Question

Explain the basic tenets and assumptions of the Mercantilist perspective, and strengths and criticisms of the Mercantalist perspective.

Answer 1

The basic tenets & assumptions of Mercantilist perspective are:

1. The strength & wealth of a country can be judged by the amount of precious metals like gold & silver it possessed. Hence, export of gold & silver was discouraged.

2. A country should always have an excess of Exports over Imports for national prosperity. Hence, imports was discouraged or was confined to raw materials.

3. Trade was the most productive & agriculture the least productive. Hence, the government should focus on commerce.

4. People were the real strength of a country. Hence, a large population should be encouraged to Increase productivity.

5. In trade, one country benefits & the other loses.

STRENGTHS:

1. More trade & industrial growth.

2. With more growth in Industries, there will be more jobs.

CRITICISMS:

1. It over emphasizes the importance of gold & silver.

2. It gives less importance to agriculture. Every sector should be focused for economic welfare.

3. Trade need not be a competition among countries & both the trading countries can benefit from trading.

4. Restriction on imports reduces choices available to the consumers.