Mercantilism

by

Albane Forestier

• LAST REVIEWED: 06 December 2022
• LAST MODIFIED: 25 May 2011
• DOI: 10.1093/obo/9780199730414-0120

Introduction

The term “mercantilism” is used to refer to a set of economic theories and policies that dominated in early modern Europe. There is to this day much debate as to what mercantilism exactly was. First, the definition of mercantilism appears relatively late, and after it had ceased to shape economic thinking and policymaking, with Adam Smith and his discussion of mercantilism as a system of economic thought and practice. Second, our understanding of mercantilist ideas is complicated by the fact that these were developed by numerous writers, and implemented in different sectors of the economy and in different national contexts over two centuries. The definition of mercantilism consequently became a hotly contested topic in political and economic theory. A debate followed Eli F. Heckscher’s book, Mercantilism (Heckscher 1955, first published in 1935, cited under General Overviews), which first brought mercantilism to the attention of a wider modern audience. It divided scholars between those who, following in the footsteps of Adam Smith, favored a liberal interpretation that saw in mercantilism a setback in the development of economic thought, and those who ascribed to mercantilism some logic and rationality by replacing it within a broader political and economic context. After this debate faded, there were few new books on mercantilism until Lars Magnusson’s study Mercantilism: The Shaping of an Economic Language (Magnusson 1994, cited under General Overviews), which led to a renewed interest in the topic. More recent scholarship has instead focused on the implementation of mercantilist ideas and the political economy of mercantilism, in particular the interaction between mercantilist systems and interest groups. The relevance of mercantilism to Atlantic history is twofold. First, mercantilist ideas influenced both European foreign trade and colonial strategies in America. This perspective shifts the debate away from the definition of mercantilism to the study of overseas trade and the economic and political impact of mercantilism on the development of American colonies. It also allows for works with a broader European scope, and for a comparison of the different mercantilist regimes in place. A by-product debate has concentrated on the importance of Atlantic trade and the American colonies to European nations. In addition, historians of the American Revolution have paid attention to the influence of mercantilism on the commercial and political formation of the early American Republic. By contrast, smuggling and the limits of mercantilist systems remain the least studied aspect of the workings of mercantilism in the Atlantic.

General Overviews

Early scholarship has mostly focused on the question of the definition of mercantilist thought. Heckscher 1955 and Coleman 1969 have set most of the terms of debate about this topic. The former argued for seeing mercantilism as a coherent body of ideas, whereas the latter insisted that mercantilist thought lacked consistency and interpreted mercantilist policies as ad hoc and pragmatic. Both Heckscher and Coleman, however, rejoined in a liberal interpretation of mercantilist weaknesses, following in the criticism of mercantilism by Adam Smith in his Wealth of Nations (see Smith 1999). The middle position between Heckscher and Coleman was reached by Wilson 1958, which identifies changes in mercantile influence on policymaking in the 17th and 18th centuries, but nonetheless credits economic policy with some degree of continuity throughout this period. More recently, Magnusson 1994 insisted on describing mercantilism as a thoughtful and rational system of economic principles for those who designed them. Hutchison 1988 nuanced Heckscher’s labeling of the entire period as mercantilist by pointing out the growing support for free trade. Ekelund and Tollison 1981 represents a departure from this focus on intellectual history by taking into account the political economy of mercantilism.

• Coleman, Donald C. “Editor’s Introduction.” In Revisions in Mercantilism. Edited by Donald C. Coleman, 1–18. Debates in Economic History. London: Methuen, 1969.

  Introduction to a brief collection of eight essays originally published between 1936 and 1966 by European and American scholars, with special treatment given to the work of Heckscher. The author develops the first and fullest criticism of Heckscher’s view of mercantilism. He finds fault with Heckscher’s methodology for focusing only on the theoretical aspect of mercantilism and contests the notion that mercantilist commercial policy was conducted along systematic lines.

• Ekelund, Robert B., Jr., and Robert D. Tollison. Mercantilism As a Rent-Seeking Society: Economic Regulation in Historical Perspective. College Station: Texas A&M University Press, 1981.

  Framed within a neo-institutional approach, this study reflects a significant shift in the study of mercantilism by introducing the notion of interest groups and rent-seeking principles. In contrast to other writers, the authors support the view that mercantilism was a rational choice for those who developed and supported it at the time.

• Heckscher, Eli F. Mercantilism. 2d ed. Translated by Mendel Shapiro. Edited by Ernst F. Söderlund. 2 vols. London: Allen and Unwin, 1955.

  Revised edition of the 1935 classic. This monumental study was the first to synthesize English and French mercantilist theories but is less interested in policies and the circumstances that gave birth to them. Following a liberal interpretation, it defines mercantilism as a uniform economic doctrine that served the interests of the rising European nation states. Reissued 1994 (London: Routledge).

• Hutchison, Terence W. Before Adam Smith: The Emergence of Political Economy, 1662–1776. New York: Blackwell, 1988.

  This wide-ranging book provides new insights into the decline of mercantilism as the dominant doctrine during the period prior to 1776 and stresses the importance of this era for the formation of modern economic debates. It extends its survey of English writers (William Petty, John Locke, and contemporaries) to include a discussion of Colbertism and the German Cameralists, and poses Adam Smith as the culmination of a period of intellectual activity, rather than as a clear-cut departure from it.

• Magnusson, Lars. Mercantilism: The Shaping of an Economic Language. London: Routledge, 1994.

  Still unsurpassed as an extensive introduction to mercantilist thought, replaced within the context relevant to its emergence and evaluated in terms of the problems and policies in force at the time. This panoramic survey of mercantilist literature covers the development of technical terms used in mercantilist debates, but focuses mostly on England. Less perceptive analysis of previous debates on mercantilism.

• Smith, Adam. The Wealth of Nations, Books IV–V. Edited by Adam Skinner. London: Penguin, 1999.

  The first writer to outline the modern concept of mercantilism, in 1776, Smith launched a fierce denunciation of mercantilism and the implementation of mercantilist ideas, designed to benefit the merchant class and the government. Indispensable starting point to an understanding of today’s discussions of mercantilism. Book 4 is titled Of the Principle of the Commercial or Mercantile System; book 5, Of the Revenue of the Sovereign or Commonwealth.

• Wilson, Charles. Mercantilism. London: Historical Association, 1958.

  Short and accessible review of the early literature on mercantilism, from Adam Smith to Heckscher and Keynes via the German Historical school. Wilson argues that mercantilism boils down to six principles and introduces an insightful differentiation between mercantilism as a system of Staatsbuilding aimed at power and as an economic system with commercial objectives. Reissued in 1967.