Mercantilism

Mercantilism was the dominant approach to economic policy in Western Europe from roughly the sixteenth through the eighteenth century, associated with statesmen, merchants and pamphleteers across England, France and the Netherlands rather than with any single founding economist. Mercantilist writers held that the power of a nation rested on its stock of gold and silver, so a government should run a favorable balance of trade, exporting more than it imports, and use tariffs, trade monopolies granted to chartered companies, and colonial policy to capture trade for the home country at the expense of rivals. Historians of economic thought commonly treat the English merchant Thomas Mun as the most systematic voice of mercantilism; his England's Treasure by Foreign Trade, written in the 1620s and published in 1664, set out the balance of trade argument in its clearest form. Mercantilist policy came under sustained theoretical attack from the French Physiocrats in the mid eighteenth century and then more comprehensively from Adam Smith, whose 1776 Wealth of Nations devoted an entire book to refuting mercantilist trade theory and is generally credited with ending the dominance of mercantilism in economic thought, even though many mercantilist practices persisted in government policy well afterward.