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Economic System: Jean Baptiste Colbert And Louis XIV Of France

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The economy of the nation is what drives its success, or its failure. When thinking of a mode of economic system, several ideas come to mind. The role of the government in this system is also put to the forefront, and two key economic minds, Jean Baptiste Colbert and Adam Smith, had varying opinions on how the economy of their nations was to prosper and how the system should be constructed. Their respective models, mercantilism and capitalism, have both promoted wealth and influence even to current times, but have differences that allow each its own unique distinction.

Jean Baptiste Colbert was the financial advisor for Louis XIV of France and championed the economic system of mercantilism, popular during the 17th and 18th centuries. Mercantilism revolves around creating a favorable balance of trade, exporting more than importing. Overseas colonies are created to allow access to raw materials, and gold and silver are desired for a sufficient war chest. This protectionist system strived for considerable economic power and influence over other nations, and allowed France to prosper as a great nation during the time period. This system can also be compared to communism, however a more severe version. Government control is heightened and income is equal among citizens, but goods and raw materials are handled by the state. This …show more content…

Diverging from mercantilism in that government interference is pushed aside, capitalism promoted the greed of the individual and argued that competition would drive the economy acting as an "Invisible Hand". Government regulation was limited, tariffs lowered, and taxes lightened. Capitalism wanted the individual and the supply and demand patterns to drive the economy forward, and Adam Smith's ideas have become the framework for much of the success the United States and other "lassiez-faire", hands-off, economies use

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Mercantilism is the belief that government intervention into the economy will build the national treasury through three main policies; a positive balance of trade, expanding into overseas colonies, and promoting

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Domestic tariffs were abolishes when foreign tariffs raised to encourage people to by goods from mother country and developed France industries. Colbert created guilds to check after the quality and quantity of goods poured. Also, in idea for a state to be self sufficient it had to export more than it imported. Trade was a very important aspect of mercantilism. Colonies were used to help the motherland.

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This could include imposing tariffs and trade restrictions, promoting exports, and granting monopolies to certain companies. Mercantilist policies were designed to increase the wealth and power of the state, and many European countries competed with one another to accumulate wealth and expand their territories. One of the key principles of mercantilism was the belief that a country's wealth was limited, and that it was necessary to hoard resources, especially precious metals, in order to increase the power of the state. This led to a focus on trade and colonization, with European powers seeking to establish colonies and trade networks around the world. Mercantilism had a significant impact on the global economy and trade, shaping the economies of Europe and the Americas, and leading to the exploitation of colonies and the creation of vast wealth for European merchants and states.

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Economy in every country in Europe was what kept Europe going. Trade and production of goods was needed to fund the country and keep a balance of power within Europe. During the Enlightenment, two ideas emerged about how the economy should be run. These two ideas were capitalism and mercantilism. Capitalism, developed by Jean Baptiste Colbert, focused on government control while mercantilism, developed by Adam Smith, was in favor of free trade.

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Like stated in the first paragraph mercantilism is an economic theory that a “mother” country would control all of the trade of smaller countries. The basic principles stated, that a countries wealth would be determined by the amount of precious metals it has. The precious metal is obtained through creating relations with international countries and trading their goods with each other. In the 1700s the whole goal or objective of mercantilism is to cut out the competitors and increase production to have more exports than imports. More exports meant that they would be receiving more money and more metals that would show how economically wealthy they are compared to other

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Capitalism, the most powerful form of economics the world has ever seen. “Capitalism knows only one color: that color is green; all else is necessarily subservient to it, hence, race, gender and ethnicity cannot be considered within it” (“Thomas Sowell”). Capitalism was designed by Adam Smith in hopes of making a free market system, meaning everyone has the opportunity to succeed by simply created something that will have some kind of demand. Adam Smith first thought of his idea in the late 1700s. He published a book that had all of his ideas of his ideal economic system that would work and make countries the wealthiest they could be.

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Similar to it's later derivative, Mercantilism relied on privately owned land, labor, and management, under the rule of a single individual in control of their own capital. The main goal of Mercantilism is profit by trade, hence the word 'mercant' (Catalan for merchant) embedded in the word. The discovery and colonization of new lands provided the perfect environment for Mercantilism to flourish. Large influxes of raw materials allowed for rapid economic growth, and a captive marketplace kept the majority of the progress focused inwards. An example of one such market can be found in England in 1651 and 1660. "

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