Discuss the Mercantilists’ views and their policies on international trade? Why did David Hume attack on the Mercantilists’ thought?

နိဳင္ငံတစ္ကာ စီးပြားေရး ရဲ. စီးပြားေရး ေပၚလစီ သမိုင္းေၾကာင္း တစိတ္တပိုင္း (Mercantilists’ views and David Hume attack on them) copy လုပ္လို.ရပါတယ္။

Mercantilism came into existence in Europe during the period from 1500- 1750. Mercantilism was a collection of economic attitudes and policies toward domestic economic activities and the role of international trade that tended to dominate economic thinking during that period.

The most important goal of mercantilism is to collect gold, silver, and precious metals. They have this policy which is to keep lower class poor to be industrious. If workers get thousands of dollars a month for their work, then they will go to the beaches and have fun there instead of going to work every day and working full hours.

Mercantilists also believe that wage increase decreases in productivity. If workers get high wages, then prices of products will be higher and that means lower demand for those more expensive products. That will lead to decreases in productivity.

Their views and policies on international trade are to find colonies and make geographical explorations that provide new opportunities for trade and broadened the scope of international relations. To find and get colonies, they find state power as the source of growth process as they used strong navy and merchant marine to get colonies and they spent a lot on that navy and marine which is the source of growth process.

After that, they import cheap primary resources from colonies and merchant ships monopolize all international trade as exclusive trading rights are given just to specified company and royal manufacturers and it does not allow anyone to export goal or sliver.

Another policy of mercantilists on international trade is to control international trade to maximize a surplus trade. They put high import barriers on consumption goods and finished goods but they put low tariffs on import of raw materials. They also maximize the inflow of species and minimize the outflow of species for shipping services.

Mercantilists view the economic activities as zero-sum game which means that one country’s economic gain was at the expense of other countries.

David Hume made the first attack on Mercantilist thought on international trade as he saw that we can make a positive-sum game rather than a zero-sum game. He saw that win/win game is possible.

David Hume’s price-specie-flow mechanism also argued that the accumulation of gold by means of a trade surplus would lead to an increase in the money supply and therefore to an increase in prices and wages which would reduce the competitiveness of the country with a surplus. Thus, unlike Mercantilists’ thought, David Hume stated that a trade surplus will finally lead to an increase in wages.

Moreover, according to David Hume, a trade surplus (or deficit) automatically produced internal repercussions that work to remove the surplus (or deficit). The movement of species between countries served as an automatic adjustment mechanism that always seeks to equalize value of exports and imports to produce a zero trade balance.