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Was Mercantilism a System?

An Examination of Historical Perspectives on Mercantile Theory and Practice

Jul 05, 2010

By the seventeenth century Europe was settling into political patterns shaped on monarchic bureaucracy. Following the Treaty of Westphalia permanent and semi-permanent geopolitical borders were established, and European lands transitioned away from the remnants of feudalism towards absolute monarchy. Rulers focused political authority within the seats and chambers of government, and with a monopoly on internal power secured leaders began to pursue a monopoly on international politics. By the enlightened dictates of Westphalia foreign affairs were now regulated by diplomacy rather than destruction, and so it was that rulers sought to enhance their international political position by the most powerful means available, economics.

Rulers across early-modern Europe responded to similar political developments with a similar economic approach, and it is in these similarities that historians find the root of the pan-European mercantile phenomenon. However, while historical observation shows that common political concerns yielded a common mercantile response, it is at this same stage of observation that the historian of mercantilism is faced with an analytic impasse. While the existence of mercantilism as a historical phenomenon is accepted and agreed upon, the nature of mercantilism's fundamental structure is not. Adam Smith was the first economic historian to study mercantilism systematically and critically, and he looked back to mercantile methods and policy as a composite whole. Smith's historical treatment of mercantile practices as a unified system was by no means uncontroversial, and sparked a debate that rages still today; was mercantilism a system?

A cursory survey of mercantile literature offers no easy answer to this question. Where one mercantilist peremptorily decreed the organization of all national activities toward a "general national economy," another humbly announced; "I pretend to form no system." The core of the historical debate regarding the classification of mercantilism as a system is driven by two considerations. First, from the perspective of historical theory, it is essential that economic history provide an accurate representation of historical reality, as it is only atop accurate representations that effective theory may be constructed. Second, from the perspective of economic history, historians must contend with the inarguable fact that at no time did there exist a group of thinkers associated with the study of a mercantilist system as such. In the words of economic historian Peter Mathias; mercantilism "never enjoyed historical reality of the same order as agriculture, or the export of capital, or Venice -- and, indeed, as a concept it is very much more recent than some of the historical phenomena ... it purports to embrace."

Today, the term "mercantilism" refers to a set of commercial theories, productive activities, distributive practices, and social policies that were spread across early-modern Europe, and that were unified primarily by their temporal coexistence and the common means of enhancing national economic power towards the end of attaining hegemonic political power. However despite its commonalities mercantilism displayed diverse characteristics in different countries, and prompted a modern historian to remark that mercantilism was not so much a system as a "red herring of historiography."

In order to extract this red herring from its murky depths we will here address the following questions: what were the theories of mercantilists?; what were the practices of mercantilists?; and finally, did mercantile theory and practice constitute a (political or socioeconomic) system? The underlying issue regarding the classification of mercantilism as a system is the relationship between history and analysis, and to clarify this relationship we will engage the topic of mercantilism historiographically, examining the ways in which mercantilism has been interpreted over time. We will begin by first establishing the context and importance of the debate surrounding mercantilism and systems, and follow this with a chronological study of primary and secondary source documents that speak to this debate. The expositions of early mercantilists will be surveyed alongside successive historical interpretations of mercantilism, and critical comparisons will be made where relevant.

From the perspective of historical inquiry the debate regarding mercantilism is centered around the concern that if mercantilism was not a system, but is approached as such, then analysis will not provide a genuine account of mercantile history or its causes and effects. If analysts do not understand mercantilism's causes and effects then their theoretical expositions -- whether historical, political, economic, or otherwise -- are rendered moot. To appreciate this problem more fully let us examine what is meant by the idea of an economic system.

Economic systems are prognostic theoretical structures justified by the evaluation of history at large, and the study of business history in particular. The basic abstraction "system" is a device used in conceptual analysis to demarcate the boundaries of some phenomena in order to provide a model of reality that facilitates a closed analysis of the phenomena. Thus, an economic system describes and facilitates analysis of business phenomena. When defining an economic system all essential features without which the system cannot exist must be identified, all unnecessary features must be set aside, and all elements of the system as well as their functions, relationships, and interactions must be described. Predictive economic systems based on the examination of business history have been used to inform political decisions for hundreds of years, and thus the exercise of defining historical systems and using them to formulate economic models has tangible, real-world consequences. With respect to the potentially systemic nature of mercantilist theory and practice, what then were the essential features without which a mercantile economic system could not have existed?

Historians across the centuries have regularly assigned a standard set of motivations and properties to mercantilism. Mercantilists believed that wealth consisted of specie (precious metal), and that the nation in possession of the most specie would be the greatest political power in the world. Because specie equaled wealth, and there was only so much physical specie available in the earth, this meant wealth existed in a physically fixed amount. Mercantilists perceived that political strength was proportionate to military strength, which in turn depended on economic strength; hence political power would rest in the hands of the nation that amassed the greatest amount of the earth's limited stock of specie and thereby maintained the strongest army. In order to obtain the greatest possible amount of wealth qua specie, mercantilists sought to create a sustainable arrangement of international exchange that was in all cases favourable towards their own nation. It was believed that such an arrangement would result from a permanent trade surplus, and to engender an eternally positive trade balance the total amount of exports would permanently have to exceed the total amount of imports. To ensure this condition a nation would have to consistently produce goods for trade in proportions dictated by the externally contingent trade balance. This meant that wasteful duplications of effort and modes of internal regional competition could not be permitted. The best means for establishing and imposing such a commercial unity was by way of a central government that imposed and controlled internal and external economic regulations. Thus the entire geopolitical region comprising the nation would have to work in a coordinated commercial -- that is, mercantile -- effort.

Mercantilism then was a national and nationalistic approach to economic organization that focused all productive and commercial activities on contributing to the economic strength of the nation as a competitive whole. This mercantile mentality dominated European economics from the sixteenth century until the eighteenth century. However, while the goals of economic and political predominance were common across Europe, the methods and theories by which they were to be attained were not.

Different nations entered the early-modern era with dissimilar political structures, borders, resources, and manufactures, and all of these factors influenced the specific forms that mercantile ideas and practices took. For example, nations with colonies such as England and France bent the resources of their international territories toward enrichment of the mother nation, while landlocked nations such as Austria could focus only on the development of internal production. With respect to theory, the academic study of mercantile ideas existed only in Germany, and where an English mercantilist posited that increasing specie exports would increase specie imports by way of investment gains, an Austrian nationalist argued that "no gold and silver should leave the country," ever. Such theoretical disparities were of course not limited to international disagreements. The same Englishman who argued for increasing specie exports also promoted assaulting the Dutch for encroaching on foreign "English" markets, while another Englishman promoted a sort of economic detente between all countries because the "mutual interest" of nations inevitably "leads them to endeavour to become serviceable to one another." Theoretical differences often stemmed from the conditions of the different eras under which theorists and commentators wrote, and even the lapse of centuries brought no resolution to the mercantile debate. Thus where twentieth-century economic historian Joseph Schumpeter saw the "mercantile system" as an "imaginary organon," his contemporary Karl Polanyi saw mercantilism as a consolidated system of "state organs." From such examples we see how it is that a potential unity in historical observations is quickly obscured by a disparity in historical interpretation, and how the debate regarding mercantilism continues still to this day.

Armed now with an appreciation for the essential features of mercantile theory and an understanding of the important differences in mercantilist practice, we may now examine their relationship to the historiographic debate surrounding mercantilism as a system. As noted earlier, Adam Smith's historical Inquiry led him to construct an outline of what he believed was the "mercantile system," and he formulated his observations and theories as a response to mercantilism as such. However: what if mercantilism was not a system? Smith is regarded as the father of modern economics, and his ideas were extraordinarily influential in the organization of present day political systems. The question then arises: if mercantilism was not a system and had not been approached by Smith as such, would his postulations and the policies of his followers have remained the same? Concomitantly, would modern economic conditions be the same?

To make this problem concrete let us consider the present day global economic crisis, and its connection to Adam Smith's historically based repudiation of mercantilism as a system. Smith believed that mercantilism erroneously focused commercial activity on production when the true purpose of commerce was in fact consumption. The reason mercantilism committed this mistake was because it was a form of systemic government intervention designed by owners who sought only to maximize export profits. Correspondingly, Smith condemned the separation of commercial ownership from productive management that was formalized in the "mercantile system," and he designed a systematic response based on free trade as a replacement for -- and here is the key point: not merely an update to -- mercantile practices. Free trade became the focus of latter day businessmen in the West, and the corporate business structure came to dominate by its combination with reactions against interventionist (mercantile) regulatory practices. Multi-national corporations entrenched themselves in the global economy during the twentieth century, and today the absence of government intervention, the overabundance of capitalistic de-regulation, and poor corporate governance are considered direct causes of the present economic crisis. "When most needed," modern economic structures based on non-interventionist free trade models "failed to provide the checks and balances" that wider social stability requires.

If Adam Smith's historical analysis had not treated mercantilism as a system then he may not have gone to such extremes in his indictment and rejection of governmental economic intervention. Proportionately, Smith's adherents and followers may not have gone so far in designing and permitting corporate regulatory freedoms. In such a case the modern economic crisis may not have unfolded with the same degree of severity. Hence, because "the views of the financial community dictate policies," it is here in the connection between mercantilism, Adam Smith, corporations, and crisis that we see how indefinite historical analysis may yield "systemic faults" and fatal results. Thus we appreciate that the historical analysis of mercantilism is hardly an academic exercise.

Having established the context, features, and importance of the historical debate surrounding the classification of mercantilism as a system, we will presently examine early mercantile literature as well as later perspectives on mercantile theory and practice. Because the principles of the early and later mercantilists -- Thomas Mun, Philipp Wilhelm von Hornick, and Sir James Steuart -- form the foundation of all subsequent analysis, they shall be given lengthier individual treatments. Historians from the nineteenth, twentieth, and twenty-first centuries will then be examined concurrently in order to afford a comprehensive representation of historical perspectives on mercantilism.

The earliest ideas regarded as systemic in their exposition of mercantilism are attributed to the seventeenth-century English merchant Thomas Mun. Mun was a Director of the East India Company, and when the Company was denounced in 1621 for exporting money to purchase spice in the midst of a specie depression, Mun rose to its defense. The logic of Mun's mercantile apologetics were later captured neatly in the chapter titles of his 1664 treatise England's Treasure By Forraign Trade. Firstly; "The Exportation of our Monies in trade of Merchandise, is a means to encrease our Treasure." Secondly; "The enhancing or debasing our moneys cannot enrich the Kingdom with treasure, nor hinder the exportation thereof." Therefore; "Foreign Trade is the only means to improve the price of our Lands." By applying a systematic mercantile approach to the exportation of treasure (wealth) Mun claimed England would eventually import more treasure and ultimately attain global dominance. More goods should be exported than imported, and the profits would then be used to purchase foreign goods. Foreign goods should be purchased at low cost, and those same goods could be exported at a markup. Countries with little capacity for establishing trade systems would rely on England for trade, and thus a stable customer base would be secured. In his own reduction; the means "to encrease ... treasure is by Forraign Trade, wherein wee must ... sell more to strangers ... than wee consume of theirs."

In reviewing Mun's treatise on Forraign Trade the modern reader discovers not a rigorous or impartial commercial discourse, but a text whose implementation closely resembles that of a partisan merchant manifesto. Mun opened his treatise by situating his own ideas and his Company's success within a religious framework; "I have endeavoured ... to teach thee two things: The first is Piety, how to fear God ... The second is Policy, how to ... serve thy Country ... so am I now to speak of Money." By this explicit declaration Mun made implicit the dictum that to oppose his treatise or his Company was to commit an act of religious and commercial heresy. Such imperatives and bias permeated Mun's manifesto. Where Mun's own ideas and the practices of his Company formed the very basis of "humane actions," contrary propositions were ignorant and malign "dark mysteries." Where English foreign trade was a "lawful course of living," similar Dutch activities encroached upon what Mun perceived as rightfully English markets, and thus constituted an offense to be rectified by imitating "former times" using "worthy courses more pleasing to God" -- in a word, war.

With respect to courses that Mun found pleasing to God, Mun punctuated his treatise with lofty references to the nobility of battle and the necessity of luxury items, and declared that his mercantile approach would shore up national military strength while also maintaining the rich in style and employing the poor. In short, Mun sought to serve his own interests and to that end he promoted mercantilism as a divine sociopolitical panacea; for "The honour of the Kingdom, ... The supply of our wants, ... The Sinnews of our wars, [and] The terror of our Enemies." Although not systematic in his approach, analysis of the scope and intent of Mun's claims supports the argument that he himself believed mercantilism was the system to end all systems.

In contrast to Mun's immaculate mercantile conceptions we find the Austrian lawyer Philipp Wilhelm von Hornick's terse twenty-one page tract of 1684, Austria Over All If She Only Will. If Mun's commercial interests were motivated by religion, then Hornick's were motivated by legalism and nationalism. For Hornick, "the might and eminence of a country consisted in its surplus of gold, silver, and all other things necessary ... for its subsistence, derived ... from its own resources, without dependence upon other countries." Following his juridical tendencies Hornick claimed the best means for achieving such might and eminence was a statute based "general national economy." Such an economy was to organize all business activity according to "nine principal rules"; i) leave no soil untilled; ii) process natural resources internally; iii) maximize the population; iv) hoard specie; v) avoid luxury; vi) conduct foreign exchange bartering away only goods; vii) never import finished goods; viii) perpetually seek foreign customers; and ix) replace consumption of foreign goods with domestic goods. Adherence to these simple statutes would help Austrians overcome "indolence and carelessness," ensure the constant inflow of capital, and generate sufficient funds for the study of cameralism and the development of a scientific government managed by expert administrators. Rational government would organize and regulate all commercial activity, bring an end to scarcity and monopoly, and herald a new era of stability for all citizens. With stable and equitable internal relations established, Austrian manufacturers could then begin to experiment with new techniques, and eventually surpass external manufactures in quality. Self-sufficiency would enable productive dominance, and here would commence Austria's mercantile millennium; "For under these conditions, it will be impossible for a country ... ever to sink into poverty."

Akin to Mun, Hornick presented his mercantile arrangements as if they were a series of mathematical deductions that followed natural business laws, and the perception of such business laws brought both men to patriotic conclusions. Where Mun denounced the Dutch invasion of "English" markets, Hornick renounced French claims to German lands and thus German resources. However, while England possessed the military might to reinforce any foreign policy it chose, Hornick rashly dismissed the need for statecraft; "Let them be angry who will"; "If they are friends, they will excuse us."

The most significant departure from Mun to Hornick was argumentative coherence. Where Mun meandered from piety to profit and back again, Hornick presented a far more focused discussion of political economy. While Austria Over All was less than one-fifth the size of Forraign Trade, Hornick offered something Mun had not: a definite program based on principles and scientific management. The brevity and certainty of Hornick's scientism contributed to public esteem for his writing, and Austria Over All quickly went through twelve editions. Just as Calvin's religious program had been revered for its surety, here we see again how programs of certainty enjoy popularity amidst uncertainty. Hornick's rational certitude echoed the philosophical trends of his era, and elements of Hornick's writing recall in form (if in not content) Francis Bacon's New Organon. By way of his own mercantile organon Hornick believed he achieved a transcendent connection with reality, and where Mun invoked divine authority Hornick invoked intellectual supremacy; "There is no need of further elucidating these fundamental rules of a general national economy. Their reasonableness is obvious to every man of intelligence." Hornick made no explicit statement that mercantilism was a system, but there can be little doubt he espoused its systemic nature by his domineering implications and admonitions.

Moving forward to the last great mercantilist we find the eighteenth-century English intellectual Sir James Steuart, and his Inquiry into the Principles of Political Oeconomy: Being an Essay on the Science of Domestic Policy in Free Nations. The cornerstone of Steuart's Principles was his axiom that man was a "sociable creature." By this observation Steuart made inferences from Neolithic natural resources to early-modern economic organization. Humans first followed available food sources in the wild, then established stable sources by agriculture, subsequently began trading their surplus, and finally arrived at an exchange economy based on money. In all phases mutual interdependence was the glue of society, and once social and personal desires were securely fulfilled groups then began to develop higher conceptions of wellbeing. Because different regions possessed different resources, varying levels of regionally bound economic development resulted. Accordingly, three distinct states of trade growth obtained; infant, foreign, and inland. During infant trade the government was to foster growth using protectionist policies. During foreign trade the government should remove protective restrictions and begin regulating prices. Inland trade resulted from the "decay" of foreign trade by an overabundance of internal exchange, and at this stage the government should implement internal duties to "indemnify exportation for the loss it must sustain from the rise of prices, occasioned by luxury." The relation between foreign and inland trade was therefore cyclical, and "since, from the nature of man, no prosperity can be permanent, the next best thing to be done is ... yield to the force which cannot be resisted; and, by address and management, to reconduct a people to the height of their former prosperity."

To appreciate Steuart's Principles we must understand his life. Sir James Steuart was educated in law and history, and studied in England, Spain, Holland, and France. He was ambassador to France, supported the Jacobites, and was exiled for nearly twenty years after their loss at Culloden in 1746. He wrote his Principles while on the continent, and this brought him high regard in England. By the lights of his Principles Steuart was asked to examine British currency in Bengal, and then reforms in England herself, and because of his prominence Steuart he returned to England in 1765 and was pardoned in 1772. Steuart focused on his Principles while in exile, and as evinced by his willingness to support radical politics we may reasonably believe he wrote free from significant political influences, whether English or otherwise. However, Steuart came from a monied family and was himself a prosperous businessman, and we must also reasonably conclude his ideas were shaped by his affluence. By his affluence Steuart lived as did the scientists of his day; traveling, reading, and writing lengthy expositions. Breaking from his predecessors Steuart analyzed not just economics but history and his own conclusions, axioms, and methods. Steuart's work was a scientific exploration, and unlike Mun and Hornick he freely declared his limitations; "I frankly confess ... a great want of language to express my ideas." Further to this, Steuart reasonably declared; "I pretend to form no system, but ... shall ... furnish some materials towards the forming of a good one." From Steuart's perspective, a good system would "be directed by the head, who is both lord and steward of the family." Hence where Mun and Hornick had only implied a system, Steuart explicated the fact that his theories were not systemic but instead contributed a first step towards the development of a complete system based on economic planning and government intervention.

Six years after the release of Steuart's mercantile Principles, Adam Smith released his proto-capitalist Inquiry into the Nature and Causes of the Wealth of Nations. The Wealth of Nations was in large measure an analysis of and reaction against mercantile theories and their corresponding policies. Smith's Inquiry spanned five books and the whole of book IV, over three hundred pages, was devoted to an examination of the genesis and failures of the "mercantile system." Smith presented mercantilism as an authoritarian system of political economy that oppressed nations across Europe by way of an organizing principle that endowed "master manufacturers" with a "monopoly of the ingenuity of all their countrymen." This monopoly had been conceived by merchants that preferred "the transitory profits of the monopolist merchant to the permanent revenue of the sovereign," and who by artful sophistry persuaded government that wealth accrued best, if not only by foreign trade. Merchants claimed that they themselves were best situated to organize domestic policies and foreign trade, and under the influence of merchant advisors and mercantile dictators Europe designed for itself a system of laws "all written in blood."

What is perhaps most striking about Smith's Inquiry is the juxtaposition of emotional extremes with a previously unseen degree of analytic ability. Although Smith goaded readers by using rhetorical flourishes such as "mercantile jealousy" and "national animosity" in place of the (decidedly mundane) phrase "mercantile system," he also managed to put the historical analysis of economics on an intellectual footing. Where Steuart had approached economic history scientifically, Smith now substantiated it as science. Steuart's upper class logic led him to encourage economic planning, but Smith's objective deconstructions revealed a free market governed by social forces. However, while Smith's historical analysis justly demonstrated the deleterious influence of private business interests on government policies, his affective verbiage did little to hide his less than neutral distaste for mercantile ideas. Whether for reasons of distaste or otherwise, Smith did not undertake an in-depth analysis of the regional factors that shaped government-business relations. Instead, he focused his observations on regional commonalities and abstracted away regional differences. By this process Smith presented mercantilism systemically and refuted its adverse regional complications systematically. Thus Smith's presentation of mercantilism as a system was just as much a heuristic device to set the stage for his own argument, as it was an empirical observation based on the operations of geopolitically minded structures and policies. As D.C. Coleman later remarked; "Without systematization, no ... destruction of the old." Such an interpretation of Smith would gain acceptance however only during the twentieth-century, and, as we shall see, the most prominent of nineteenth-century historians agreed with Smith that mercantilism was indeed a system.

In 1817 David Ricardo released The Principles of Political Economy and Taxation, and in 1867 Karl Marx released Capital. The two men disagreed on the full range and characteristics of mercantile phenomena, but both men accepted Smith's conclusion that mercantilism was a system.

Ricardo's Principles treated many of Smith's conclusions as palpable natural truths, and though Ricardo's examinations respectfully questioned many features of Smith's Inquiry mercantilism itself was left indubitably systemic. In Ricardo's eyes; "The injurious effects of the mercantile system have been fully exposed by Dr. Smith; the whole aim of that system was to raise the price of commodities in the home market." National governments obscured their intentions using the rubric of national empowerment, and forcibly maintained unconventional manufactures by "forcing capital into channels where it would not otherwise flow." This artificially inflated prices by placing increased demands on domestic manufactures that were not suited for the tasks assigned them. The resulting increases in consumer prices reflected only increased production costs, and not expanded profit margins. Hence mercantilism was an unnatural system of protection aimed at government aggrandizement that crippled foreign competition and enforced domestic productive activities that could not respect the basic law of supply and demand.

Correspondingly, Marx believed that mercantilists misunderstood not only basic economic laws but also the fundamental metaphysics of money. Mercantilists rallied entire societies around the slogan "balance of trade," and steered all political activity toward the single goal of multiplying specie. By that goal mercantilists proceeded to organize domestic industries and foreign policies around the delusion that "value and its magnitude" arise "from their mode of expression as exchange-value." Because of a puerile fascination with simplistic arguments mercantilists mistakenly believed that specie alone was wealth, and that under a system of protectionism all investments of specie would easily reproduce themselves. Mercantilism was for Marx a fantastical system that by sheer force of will held entire nations to the belief that imperious economic policies were tantamount to wise investment practices.

Marx and Ricardo did not evaluate the rudiments of mercantilism in a magnitude anywhere near that of Smith, and it is in this fact that we locate their significant contribution to the debate surrounding mercantilism as a system. Both Ricardo and Marx were seminal economic historians, and both offered similar assessments and criticisms of the "mercantile system." Eschewing lengthy examinations of the topic, both men deeply scrutinized trade policies, exchange practices, and capital movements; and both accepted the systemic nature of mercantilism without deliberation. Ricardo and Marx applied the "mercantile system" as an elementary principle in their own analyses, and this point of agreement between the two men is important precisely because the differences between them were manifold. Marx espoused revolution; Ricardo promoted progressivism. Marx demanded communism; Ricardo encouraged free trade. Accordingly, as regards their analytic approaches and historical acceptance of the systemic character of mercantilism, it is remarkable that Marx' dialectical materialism reconciled with Ricardo's "one class profiting at the expense of another." Also noteworthy is the fact that just as Smith denounced the mercantile system Marx and Ricardo did the same. However where Smith apportioned hundreds of pages to his castigation of mercantilism, Marx and Ricardo approached it with effortless contempt. Here perhaps we have an even more pronounced instance of Coleman's maxim ("Without systematization, no ... destruction of the old"); and this is a point that we will return to later. This notwithstanding, with respect to historical analysis writ large both Marx and Ricardo devoted considerable study to their conceptual frameworks, and we therefore find in their analyses a compelling sanction for the belief that nineteenth-century interpretations of mercantilism yielded the conclusion that it was a system.

Following the era of Marx and Ricardo the purview of historical economic analysis grew dramatically throughout the twentieth-century, and here we shall survey the commentaries of prominent economists and historians who spoke on the debate surrounding mercantilism and systems. Amongst twentieth and twenty-first century historians Karl Polanyi stood out for his handling of mercantilism as a system. John Maynard Keynes, Joseph Schumpeter, D.C. Coleman, and Lars Magnusson all doubted the reasonability of seeing in early-modern commercial practices a set of elements so consolidated and interdependent that they could be referred to as a system.

Keynes cast doubt on the systemic interpretation of mercantilism in 1936 when he commented that apart from conquering new lands the proprietorship of foreign territories was not an option, and therefore the balance of trade was a natural focus when considering ways to increase national specie caches. Even in the case that it was possible to obtain foreign holdings there was no guarantee that a foreign nation would honour the proprietary rights of an external owner. Early economic theorists and political planners across Europe were subject to these same conditions of domestic and foreign finance, and any resulting similarities in the policies of different countries could not be taken to imply that mercantilists managed political economy systemically. In consideration of these observations Keynes declared himself resolutely "against the inadequacy of the theoretical foundations of the laissez-faire doctrine" encouraged by Adam Smith. Where Smith had perceived a system, there were in fact only systematic similarities of structure and behaviour.

Eight years later Karl Polanyi undertook a socially oriented examination of the historical behaviours and conditions that led to mercantile political economies and arrived at an opposite conclusion; "The mercantile system was, in effect, a response to many challenges." Prior to mercantilism trade was largely under the control of regional businessmen and managers, and they repeatedly blocked political efforts at centralization. Local businesses adhered to a practice of noncompetitive regional exchange that organized collections of towns into trade systems that operated independently of central and national regulations. Mercantilism severed these patterns when "the Commercial Revolution ... shifted the center of gravity of the Western world from the Mediterranean to the Atlantic seaboard and thus compelled ... larger agrarian countries to organize for commerce and trade." Politicians and business enthusiasts then applied what had formerly been regional modes of organization to entire nations, and erected a palpable artifice of commercial management under the auspices of the state, and thus they established the mercantile system.

Counter to Polanyi, Joseph Schumpeter in 1954 saw in mercantilism not a system but only "definite patterns of behaviour that seem to invite sublimation into 'principles.' " Such sublimations had of course repeatedly been effected, and here Schumpeter directly engaged the methods of historians including Smith, Ricardo, Marx, and Polanyi. Schumpeter presaged Coleman's maxim, and launched into a sustained assault on all who deigned to depict mercantile nations as systems only so they might attack those nations as complete systems. "[H]ostile critics" however were not the only indiscriminating observers who conveniently grouped certain mercantile practices and ideas into a spurious system. Proponents of the "mercantile system" exploited opportune principles and exaggerated them into a system as "a matter of political preference." That "imaginary organon" referred to as the "mercantile system" was therefore in reality the result of poor analysis and expedient systematizing impositions. Exponents of that organon considered theory as equal to practice and practice as constitutive of theory, and such a "standpoint ... is of course wholly untenable"; for mercantilism was no system.

Following in step with Schumpeter's analysis, in 2008 Lars Magnusson prefaced his anthology Mercantile Theory and Practice with a historiographical investigation of mercantilism, and arrived at a conclusion regarding mercantilism's systemic disposition that was unambiguous and categorical; never was mercantilism a system. Mercantilism was a common practice of state intervention in the economy brought about by disparate thinkers residing in heterogeneous locales who were reacting to wars, Westphalia, and the rise of the nation-state. Mercantile ideas were conceived at a time of powerful monarchs and strong monarchies, and mercantile practices were aimed at enhancing monarchical strength by way of establishing military supremacy. The primary feature of mercantile thought was the importance of specie accumulation. When viewed through the prism of modern economic precepts, mercantilism was a totalizing approach to specie collection that promoted horizontal integration by increasing the domestic population and diversifying resource exploitation, and sought vertical integration by controlling all stages of production. Ideally, domestic manufactures should satisfy all wants, thus imports could be avoided and specie would not be exported. The notion that money should not leave the country made perfect sense in an area of the world beset by war and strife, but similarities in political expressions of that notion never meant those political economies were systemic.

In examining the motivations of Polanyi, Keynes, Schumpeter, Coleman, and Magnusson we see that all five men were concerned with objective analysis, but that the primary subjects and objects of their analytics varied. The twentieth-century was marked by increases in the professionalization of economics and history, and these authors were reared in an environment that was increasingly defined by peer-review and scholarship. However, where all of these authors shared a passion for academic discipline, Polanyi's inclinations stand out among this set of authors for being focused on the primacy of democracy and freedom. While Polanyi opened his treatise with a reflection on the social implications of private capital, Schumpeter, Keynes, Coleman, and Magnusson opened theirs with discourses on method, scope, semantics, and process. This is not to suggest that Polanyi was superlatively ethical, but rather that he did not approach the investigation of the phrase "mercantile system" as his peers did, and this observation does much to explain his supposition that mercantilism was a system. Polanyi's asymmetrical application of the concept of mercantilism arose from the fact that he was a social historian first where the other authors approached the topic as analytic academics. Speaking generally, Magnusson's survey of mercantilists and historians strengthened the considerate judgments of Keynes, Coleman, and Schumpeter, and reinforced Coleman's observation that it was "surely an historical absurdity to see" mercantilism "as enduring, developing, and being consistently put into operation, state by state, problem by problem, over three centuries and all Europe."

In developing our own answer to the question "was mercantilism a system?" the answer must therefore in all cases depend on how the concept "system" is applied. During the seventeenth-century Thomas Mun designed theories to safeguard his own commercial practices, and though he did not use the words "mercantile" or "system" he used the phrase "forraign trade" to represent a semi-organized set of axioms and rules, and applied the concept "forraign trade" much as a modern analyst applies the concept of a system. In the same century Philipp Wilhelm von Hornick used the word "commercial" synonymously with the term "cameral primer," and thus he treated commerce and governance as different theoretical aspects of a naturally unitary political economy. Hornick's nationalistic formulations were unmitigated Austro-mercantile protectionism, and just as Mun had, Hornick implied in his mercantilism a unified system. In the eighteenth-century Sir James Steuart wrote that economics could be studied and regulated as a system, but explicitly stated that his own theories were not systemic. Six years later Adam Smith analyzed economic conditions across Europe and concluded that mercantilism was the dominant de facto system of political economy. In the nineteenth-century David Ricardo and Karl Marx agreed with Smith's conclusion, even if they disagreed with his politics. In the twentieth-century Karl Polanyi approached mercantilism as a malleable system of economic organization that developed as a response to international politics under the influence of national conditions. Polanyi's contemporaries John Maynard Keynes, D.C. Coleman, and Joseph Schumpeter commented that mercantile theory and practice formed at most a quasi-system, and Schumpeter claimed that those who referred to mercantilism as a (complete) system were hypothesizing an entirely "imaginary organon." Most recently in 2008, Lars Magnusson claimed mercantilism was not a single or unified system but a collection of policies and actors operating in Europe at the time that the modern nation-state was coming into existence. Per Magnusson the mercantile phenomenon encapsulated a common drive for absolute politics by way of diverse economic practices, and while mercantilism remains an object of economic analysis it was never an economic system.

With these diverse considerations and historical interpretations of mercantilism in mind, we may now attempt an answer to our central question; was mercantilism a system? By the standards of economic and historic analysis that were practiced prior to the twentieth-century mercantilism was indeed considered as a system; however, by the standards of analysis that emerged in the twentieth-century it was not. During the centuries that followed the mercantile era, social science progressed and academic rigour advanced. Although historians in all eras agreed that early-modern European countries responded to similar geopolitical conditions with similar economics ideas, by the criterion of modern research models these responses never manifest themselves in a definitively systemic manner. Common among mercantilists was the advocacy of government control in production, and the belief that a positive trade balance would ensure specie inflows. Specie would strengthen the economy and the army, and political predominance would surely follow. Hence, while it is true that systems theories often operate at high levels of abstraction, the level of disunity at which the case for mercantilism operates exceeds the bounds of modern analytic tolerance.

Early mercantilists and later historians presented their ideas as comprehensive and even as objectively true, and this often led them to treat their abstractions as immutable theoretical representations of closed natural systems. By the standards of modern history we must be careful not to approach mercantilism as a ready system, but first as a conceptual quandary that reminds us we must all be careful, and work to avoid historical presuppositions.

Part of the series: UWO