Thomas Mun's Theory Of Mercantilism

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Introduction: Thomas Mun (1571-1641) was a renowned English writer on economics. He was a director of the East India Company and standing commission on trade. His education qualification is still unknown but readers often assume that there were close links between the Indian and the Mediterranean trades and he served his apprenticeship in the latter. He was also a prominent and rich member of the East India Company and his economic thought was greatly influenced by his role as a businessman and merchant. His pamphlet, England’s Treasure by Forraign Trade, “has been almost universally accepted among economists as the embodiment of seventeenth-century mercantile doctrine.” (Muchmore, 1970) Mercantilism as a self interest driving economic thought: …show more content…

It was expressed perhaps more methodically by Mun than by any other contemporary economist. While Malynes placed great emphasis on the particular trade balances of one country with each other country, taken singly, Mun showed that what really mattered was the overall balance of trade. The inflow and outflow of gold depends on the general balance of trade, and the State should pay direct attention to this. Therefore, it was permitted to maintain a commercial deficit with some countries, such as those from which raw materials were imported, if this was favourable to the increase of the national production of industrial goods. Most of these goods could be sold abroad at high prices, because of the monopolistic advantages associated with the superior technology required to produce …show more content…

This criticism is directly linked to the opening chapter of England's Treasure , listing twelve qualities needed in a good merchant. An export surplus will make a country rich, an import surplus render it poor. Gross imports can be large if a substantial portion of them is re-exported, as the East India Company is wont to do. What is needed is restraint in consumption of imports so as to enable them to be resold abroad for treasure. The country will grow rich if Englishmen increase productivity in the production of the "natural Commodities of the Realme," do not neglect fishing (this is a reference to the strength of the Dutch in the herring fisheries) and avoid excesses of consumption of food and

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