Mercantilism Vs. Laissez-Faire Essay, Research Paper
During the enlightenment era, numerous philosophs believed they had the key to a successful economy. Two policies seemed particularly well liked, mercantilism, and the policy of laissez-faire. Mercantilism was an economic strategy depending heavily upon a national monopoly of trade with colonies of a New World. Within mercantilism, colonies provided there home countries with raw materials as well as a market for the finished goods manufactured in the home country. In return, the home country provided the colonies with military security, and political administration. In order for the mercantile system to work, the home country and the colony must trade exclusively with one another. The home countries tried to ensure this by enforcing navigational laws, tariffs, bounties, and prohibition against trading with subjects of other monarchs. Of course this was a very hard system to maintain, and this era became known as the “golden age of smugglers”. Colonies often desired to trade between themselves because it was very cost effective and turmoil between colonies would breed conflict between their mother countries. Mercantile supporters argued that the world is an arena of scarce resources and one economy can only benefit at the expense of another.
Laissez-faire, however, required little or no governmental intervention in the economic mechanics of a country. Laissez-faire relied on economic growth through competitive free enterprise, this was based on the thought that most economic decisions can be made through the mechanics of the marketplace. Those who supported the laissez-faire system distrusted the government and argued that their decisions were often corrupt and mischievous. They said that the government should maintain a strong currency, enforce contracts, protect property, impose low tariffs and taxes, and leave the remainder of economic life to private initiative. This idea strongly appealed to the middle class.
In comparison between the two systems, which can definitely be described as residing on opposite sides of the economic spectrum. Both systems need the government to provide protection, political management, and enforce laws and contracts. Differences between the two, being few of many, are obviously the lack of government participation in one and the necessity of it in the other. As the central government would provide half of the equation for mercantilism, the less governmental interference the better in laissez-faire.
In the opinion of the author, the economic system based of laissez-faire would be the most financially and economically efficient. Because an economy will grow and prosper on its own, the government restriction placed upon it would only hinder is expansion.