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TABLE OF CONTENTS
What is Mercantilism?
What is Physiocracy?
History and political atmosphere of the time
The founders and major contributors to each
MERCANTILISM 1500-1750
From Philipp Wilhelm von Hornick, in his Austria Over All, If She Only Will of 1684
1. That every inch of a country's soil be utilized for agriculture, mining or manufacturing.
2. That all raw materials found in a country be used in domestic manufacture, since finished goods have a higher value than raw materials.
3. That a large, working population be encouraged.
4. That all export of gold and silver be prohibited and all domestic money be kept in circulation.
5. That all imports of foreign goods be discouraged as much as possible.
MERCANTILISM 6. That where certain imports are indispensable
they be obtained at first hand, in exchange for other domestic goods instead of gold and silver.
7. That as much as possible, imports be confined to raw materials that can be finished in the home country.
8. That opportunities be constantly sought for selling a country's surplus manufactures to foreigners, so far as necessary, for gold and silver.
9. That no importation be allowed if such goods are sufficiently and suitably supplied at home.
MORE ON THE THEORY Mercantilists viewed the economic system as
a “zero-sum game”
This makes it impossible to maximize the common good
Believed that world trade was fixed and that the only way to increase it was to take from another country
They also believed that farmers should live on "margins of subsistence"
CRITICISMS OF MERCANTILISM
Mercantilists did not believe that the value of money was relative
Believed that the amount of gold and silver contained within a countries borders were the only measure of wealth
Adam Smith was considered to be the father of anti-Mercantilist thought
PHYSIOCRACY
Greek for “Government of Nature” Originated in France in late 18th century Source of national wealth is from productive
work through land and land development
Francois Quesnay
Anne-Robert Jaques Turgot
PHYSIOCRATIC BELIEFS
Free trade is best Property rights are necessary Investment capital establishes growth Wealth is not infinite
Diminishing returns exist
TABLEAU ÉCONOMIQUE
Written by Francois Quesnay in 1758 Paved foundation for physcratic
economics Three “movers” in the economy
1. The Proprietary – Landowners2. The Productive – Agricultural
Laborers3. The Sterile – Merchants/Non-raw
material laborers
1500-1550
Spanish expansion. 1517 – Martin Luther’s 95 Theses. 1519-1522 – Ferdinand Magellan’s voyage. 1533 – Henry VIII separates from Rome. Portuguese expansion.
1550-1600
England in the Elizabethan Era. 1568 – The Eighty Years’ War. 1577-1580 – Sir Francis Drake’s voyage. Iberian unification and the Anglo-Spanish
War. Venetian decline.
1600-1650
The Dutch Golden Age. Unification of England and Scotland. English expansion. 1618 – The Thirty Years’ War. 1648 – The Peace of Westphalia.
1650-1750
The Anglo-Dutch Wars. 1664 – Thomas Mun’s Treasure by Foreign
Trade. 1684 – Philipp von Hornick’s Austria Over All. Global empires enter into decline. 1767 – James Steuart’s Inquiry into the
Priciples of Political Economy.
1750-1800
1730 – Richard Cantillon’s Essay on the Nature of Commerce.
1754 – The Seven Years’ War. 1758 – Francois Quesnay’s Economic Table. 1775-1776 – The American Revolutionary
War/Declaration of Independence. Adam Smith’s The Wealth of Nations.
1789-1799 – The French Revolution.
SIGNIFICANT INDIVIDUALS:
MERCANTILISM
Philip Von Hornigk:
- Born 1640, Died 1714
Giovanni Botero:
- Born 1544, Died 1617
Thomas Mun: (Right)
- Born 1571, Died 1641