What Does "mercantilism" Mean in History?

Mercantilism was a system of political economy that was predominant in Western Europe from the 16th century through the late 18th century. It was dedicated to bolstering exports, limiting exports and building robust central national economies. Based on a nation's amassing of precious metals, mercantilism became stagnant by the late 18th century and gradually led to the development of more laissez-faire economics.

Mercantilism evolved from the desire to consolidate economic power from the regional centers of the feudal era to larger national economies. As such, mercantilism was central to the development of the nation-state.

The consolidation and nationalization of European economies had two important consequences. As nations became more competitive over trade, their conflicts with one another became more frequent and expansive. This led to the expansion of military capacities, which required capital derived from taxation on mercantile interests. In exchange, those interests prevailed upon governments for tariffs and laws that protected them from foreign competition. Protectionism of large economic interests and early corporations and their prototypes became a common feature of the mercantile system.

Mercantilism in its pristine form became untenable. Economic stagnation resulted as nations sought to increase exports and decrease imports. Eventually, mercantilism evolved into modern capitalism, with more open markets and decreased attachment to precious metals.