Mercantilism and Liberalism (Essay Sample)

Name:
Instructor:
Course:
Date:
Mercantilism and Liberalism
Mercantilism is an economic theory, which stipulates that trade generates wealth and trade itself is stimulated by accumulation of positive balance of trade through government’s protection (Heckscher 19). Liberalism is a concept stipulating that for a country to increase its wealth, the government should not control the economy but instead let the forces of demand and supply create equilibrium (Jessop 454).These ideals try to explain how a country can grow and improve its wealth.
Both ideals have the view that it is possible for a country to achieve wealth, which will in turn lead to growth. Mercantilism states that this can be achieved by promoting exports but at the same time limiting the imports. This will ensure that there is a surplus balance of trade which constitutes the wealth achieved (Heckscher 22). The liberal economists also argued that wealth could be achieved but only by maintaining a free market. They argued that economic growth is a function of the labour division, which in turn depends on the market scale.
The main difference between the two ideals is how the wealth is to be achieved and maintained. Mercantilism had the view that the government should take full control of the economy. The idea was that power creates wealth, which then increases the power. Thus, the more the powerful, the more the wealthier, and vice versa (Heckscher 23 ). Liberals on the other hand argued that the political and economic institutions should be separate. The government should maintain a free market governed by the forces of demand and supply. To achieve wealth countries should focus on primary goods that they could ma...