Friday, October 28, 2016

Economic Ideas: Mercantilism as Monarchy’s Planned Economy

Richard Ebeling emails:

I have a new article on the Future of Freedom Foundation (FFF) website on, “Economic Ideas: Mercantilism as Monarchy’s Planned Economy.”

There is little new under the sun. The types of regulated and planned economies that we have experienced over the last century were imposed and implemented four hundred years ago, and was known as the economic system of Mercantilism.

In the seventeenth and eighteenth centuries, the modern State was consolidating its centralized power and the economic method used by the European monarchies of that time was called Mercantilism. International trade was considered part of a zero-sum game between monarchs wishing to increase and consolidate their domestic and foreign power. To facilitate this, all imports and exports were under the regulatory control of the state, with the goal of creating “positive” balances of trade.

But this extended to domestic commerce, industry and trade under which not one facet of economic life was left out of the oversight by the government of the king. Prices and wages were fixed by the State, production methods and locations were strictly controlled, and punishments for violation of the regulations and restrictions were severe.

But the market always is own corrections, and in the face of the Mercantilist planned economy, that was the black market and the enterprising smuggler, who later proponents of freedom and free enterprise look back upon and even considered to be heroic “reformers” helping to undermine the spiders’ webs of government economic control.

But soon the French Physiocrats appeared offering the economic ideas that would help to undermine this earlier system of central economic planning.


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