The Decline of Mercantilist Trade Doctrines

As the seventeenth century came to a close heterodox ideas appeared from many quarters containing statements normally associated with classical liberalism. To those imbued with the new spirit of inquiry and its successes typified by Newton’s discovery of the laws of physics and Harvey’s description of the circulation of the blood in the human body, mercantilist theory was vulnerable on two counts. First, protectionist policies might conceivably preserve trade for a while, but could not guarantee its expansion. The only sound basis for a thriving commerce is the accumulation and efficient utilisation of productive resources. And both commerce and the efficient employment of resources are best left to be carried on by individuals pursuing their own self-interest. Second, and reinforcing the first point, the indefinite accumulation of treasure must be self-defeating in the long run if the logic of the quantity theory was to be taken seriously.