Economics

Mercantilism is an economic nationalism for the purpose of building a powerful wealth and nation while Adam Smith created a different notion for this concept and calls it as a mercantile system of political economy. This type according to Smith distinguish the system to enrich the country by limiting imports and encouraging exports which was dominated by Western European countries from the sixteenth up to the late eighteenth century. Although, mercantilism type of system was to create a favorable balance of deal that could bring silver and gold into the nation and maintain domestic employment. This provides the basic interest of producers and merchants whose actions were protected by the state. Thus, the most important intention for mercantilism according to Smith was to consolidate the regional power of feudal era especially in the sixteenth century to increase the growth of industry relative to agriculture, increase the volume of trade and increase the use of metallic system (silver and gold) to barter transactions.

Adam Smith Views on Mercantilism
Adam Smith is one of the first economists who showed that mercantilism is a bad idea. He explained that the real wealth of nation is the ability to provide more goods and services. He further reiterates that the government should only do things that the private sectors cannot do such as judicial and defense system. He further stress out that people would only do their best to meet other people needs because of self interest regulated by competition. Thus, he is the first one who advocated free trade economy that could maximize nations wealth. Moreover, he created the concept of comparative and absolute advantage and how productivity is increased by the division of labor. Free market economy of individuals is still the key decisions to improve wealth of a nation. For example, in a free market economy, the rising and falling of the demand would causes prices and profits to rise in the case of the former concept and decline on the case of the latter one. Thus, the result would be the shifting of resources to the former from the latter.

Principles of Mercantilism
The principles of mercantilism lie upon on its supply of capital and global volume of international trade and its economic assets which are represented in terms of bullion (silver, gold and trade value) detained by the nation. Also, it further assumes that the monetary assets or capital together with wealth are similar. However, during the period of mercantilism, the conflict between nation-states is more frequent and more extensive. The armies and the navies were no longer momentary forces but rather full time professional forces. Also, the government primary objective was to command sufficient quantity of bullion to support military attacks for their aid of territorial expansion. Thus, most of the mercantilist policies were the result of the relationship between the government and their mercantile classes. Instead of paying levies and taxes to support the armies of one nation, the government passes policies that would further protect their business interest against foreign competition.

Conclusion
Today the mercantilist principles have passed and modern economist accept the concept that Adam Smith. The insight of the free trade act that lead to international specialization of labor to obtain greater economic well-being for most nations. Although some mercantilist policies continue to exist in the modern times like in mid-1970 when global economic recession occur because of oil crisis leading to some economist to label the attitude of neomercantilism (surge of protectionist sentiment). However, the establishments of World Trade Organization (1994) enforced the member of this group to agree on International Trade Act. On the other hand, the principles of Adam Smith remain to be the most famous books of economics of all time. Powerful movements that led to the birth of Modern Capitalism were basically came from the idea of Smith and deserves to be regarded as one of the most influential person of the modern times.