Starting with the XV century European states are activated in terms of international relations, develop international economic relations, there are the first large organizations, such as the East India Trading Company.All this pushed the economists of the era to create a system of rules and doctrines expressed in the policy of mercantilism, which was the main idea of the active participation of the state in the economic activities of the country and its people in order to accumulate cash, gold and silver. notion of mercantilism is closely linked to the notion of protectionism, political doctrine, according to which economic relations with other countries is limited, the outflow of capital and consumption of foreign goods is prohibited.
principles of policy of mercantilism
in such European countries as England, France, Germany and Austria, in
the XV-XVI centuries.policy of mercantilism was to accumulate funds in the country by any means.These goals were restrictions on the importation of foreign goods, the prohibitions on the export of gold and silver out of the country, a ban on the purchase of foreign products due to proceeds from the sale of goods abroad, etc.Over time, the data are modified and changed, and since the end of the XVI and ending mid XIX century mercantilist policies gradually moved away from the rigid restrictions on the export of precious metals.
By the end of the XIX century mercantilism has been adopted as the basic economic doctrine of all the strongest European powers.Artificial government intervention in economic life has led not only to the positive economic consequences (increase in the trade balance, GDP growth, improving the welfare of the population), but also to the development process to ensure production growth in the birth rate, reduce social tensions and improve the quality of life of the population.According to economic historians such as Emmanuel Valerstayn and Charles Wilson, a technological revolution in England in the XIX not have happened without the practical application of the principles of mercantilism. Pursue mercantilism is difficult in the event that the country lacks natural wealth.That means no development of production, in connection with which the accumulation of capital becomes problematic.
critique of mercantilism
Assessment of the economic welfare of the country only in terms of availability of funds it is not quite right.Adam Smith, one of the greatest economists of the era, wrote that the large gold and monetary reserves of the country do not have economic development without proper influence the development of demand and supply of goods and services, and without the development of basic capital.In other words, it is important not the very existence of money and precious metals in the treasury of the state and competent to use them for the benefit of market development, production, supply and consumption.