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Economics/Differences between Mercantilist and Neo-Mercantilist theory.


Mason wrote at 2008-03-26 06:30:59
Adam Smith did not develop mercantilism. In fact, his work (The Wealth of Nations) was pretty much directly opposed to mercantilism. He was a proponent of free trade as much as possible, and was a laisez-faire capitalist.

f0ul wrote at 2008-04-17 13:45:46
Mercantilism is the theory that there is only so much wealth in the world and so, if you export more than you import, the return will be a greater proportion of the wealth available.

This is nonsense, and was argued against by Adam Smith. There wasn't a single person who came up with the idea of mercantilism or neo mercantilism.  

The differences between them is that mercantalism was based on royal licences to trade a route enforced by the Navy.  The Neo version used political control of high taxes on imports and subsidies to local companies allow favourable trading conditions to government approved products and services.

jus wrote at 2009-04-11 07:22:03
Just to correct you. Adam Smith was one of the first persons to strongly refute against mercantilism after the physiocrats. He believed in the laissez faire economy and the "invisible hand"

kenny wrote at 2012-02-17 22:42:31
mercantilism wasn't developed by adam smith, however its idea originated from about 5 guys namely-Thomas Mun, Gerard Malynes, Charles Davenant,Jean Baptiste Colbert, Sir William Petty.

Peter Danenhower wrote at 2013-03-14 19:03:29
I agree with the respondent that Adam Smith was a staunch critic of mercantilism and also that no one person invented mercantilism or neo-mercantilism.  However, I part company with the answers so far because I think it is a mistake to identify the essence of mercantilism too closely with its historical context.  For example, many analysts of mercantilism identify accumulation of gold or viewing the economy as a zero sum game as essential characteristics of mercantilism.  The importance of gold was a parallel idea that got mixed in with what I think is the real essence of mercantilism, namely the attempt to accumulate wealth by individuals (or heads of state) by increasing revenue (exports) and cutting costs (imports).  Understood in these terms, it is easy to see that mercantilism is very much with us.  Most corporations are run on this ideology.  Critics of mercantilism universally understand that we can't expect to export endlessly, while importing very little, because this creates trade imbalances that are intolerable for all sorts of reasons.  The only difference between international trade and domestic trade is that nations are organized enough to revolt against trade imbalances.  (Actually, in many cases even whole nations have not been able to effectively object to negative trade imbalances.)  If consumers and workers were unionized effectively enough then the domestic "trade imbalances" between wealthy and poor (99% and 1%) would not be tolerated either.  Furthermore, domestic society as a whole whole would benefit enormously in all the ways that conservatives insist nations benefit from freer trade.  For example, if wages and working conditions improve, then workers can participate more fully in the economy which creates more economic activity.  So leveling out "trade" between workers and corporate owners  improves the domestic economy.


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