In This Article Expand or collapse the "in this article" section Mercantilism

  • Introduction
  • Selected Original Works
  • Adam Smith’s “Mercantile System”
  • The German Historical School
  • Jacob Viner’s Scholarship on Mercantilism
  • Eli Heckscher’s Mercantilism
  • Mercantilism and Classical Liberalism
  • Mercantilism and Colonial History
  • Selected General Sources

International Relations Mercantilism
Kenneth A. Reinert
  • LAST MODIFIED: 24 February 2021
  • DOI: 10.1093/obo/9780199743292-0298


The notion of “mercantilism” or the “mercantile system” as a formal idea was identified by Adam Smith in his The Wealth of Nations. Smith had in mind a set of writers (the mercantilists) who were active in the 16th and 17th centuries, primarily but not exclusively in England. As commonly stated, mercantilist thought supported a policy position that countries should attempt to achieve trade surpluses that result in an inflow of “precious metals” or gold. In some renderings, this inflow of gold was seen as supporting royal treasuries. Mercantilism was often expressed as a system of economic nationalism. As such, it also had elements of a “zero sum” approach to international economics relations, although whether this “zero sum” thinking extended into the domestic realm is a matter of some debate. In recent decades, interpretations of what exactly mercantilism stood for have diverged significantly. This is perhaps a positive development as it provides layers of nuance to what had become a simplification of what mercantilist writers really stated, as well as differences of opinion among these writers. The origins of mercantilism are wrapped up with another school of thought—that of “bullionism,” which focused directly on transactions in precious metals. These two schools of thought had a significant temporal overlap, although mercantilism eventually prevailed. Mercantilism also became wrapped up in European colonial activities, from the British East India Company, some of whose spokesmen were mercantilist writers, to Prince Leopold’s Belgian Congo disaster. For this reason, it is important to consider the impacts of mercantilism both within the Western European context and within Western European colonial systems. While in the end the mercantilist emphasis on the balance of trade and, more broadly, economic nationalism was incorrect, modern analysis of the school of thought has revealed that the mercantilist writers were indeed engaged in real economic analysis. Key concepts uncovered by mercantilist writers included balance of payments accounting, trade in services, monetary theory, aggregate employment, exchange rate determination, and others. These insights secure mercantilism a place in the history of economic thought.

Selected Original Works

Most of the original works of mercantilist writers were in essence “pamphlets” arguing for specific policies. Indeed, Spiegel 1991 (cited under Selected General Sources) reported on a “veritable flood” of pamphlets beginning in the 1500s and increasing by orders of magnitude during the 17th and 18th centuries to reach into the thousands. This is clear evidence of an active area of early economic writing. Beginning in the early 17th century, mercantilist writings included the “balance of trade” doctrine as a revision of bullionism where the focus shifted from controlling specific exports of precious metals to the overall trade balance. Two of the earliest such pamphlets were by de Malynes and Wheeler in 1601, and one of the more recent was Steuart 1767. De Malynes 1622 then relaxed the focus on the balance of trade. The most famous mercantilist publication was Mun 1664, one of a number of works he wrote, and one published posthumously. His association with the East India Company was a main motivator for his writings. As others later noted (e.g., Viner 1930a [cited under Jacob Viner’s Scholarship on Mercantilism] and Spiegel 1991 [cited under Selected General Sources]), Mun drew attention to nontangible items in the balance of payments, including trade in services and what would now be called net income and net transfers. Mun also discussed trade policies, including the exemption of export taxes on what we would now call re-exports of manufactures, and he developed a simple model of market-determined exchange rates. An ongoing issue was also the role of merchant adventurers, particularly the Society of Merchant Adventurers and the East India Company, in the economic development of England. Works by members of the Society of Merchant Adventurers include Wheeler 1601 and Misselden 1622, and works by members of the East India Company include Mun 1621, Mun 1664, and Child 1692. As such, mercantilist pamphlets were an early example of what we would now call corporate lobbying. However, the scholarship on mercantilism has shown that their writings contained more than special pleading, including some elements of liberal economic policy, as well as elements of economic theory, going beyond international economics into public finance, for example. These latter aspects give them a real place in the history of economic thought and make them worth continued study. However, in their association with merchant adventures and the East India Company, mercantilism became entwined with colonial histories, often to profound negative effect in the colonies. Subsequent scholarship would sometimes question whether there was a consensus of thought that could be described as “mercantilist” or whether this was just a fabrication of later writers. This question is still debated. However, there does indeed appear to be a collection of works of a “mercantilist” character.

  • Child, Josiah. A New Discourse on Trade. London: T. Sowle, 1692.

    Written by a governor of the East India Company sometimes referred to as the “liberal” mercantilist. Child relaxed the focus on the balance of trade, placing emphasis on lowered interest rates and the state of shipping. His “liberalism” did not extend to either the Atlantic nor the Asian colonies where he supported imposing trade restrictions as critical to Britain’s power and wealth.

  • de Malynes, Gerard. A Treatise of the Canker of England’s Common Wealth. London: Richard Field for William Iohnes, 1601.

    De Malynes expressed a concern in this pamphlet with a rough balance of trade, famously stating “the Prince … ought to keep a certaine equality in the trade or trafficke betwixt his realme and other countries.” This “certaine equality” would be somewhat downplayed in Malynes later writings, with other issues taking center stage. Nonetheless, this early work helped to launch the balance of trade doctrine.

  • de Malynes, Gerard. The Maintenance of Free Trade. London: I. Legatt for William Sheffard, 1622.

    This work was published in the same year as Misselden 1622 as a reply to that pamphlet. De Malynes was less concerned with the balance of trade and more concerned with issues in the market for precious metals. In this work, de Malynes also foreshadowed David Hume’s price specie flow mechanism, contributing to early economic theory in the realm of international finance.

  • Misselden, Edward. Free Trade and the Means to Make Trade Flourish. London: John Legatt, 1622.

    Misselden was a merchant adventurer, and this pamphlet reflected his testimony to the English Standing Commission on Trade. Free Trade had some harsh things to say about the East India Company, but nonetheless Misselden would later become one of its representatives. He was concerned with England avoiding a loss of precious metals and argued in favor of “free trade” in the sense of freedom to export and “Freedome of the Sea.”

  • Mun, Thomas. A Discourse of Trade from England into the East Indies. London: Nicholas Okes for Iohn Pyper, 1621.

    The first of two works of British mercantilism written by a board member of the East India Company to defend its operations. This work addressed a series of objections to the East India Company’s operations, most notably the bullionist controversy of the Company’s exports of gold as part of its operations. Mun also addressed other issues, including the use of natural materials in shipbuilding and supplies.

  • Mun, Thomas. England’s Treasure by Foreign Trade. London: Printed by J.G. for Thomas Clark, 1664.

    While not published until 1664, this work was written in the 1620s. In perhaps the most famous statement on the balance of trade doctrine, Mun stated: “The ordinary means therefore to encrease our wealth and treasure is by Forraign Trade, wherein wee must ever observe this rule; to sell more to strangers yearly than wee consume of theirs in value.” The document explored the means through which this policy prescription could be achieved.

  • Steuart, James. An Inquiry into the Principles of Political Economy. 3 vols. London: A. Millar and T. Cadell, 1767.

    The work of a writer sometimes called the “last mercantilist” and the first book to use the term “political economy” in its title. It was a comprehensive work of “moderate mercantilism” but was overshadowed by Adam Smith’s The Wealth of Nations nine years later. The book consists of three volumes (Population and Agriculture, Trade and Industry, and Money and Coin), with the second volume containing an extended discussion of the balance of trade.

  • Wheeler, John. A Treatise on Commerce. Middelburg, UK: Richard Schilders, 1601.

    One of the first mercantilist works written without apology by a member of the Society of Merchant Adventurers. It defended what would now be termed “orderly competition” by the SMA and was a clear example of the “corporate lobbying” nature of mercantilist writing. Nevertheless, it is a benchmark pamphlet of some importance in the early history of mercantilist writings.

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