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Question: General Definition of Mercantilism!?
Not a homework question just something that was in my homework that I never understood!.

Best Answer - Chosen by Asker:
Mercantilism was an economic theory, prevalent between about 1500 and 1800, that had its origins in Catholic theological belief, and stated a number of general principles:

1!. the wealth of a country was determined by its stock of raw materials, labour, bullion (gold and silver) and manufacturing capacity,
2!. the total volume of international trade was fixed over any medium period of time, so that one country's gain would result in another's loss; we would say that international trade was a "zero-sum game",
3!. the only way to preserve a nation's wealth was to protect its trade by tariffs, encouraging exports and discouraging imports!.

Mercantilism was used as the basis (excuse!?) for colonialism and for some wars, notably in India and North America!. The theory suggested that the wealth of the colonial power could be raised without reducing the economic conditions of undeveloped lands, because they had no powers of manufacture anyway!. In some ways, the argument was still in use in the mid-19th to the early 20th centuries, especially in Africa and Australasia!.

It's been said that mercantilism was used as the basis for slavery but that isn't clear!. Slavery existed centuries before the mercantilists and for 100 years after the theory stopped being used for policy and legislation!.

Adam Smith 1723-90 showed that the theory was flawed because enterprise and invention could raise national wealth, using the same volume of raw materials and labour as before but in better economic combinations!. In his book "The Wealth of Nations" he described a scientific approach to production, so that greater wealth could be created and therefore international trade expanded!.

The real failures of mercantilist theory were exposed by David Ricardo 1772-1823 who showed that relative advantage in production and trade could result in a general increase in international wealth and trade!.

By the mid 1800s, mercantilism was dead as a policy structure!. Specialisation and free trade was widely accepted as desirable by all enlightened governments, although it proved difficult to implement fully because of territorial imperatives among European states, and protectionism employed by USA!. Only in the 20th century did free trade become possible and then only during periods of peace, which weren't many!.Www@QuestionHome@Com

Under Mercantilism:

1!. Exports must exceed imports!.

2!. Wealth is finite!.

Those countries operating under a mercantilism economy usually had strong armies and navies and merchant marine fleets because they thought the only way to increase one's finite wealth was either to forcibly take it from another place or force other people to purchase your goods - or both!.

In his book: THE WEALTH OF NATIONS, Adam Smith argued that capitalism was a superior economic policy than mercantilism!.Www@QuestionHome@Com

The policy of getting colonies, extracting raw materials from them, finishing the goods, and selling them back to your captive market, the colonies!. It is also exporting more goods than importing goods, which is basically the profit motive!.Www@QuestionHome@Com