Mercantilism

Mercantilism was a dominant economic theory and policy in Europe between the 16th and 18th centuries. It emphasized that a nation’s wealth and power were best increased through trade control, accumulation of precious metals, and a favorable balance of trade (more exports than imports).

Key Features: Wealth as finite: Mercantilists believed that the world’s wealth was limited, so nations had to compete for resources and trade dominance. Emphasis on bullion: Gold and silver were considered the primary measures of national wealth. Export promotion and import restriction: Policies encouraged exports and limited imports through tariffs, quotas, or monopolies. Colonial expansion: Colonies were exploited for raw materials and served as captive markets for the mother country. State intervention: Governments actively regulated trade and commerce to strengthen national power.

Examples: England imposing trade restrictions on colonies while exporting finished goods. Spain accumulating gold and silver from colonies in the Americas. Establishment of state-sponsored trading companies, like the British East India Company.