According to Laura LaHaye in Fortune, "Mercantilism is economic nationalism for the purpose of building a wealthy and powerful state. Adam Smith coined the term 'mercantile system' to describe the system of political economy that sought to enrich the country by restraining imports and encouraging exports. This system dominated western European economic thought and policies from the sixteenth to the late eighteenth century. The goal of these policies was, supposedly, to achieve a 'favorable' balance of trade that would bring gold and silver into the country.
...The most important economic rationale for mercantilism in the sixteenth century was the consolidation of the regional power centers of the feudal era by large competitive nation-states. Other contributing factors were the establishment of colonies outside Europe, the growth of European commerce and industry relative to agriculture, the increase in the volume and breadth of trade, and the increase in the use of metallic monetary systems, particularly gold and silver, relative to barter transactions.
...Of the false tenants of mercantilism that remain today, the most pernicious is the idea that imports reduce domestic employment. This argument is most often made by American automobile manufacturers in their claim for protection against Japanese imports. But the revenue that the exporter receives must be ultimately spent on American exports, either immediately of subsequently when American investments are liquidated. "
Economist and Physiocrat François Quesnay ascribed "France's poverty to mercantilism, which he called Cobertisme (after Louis XV's Finance Minister, Colbert). The French government had protected French manufacturers from foreign competition, thus raising the cost of machinery for farmers, and had also sold to wealthy citzens the power to tax farmers. These citizens had then used this power to the limit."
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