Pysioeconomicism In The Mercantilist

The physiocrats were a group of French economists whose ideas were developed in the wake of the economic and social disorder that was, at least partially, due to the effects of mercantilist policies (Huh, 2016). Physiocratic thinkers such as John Law, Richard Cantillion, and perhaps most notably, Francois Quesnay made lasting impressions on economic thought and were instrumental in establishing the idea of the free market. Unlike the mercantilists, the physiocrats largely believed that the wealth of a nation relied on agricultural output and not the accumulation of precious metals (Huh, 2016). Physiocrat thinkers also believed in gains from international trade and did not support tariffs of any kind. They also departed from mercantilist thought …show more content…
The close relationship between international trade and nationalism that was prominent in the mercantilist philosophy has become an issue again this Presidential election cycle. One popular candidate recently cited a trade imbalance as the deciding factor in “winning” or “losing” in the global economy. Precisely as the mercantilists had failed to consider the concept of comparative advantage and the role of a floating exchange rate, today’s politicians seem to deliberately overlook these truths in favor of promoting nationalism based on the zero-sum game fallacy. (trump) That being said, there are candidates today who view trade as a positive, much like the physiocrats did, and promote policies that support free …show more content…
In terms of the Corn Laws, Ricardo was a staunch opponent of tariffs on imported grain. He agreed with Malthus, in that a tariff on imports would increase domestic demand and subsequently increase domestic prices. However, unlike Malthus, he believed that the tariff on imports would have a negative effect on the economy due to decreased capitalist incentives. According to Ricardo, as prices and rents would increase, the capitalist would see profits reduced, as rent must be subtracted from the capitalist’s total revenue. Given that the expectations for capitalist profits would fall based on the implementation of a tariff, the industry as whole would see less capital investment, bringing total output down, and triggering a rise in unemployment. In Ricardo’s eyes, allowing a government to simply create a framework for businesses to operate, produce, and exchange freely with other countries was all the best way to encourage economic