Mercantilism is the political-economic system that allows for the development of wealth and power accumulation abroad. The etymologic history for the term stems from Adam Smith, who used the wording "mercantile system" to describe a system of enriching a country by minimizing imports and maximizing exports. The system supports imperialism, colonialism, as well as various governing trading tools such as tariffs and subsidies. A universal feature of mercantilism was high tariffs, which reflects the foreign influences European powers such as Britain wielded. Mercantilist economic policies were focused on increasing the power of the state as a way of strengthening the government's grip over the economic realm. Now considered an outdated system, mercantilism dominated western European economic thought throughout the 16th and 18th centuries. Today, we are going to examine the philosophy, implementation, and downfall of mercantilism in the west.
The adoption of mercantilism was rooted in the historic development of the feudal area, which combined the strength of the local powers into connected nation-states. The growth of foreign interactions and trade as well as the establishment of non-European colonies contributed to this development. England became the first large-scale implementation of mercantilism in the late 1500s. Some of the efforts of England during this time period included the development of navy and merchant fleets that were capable of challenging the Spanish monopoly on trade. After England was able to sufficiently develop a global empire by the 18th century, the mercantile framework for intertwining foreign trade and political power was adopted by other countries. France followed suit throughout the 17th century, as Jean-Baptiste Colbert, a French statesman, championed a version of mercantilism called Colbertism.
The annexation of the Mughal Bengal, a district of the Mughal Empire, by the East India Company represented the decline of mercantilism in the late 18th century. Academics started to see the malicious effects of the economic system with regard to foreign affairs. Classical economists such as Adam Smith helped re-shape the opinions of the British with regards to their political-economic system. In 1846, the repeal of the Corn Laws, tariffs and trade restrictions on imported food, represented the development of free trade globally.