Mercantilism and Early Capitalist Economic Policy

Mercantilism and Early Capitalist Economic Policy

Companies: The trend of bourgeois political economy and the economic policy of states in the era of primitive accumulation of capital (15th–18th centuries) reflected the interests of commercial capital when it was still attached to industrial capital. The mercantilist view held that gain is created in the sphere of circulation and that the wealth of nations lies in money. Hence, mercantilist policy tended to attract as much gold and silver as possible to the country.

The first mercantilists (Stafford and others) insisted on a ban on all exports of the country's money. What they proposed was to accumulate money in the country by all means, exporting goods to foreign markets. With the growth of capitalist economic forms and the expansion of foreign trade, the inconsistency of the policy that sought to retain money from circulation became increasingly apparent.

Shift to Trade Balance Policy

In place of a policy focused on an active monetary balance, the policy of the trade balance was presented. Its supporters were later mercantilists (T. Mun, A. Serra, et al.). According to them, the State must have a favorable trade balance: imports of goods must not exceed exports. This was intended to stimulate the development of industry producing for export.

Mercantilists considered the source of wealth to lie in foreign trade, and insofar as artisans supplied the goods to be exported, they concluded that it was essential to promote craft production. Capitalist production was in its infancy, and mercantilist ideas were conditioned by the level of economic development at that time.

Decline and Historical Role

Mercantilism began to decline in the mid-seventeenth century since, as capitalism progressed, the main means of increasing wealth shifted to capitalist production. Mercantilism, as characterized by Marx, was the prehistory of political economy. Modern political economy began only when the theoretical investigation of the circulation process passed to the process of production (Marx).

In its time, the policy of mercantilism was progressive: it helped develop the first large capitalist enterprises (manufacturing), facilitated the progress of productive forces, and contributed to the victory of capitalism over feudalism. From the commercialist economic thought of the bourgeoisie emerged the theory of the Physiocrats.