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    Principles of mercantilism

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    Based on your knowledge of contemporary economic theory, evaluate the five principles of mercantilism.

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    The five principles of mercantilism are as follows:

    a) The welfare of a national economy depends upon the increase of population.

    Commerce and industry could develop if there was additional population. An increase in population was a condition for a higher state of economic life. I agree with this principle because in order to have a prosperous economy, there must be an increase in population. Adam Smith said in the Wealth of Nations that in order for an economy to grow, there must be a growth in productive labor (the amount of goods and serviced produced.) Societies with high productive labor tend to have economies that grow. Labor is the ultimate source of value. As more and more people enter the workforce, production will increase, thus stimulating growth in the economy. Larger populations also lead to more potential consumers and larger markets.

    b) The national economy also depends upon the increase of the mass of precious metals in the country.

    The expansion of hte mass of money was a condition of the transition to a higher state of economic development. Adam Smith said that if one person or a country had a large quantity ...

    Solution Summary

    Define and evaluate the five principles of mercantilism.