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Author(s): D. C. Coleman
Source: The Historical Journal, Vol. 23, No. 4 (Dec., 1980), pp. 773-791
Published by: Cambridge University Press
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Historical Journal
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The Historical Journal, 23, 4 (I980), pp. 773-79I-
Printed in Great Britain
MERCANTILISM REVISITED
D. C. COLEMAN
Pembroke College, Cambridge
The intention of this paper' is to look at some of the problems which arise in
attempts to provide 'explanations' of mercantilism and especially its English
manifestations. By 'explanations' I mean the efforts which some writers have
made causally to relate the historical appearance of sets of economic notions
or general recommendations on economic policy or even acts of economic
policy by the state to particular long-term phenomena of, or trends in,
economic history. Historians of economic thought have not generally made
such attempts. With a few exceptions they have normally concerned themselves
with tracing and analysing the contributions to economic theory made by those
labelled as mercantilists. The most extreme case of non-explanation is provided
by Eli Heckscher's reiterated contention in his two massive volumes that
mercantilism was not to be explained by reference to the economic circumstances
of the time; mercantilist policy was not to be seen as 'the outcome of the
economic situation'; mercantilist writers did not construct their system 'out
of any knowledge of reality however derived '.2 So strongly held an anti-
determinist fortress, however congenial a haven for some historians of ideas,
has given no comfort to other historians - economic or political, Marxist or
non-Marxist - who obstinately exhibit empiricist tendencies. Some forays
against the fortress have been made.3 Barry Supple's analysis of English
commerce in the early seventeenth century and the resulting presentation of
mercantilist thought and policy as 'the economics of depression' has passed
into the textbooks and achieved the status of an orthodoxy.4 More recently
Peter Earle, in his examination of the economic ideas of Defoe, has related
those ideas, or some of them, specifically to the alleged stagnation of European
commerce in the middle and later decades of the seventeenth century.5 Still
' This is an amended version of the Neale Lecture in English History given at University
College, London, on 6 December I979.
2 E. F. Heckscher, Mercantilism, revised edition, ed. E. F. Soderlund (2 vols., London, I955),
I, 20; II, 347.
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774 D. C. COLEMAN
II
6 Lars Magnusson, 'Eli Heckscher, mercantilism, and the favourable balance of trade',
Scandinavian Economic History Review, xxvi, no. 2 (I 978), I I 4.
7 Joyce Oldham Appleby, Economic thought and ideology in seventeenth-century England (Princeton,
NJ., 1978). See also her article 'Ideology and theory: the tension between political and economic
liberalism in seventeenth-century England', American Historical Review, LXXVI (I976).
8 Dugald Stewart, Biographical memoirs of Adam Smith... William Robertson... and Thomas Reid
(Edinburgh, i8i i), p. 49. The memoir of Smith was originally read by Stewart to the Royal
Society of Edinburgh in 1793.
9 Wealth of nations, p. 360. Unless otherwise stated, the references here given are to the Cannan
edition in the one-volume Modern Library format (New York, I937).
10 Though probably developed earlier, c. 1750, as well as independently by Turgot. See
R. L. Meek, 'Smith, Turgot and the "four stages theory"', History of Political Economy, iII (I97I).
Also H. M. Hopfl, 'From savage to Scotsman: counterfactual history in the Scottish
Enlightenment', Journal of British Studies (Spring 1978).
" Andrew S. Skinner, 'Adam Smith: an economic interpretation of history' in Andrew
S. Skinner and Thomas Wilson (eds.), Essays on Adam Smith (Oxford, 1975), p. 155. It might seem
more chronologically appropriate to say that Marx was remarkable for the almost Smithian
reliance which he placed on economic forces.
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MERCANTILISM REVISITED 775
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776 D. C. COLEMAN
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MERCANTILISM REVISITED 777
to an ambivalence in Smith's own work. One has a pedigree which follows the
stage-theory line, manifesting itself in the German historical school, and in the
particular sort of explanatory model developed by Marx and extended by
modern Marxist historians and neo-Marxist disciples. The other, following
the path of the 'invisible hand' and classical economic liberalism, led to
Heckscher's massive work, the anti-determinist position of which was par-
ticularly applauded by economists of a laissez-faire persuasion.20 Some of
the modern attempts at explanation are more eclectic, combining elements
of both lines of thought. Unfortunately, because of their common starting
point and the confusion which it generated about the very nature of mer-
cantilism, the results sometimes merely make confusion worse confounded.
Some of the recent examples demonstrate these contradictions.
III
The emphasis placed by the mercantilists upon trade as the source of value and as the
general driving force of progress becomes fully comprehensible in the context of
merchant capitalism, as does the role of the state in the reproduction of unequal
exchange. Viewed in this way the mercantilist theories and notions become primarily
rationalisations of reality.2'
20 D. C. Coleman, 'Eli Heckscher and the idea of mercantilism', Scandinavian Economic History
Review, v, no. I (I957), 8, reprinted in Revisions in mercantilism.
21 Magnusson, loc. cit., p. I 4 22 Ibid. pp. I I4I5 2 Ibid. pp. I I7, I2I.
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778 D. C. COLEMAN
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MERCANTILISM REVISITED 779
29 Appleby, 'Ideology and theory', loc. cit., p. 5I5. According to Macpherson, 'the possessive
market model... does not require a state policy of laissez-faire; a mercantilist policy is perfectly
consistent with the model and may indeed be required at some stages in the development of a
possessive market society'; C. B. Macpherson, The political theory of possessive individualism (Oxford,
I962), p- 5-
30 Appleby, 'Ideology and theory', loc. cit., p. 5I5.
31 Appleby, Economic thought, pp. 25, 30-I, 33 (my italics), 54, 84-5, I05, I27, I30.
32 And still more so to Dr Alan Macfarlane's views as expressed in his Origins of English
individualism (Oxford, I978).
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780 D. C. COLEMAN
he 'worked from the system to the facts not from the facts to the system '33 seems
applicable to other explanations of mercantilism.
When we put these two recent explanations side by side it is evident that
they have only occasional points of contact. In the one, English mercantilism
emerged around I7I3, with responsibility attaching to a combination of
landlords and manufacturers exercising sway over government; in the other,
it emerged at various times and places in Western Europe between the end
of the 'feudal mode of production' and the onset of the industrial revolution,
with responsibility attached primarily to merchant capitalists.34 In the one,
commercial expansion stimulated notions of economic liberalism formulated
in a new language of abstract economic analysis; in the other, merchant
capitalism and monopolistic exploitation provided the rationale for the
balance-of-trade theory. At the time when Mrs Appleby has mercantilism
beginning in England, most branches of English trade (with the notable
exception of that to the East) had been freed from the control of monopolistic
companies. Conversely, in the later sixteenth century, when most of English
overseas trade was controlled by such companies, England was, apparently,
barely emergent from a subsistence economy with mercantilism hardly a cloud
on the horizon.
And so on. For all their differences, however, both depend upon a legacy
of Adam Smith: the model-building, the 'conjectural history', the stage-theory
of growth, all of which made their appearance in the Scottish enlightenment
of the eighteenth century to which Smith was so distinguished a contributor.
Sundry well-known hands have modified, refined and built upon those ideas,
in economics and in sociology. Whatever their value in helping us to
understand the long-term economic and social past, they do create methodo-
logical problems. The use of the concept of mercantilism provides a specific
example of one of those problems made manifest. For it has the effect of too
easily diverting attention away from the reality, the quality, and the nature
of what passes for the economic writings of the time, their authors, and the
immediate political context in which must be seen both the writings themselves
and the acts of government policy which seem to reflect the views expressed
therein. Instead of trying to fit economic notions into a pre-conceived structure
and thus to 'explain' them it might be fruitful to look more closely at the nature
and contents of a few characteristic features of mercantilist thoughts and deeds.
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MERCANTILISM REVISITED 78I
IV
35 Mercator or Commerce Retrieved, no. 48 (io-i 2 September I 7 I 3), generally attributed to Daniel
Defoe.
36 See L. Stone, 'Elizabethan overseas trade', Economic History Review, 2nd series, iI (I949).
37 As distinct from statistics which economic historians have derived from earlier contemporary
data kept for customs purposes.
38 This calculation is to be found in King's MS journal, the so-called 'Burns journal', published
in facsimile in T. P. R. Laslett (ed.), The earliest classics: John Graunt and Gregory King, Pioneers of
demography series (London, I973), p. 207.
39 G. S. Holmes, 'Gregory King and the social structure of pre-industrial England', Transactions
of the Royal Historical Society, 5th series, xxvii (I977).
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782 D. C. COLEMAN
elsewhere gave for home and overseas markets for national output.40 The two
calculations are not of course strictly comparable but the disparity does suggest
that Adam Smith's remark 'I have no great faith in political arithmetic' was
more than a little justified.
All these calculations, however, were merely part of other efforts concerned
to emphasize the significance of overseas trade. Most contemporaries did not
yet look at trade in this quantitative way; the very irreconcilabilities of King's
guesses are indeed pointers in that direction. The aggregation of individual
actions which we call 'overseas trade' was seen by commentators and
statesmen as a series of acts valuable or damaging to the State. Their
significance, unlike that of internal trade, was seen as lying in their contribution
to the country's position in wealth and strength relative to other countries. The
specified task of the commissioners of trade and plantation on which they
reported in I697, 'to examine what trades are or may prove hurtful or are or
may be made beneficial',4' was not different in kind from Burghley's approach
to what he had seen as similar problems calling for action over a century earlier,
where England's commerce was a good way short of being 'globe-girdling'.
It is this politico-economic dimension which also makes relevant the
circumstances and political orientation of those who penned the tracts or
documents in which such ideas appear. Schumpeter, like some other historians
of economic thought, scorned the relevance of such considerations, emphasized
that it was unsafe to talk about motives, and concluded that 'little more than
triviality results from stressing this '.42 In so far as his concern was with
economic analysis, with the logical coherence of trains of reasoning, he was
right. Mrs Appleby also regards as 'irrelevant' the self-interest of seventeenth-
century pamphleteers because her enquiry, she says, is concerned with 'why
certain explanations satisfied and others did not'.43 Now this, it seems to me,
makes her concern different from Schumpeter's. She does not ask: who read
the tracts, how many readers, how influential?44 Instead she uses a sociological
criterion of acceptance (or non-acceptance) i.e. whether or not the ideas
become ideology, which is defined as 'a system of meaning shared by members
of a society '.45 In practice, however, as she tells us that it was a series of political
decisions made between I696 and 1713 that created English mercantilism46
it would seem that the effective criterion, on that issue at least, was endorsement
(or non-endorsement) by the government. This being so, the political affiliations
40 This calculation is in the tract called ' Of the Naval Trade of England, AO. i688 and the National
Profit arising thereby, published in G. E. Barnett (ed.), Two tracts by Gregory King (Baltimore, I936),
p. 63.
41 Calendar of MSS of the Houses of Lords, vol. x, new series (I 7 I 2- I 4), I 53-62.
42 Joseph A. Schumpeter, History of economic analysis (Oxford, I954), p. 337 n. 6.
43 Appleby, Economic thought, p. 22.
44 Just how widely read were the economic tracts of the day is a topic worthy of further enquiry.
It is noteworthy that even so important a writer on economic matters as John Locke seems to
have possessed only a comparatively small number of the major tracts. See J. Harrison and
T. P. R. Laslett (eds.), The library of John Locke (2nd edn, Oxford, I97I), esp. pp. i8, 25.
45 Appleby, Economic thought, p. 5. 46 See above, p. 778.
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MERCANTILISM REVISITED 783
and interests of those who made the recommendations can hardly be irrelevent
to an historian interested in explanations; and if such explanations are to claim
historical reality they can hardly ignore the varying political stances of such
men as, say, Child, Davenant, or Martin. King's pioneering calculations, as
Professor Holmes has shown, were not impervious to his high tory views. Let
us take, for example, Henry Martin's Considerations on the East India trade of I 701.
It mayjustly be described as a work of' unprecedented analytic skill' but when
used as a piece of evidence it should certainly not be treated as though it were
just a tract about the East India Company,47 thereby ignoring the fact that
Martin's enthusiasm for competition manifest therein rested upon the need to
justify the New East India Company created by the whig government in 1698
with the joint intention of raising a loan of C2m and of embarrassing the tory
Old East India Company. And the same author's enthusiasm for protection
against competition whilst writing as a whig contributor to The British merchant,
a decade or so later, hardly suggests that his economic ideas should be seen
as part of the trend of economic liberalism, or at least not without playing tricks
with history.
Several modern writers, including Mr Magnusson, have pointed to the
apparently recurrent assumption, sometimes implicit and sometimes explicit,
made by mercantilist writers, namely that there is a fixed cake of trade and/or
economic activity, and that one nation's gain therein must be another's loss.
Heckscher quoted from Bacon and Montaigne ('no man profiteth but by the
loss of others') to exhibit the intellectual foundations of such a view at the end
of the sixteenth century and from Colbert to show its practical application in
economic administration towards the end of the seventeenth century.48 It is
not difficult to find comparable observations in England, be they from the likes
of Charles Davenant and others whom Schumpeter categorized as 'consultant
administrators and pamphleteers' or from the pens of such men as Pepys and
Swift, names which do not normally occur in histories of economic thought
or treatises on mercantilism.49 Pepys, to take one example, recorded in
February I 664:
.. thence to the coffee-house with Capt. Cocke, who discoursed well of the good effects
in some kind of a Dutch war and conquest (which I did not consider before, but the
contrary), that is that the trade of the world is too little for us two, therefore one must
down.50
Are such utterances tributes to what Heckscher called 'a matter of recognized
mercantilist doctrine'? Is this a crucial notion to be explained by reference to
current economic circumstances?
As a start it is worth looking at what Montaigne in fact wrote in the 158os
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784 D. C. COLEMAN
and the context of his much-quoted adage. Chapter xxi of the first book of
his essays is entitled, in John Florio's translation of I603, 'The Profit of one
Man is the Damage of Another'. The text of the chapter is as follows.
Demades the Athenian condemned a man of the city, whose trade was to sell such
necessaries as belonged to burials, under colour he asked too much profit for them: and
that such profit could not come unto him without the death of many people. This
judgment seemeth to be ill taken, because no man profiteth but by the loss of others:
by which reason a man should condemn all gain. The merchant thrives not but by the
licentiousness of youth; the husbandman by dearth of corn; the architect but by the
ruin of houses; the lawyer by suits and controversies between men: honour itself and
practice of religious ministers is drawn from our death and vices. 'No physician
delighteth in the health of his own friend', saith the ancient Greek comic; 'nor no
soldier is pleased with the peace of his city, and so of the rest'. And which is worse,
let every man sound his own conscience, he shall find that our inward desires are for
the most part nourished and bred in us by the loss and hurt of others; which when I
considered, I began to think, how nature doth not gainsay herself in this, concerning
her general policy: for physicians hold that 'the birth, increase, and augmentation of
every thing is the alteration and corruption of another'.
Despite its references to the merchant and the husbandman this essay seems
to me a long way from being a contribution to economic analysis. And it
certainly has no originating relationship with the economic circumstances of
Montaigne's sixteenth-century France, if only because the major part of the
whole essay is lifted, almost word for word and complete with the reference
to the obscure Athenian orator Demades, from Seneca's De Beneficiis.52 It
belongs indeed to that literary tradition of comment upon human life and
morality which has spawned a variety of aphorisms and aper,us, saws and
proverbs, essays, epigrams, maxims, analects - call them what you will. For
many people, including the educated, such notions seeping into common
consciousness, helped, along with religion, ritual and magic, to provide a body
of insights necessary for the comprehension of social existence. And as men
turned towards a closer examination of what we today call economic pheno-
mena, such maxims and aphorisms formed important ingredients of their
51 The essays of Michael, lord of Montaigne (translated John Florio, I603, facsimile edn, Menston,
England, I969), p. 46. Spelling modernized.
52 See Montaigne, Essais, ed. M. Rat (2 vols., Paris, I962), I, I I I-I2, and 695. F. Prechac (ed.),
Seneque, Des Bienfaits (2 vols., Paris, I926),II, 69-7I. The popularity of both Montaigne and Seneca
in London c. i6oo can perhaps be judged by the fact that Florio's I603 translation of the Essays
had gone into three editions by I632, new translations being later made in I693 and in I7II;
and that, apart from a translation of Seneca's works in I6I4 the De Beneficiis had been the subject
of a separate translation, by Arthur Golding, published in London in I578 (The Woorke of the
excellent Philosopher Lucius Annaeus Seneca concerning Benefyting, London, I578; facsimile edition,
Amsterdam, I974).
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MERCANTILISM REVISITED 785
So, embedded amidst the general economic and social recommendations for
the achievement of a political end is both the 'timeless' aphorism and the
specifically 'timed' reference to the Dutch dominance of European trade and
shipping in the early seventeenth century. It is a structure characteristic of
many mercantilist pronouncements.
In Bacon's essay the notion has been transferred from the plane of individual
moral behaviour in a society (where it remained in Montaigne's essay) to that
of national economic behaviour in the competitive international market. It is
easy to say that this somehow 'reflected economic circumstances'; or, with
rather more sleight of hand, that it reflected a transformation of the English
economy by market forces. But what happened next? Thereafter the notion
rapidly became linked to the balance-of-trade dogma, thereby producing
Smith's 'principle of the mercantile system', i.e. that the favourable balance
of trade was the only, or at any rate the main, route to increasing the nation's
relative share in a fixed amount of the world's wealth. If such a proposition
53Francis Bacon, 'Of seditions and troubles', essay xv in Essays, ed. M. J. Hawkins (London,
1972), pp. 45-6.
27 HIS 23
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786 D. C. COLEMAN
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MERCANTILISM REVISITED 787
27-2
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788 D. C. COLEMAN
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MERCANTILISM REVISITED 789
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790 D. C. COLEMAN
'In defence of free trade') that mercantilism rested on the notion that 'the
wealth of a nation consists of the quantity of precious metal within its
borders'.67 Appropriately it was an historian, Robert Skidelsky, who wrote to
put The Times right and to upbraid it for repeating that 'slovenly inaccuracy'.
In his letter he also made a plea for mercantilism as 'an important element
in any modern economic system', for the need to 're-integrate the mercantilist
approach into a liberal political economy'.68 In so doing he was, consciously
or unconsciously, providing apt support for A. V. Judges' forty-year-old
definition of mercantilism as 'an imaginary system conceived by economists
for purposes of theoretical exposition and mishandled by historians in the
service of their political ideals '.69
Yet its revival and persistence in depressed times suggests that the perception
ofeconomic difficulties offers a clue to helping us towards a better understanding
of some at least of those ideas and actions which, for want of a better shorthand,
we are likely to go on calling mercantilist. It is very tempting to present them
as the policies pertinent to a phase of nil economic growth. Tempting, but much
too facile. For we shall never understand them historically, and least of all their
practical manifestations in government policy, unless we address ourselves to
their political and social context, as well as to the nature and conjuncture of
economic circumstances and the mainly pre-analytical contemporary percep-
tions thereof. For England this means, I think, seeing mercantilist ideas and
actions as utterances or moves in a bargaining process, as, so to speak, a series
of games involving Crown, parliament, and sets of interest groups. The varying
strengths of the contending parties determined the outcome. In English history
the forms which mercantilism took were the product not so much of an
over-developed monarchy ruling over an under-developed economy (though
it was sometimes that) as of a central executive which believed itself to be strong
but in reality was often weak. It rarely possessed anything remotely describable
as 'economic policy' but it always had financial problems for the solution of
which it had to parley with both the creators of wealth and the payers of taxes.70
The parleying, manoeuvring and bargaining were pervasive, continuous,
multi-faceted and especially evident in times of depression and war. Those who
penned the tracts and pamphlets which provide historical evidence were often,
though not always, writing for the performers in the bargaining game, and
should be seen as such. I am not suggesting either that those who ultimately
shaped the economic actions of the State were wholly uninfluenced by the ideas
expressed by economic writers or that the latter were all mere hirelings devoid
of any capacity for making logical advances in economic analysis. That would
be patently absurd. I am concerned simply to emphasize my unrepentant
67 The Times, 22 Aug. I973. 68 The Times, 27 Aug. I973-
69 'The idea of the mercantile state', loc. cit., p. 59.
70 Some characteristic specimens of this process can be seen analysed in, to give a few instances,
C. Edie, 'The Irish cattle bills: a study in restoration politics', Transactions of the American
Philosophical Society, new series, LX, part 2 (Philadelphia, I970), 5-62; P. Langford, The excise crisis
(Oxford, I 975); M. J. Jubb, 'Fiscal policy in England in the I 720S and I 730s', unpublished Ph.D.
thesis (Cambridge, I978).
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MERCANTILISM REVISITED 79I
support for George Unwin's dictum that we need a corrective to the tendency
' as misleading as it is all but universal. . . to overestimate the active part which
wise forethought and the deliberate pursuit of clear ideas has played in the
economic history of nations' .71 That was written as long ago as I 9 I 3. The rise
of the professional economist since that date has in no way diminished the need
for the corrective. If we wish to use theoretical tools to help us - and I am not
proposing that we should eschew them - some form of bargaining theory might
well prove useful, more useful indeed than the models devised by Smith or Marx
or Weber. As for mercantilism, in the end, though we may never succeed in
disposing of the word we should at least understand that mercantilism is one
of those non-existent entities that had to be invented in order to prevent the
study of history from falling into the abyss of antiquarianism.
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