mercantilism

Definition

Body of economics thought popular during the mid 16th and late 17th centuries. It held that money was wealth, accumulation of gold and silver was the key to prosperity, and one nation's gain was another's loss. Supported by economists such as Gerard de Malynes (1586-1641), Edward Misselden (1608-54), and Sir Thomas Mun (1571-1641) in the UK, Jean Baptiste Colbert (1619-83) in France ,and Antonio Serra in Italy (1570-?), it exhorted governments to maintain surplus of exports over imports through tariffs (duties), colonialism, and other such measures. Mercantilism's demise was initiated by David Hume, Adam Smith (who coined the term), and other classical economist (see Classical Economics) who saw it as serving only the merchant class and argued that real wealth was to be equated with full employment through greater production of goods and services. In more recent times, the mercantilism dogma was revived by the UK economist John Maynard Keynes (1883-1946) when he stated that a surplus in balance-of-trade stimulates demand, thus increasing the national wealth. When corporations, politicians, and unions demand control over imports through higher-duties to protect local jobs and industries, they are resorting to mercantilism. See also laissez faire economics.