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Jean- Baptiste Colbert Case

Essay by   •  April 16, 2014  •  Essay  •  467 Words (2 Pages)  •  1,232 Views

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Jean- Baptiste Colbert, a French mercantilist, and Adam Smith, a Scottish philosopher, sought to increase the wealth of their countries through the use of the contrasting devices of mercantilism and capitalism. Colbert believed in mercantilism, or the belief of the benefits of profitable trading in favor of the state. On the other hand, Smith believed in capitalism, or the benefit of both individual and state through a self-regulated market. Colbert's mercantilism and Smith's capitalism differed mainly in the role of government and the zero sum versus positive sum ideologies of the states.

Mercantilism, the economic concept that promotes more exports and less imports strongly in favor of the state, was used to increase the wealth of France by Jean-Baptiste Colbert. Colbert believed in bullionism, sea power, and the utilization of internal taxes to increase the economic power of the state. Bullionism, the belief that the economic welfare of a nation can be determined by the amount of precious medals that they own, is a basic characteristic of mercantilism. Colbert also believed that successful mercantilist nations should have strong control over the sea through the use of great fleets to transport goods and increase the prestige of the state. Internal tariffs were also put into place by Colbert as a mercantilist tactic to increase the power of the state over the people economically.

Adam Smith of Scotland developed capitalism in his book Wealth of Nations, which advocated more individual profit and less involvement of the government in business. An "invisible hand" was said to regulate the free market and ensure that goods were produced as needed, basically entailing that the capitalist market was self-regulating. When capitalist-minded individuals are given the freedom to seek success driven by self-interest, profit motive is established. The Law of Supply and Demand proved that in a capitalist state, individual freedom and profit interest would promote the production of goods and services needed by the people at reasonable prices. The sole belief of Smith as a capitalist was that government should interfere minimally in the business affairs of individuals to promote profit motive and self-interest in economic success.

Colbert's mercantilism and Smith's capitalism possess great differences in the role of government in each, and the zero sum versus positive sum ideology. In a mercantilist state, government

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