Conclusion of the Mercantile System
- For Smith, mercantilism basically refers to when a government encourages exports while discouraging imports, with the thought that this will make the country wealthier. You actually still hear these kinds of ideas today whenever a government official talks about a trade surplus or trade deficit.
- In some cases, countries have prohibited the exporting of machinery to other countries because they're afraid those countries will use the machines to establish competing businesses. There have also been laws against English business people moving to other countries to practice the same business.
- What mercantilism gets fundamentally wrong is thinking that economies are based on production. He insists that they're actually based on consumption. Goods are worthless unless there are people ready to consume them, and all production eventually must meet the demands of consumption.
- In the end, it's clear that the general public of consumers were not the ones who created the mercantile system. It was the producers who wanted to protect their interests.