Mercantilism was an economic theory and practice, dominant in Europe from the 16th to the 18th century, that promoted governmental regulation of a nation's economy for the purpose of augmenting state power at the expense of rival national powers. It was the economic counterpart of political
absolutism or absolute monarchies. Mercantilism includes a national
economic policy aimed at accumulating
monetary reserves through a positive
balance of trade, especially of
finished goods. Historically, such policies frequently led to war and also motivated colonial expansion. Mercantilist theory varies in sophistication from one writer to another and has evolved over time. High
tariffs, especially on manufactured goods, are an almost universal feature of mercantilist policy. Other policies have included
- forbidding colonies to trade with other nations;
- monopolizing markets with staple ports;
- banning the export of gold and silver, even for payments;
- forbidding trade to be carried in foreign ships;
- subsidies on exports;
- promoting manufacturing through research or direct subsidies;
- limiting wages;
- maximizing the use of domestic resources; and
- restricting domestic consumption through non-tariff barriers to trade.
