Mercantilism

An economic current that emerged in the 15th-16th centuries and formed through the “first theoretical treatment” of the modern capitalist mode of production and took the late commercial capital of feudal society as its object of inquiry. The representative figures and ideas of mercantilism were mainly Montchrestien and Colbert of France and Thomas Mun of Britain. Among them, Montchrestien’s Traicté de l’oeconomie politique dédié en 1615 au roy et à la reine mère du roy was the first to use the term “political economy” in any literature found to date.

The main view of mercantilism is that only what is realized and truly realized as money is wealth, therefore, wealth is money and money is wealth; they reduced national economic policies and all economic activities to seizing gold and silver, and domestic trade cannot increase a country’s monetary volume, only by exporting domestic goods abroad, exchanging them for money, and maintaining trade surplus can we bring about an increase in the amount of money, that is, wealth. This reflected the enthusiasm of the rising bourgeoisie for gold and silver and its desire for accumulation of capital.

With the economic development, the main propositions of mercantilism can be divided into two stages: The early stage from the 15th century to the mid-16th century, because the production and circulation of domestic commodities in Western European countries were still undeveloped, and the development of foreign trade was insufficient, it was impossible to attract foreign precious metals and retain domestic precious metals, notably gold and silver only by economic means. Therefore, the early mercantilism advocated the adoption of compulsory administrative means to prohibit the export of currency as well as selling more and buying less, or even not buying, in foreign trade to achieve the accumulation of currency, i.e., achieving accumulation by regulating the movement of currency, a point of view, which can be called “theory of money equilibrium” or “theory of balance of money”. The late stage from the second half of the 16th century to the mid-17th century, with the continuous development of the domestic manufacture in Western European countries and the formation of the international market, it became possible to expand foreign trade and realize a trade surplus; and propositions of mercantilism changed to allowing currency to be transported abroad and expanding the purchase of foreign commodities, but it was necessary to keep the export of commodities greater than the import of commodities to ensure a trade surplus, i.e., achieving the purpose of accumulation by regulating the movement of commodities, which was also called “theory of trade equilibrium” or “theory of balance of trade”. The combination of commercial capital and state power, and the reliance on feudal nation-state power to formulate and implement policies and decrees characterized mercantilist trade policy.