Mercantilism

Definition

Mercantilism is an economic theory that emphasizes the role of the state in managing international trade and accumulating wealth, primarily through a favorable balance of trade. This system was prevalent in Europe from the 16th to the 18th centuries and is crucial to understanding the economic motivations behind the Atlantic Slave Trade, as nations sought to expand their empires and control resources and labor to enhance their wealth.

5 Must Know Facts For Your Next Test

1. Mercantilism led European nations to establish colonies in the Americas and Africa, aiming to exploit their resources and generate wealth.
2. Under mercantilism, colonies were expected to provide raw materials to the mother country while serving as markets for manufactured goods.
3. The Atlantic Slave Trade was heavily influenced by mercantilist policies, as enslaved Africans were viewed as essential labor for producing cash crops like sugar and tobacco.
4. Governments implemented protective tariffs and trade regulations to enhance national wealth and limit foreign competition during the mercantilist era.
5. Mercantilism eventually gave way to capitalism as new economic theories emerged, emphasizing free trade and market competition.

Review Questions

• How did mercantilism influence European powers' approach to colonization during its height?
  • Mercantilism significantly shaped European powers' colonization strategies by promoting the establishment of colonies as sources of raw materials and markets for finished goods. European nations aimed to maximize their wealth through controlled trade, leading them to conquer territories in Africa and the Americas. Colonies were seen as essential to achieving a favorable balance of trade, allowing mother countries to accumulate gold and silver while minimizing reliance on foreign imports.
• Discuss the relationship between mercantilism and the Atlantic Slave Trade, highlighting how economic motivations drove this system.
  • Mercantilism directly fueled the Atlantic Slave Trade as European nations sought to secure a steady supply of labor for their colonies' agricultural economies. The demand for cash crops such as sugar, tobacco, and cotton created a reliance on enslaved Africans, who were forcibly transported across the Atlantic. This trade was justified within a mercantilist framework that viewed enslaved individuals as commodities essential for maximizing profits and maintaining a favorable balance of trade.
• Evaluate the long-term impacts of mercantilism on global trade patterns and economic systems after its decline.
  • The decline of mercantilism led to significant shifts in global trade patterns and economic systems, paving the way for the rise of capitalism. As nations moved toward free trade principles, it encouraged competition, innovation, and efficiency in production. This transition dismantled colonial monopolies that had previously restricted trade routes, leading to increased global interdependence. The legacy of mercantilist policies also contributed to lasting social inequalities rooted in colonial exploitation that continue to affect societies today.

Related terms

Balance of Trade: The difference between the value of a country's exports and imports, where a favorable balance means exporting more than importing.

Colonialism: The practice of acquiring and exploiting territories by a foreign power, often for economic benefit, which was a key aspect of mercantilist policies.

Triangular Trade: A historical term describing the three-legged trade system between Europe, Africa, and the Americas, which facilitated the exchange of goods, enslaved people, and resources.