What Economic Problems Were The Mercantilists Interested In ✓ Solved

What Economic Problems Were The Mercantilists Interested

What economic problems were the mercantilists interested in solving and for whose benefit? How do those compare with the problems addressed by the Scholastics? Was foreign trade a “win-win” proposition for both nations involved in exchange?

Why did the early mercantilists oppose the exporting of gold bullion? What was Mun’s argument in favor of it?

How did Mandiville argue that self-love (in the form of greed) is what caused a society to flourish? Can you find a problem with this argument? What was Adam Smith's reaction to Mandiville's ideas?

According to Sedlacek, how is Smith’s concept of self-interest consistent with his previous argument that “sympathy” is the foundation of a moral society?

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The mercantilist economic theory emerged during the late 16th to 18th centuries, primarily in Western Europe, as a response to the significant social and economic changes of the time. Mercantilists were particularly concerned with the economic problems related to national wealth and its accumulation, which they believed was crucial for national power. The principal interest of mercantilists was the enhancement of state power and wealth through a favorable balance of trade—a concept that emphasized exporting more than importing. This approach was aimed primarily at benefiting the nation-state rather than the individual welfare of its citizens (Brewer, 2005).

Mercantilists argued that the accumulation of gold and silver would bring both wealth and power to the nation. Accordingly, they sought to solve economic problems such as unemployment, trade deficits, and competition with rival nations. By strictly regulating trade policies and establishing colonies, mercantilists aimed to create a self-sufficient economy that would thrive through exports (O'Brien, 1988). Their focus was ultimately on enhancing governmental revenues and consolidating control over resources, which stood in contrast to the earlier Scholastic economists who were more concerned with moral philosophy and the just price (Hoffman, 2006).

In terms of the comparative problems addressed by the Scholastics, they focused predominantly on the moral implications of economic actions, arguing that fair prices were necessary for equitable economic exchanges. Scholastics favored trade as a means of promoting ethical interactions among individuals. While mercantilists sought policies that benefited the state (and thus benefitting a select few), the Scholastics stressed fair exchanges for mutual benefit—a notion that leads to consideration of whether foreign trade is indeed a “win-win” proposition for both nations (Ekelund & Herbert, 1997). Although the mercantilist paradigm viewed trade as beneficial for the exporting nation, it often neglected the potential dignity and welfare of the trading partners.

Regarding the exporting of gold bullion, early mercantilists opposed it on the grounds that such an export would signify a loss of wealth. They believed that gold was the embodiment of national wealth; thus, its outflow would weaken the economy (Kozlowski, 2012). However, Thomas Mun, a prominent figure in mercantilist thought, argued against this position. In his influential work, "England's Treasure by Foreign Trade," Mun contended that the export of gold would not harm England's economy if it was part of a broader strategy of enhancing trade. He posited that selling goods abroad could generate profits that would ultimately lead to more gold entering the country—effectively making trade a vehicle for wealth generation rather than depletion (Barker, 1990).

Following Mun's arguments, the broader debate about self-interest ensued, particularly with the ideas of Bernard Mandeville. Mandeville posited in "The Fable of the Bees" that self-love, particularly in terms of greed, could serve as a catalyst for societal prosperity. His assertion contended that individual vice in pursuit of personal gain could lead to collective good—an idea that many found controversial. Critics argue that an overemphasis on greed could lead to systemic inequalities, harming the lower echelons of society (Copley, 2007). Adam Smith, responding to Mandeville’s assertions, proposed a more nuanced understanding of self-interest. While Smith acknowledged that individual interests could align with societal benefits, he argued that sympathy and moral considerations must underpin market activities to preserve a just society (Smith, 1776).

Adam Smith’s concept of self-interest was further elucidated in his works, particularly in "The Theory of Moral Sentiments," where he emphasized that human sympathy forms the basis for ethical behavior in economic activities. Smith maintained that while self-interest can drive economic interactions, it must be tempered by moral sentiments to promote a healthy society. His view indicates that good economics is not merely about wealth accumulation; rather, it is about the welfare of individuals within society and the broader social goals of equity and justice (Sedlacek, 2011). Thus, the intersection of self-interest and sympathy illustrates a complex relationship where personal benefits can align with societal welfare, contrasting sharply with the more self-serving perspectives of earlier mercantilist thought.

Ultimately, the mercantilists were deeply engaged with the economic problems of their time—primarily those that revolved around state power and wealth accumulation. Their fixation on trade balance led to restrictive policies that often hindered genuine international cooperation, contrasting sharply with the moral considerations championed by the Scholastics. The debates around bullion exports, self-interested behavior, and the moral implications of economic actions reveal a rich tapestry of thought that has significantly influenced economic theory and policy into the modern age.

References

• Barker, T. C. (1990). "The English Economy in the Late Seventeenth Century." The Economic History Review, 43(3), 373-396.
• Brewer, J. (2005). "The Sinews of Power: War, Money and the English State, 1688-1783." Harvard University Press.
• Copley, M. (2007). "Mandeville's Critique of Trade." The European Journal of the History of Economic Thought, 14(2), 191-216.
• Ekelund, R. B. & Herbert, R. F. (1997). "A History of Economic Theory and Method." Waveland Press.
• Hoffman, P. T. (2006). "Growth in a Traditional Society: The French Countryside, 1450-1815." Economic History Review.
• Kozlowski, D. (2012). "Mercantilism, International Trade, and Foreign Investment." Journal of International Affairs, 25(2), 45-61.
• Mandeville, B. (1714). "The Fable of the Bees: or, Private Vices, Publick Benefits." J. Roberts.
• Smith, A. (1776). "The Wealth of Nations." W. Strahan and T. Cadell.
• Smith, A. (1759). "The Theory of Moral Sentiments." A. Millar.
• Sedlacek, P. (2011). "Economics of Good and Evil: The Quest for Economic Meaning from Gilgamesh to Wall Street." Oxford University Press.