Mercantilism catches a central place in history in understanding the economic thought of the past. Mercantilism, which started in the 16th century and continued until the 18th century, laid the foundation for modern economic thought. here, mercantilism was the three basic assumptions that shaped the economic policies of nations during this era. In this blog post, these assumptions are considered in detail
1) There is a Finite Amount of Wealth in the World
The basic assumption of mercantilism was which the wealth of the world is limited. In mercantilism , wealth was primarily measured in precious metals ( gold and silver). They believed that a certain amount of these metals existed in the world and the survival of a nation depended on its ability to store as much of them as possible.
This belief led to policies aimed at accumulating precious metals through practices such as export promotion and import restrictions. Governments sought to accumulate wealth through a favorable balance of trade, where they exported more goods than they imported, thereby accumulating more precious metals. This assumption led to the mercantile obsession with gold and silver, economic policies and colonial expansion.
2) A Nation Can Only Grow Rich at the Expense of Other Nations
Mercantilists believed that one nation's gain was another nation's loss And in order to become rich, a nation must Exploited other nations. This led to international trade was a competition whose goal was to achieve a favorable balance of trade.
To achieve this trade policies often included tariffs, subsidies, and other trade restrictions designed to protect domestic industries and promote exports. The idea was to maximize a nation's share of the global economy. even if it meant limiting opportunities for other nations.
1) A Nation Should Try to Achieve and Maintain a Favorable Trade Balance
may be the most well known aspect of mercantilism is the Attention on maintaining a favorable trade balance. Mercantilists believed that a nation should try on to export more goods than it imported. This surplus in trade would result in the inflow of precious metals, increasing the nation's wealth and power.
To achieve this, mercantilist governments actively intervened in trade, imposing tariffs on imports, providing subsidies to domestic industries, and even outright banning the export of certain raw materials to encourage their domestic processing. These measures aimed to maintain a trade surplus and ensure a constant inflow of wealth.
this three assumptions of mercantilism shaped economic policies and thinking for centuries. While modern economics has moved beyond many of these ideas, understanding the historical context and assumptions of mercantilism helps us appreciate the evolution of economic thought and the complexities of economic systems throughout history.
Written by Manoj
https://www.economicshelp.org/blog/17553/trade/mercantilism-theory-and-examples/.
https://aryabhattacollege.ac.in/samplepaper/637199518725949904The%20concept%20of%20mercantilism.pdf
https://tyonote.com/mercantilism/#Key_Points_of_Mercantilism
No comments:
Post a Comment