Mercantilism and Liberalism

Mercantilism and Liberalism embody starkly contrasting ideologies, particularly when considering their perspectives on economic policies, political rights, and the nature of governance.

Emerging in the 17th century, Mercantilism was an economic doctrine that championed the promotion of national or imperial interests through export stimulation and import limitation. The aim was to achieve a favorable balance of trade, consequently amassing gold, the universal medium of exchange at that time. This ideology fueled colonization, with European powers seeking inexpensive raw materials and new markets for their finished goods. This mercantilist stance was prevalent until the advent of the industrial revolution, which triggered overproduction and subsequently led to the advocacy for free-market ideologies by intellectuals like Adam Smith and David Ricardo.

These thinkers posited that international trade wasn’t a zero-sum game and that free trade could usher in more efficient resource allocation through the market’s invisible hand. This shift towards free trade was also necessitated by the emerging industrial societies’ need for broader markets. Subsequently, Britain began to promote free trade across its colonies.

In contrast, Liberalism as an ideology prioritizes the individual, endorsing maximal freedom in decision-making. This political ideology came into being during the Enlightenment movement and the political upheavals of the 17th and 18th centuries, closely associated with the dismantling of feudalism, which signaled the end of the Medieval Era in Europe and the onset of the Enlightenment and scientific revolution.

While Mercantilism placed the interests of groups, such as charter companies, above individuals, economic liberalism championed economic freedom, advocating for Laissez-Faire or free-market economics, in opposition to Mercantilism and state monopolies.

In the political realm, Mercantilism advocated for the Divine Rights of Kings or constitutional support for mercantilist companies. Conversely, political liberalism proposed a constitutional, representative form of government that respected individual rights.

At a systemic level, Mercantilism led to the creation of charter companies and colonization. In contrast, early liberalism justified imperialist policies under the guise of a civilizing mission and social Darwinism. This justification aligned with the finance stage of colonialism, a subtle form of control by the metropole over the colony.