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Contribution Of Mercantilism

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• Mercantilists associated nation wealth with money, gold and silver (treasures). They believed that the growth of wealth strongly demands protection measures to control the trade. Mercantilism states that the trading balance could be reached only with government intervention. The source of wealth was supposed to be reached by unequal trading exchange between the states. Mercantilists were keeping to several doctrines for contributing to wealth growth. Among them we can outline industry support by import of cheap raw materials, protectionist tariffs on import, support of export, measures to boost the population growth for sustaining the low costs of labor, provision of gold inflow into the country and prevention of foreign investment into the …show more content…

According to them the creation of agricultural goods is the basement for all other forms of wealth, supply of occupation for all layers of population, give a move to manufacturing industry and sustain the prosperity of the nation. Founder of physiocratic economic theory Quesnay considered money as useless wealth, regarding them only as the intermediary in exchange, therefore, rejecting the main thesis of mercantilists. According to Quesnay, only process of agriculture involves creation of new wealth. As a consequence, physiocrats developed the notion of “product net”, the excess of production from agriculture above the production costs. As we can already assume, the main policies were directed towards agricultural sector. For example, the land rent was seen as the only form of taxes. Besides, physiocrats were developing the idea of government non-intervention. In other words, government should state the laws which will result into the natural flow of state …show more content…

The material is seen as land and nature; the creator of wealth is labor in different spheres of material production. The main source of wealth, according to Smith, is the annual labor of nation used for personal and production usage. The prerequisite for growth of wealth is seen as the division of labor. Among other factors of wealth growth we can outline the growth of population, the increase of portion of population occupied in production. Furthermore, it is the transfer from manufacturing to factory, freedom of competition and the cancellation of customs barriers. The main policy is the well-known promotion of free competition and that through private interest of producers the market economy will find the best solutions to all social complications. In other words, Smith represented the idea that the government should fulfill three main responsibilities: costs on public works, the costs of military security, the costs of justice administration including the security of property

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