Mercantilism

Mercantilism defined

• An economic idea which asserts that government control over foreign trade is necessary for the prosperity and security of the nation.

Characteristics of Mercantilism

• Tariffs to protect domestic businesses from foreign competition.

• Building a network of overseas colonies to provide raw materials and a market for manufactured goods.

• Exporting more than you import. EXCEPT gold and silver. Do not export these at all.

Mercantilism in action

Problems with Mercantilism

• It promotes “the popular folly of confusing wealth with money.” –Adam Smith

• Mercantilism creates government-guaranteed monopolies, which stagnates trade.

• It assumes that the colonies will not create a manufacturing base or a merchant class of their own.