LE MERCANTILISME | DME

Summary

In this video, the economic theory of mercantilism, dominant in the 16th and 17th centuries, is explored. Mercantilism emphasizes the importance of exports and capital influx for economic growth, outlining three foundational elements: the need for increased money supply, the significance of maintaining a trade surplus, and the role of state-directed production for export. The video discusses Colbert's France as a prime example, highlighting both the successes and failures of mercantilist policies. It critiques mercantilism's flaws, including its tendency to foster competition among states and the inflationary pressures it creates, ultimately questioning its viability in modern economics.

Takeaways

• 😀 Mercantilism dominated economic thought in the 16th and 17th centuries and is experiencing a resurgence among Keynesians.
• 💰 A key principle of mercantilism is that economic growth is reliant on an increase in the money supply.
• ⚔️ Money supply can increase through warfare (seizing territories rich in resources) or by achieving a trade surplus.
• 📉 States aim to reduce imports to ensure a trade surplus, often using heavy taxes or regulations on foreign goods.
• 🏭 State intervention is crucial for developing industries focused on producing goods for export.
• ⚓ Colbert's France under Louis XIV exemplifies mercantilism, emphasizing the importance of a strong navy for trade.
• 🏗️ Colbert sought to transform raw materials into high-quality products for export, establishing monopolistic industries.
• 🔄 Mercantilism can lead to economic conflict if all states pursue trade surpluses, potentially resulting in currency confrontations.
• 📈 The influx of money can cause inflation, which, while helpful for debt repayment, diminishes competitiveness.
• 🇺🇸 The USA's negative trade balance since 1964 challenges the mercantilist view that exploitation is the only source of wealth.

Q & A

What is mercantilism?

Mercantilism is an economic theory that dominated the 16th and 17th centuries, focusing on the importance of exports and the inflow of capital.

What are the three foundational elements of mercantilism?

The three foundational elements of mercantilism are: 1) Economic growth is linked to the increase in the money supply; 2) The money supply can increase through warfare or a favorable trade balance; 3) The development of public or private industries aimed at exporting goods.

How does mercantilism suggest a country can increase its money supply?

A country can increase its money supply either by waging war to seize territories rich in gold and silver or by selling more goods abroad than it buys, leading to a trade surplus.

What is the role of trade in mercantilism?

Trade plays a crucial role in mercantilism, where countries aim to export more than they import to generate a trade surplus, which helps increase their gold and silver reserves.

What strategies do mercantilists advocate for reducing imports?

Mercantilists advocate for heavy taxation on foreign goods or imposing standards that prevent foreign products from being sold in the domestic market.

Who is a notable figure associated with mercantilism, and what did he advocate?

Jean-Baptiste Colbert is a notable figure associated with mercantilism. He promoted the idea of importing raw materials to produce high-quality goods for export, significantly contributing to France's economy under Louis XIV.

What were some outcomes of Colbert's mercantilist policies?

While Colbert aimed to strengthen France's economy through mercantilist policies, the results were mixed. Upon his death, public sentiment was not favorable towards him.

What are the major flaws of the mercantilist system?

Two major flaws of mercantilism are: 1) If all states pursue trade surpluses, it can lead to economic conflicts; 2) An influx of money can result in inflation, which diminishes competitiveness.

How does inflation impact a country's competitiveness according to mercantilist thought?

Inflation can make a country less competitive because it raises prices, leading to a decrease in export capacity and purchasing power among the population.

What argument is made against mercantilism regarding the U.S. economy?

An argument against mercantilism is that if exploitation is the sole source of wealth, the U.S., which has had a negative trade balance since 1964, should be considered a very poor country.