5.3- The Mercantilist Economy

Mercantilism

An economic theory that views global wealth as fixed, promoting that one state's gain is another's loss.

Favorable Balance of Trade

A situation in which a country exports more than it imports.

Tariffs

Taxes on imports designed to protect domestic industries.

Monopoly

Exclusive trading rights granted by the government to certain companies.

Jean-Baptiste Colbert

Finance minister under Louis XIV, architect of French mercantilist policy with a focus on tariffs and monopolies.

Royal Absolutism

A political system where a single ruler holds absolute power, exemplified by Louis XIV's reign.

Indentured Servants

Poor Europeans who agreed to work for a fixed term in exchange for passage to the New World.

Silver/Bullionism

An economic theory that emphasizes the importance of accumulating precious metals, particularly silver.

Price Revolution

A period of widespread inflation triggered by an influx of silver into Europe.

Specie-flow mechanism

David Hume's theory that accumulating silver leads to inflation and ultimately uncompetitive exports.

The Wealth of Nations

Adam Smith's work that challenged mercantilism, advocating for free markets and competition.

Navigation Acts

Laws that used to control colonial trade and enabled England to collect taxes on imports.

British East India Company

A major trading company that received monopoly privileges from the British government.

Colonialism

The practice of acquiring and maintaining colonies for economic benefit.

Economic Competition

The rivalry between businesses and nations to capture market share and generate wealth.

Raw Materials

Natural resources harvested in colonies for trade and profit.

Colbert's Policies

Integrated tariffs and state-controlled factories to bolster France's economic power.

Louis XIV's Statement

'I am the state'—a declaration of absolute authority by the French king.

Subsidized Exports

Financial support from governments to encourage domestic exports.

Enslaved Labor

Humans forced into servitude for economic gain, significant in sustaining colonial economies.

Competition as Inevitability

The belief in mercantilism that economic rivalry among nations is unavoidable.

Consumer Prices

The cost that consumers pay for goods, often raised due to tariffs.

Colonial Trade Control

Dominance by imperial powers over all trade in and out of colonies.

Economic Control and Royal Authority

The use of economic policies to consolidate and strengthen royal power.

Commercial Conflict

Tensions and hostilities arising between nations due to trade disputes.

Hume's Challenge to Mercantilism

David Hume's argument highlighting the negative consequences of government trade controls.