The Structure Of Views And Economic Thought - Mercantilism And Libertarianism

The structure of views and economic thought appeared in Europe after the end of the Middle Ages. It triumphed in the modern era (from around the 17th century). This was due to the fact that in Western European countries, which had centralized power, there was a rapid development of the merchant class, as well as its enrichment. Several interesting views are presented in this article.

Mercantilism

Definition

The word "mercantile" comes from the French language (mercantile) and means "commercial", "profit-oriented". Mercantilism is defined as a system of views according to which the prosperity of a state depends mainly on the amount of ore it possesses.

Assumptions

Adherents of mercantilism had several assumptions. They claimed that countries constantly compete with each other and want to become the winner in the game for influence in the economic sphere, but also, for example, in the military. Only a very rich country. The fundamental source of wealth is a positive trade balance. The state then has a significant financial surplus, so the amount of goods sent abroad should be greater than those received - and this economic activity is the most important. First of all, it is worth collecting precious metals, because they are synonymous with wealth.

Background

The rise of mercantilism coincided with the age of geographical discoveries. Countries such as Great Britain and Spain took possession of colonies in remote parts of the world. International trade began to develop to unprecedented proportions. The production capacity (primary capital accumulation) of factories was increased. New units related to economic turnover were created, e.g. commodity exchanges, insurance of articles.

An early variety of mercantilism was bullionism (from the French bullion meaning "metal in bars"). The fundamental rule in this doctrine was the identification of prosperity with the accumulation of precious metals in the country. Mostly silver and gold. It was assumed that such an approach influenced the development of trade and, consequently, increased the monetary income of the state. The export of ore abroad was therefore prohibited.

Example and possible consequences

An example of the application of mercantilism is the reduction of imports. Social demand can only be met by intensifying domestic production.

The larger these regulations were, the more counterproductive they were. For example, the large amount of gold and silver on the market has increased the prices of commodities, which in turn has increased inequality in society.

Libertarianism

Definition and assumptions

Libertarianism is a political view that puts personal freedom first. Among other things, libertarians strive for the complete privatization of public property, the abolition of taxes, the prohibition of state interference in the economy, and the limitation of the state's access to the lives of its citizens to a minimum. People adopting this political view are most often characterized by a strong desire to own private property and eliminate state activities.

Background

The concept of libertarianism appears already at the end of the 19th century, where there are mentions of enlightened freethinkers who already at that time referred to the free will of man. Another figure who first used the term libertarianism in writing was William Belsham in 1789. Since then, left-leaning people have started using the term to describe their political views.

Types

There are many currents of libertarianism, which is why it is difficult to clearly define its place on the political scene. The main currents that accompany the doctrine of libertarianism are:

Minarchism - a trend in which followers mainly seek to significantly reduce the role of the so-called state. A minimal state, but they recognize the necessity of state administration in order to protect citizens residing in a given state. The administrations responsible for this would be supported by membership fees and donations.

Anarcho-capitalism is a total variant of libertarianism. It assumes closing all the necessary functions performed so far by the state and replacing them with such activities that will be based on voluntary market agreements signed only by entities interested in them. Supporters of this view believe that such a solution will be much better and more effective both for the individual and for society.

 

Source: Begg D., Fischer S., Dornbusch R. (1997) Ekonomia. Makroekonomia,