Merchantilist School of Economic Thought

In: Business and Management

Submitted By mmorris
Words 1373
Pages 6
History of Economic Thought
September 6, 2012
The Mercantilist School

1. What Was the Historical Background of the School?

Mercantilisms were a group of writers and thinkers who prevailed in Europe after the decline of feudalism in the early 15th century and the beginning of the Industrial revolution in 1780 (Mathur). The use of money expanded and trade increased within each country and between countries (Brue Grant 13). The focus was on the economic competition, they believed that politics must control economics. The Europeans explored and extended the sphere of commerce part due to the development of navigation (Brue Grant 13). The primary objective of the Mercantilism was to increase the power of the nation state. The more gold a nation had the richer and more powerful it became. Intense rivalry and competition among states began. Mercantilists believed the way for a nation to become rich and powerful was to export more than it imported. “The mercantilist school superseded feudal concepts, encouraged nationalism, gave new dignity and importance to the merchant, and justified a policy of economic and military expansion” (Brue Grant 13).

2. What Were the Major Tenets of the School?

The main principles of the Mercantilism School are as follows:

Wealth was power, and therefore the objective of the country was to maximize its wealth through the possession of gold and silver it possessed. (Brue Grant 14). Trade policy tended to be to import raw materials, and export finished goods. They believed if the country sells more than it buys, then the foreigners should pay by sending gold and silver and the wealth of the country therefore increases. The government did all in its power to promote the nation’s exports by subsidies and imposed taxes and prohibitions on imports. Nationalism was driven for militarism to win and hold colonies or engage in…...

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