Mercantilism

Definition

Mercantilism is an economic theory that emphasizes the role of government in regulating trade and commerce to enhance national power. It advocates for a positive balance of trade, where a country exports more than it imports, ultimately leading to the accumulation of wealth, particularly in the form of gold and silver. This theory played a significant role in shaping colonial policies and interactions.

5 Must Know Facts For Your Next Test

1. Mercantilism gained prominence in Europe from the 16th to the 18th centuries, influencing colonial policies and trade practices.
2. Under mercantilist principles, colonies were expected to provide raw materials to the mother country while serving as markets for its manufactured goods.
3. The Navigation Acts were a series of British laws that exemplified mercantilist policies, aiming to control colonial trade and ensure that it benefited England.
4. Mercantilism contributed to tensions between colonies and their mother countries, as restrictive trade practices often limited economic opportunities for colonists.
5. As industrialization progressed in the late 18th century, mercantilism began to decline in favor of free trade ideologies.

Review Questions

• How did mercantilism shape the economic relationship between colonies and their mother countries?
  • Mercantilism established a system where colonies were viewed primarily as sources of raw materials and markets for manufactured goods from the mother country. This relationship dictated trade practices that favored the economic interests of the colonizing nation, often at the expense of colonial autonomy. Colonies were required to adhere to strict regulations that ensured their resources benefited the mother country, reinforcing a cycle of dependency and control.
• Discuss how mercantilist policies contributed to social stratification within colonial societies.
  • Mercantilist policies led to significant social stratification within colonial societies as they created distinct economic classes based on access to trade and resources. Wealth was concentrated among merchants and landowners who profited from trade with the mother country, while lower classes faced restrictions on their economic activities. This division fostered tensions among different social groups and laid the groundwork for future movements advocating for greater independence and equality.
• Evaluate the long-term impacts of mercantilism on global trade networks and colonial economies in the post-colonial era.
  • The long-term impacts of mercantilism on global trade networks are evident in how historical trade patterns shaped economic relations between former colonies and their colonizers. Even after gaining independence, many post-colonial economies struggled with legacies of exploitation and dependency that stemmed from mercantilist practices. This created challenges in establishing equitable trade relationships globally, as former colonies often found themselves at a disadvantage in international markets, affecting their economic development well into modern times.

Related terms

Balance of Trade: The difference in value between a country's exports and imports over a specific period, with a positive balance indicating more exports than imports.

Colonialism:

The practice of acquiring control over another country or territory, often establishing settlements and exploiting resources for the colonizer's benefit.

Tariffs: Taxes imposed on imported goods, used by governments to protect domestic industries and promote exports.