Mercantilism

Key Term: Mercantilism

Key Concept and Explanation of Interest:

The economic theory of mercantilism rests largely on the premise that a nation’s wealth is completely dependent on its capital (in terms of material wealth) and the idea that the supply of the earth’s capital is finite from an economic standpoint. The theory is a strong proponent of exporting goods in lieu of importing them, as more exports than imports implies a good economic balance according to that theory of national wealth accumulation. It is interesting that this concept came about at the same time as the rise of the nation-state, and that it largely became the dominant economic policy in post-feudal European nations, ultimately becoming a precursor or beginning to modern capitalism. It is also interesting to note the effects of this theory in the internal affairs of various European nations, international affairs, geopolitics, and world history, as well as surprising remnants of it existing in various parts of the world today.

Explanation of Key Concept:

Mercantilism, or the Mercantile System, was an ill-defined economic concept developed largely in 16th century Europe which focused on capital, largely in the form of bullion accumulation and control. It influenced newly formed nation-states to adopt protectionist policies and controls on what they construed as their national wealth, and promoted a trade balance favorable to the individual nation’s interests. This policy prevailed for approximately three hundred years before collapsing “because nations cannot export without another nation’s willingness to import.” (Satterlee and Robinson, 2008, p. 120)

Major Article Summary:

McGuire, M.C., Ohta, H. (2005) Implicit Mercantilism, Oligopoly, and Trade. Review of International Economics, 13, 1, 165-184, Retrieved April 1, 2008, from the Business Source Premier database,...