Mercantilism Vs. Liberalism

Introduction
This essay is about Mercantilism and Economic Liberalism, two economical doctrines which have had a dominant place in the history of economy over the last few hundred years. Mercantilism appeared in the XVII century as a consequence of a series of economic circumstances, such as the scarcity of agricultural and industrial surpluses and the precarious situation of transport, whichled to a very restricted development of commerce, united with the belief that the wealth of a nation was measured by the amount of bullions of gold and silver that it owned. Economic Liberalism, on the other hand, was intimately united to the industrial revolution process (XVIII century), due to the new production system and the new organization of the society that it triggered. We have researchedall the main characteristics of both systems and their respective origins, in addition to reproduce certain biographic details of some of the most important figures of each one. As we had a limited number of pages, we decided to summarize all this in order to explain with more details the issue that, under our point of view, was more interesting and required more attention. This issue in which wewanted to focus was the comparison between both doctrines, which we have included in the “Conclusion”. Apart from mentioning the differences and similarities between both systems, we have also included a piece of the critique that Adam Smith (considered the “spokesman” of Liberalism) made to Mercantilism.

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Mercantilism
Mercantilism is the economic doctrine in which the State foreign tradecontrol has a really big importance for ensuring the military security of the State, demanding a positive balance of trade. Mercantilism dominated Western European economic policy (England, France..) and was carried out from the 16th century to late-18th century. It was also an important cause for many wars and motivated colonial expansion. Its main policy is to apply high tariffs, especially onmanufactured goods. However, mercantilism also promotes a network of overseas colonies (which weren't allowed to bargain or trade with other nations), monopolizing markets with staple ports, banning the export of gold and silver, exporting subsidies or limiting workers' wages. It also defends restricting domestic consumption with non-tariff barriers to trade. Some of the critical economists tomercantilism were Adam Smith, whose critic to this doctrine is contained in his work "The Wealth of Nations" (1776), and David Ricardo, when explaining the comparative advantage. Besides, mercantilism was eventually rejected by Britain and France by the mid-19th century, finishing the mercantilism era. However, it didn't completely mean the end of the mercantilism. Furthermore, what is called"neomercantilism" is a 20th century economic policy that uses the ideas and techniques of neoclassical economics. Nevertheless, it has different goals and focuses on more rapid economic growth, mainly based on advanced technology. It defends several policies such as substitution state taxing, subsidizing or general regulatory powers for tariffs and quotas, among others. In its simplest form, mercantilismwas naive bullionism, which is an economic theory that promotes that the wealth of a nation is defined by the quantity of gold it owns. Its emphasis on monetary metals accords with current ideas regarding the money supply, such as the stimulative effect of a growing money supply. Specie concerns have since been rendered moot by fiat money and floating exchange rates. However, this emphasis onmoney was sometimes supplanted by industrial policy, accompanied by a shift in focus from the capacity to carry on wars to promoting general prosperity. Besides, mature neomercantilism recomends selective high tariffs to promote the mutual growth of countries through national industrial specialization. Nowadays, support of mercantilist methods for maintaining high wages in advanced economies are...