ECS3705
ASSIGNMENT 1 SEMESTER 2 2025
UNIQUE NO.
DUE DATE: 25 SEPTEMBER 2025
, History of Economic Thought
Question 1
Mercantilist Views on Wealth Creation
Mercantilism, dominant from the 16th to 18th centuries, posits that a nation’s wealth is
measured by its stock of precious metals primarily gold and silver. Wealth is thus
created or increased through exporting more than importing, accumulating trade
surpluses, and possessing expansive colonial possessions that provide raw materials
and serve as captive markets (Kindleberger, 1993). Wealth is effectively “created” by
amassing bullion, a tangible store of value, rather than by services or intellectual capital.
This emphasis on tangible reserves shaped policies oriented toward trade surpluses,
colonial monopolies, and the regulation of commerce.
Mercantilist Views on Wealth Stimulation
To stimulate wealth, Mercantilists advocated aggressive state intervention in the
economy. They supported protectionist policies like high tariffs, import bans, and export
subsidies to discourage imports and encourage homegrown production. Colonies were
viewed as extensions of the mother country, supplying raw materials and purchasing
manufactured goods thus stimulating domestic industries. Jonathan Swift’s Drapier’s
Letters famously satirized British mercantilist policies of forcing Irish purchases of costly
engineered coinage (Swift, 1725), reflecting contemporary discontent with such
stimulation strategies.
Role of Government in the Economy
In mercantilist thought, government plays a domineering role authorizing monopolies,
regulating exchanges, and issuing mercantilist legislation such as navigation acts and
tariffs to shape economic outcomes (Heckscher, 1935). Governments applied regulation
to ensure that manufacturing and trade benefitted the national interest. They also
subsidized domestic producers and chartered companies like the British East India
Company, granting exclusive trading rights to bolster exports and control colonial trade
networks. This approach sees the state not as a passive arbiter, but as an active
architect of economic strength.
ASSIGNMENT 1 SEMESTER 2 2025
UNIQUE NO.
DUE DATE: 25 SEPTEMBER 2025
, History of Economic Thought
Question 1
Mercantilist Views on Wealth Creation
Mercantilism, dominant from the 16th to 18th centuries, posits that a nation’s wealth is
measured by its stock of precious metals primarily gold and silver. Wealth is thus
created or increased through exporting more than importing, accumulating trade
surpluses, and possessing expansive colonial possessions that provide raw materials
and serve as captive markets (Kindleberger, 1993). Wealth is effectively “created” by
amassing bullion, a tangible store of value, rather than by services or intellectual capital.
This emphasis on tangible reserves shaped policies oriented toward trade surpluses,
colonial monopolies, and the regulation of commerce.
Mercantilist Views on Wealth Stimulation
To stimulate wealth, Mercantilists advocated aggressive state intervention in the
economy. They supported protectionist policies like high tariffs, import bans, and export
subsidies to discourage imports and encourage homegrown production. Colonies were
viewed as extensions of the mother country, supplying raw materials and purchasing
manufactured goods thus stimulating domestic industries. Jonathan Swift’s Drapier’s
Letters famously satirized British mercantilist policies of forcing Irish purchases of costly
engineered coinage (Swift, 1725), reflecting contemporary discontent with such
stimulation strategies.
Role of Government in the Economy
In mercantilist thought, government plays a domineering role authorizing monopolies,
regulating exchanges, and issuing mercantilist legislation such as navigation acts and
tariffs to shape economic outcomes (Heckscher, 1935). Governments applied regulation
to ensure that manufacturing and trade benefitted the national interest. They also
subsidized domestic producers and chartered companies like the British East India
Company, granting exclusive trading rights to bolster exports and control colonial trade
networks. This approach sees the state not as a passive arbiter, but as an active
architect of economic strength.
