Mercantilists vs. Physiocrats
Between the 16th and the 18th centuries, the states of Western Europe were torn between two economic philosophies, that of mercantilism and the physiocrat's doctrine, the former of which dominated the latter in terms of the actual policies of the most powerful nations of these centuries such as Great Britain and Spain. The main difference between these the economic doctrines of mercantilism and physiocratism were the levels of government control these two philosophies endorsed.
Mercantilism equated a high level of government control with prosperity and the future of the state. (Rempel, 2005) Physiocratism stressed a lack of government control as key to allowing the agricultural sector within a nation to flourish. Thus physiocratism wished to enhance the prosperity of the rural populace rather than the aristocratic populace in control of governing the land as the 'key' to a successful economy.
Physiocratism stressed the need to increase the net product of the nation rather than to enhance the nation's...
It offers a good theory as it emphasizes on the production and export of those items for which a country possesses a comparative advantage. Furthermore, through its focus on the reduction of taxes and tariffs in international trade and the adherent practices, the theory of comparative costs has set the basis for the contemporaneous processes of market liberalization and globalization. But the theory has not been spared from criticism. Oumar
Smith believed this would lead to inefficiency. However, unlike Plato, Smith did not believe that the ideal republic should decide from birth what occupation an individual should follow, rather that the individual must freely choose by his or her own will, how to direct his or her energies and labor in the most efficient and self-interested fashion, which would ultimately result in the advancement of the nation as a whole.
(Smith, 1904) Smith on Labor The importance of the labor skills and the method of production of which the factor labor contributed the major share was the theme of the ideas of Smith. In the Wealth of Nations Smith argued that it was labor which created wealth and supplied the necessities - "The annual labor of every nation is the fund which originally supplies it with all the necessaries and conveniences
In addition, he argued that human behavior is mainly based on the pursuit of material profits. According to Smith the society could develop only in case of existence of freedom and equality. These rational principles according to Smith could stimulate objective development of society and development of economical relations. His philosophical and moral ideas of course influenced his political economy. Smith's political economy based on freedom of competition and Smith
The theory also recognizes the latent role of education in the society as one that is used in the socialization of persons into the mainstream of the society. This form of education is referred to as "moral education" and serves in increasing the level of cohesions in our social structures and therefore resulting in the creation of social diversity through the bringing of people from different backgrounds together. This
The reference to Montesquieu (as well as to Smith) in that part of the 'Dissertation' which deals with the 'Progress of Philosophy during the Seventeenth Century' was made just as a digression, and the further development of Jurisprudence by writers on Political Economy as well as 'the mighty influence which his [Montesquieu's] writings have had on the subsequent history of Scottish literature' (Stewart, 1854) were to be explained in the
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