Final answer:
Mercantilism is an economic theory rooted in the belief that the world's wealth is finite and centered on gold and silver, leading nations to seek a positive balance of trade by maximizing exports and minimizing imports. Mercantilist policies included high tariffs, trade monopolies, and exploitation of colonies to support the economy of the mother country. This protectionist approach was later criticized by proponents of free trade.
Step-by-step explanation:
Mercantilism: Trade and Power
Mercantilism is an economic theory that flourished from the 16th to the 18th century, predominantly in Europe, and presents a protectionist view of international trade. According to mercantilist thought, the world's wealth was finite and represented by gold and silver, making economic competition a zero-sum game where one nation's gain was another's loss. Nations practiced mercantilism through policies that favored a positive balance of trade, preferring to export more than they imported to amass precious metals and increase national wealth.
To achieve this, mercantilist nations exploited their colonies for raw materials—especially gold and silver—which were sent back to the mother country. These policies were associated with high tariffs, monopolies, and strict control over colonial trade to ensure that colonies benefited the home country's economy. The ultimate goal for mercantilist countries was economic self-sufficiency, minimizing imports by producing goods domestically and maximizing exports to accumulate wealth.
Nations like England, France, and the Netherlands not only sought to control trade with their colonies but also used mercantilist policies to subsidize the development of manufacturing and navy capabilities. This economic system was criticized in the late 18th century by economists such as Adam Smith, who argued against its protectionist standpoints and emphasized the potential for all nations to prosper through free trade and competition.