Definition of Mercantilism – What it is, Meaning and Concept

Determining the etymological origin of the term mercantilism is the first thing we are going to do, before entering fully into the analysis of its meaning. Specifically, we would have to say that it is a word that comes from Latin, and more exactly is the result of the sum of the following Latin components: “mercari”, which is synonymous with “trade”; “-Il”, which comes to indicate a “quality”, and the suffix “-ism”, which is equivalent to “system”.

The mercantilism it’s a economic system which is based on the development of Commerce and the export. His doctrines were developed among the 16th centuries and XVIII on Europe.

MercantilismFor the establishment of mercantilism, a State strong that could take the necessary measures to regulate the economy. The prosperity of each nation was linked by the capital accumulated by it, which in turn was represented by the accumulation of precious metals in the power of State.

Mercantilist theorists held that said capital it could be increased from a positive trade balance, that is, with a level of exports that exceeds the level of imports. This translated into a government that it should implement protectionist policies, protecting domestic production with import tariffs and favoring exports.

All of this explains why State it must have a strong position in the establishment of mercantilism. Otherwise, the establishment of tariff barriers and the adoption of protectionist policies in general would not be possible.

Specifically, for all the above, we can establish that these are the pillars on which mercantilism was based:
• The economy must be regulated at all times by the State.
• The wealth of a country is determined by the amount of gold and silver that it has within what would be its borders.
• In order to accumulate more silver and more gold, two things are necessary: ​​reduce imports and increase exports. The latter, for their part, must be encouraged by promoting manufacturing.
• It is essential that companies that depend on the State are created in the relevant country in order to improve trade.

Many are the characters who advocated and defended commercialism. However, among all of them the Frenchman Jean-Baptiste Colbert stands out. This was Minister of King Louis XIV and stood out for carrying out actions such as the reestablishment of old manufactures and the granting of monopolies, the promotion of the Languedoc Canal, the improvement of communication infrastructures such as roads and the construction of new ones. to promote trade.

Mercantilism had its peak, although it also received much criticism. Various theorists pointed out that mercantilism did not take into account the competitive advantages of each country (each nation has natural conditions that allow it to obtain certain products with fewer resources, which it can export to import others) and that, if wealth was only accumulated in the form of precious metals, its supply would increase and, therefore therefore, it would lower its price.

In everyday language, on the other hand, mercantilism is known as mercantile spirit that applies to things that, in theory, should not be tradable. For instance: “I do not understand commercialism in affective relationships”.

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