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The (Benign) Economic Consequences of the Mercantile System

In: Adam Smith and the Wealth of Nations

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  • Daniel Diatkine

    (University of Paris-Saclay, Univ Evry)

Abstract

(1) The Principle of the mercantile system affirms that the interest of merchants is identical to the common interest. (2) As, according to Smith, it is not easier to buy than to sell, exchange is an exchange of commodities by means of commodities. As all goods have the properties of money and the difference between barter and monetary exchange lost most of its meaning. (3) For Smith the mercantile system was the result of history of Europe, since the fall of the Roman Empire. It is not the result of ignorance, as Physiocrats (who forge the expression “système mercantile”) suppose. However the economic damages which this system causes in Great Britain are easily compensated by savings. However it is not the case in Bengal, ruled by the East India Company. Savings allowed Smith to alleviate Hume’s concern about the growth of public debt in Britain. According to Hume, the transformation of Great Britain into an absolute monarchy would be the less catastrophic consequence of the public debts. For Smith this one implies an important reform of the British Empire, and this reform would be a bettering of its constitution (see next chapter).

Suggested Citation

  • Daniel Diatkine, 2021. "The (Benign) Economic Consequences of the Mercantile System," Palgrave Studies in the History of Economic Thought, in: Adam Smith and the Wealth of Nations, chapter 0, pages 69-92, Palgrave Macmillan.
    • Handle: RePEc:pal:pshchp:978-3-030-81600-1_4
    DOI: 10.1007/978-3-030-81600-1_4
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