10-th topic. Medieval economic theories - Mercantilism

Mercantilism (in Italian: merchant) as a main trend of economic policy and economic thinking of Western Europe countries in XV-XVIII centuries was theoretical and practical system which firstly studied economic activity and objective lows. Most following systems of economic policy and theory had been created on the base of criticism of mercantilism.

Main ideas and principles of mercantilism are: precious metals and their saving reflect the essence of wealth; increase of state wealth and state power by the way of saving of gold and silver; regulation of foreign trade for inflow of gold and silver to national economy; cheap imports of raw materials to assist for the development of the industry; the imposition of protectionist tariffs on imported industrial products; promotion of export, in particular, the export of final products; population growth to keep wages low, etc.

Antoine de Montchrestien (1575-1621) believed that wealth is people’s happiness and labor is the wealth. They considered that, wealth is to have money. As individuals, if the government wants to increase the wealth, expense should be less than revenue. They identified that surplus with the saving of money and collection precious metals.

The main line of mercantilist’s works is idea that the main indicator for economic welfare is trade surplus. Mercantilists focused their attention to export of national industrial products and acquisition of colonies and markets.

Mercantilist strengthened mainly two ideas in economic theory: the governments should only focus on national economic interests and saving of wealth is base of economic welfare.  Thus, the medieval western economic schools started to gradually replace the concept of “social-economic welfare” to the concept of “economic welfare”.  The area of “economy” which defined by the most ancient and ancient theoretical schools started to narrow gradually.

Some materials were used from the book of “The history of economic studies” published under  editing by M.Meybullayev

Aghanemat Aghayev