Archive for the ‘mercantilism’ Tag

Pirates As Market Heroes   Leave a comment

Image result for image of pirates as free merchantsAs the government’s mercantilist policies restricted and diverted manufacturing, commerce, and trade into directions that opposed the desires of individuals, another market began to develop. This black market of smuggling was incentivized by mercantilism’s failures to get around the government’s economic controls.

The liberal economists of the nineteenth century understood that misplaced, distorted, and restrictive regulations suppressed more open trade within and between nations and warned that these policies would necessarily create corrective reaction in the form of black marketeers who went over, under and around the commands of the state. Explained Jerome-Adolph Blanqui:

“It is in the nature of bad institutions never to be respected, and to give birth to protests that end in bringing about reform; smuggling was to the exclusive system [mercantilism] the constant and the most expressive of these protests …

“It is as exact in its deliveries as the most scrupulous merchant; it braves the seasons and defies the best-guarded lines of customhouses, to such a degree that assurance companies, which protect it, count upon fewer losses than any other.

“Smuggling is, in fact, the only means that remains to the various industries to procure for themselves the prohibited products whose use is indispensable for them …

“It is owing to smuggling that commerce did not perish under the {Mercantilist] regime … While savants discuss and commerce entreats, contrabandage acts and decides on the frontier; it presents itself with the irresistible power of actual facts, and freedom of trade has never won a victory for which smuggling has not prepared the way.”  Jerome-Adolph Blanqui

The black marketeer was considered an important element of moving the economic system in the direction of free market reform.

The smuggler is a radical and judicious reformer. The smuggler is essential to the well being of the whole nation. All external commerce depends on him.

[However] I am far from thinking that the direct effect of his [the smuggler’s] exertions in giving us a free trade in those commodities which, from their bulk and value, fall within his province, are any compensation for the crime, misery and the public expense [of the mercantilist system].” Nassau Senior, Three Lectures on the Transmission of the Precious Metals from Country to Country, and the Mercantile Theory of Wealth (1828)

In the last decades of the 18th century, arguments questioned the mercantilist conception of society and the economy. Leading centers of change in France and Scotland put forth ideas that undermined the rationales for government regulation and control of economic activities in society. What arose in counterbalance was a vision of a free society based on individual liberty, free trade, and market-based and -directed prosperity.

Although I haven’t gotten to pirates yet in the Daermad Cycle, they will play a role later in the series. Might as well get started reading the series so you’re prepared.

Posted November 3, 2016 by aurorawatcherak in History

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Mercantile Oppression   Leave a comment

Mercantilism sought enrich the monarch of a particular country at the expense of other countries and even the people of that monarch’s country. This was accomplished by preventing the king’s subjects from freely trading with buyers and sellers in other countries. The power of the state prohibited transactions the king disapproved and compelled manufacturers to produce what the monarch deemed desirable and to sell them at prices that the king considered “just” and “fair.”

Image result for image of colonial oppression

France was the powerhouse of mercantilism economic commands. Royal France, perhaps, was the most determined in imposing and enforcing the Mercantilist economic commands. The famous French classical liberal and advocate of free enterprise, Charles Dunoyer (1786-1862), explained the extent and form of many of these government controls and regulations in his book, The Passage to Liberty(1845):

“The State exercised over manufacturing industry the most unlimited and arbitrary jurisdiction. It disposed without scruple of the resources of manufacturers; it decided who shall be allowed to work, what things it should be permitted to make, what materials should be employed, what processes followed, what forms should be given to production.

“It was not enough to do well, to do better; it was necessary to do according to the rules … Not the tastes of the consumers, but the commands of the law must be attended to. Legions of inspectors, commissioners, controllers, jurymen, guardians were charged with its execution.

“Machines were broken; products were burned when not conformable to the rules. There were different sets of rules for goods destined for home consumption and for those intended for exportation. An artisan could neither choose the place in which to establish himself, nor work at all seasons, nor work for all customers.

“There exists a decree of March 30, 1700, which limits to eighteen towns the number of places where stockings might be woven. A decree of June 18, 1723, enjoins the manufacturers of Rouen to suspend their works from the 1st of July to the 15th of September, in order to facilitate the harvest.

“Louis XIV, when he intended to construct the colonnade of the Louvre, forbade all private persons to employ workmen without his permission, with a penalty of 10,000 livres, and forbade workmen to work for private persons, on pain for the first offense, of imprisonment, and for the second, of the galleys.” Charles Dunoyer (1786-1862), The Passage to Liberty(1845):

Monsieur Roland of Rouen described the treatment of businessmen and merchants accused of violating the rules and regulations imposed by the government under mercantilism.

“The manufacturers were summoned, tried, and condemned; their goods were confiscated; copies of their judgment of confiscation posted in every public place; fortune, reputation, credit, all lost and destroyed.

“And for what offense? Because they had made of worsted a kind of cloth called shag, such as the English used to manufacture, and even sell in France, while the French regulations stated that that kind of cloth should be made of mohair.

“I have seen other manufacturers treated in the same way, because they had made camlets [the collars on women’s blouses] of a particular width, used in England and Germany, for which there was a great demand from Spain, Portugal, and other countries, and from other parts of France, for which the French regulations prescribed other widths.” Jerome-Adolph Blanqui, History of Political Economy in Europe (1846)

Alexis d’Tocqueville (1805-1859) provided one of the best descriptions of just how pervasive mercantilist regulations and controls extended into every corner of French society. Yes, that is the same d’Tocqueville who wrote Democracy in America.

“The government had a hand in the management of all the cities in the kingdom, great and small. It was consulted on all subjects, and gave decided opinions on all; it even regulated festivals. It was the government that gave orders for public rejoicing, fireworks, and illuminations …

“You have neither Parliament, nor estates, nor governors; nothing but thirty masters of   requests [i.e., the heads of the bureaucratic planning agencies in Paris], on whom, so far as the provinces are concerned, welfare, misery, plenty or want entirely depend …

“Under the old regime, as in our own day, neither city, nor borough, nor village, nor hamlet, however small, nor hospital, nor church, nor convent, nor college could exercise a free will in its private affairs, or administer its property, as it thought best. Then, as now, the administration was the guardian of the whole French people …

“A very extensive machinery was requisite before the government could know everything and manage everything in Paris. The amounts of documents filed were enormous, and the slowness with which public business was transacted was such that I have been unable to discover any case in which a village obtained permission to raise its church steeple or repair its presbytery in less than a year. Generally speaking, two or three years lapsed before such petitions were granted …

“Ministers are overloaded with business details. Everything is done by them or through them, and if their information be not coextensive with their power, they are forced to let their clerks act as they please, and become the real masters of the country [i.e., authority was delegated to a permanent bureaucracy] …

“A marked characteristic of the French government, even in those days, was the hatred it bore to everyone, whether noble or not, who presumed to meddle with public affairs without its knowledge. It took fright at the organization of the least public body that ventured to exist without permission. It was disturbed by the formation of free society. It could brook no association but such as it had arbitrarily formed, and over which it presided. In a word, it objected to people looking over their own concerns, and preferred general inertia to rivalry …

“Government having assumed the place of Providence, people naturally invoked its aid for their private wants. Heaps of petitions were received from persons who wanted their petty private ends served, always for the public good …

“Nobody expected to succeed in any enterprise unless the state helped them. Farmers, who, as a class, are generally stubborn and indocile, were led to believe that the backwardness of agriculture was due to the lack of advice and aid from government …

“Sad reading, this: Farmers begging to be reimbursed the value of lost cattle or horses; men in easy circumstances begging for a loan to enable them to work their land to more advantage; manufacturers begging for monopolies to crush out competition; businessmen confiding their pecuniary embarrassments to the intendant [the local bureaucrat], and begging for assistance or a loan. It would appear that the public funds were liable to be used in this way …

“France is nothing but Paris and a few distant provinces that Paris has not yet had time to swallow up.” Tocqueville, The French Revolution and the Old Regime (1856)

While mercantilism restricted the domestic economy, it strangled the colonial economy. Mercantilism called for the “mother country” to possess valuable colonies around the world so that they might control useful resources and raw materials that may be essential for its economic development. It would also secure essential supplies during times of war with other nation-states.

thewillowbranchMercantilism required the “mother country” to keep and maintain its colonial territories in a subservient position. For example, the British government attempted to limit the development of manufacturing in its 13 American colonies. Their dependency on the “mother country” for manufactured finished goods in exchange for colonial raw materials would make it more difficult for such colonies to become economically independent of the “mother country and would assure that the “mother country” could make a net gain – a “positive” balance of trade” – even with its own colonial dependencies. Colonial dependency on the “mother country” for manufactured finished goods made it more difficult to achieve independence.

In Daermad Cycle, the invading Svard seek to set up economic ports for the purposes of extracting the wealth of Celdrya to its own people. I haven’t yet decided that it will be a mercantilist system, but it is among the potential systems under consideration.

 

It Was All About the King   Leave a comment

In the mercantilist conception of the nation-state and society in general, it was taken for granted that the king’s government had both the right and responsibility to control and direct the economic activities of the sovereign’s subjects. The lands and the people in these countries were viewed as the property of the king to use and dispose of in any manner that he considered most beneficial to his interests.

If the monarch took any interest in the most immediate well-being of his subjects, it was only as a necessary means to the end of his own betterment.

Antoine de Montchrestien (1575-1621) expressed this understanding in a book addressed to the king and queen of France in which he warned of the danger of permitting foreign sellers to compete in the French market:

First of all, I point out to your Majesties that all the implements, the manufacturing of which you are in charge, both in and out of the kingdom, not only in cities but in entire provinces, can be made abundantly and at a very good price in your Lordship’s country.

And further, that allowing in and receiving foreign-made goods here means to take away the life of the several thousands of your subjects to whom this industry is an inheritance and the source of their income; it means reducing your own wealth which derives from and increases through the wealth of the people.” Antoine de Montchrestien (1575-1621), A Treatise on Political Economy (1615)

Image result for image of divine right of kingsMontchrestien offered a conclusion to the monarchs: “Let us, therefore, relish in the fruits of our own labor, that is to say, let us rely on ourselves.”

The mercantilist theorists of the day saw trade with other countries as a cause of national disaster that would cause job losses and falling incomes. International trade was seen to undermine the commercial traditions of the people and believed to reduce , and it reduced the income and wealth of the government by lowering tax revenues.

Mercantilists acknowledged some benefits of trade, but only if the value of the goods imported from other countries was minimized and the value of goods exported to other countries was maximized. Of course the mercantilists argued for the government to control and direct foreign trade to assure a “positive” balance of trade. (This sounds so much like Trump’s economic policies, by the way).

Thomas Mun (1571-1641) articulated this idea in his posthumously published work,England’s Treasure by Foreign Trade (1628):

“Although a Kingdom may be enriched by gifts received or by purchase taken from some other Nations, yet these are things uncertain and of small consideration when they happen. The ordinary means therefore to increase our wealth and treasure is by foreign trade, wherein we must ever observe the rule; to sell more to strangers yearly than we consume of theirs in value.

“For suppose that when this Kingdom is plentifully served with Cloth, Lead, Tin, Iron, Fish and other native commodities, we do yearly export the [surplus] to foreign countries to the value of twenty two hundred thousand pounds; by which means we are enabled beyond the Seas to buy and bring in foreign wares for our use and consumptions, to the value of twenty hundred thousand pounds;

“By this order duly kept in our trading, we must rest assured that the Kingdom shall be enriched yearly two hundred thousand pounds, which must be brought back to us in so much Treasure; because that part of our stock which is not returned to use in wares must necessarily be brought home in treasure.” Thomas Mun (1571-1641), England’s Treasure by Foreign Trade (1628)

The mercantilists saw money, in the form of gold and silver, as the greatest and most valuable form of “treasure” (wealth). With a large “war chest” of gold and silver, the monarch would be able to acquire, at home and abroad, all the real goods and services that might ever be needed to win in the conflicts and combats among the nations of the world that the mercantilists considered inevitable and inescapable if a country was going to survive on the international political stage.

“A King who desires to lay up much money must endeavor by all good means to maintain and increase his foreign trade, because it is the sole way not only to lead him to his own ends, but also to enrich his Subjects to his farther benefit …

“The Gain of their foreign trade must be the rule of laying up their treasure, which although it should not be much yearly, yet in the time of a long continued peace, and being well manage to advantage, it will become a great sum of money, able to make a long defense, which may end or divert a war.” Mun

Mercantilist societies sought to be as self-sufficient as possible. If imports were needed, they wanted to limit them to raw materials that could be worked up into manufactured goods at home. It was believed this would stimulate domestic employment, meet certain national economic needs, and have a greater value for re-export so to acquire a net inflow of gold and silver to add to the King’s “treasure.”

My fantasy series does not completely align itself to medieval European history and economic systems. My Celts have been gone from Europe for a thousand years and so have developed some other systems. Mercantilism is not found in Celdrya, the primary society in the series. However, neighboring nations may practice a form of it.

 

Posted October 31, 2016 by aurorawatcherak in History

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What Is Mercantilism   Leave a comment

In researching for my fantasy series Daermad Cycle, I concentrated on medieval Europe as a model for my society. Why reinvent the wheel, right? I adjusted my society to reflect changes you might expect over a millennia.

Image result for image of mercantilism

I needed to acknowledge the changes that happened in European society after my Celdryans left because my people didn’t experience the same events as Europeans did.

My folks missed mercantilism, for example.

What was Mercantilism?

It was a system of economic planning and invention that could be grouped under five broad headings.

Mercantilism was a system of political unification.

“It’s first object was to make the state’s purposes decisive in a uniform economic sphere and to make all economic activity subservient to considerations corresponding to the requirements of the state and to the state’s domain regarding as uniform in nature.” Eli Heckscher, Mercantilism (1935)

Mercantilism was a system of power.

“The object of mercantilism in using economic forces in the interests of the state … [was] to strengthen the state authority itself; it concentrated on … the state’s external power, in relation to other states.” Eli Heckscher, Mercantilism (1935)

Mercantilism was a system of protection.

“The attitude of mercantilism toward the means of supplying the wants of human beings, i.e., towards commodities, was the theory of the danger from which economic policy was chiefly to protect a country lay in having too many goods [imported from other countries].” Heckscher

Mercantilism was a monetary system.

“The connection between money and goods in the mercantilist conception of economics was represented in teh balance of trade theory …. Ideas on the balance of trade and the significance of money undoubtedly occupy a central position in mercantilism.” Heckscher

Mercantilism was a conception of society.

“Mercantilism revealed a fairly uniform conception of general social phenomena in the fields of economics, and this, too, reacted in many ways on the nature of economic policy [as a conception of society in which all interests were to be made obedient to the monarch captured in the famous phrase of the French king, Louis XIV – ‘I am the State’].” Hechscher

Ooo, we just circled back to “divine right of kings.”

 

Posted October 29, 2016 by aurorawatcherak in History

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Rise of Mercantilism   Leave a comment

Following the fall of Rome, Europe became divided into local and regional political and economic entities, each functional largely in isolation from each other.

Image result for image of feudal kingdomsMost lords under the European feudal system were the descendants of migratory marauders who decided to settle down and oppress a part of the country side full-time, from the comfort of their fort (called a dun in Celdrya).

In my fantasy series, the Celdryan lords are the descendants of the first settlers, who came through a veil from Europe. The only “king” to make the crossing was a tribal king in the Celtic tradition. He claimed all the land he could see, parceled out among his loyal men and then set about the process of surviving in a new world. Over the last 1000 years, the kingdom has grown as the younger sons of lords, accompanied by free farmers and tradesmen, have pushed into new territory, displacing the native Kin and Mountain Folk.  The royal family died out a century ago, but the feudal system has remained and people still dream of the True King. The whole series is focused on the search for the One’s True King.

In Europe, kings and princes determined to concentrate power in their own hands. They wanted to be absolute rulers. Some were able to do this in a limited geographical region, while others spread their shadow over vast territories. This concentration reduced the power and authority of the nobility at the local and regional levels, but it didn’t hold. In the 15th and 16th centuries, forces began to reverse this concentration of power.

Mercantilism developed in the emerging nation-states under the kings of France, Spain and Great Britain. They were meant to be a set of economics tools to assist in centralizing political power and control

Different countries followed different paths to mercantilism. The monarchies of Spain and France became nearly absolute within the limitations of the times. In Great Britain, the nobility had a long history of resistance against losing their traditional rights and privileges, so royal power was less concentrated and absolute, but mercantilism still have a vast influence on British society both in England and its colonies.

 

Posted October 28, 2016 by aurorawatcherak in History

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The Trade Deficit Doesn’t Matter   1 comment

Walter E. Williams explains, without ever using the word, why “tariffs” are a bad idea and wholly unnecessary. Lela

 

Let’s look at the political angst over trade deficits. A trade deficit is when people in one country buy more from another country than the other country’s people buy from them. There cannot be a trade deficit in a true economic sense. Let’s examine this.

I buy more from my grocer than he buys from me. That means I have a trade deficit with my grocer. My grocer buys more from his wholesaler than his wholesaler buys from him.

Source: The Trade Deficit Doesn’t Matter

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