Thursday, March 26, 2009

mercantilism and Domestic Economic policy (2)

mercantilist economic policies resulted from the view of the world prominent at that time time.the identification of wealth with holdings of precious metals instead of a nation is productive capacity and the static view of world resources were crucial to the policies that were pursued .while these doctrines seem naive today ,they undoubtedly seemed logical in the period from 1500to 1750 .Frequent warfare lent credibility to maintaining a powerful army and merchant marine .the legitimization of and growing importance of saving by the merchant class could easily be extended to behavior by the state,making the accumulation of precious metals seem equally reasonable .however ,the pursuit of power by the state at the expense of other goals and the supreme importance assigned to the accumulation of precious metals led to an obvious paradox:rich nations in the mercantilist sense would comprise large numbers of very poor people .Specie was accumulated at the expense of current consumption .At the same time,the rich nations found themselves expending large amounts of their holdings of precious metals to protect themselves against other nations attempting to acquire wealth by force .

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