A system of ideas and government policies advanced by a series of writers of economic pamphlets, many of them merchants (hence the term), who in the period 1550–1750 advanced theories of international trade, money, prices and employment. The major writers of this school include HALES, MALYNES, NORTH, MUN and CHILD. The earlier writers emphasized the importance of keeping the balance of payments in surplus so that bullion could be accumulated. Money was not seen, initially, as being a factor of production, except to finance wars. TARIFFS, EXCHANGE CONTROLS and monopoly trading companies were advocated to achieve these ends. Later writers developed more subtle theories looking at the balance of payments as a whole. Since the East India Company exported silver bullion to India to pay for imports from India, writers had to provide a more complex theory of international economics, moving from particular to general balances. In a sense, mercantilism was an elaborate theoretical justification for tariffs, then a major source of government revenue.
This school of economics can be viewed more sympathetically as promoters of policies which would create national strength and growth. They were worried about unemployment, especially in England which was adjusting to the problem of provision for the poor after the dissolution of the monasteries and the decline in the wool industry Unemployment prevented a nation from achieving its full output potential so they advocated public works and regional policies not dissimilar from many which have been used in Western countries in the twentieth century The critiques of HUME and SMITH—particularly Hume’s assault in his SPECIEFLOW MODEL and Smith’s discussion of the nature of money and of the desirability of free trade—relegated mercantilist doctrines to the sidelines of economics. But some nineteenth-century writers, including LIST, had ideas with a mercantilist tinge. The recent school of NEO-MERCANTILISM has kept these writers’ ideas firmly on the agenda of economic policy discussions.
