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Materials of Manufacture
The mercantile system, also known as the commercial system or mercantilism, is a theory of political economy that defines national wealth as the amount of resources (particularly gold and silver) that a country accumulates within its borders. Mercantilists focus on achieving a favorable balance of trade by raising exports and lowering imports, which enables their country to take in more gold and silver as payment. Smith primarily dedicates Book IV of The Wealth of Nations to refuting the mercantile system, which dominated Europe in his era. He argues that the mercantile system focuses on production, instead of the real measure of national wealth: consumption, or the ability to purchase goods and labor.
Mercantile System Quotes in The Wealth of Nations
The The Wealth of Nations quotes below are all either spoken by Mercantile System or refer to Mercantile System. For each quote, you can also see the other terms and themes related to it (each theme is indicated by its own dot and icon, like this one:
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Book 4, Chapter 8
Quotes
Consumption is the sole end and purpose of all production; and the interest of the producer ought to be attended to, only so far as it may be necessary for promoting that of the consumer. The maxim is so perfectly self-evident, that it would be absurd to attempt to prove it. But in the mercantile system, the interest of the consumer is almost constantly sacrificed to that of the producer; and it seems to consider production, and not consumption, as the ultimate end and object of all industry and commerce.
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Mercantile System Term Timeline in The Wealth of Nations
The timeline below shows where the term Mercantile System appears in The Wealth of Nations. The colored dots and icons indicate which themes are associated with that appearance.
Book 4, Introduction
...government. The next two chapters will address the two main approaches to political economy: the mercantile (or commercial) system and the agricultural system.
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Book 4, Chapter 1
In summary, the mercantile system wrongly sees gold and silver as the measure of wealth, and it tries to build...
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Book 4, Chapter 3
...Of the Unreasonableness of those Restraints even upon the Principles of the Commercial System.” The mercantile system wrongly encourages nations to restrict imports from countries with which they have a negative balance...
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Book 4, Chapter 5
...rather than exportation. This would reduce real prices for domestic consumers. But due to the mercantile system ’s focus on international trade and manufacturers’ desire to keep domestic prices high, the government...
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Book 4, Chapter 7
...make the world’s nations equal and mutually interdependent through trade. Colonialism has also spread the mercantile system and turned Europe into the world’s center of manufacturing, so it benefits all the nations...
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The mercantile system disrupts this natural distribution of capital, and this effect is the strongest in Europe’s trade...
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Book 4, Chapter 8
The mercantile system ’s stated goal is to improve the balance of trade by increasing exports and reducing...
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The mercantile system ’s central flaw is that it focuses on reshaping production, when consumption is really “the...
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Book 4, Chapter 9
...its land. But French philosophers have advocated the system because Louis XIV’s government followed the mercantile system , banned grain exports, and devastated French agriculture. The agriculturalists divide people into three groups:...
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Book 5, Chapter 2
Then, Britain adopted the mercantile system . It replaced export duties with bounties and drawbacks, while creating different import duties for...
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