Mid-18th Century Economic Changes: The Rise of Adam Smith and the Decline of the Mercantilists and Physiocrats

By Warlow, Timothy D.; Pitts, Sarah T. et al. | Journal of Economics and Economic Education Research, September 2007 | Go to article overview

Mid-18th Century Economic Changes: The Rise of Adam Smith and the Decline of the Mercantilists and Physiocrats


Warlow, Timothy D., Pitts, Sarah T., Kamery, Rob H., Journal of Economics and Economic Education Research


ABSTRACT

The mid-18th century was a time that saw the birth of new economic systems. The mercantile system of the past 250 years was being attacked by new movements in economic thought. One of the chief critics of mercantilism was Adam Smith, and with the publication of his greatest work, Smith drastically changed modern economic theory and created a science out of what was once a philosophy of merchants. Smith was not the first critic of mercantilism. He was preceded by a group of French economic philosophers whose theories had much influence on Smith's work. This paper will explore the rise of mercantilism and its principles, detail the criticisms of Adam Smith toward mercantile doctrine, and discuss the physiocratic doctrine that laid the groundwork for economic change.

INTRODUCTION

This paper will discuss the origins of mercantilism. Through an exploration of the times leading up to mercantilism, a more detailed understanding of mercantile principles will be ascertained. The onset of international commerce laid the groundwork for the mercantile system by creating a new class of merchants who explored the philosophy of economics in an attempt to ensure their own well being. Mercantilists derived much of their doctrine from their strong sense of nationalism. The desire to create a strong state led to the development of the mercantile principle of wealth as existing in the form of specie--gold and silver. The desire to accumulate large amounts of specie led to the development of the balance of trade principle, which would be essential to mercantilistic economic policies. The mercantile system thus developed from a strong sense of nationalism, which led to a desire for the accumulation of gold and silver, further leading to the balance of trade doctrine, enabling said accumulation.

The paper will also address Smith's comments on mercantile doctrine. In An Inquiry into the Nature and Causes of the Wealth of Nations, Smith explores the importance of gold and silver accumulation that is embedded in the tenets of mercantilism. Smith, through his analysis of mercantile arguments in favor of specie accumulation, will ultimately find such arguments in error. By his analysis of mercantile principles, Smith proves to be one of mercantilism's greatest critics. He advocates against specie accumulation and the necessity of a favorable balance of trade to aid in this accumulation, two doctrines that are at the heart of mercantile thought.

The paper will end in a discussion of the physiocratic doctrine that developed in France during the last half of the 18th century. The physiocratic doctrine was vastly different from the principles of mercantilism. The physiocrats placed much emphasis on land as the true creator of wealth. The mercantile principle of wealth existing in the forms of gold and silver was dismissed and more concrete forms of wealth were adopted. The circulation of wealth within a nation was also demonstrated by Quesnay, the undisputed leader of the physiocrats, in his book Tableau Economique. This book also explored the productivity of labor and ruled that agriculture was the only productive industry. The physiocrats exhibited strong criticism toward the mercantilistic economic system of the time, especially the system of taxation. The physiocrats further opposed governmental regulation in favor of a laissez-faire system of no interference. The physiocratic system is clearly the antithesis of the mercantile system and lays the groundwork for the publication of Smith's book.

THE RISE OF MERCANTILISM

"Mercantilism is the name given to some 250 years of economic literature and practice between 1500 and 1750" (Landreth, 1976). Mercantilism was the result of the developing commercial class, the merchants, and the name "mercantilism" is "derive[d] from the Italian word for merchant" (Canterbery, 2001). As they gained wealth and power, merchants' writings began to develop into the economic system known as mercantilism. …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA 8, MLA 7, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Note: primary sources have slightly different requirements for citation. Please see these guidelines for more information.

Cited article

Mid-18th Century Economic Changes: The Rise of Adam Smith and the Decline of the Mercantilists and Physiocrats
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen
Items saved from this article
  • Highlights & Notes
  • Citations
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA 8, MLA 7, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Search by... Author
    Show... All Results Primary Sources Peer-reviewed

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.