• Mercantilism emerged in the late-fifteenth century with the growth of trade routes, trans-oceanic empires, and increased international shipping.
• It was associated with the influx of gold, silver, and luxury goods from the New World and the East, transforming European states and societies.
• The relationship between economic thought and state policies led to the concept of “mercantilism,” which characterized the economic nationalism of rising European states.
• Definitions of mercantilism vary, with scholars disagreeing on its exact meaning.
• Mercantilism has two main interpretations: classical economists like Adam Smith condemned it, while German historical economists, like Gustav Schmoller, approved of its focus on state power.
• Adam Smith coined the term “mercantilism” in his book “Wealth of Nations,” published in 1776.
• Mercantilist policies were not uniform across states and were influenced by local variations and practical considerations.
• State policies were influenced by the ideas of pamphleteers, authors, and policy makers who addressed specific economic and political issues of their time.
• Mercantilism is characterized by its focus on the economic welfare of the state, regulation of nationalist character, and the importance of money in defining wealth.

Origins

• Mercantilist policies of economic nationalism were rooted in earlier feudal and municipal practices in Europe.
• These earlier practices showed a distrust of outsiders, a preference for gold and silver, and relied on corporate institutions like guilds.
• Mercantilism extended these ideas to the level of the entire state, emphasizing the importance of trade and wealth for the monarchy.
• The government played a central role in regulating the economic life of subjects, but policies varied among different states based on their specific economic and social conditions.
• Strong governments and developed trade were prerequisites for implementing mercantilist policies.
• Mercantilist policies aimed to strengthen centralized state structures by regulating semi-independent local authorities.
• Initially, mercantilist policies focused on nationalism, with customs tolls and restrictions on trade in various European states.
• According to historian Braudel, many key decisions of classic mercantilism had precedents in earlier policies.
• Mercantilists were considered patriots, seeking to defend their nation’s interests.