Mercantilism is a set of doctrines that insist on the need for active government intervention in the economy. The term was introduced by the economist A. Montchretien.
The essence and types of mercantilism
The main form of state participation in the economy, according to the mercantilists, should be state protectionism. It consists of high import duties and subsidies for domestic producers. Mercantilists considered the main goal of the state to accumulate maximum income. It should spend less than it earns, which excludes the formation of public debt.
It is customary to distinguish between two types of mercantilism - early and late.
Early mercantilism existed in the last third of the 15th to mid-16th century. It was characterized by the theory of the monetary balance, which substantiated the policy of increasing the monetary balance. The retention of precious metals in the country was considered important. The export of gold, silver, as well as local money was severely persecuted. The main provision of mercantilism was also the maximum restriction on the import of goods on which high duties were set. The improvement in the trade balance was perceived not only as a way to increase government revenues, but also to increase employment.
Late mercantilism (2nd half of the 16th - 17th centuries) was based on a system of active trade balance, which replaced the monetary one. His key principle was: "Buy - cheaper, sell - more expensive." The mercantilist policy is aimed at state support for the development of domestic industry. At the same time, severe restrictions on foreign trade were lifted. But the state had to protect the population from the degradation that free trade brings.
The political significance of mercantilism
Mercantilism interpreted the relationship between politics and economics in a peculiar way. The state acted as the main institution for capital accumulation, reflecting the realities of those days. At the same time, mercantilism was of a class nature and reflected the interests of the bourgeoisie. At the same time, mercantilism was at the origins of scientific bourgeois economy.
Mercantilism as a state policy in the field of economics was implemented in certain periods in many countries. He was adopted by England, Austria, Prussia, Sweden, France, Russia (under Peter the Great, Nicholas the First). According to historians, it was mercantilism that became the source of industrial growth after the revolution in England. In general, mercantilism is credited with its ability to create centralized strong nation states and ensure their competitiveness in the world arena.
The criticism of the mercantilists was based on the fact that today it is morally outdated. So, it is based on the principles of inelastic demand and limited individual needs. Mercantilists see the economy as a zero-sum game, i.e. the gain of one, for the other - the loss. They put merchant capital at the forefront, although this was historically justified. The fact is that it preceded the emergence of industrial capital. A. Smith emphasized that the accumulation of precious metals does not necessarily lead to an increase in consumption, but this is the basis of welfare.
