If you get the chance, look up mercantilism. Our second President, John Adams, was very much into mercantilism, as were most of the New England businessmen.
Mercantilism views wealth as bullion (gold, silver etc) and is finite. Resources are used to create products used to trade for as much bullion as possible and as such, a nation needs to maximize every piece of land for production. They wanted to maximize the resources into producing goods that they can sell to someone. Consequently finding and developing a consumer base was essential. Since world wealth was finite, if one wanted to gain, it was at someone else’s expense. This lead to a concept of balance of trade, where whatever a business exports/imports, they had to get the better deal. In other words there was a finite amount of wealth being transacted between the export/import and you wanted 51% or more of that transaction if it were to be a good deal. There was always a loser and winner in every transaction. This is also known as a Zero Sum Game. The businesses involved the government into helping balance the trade in their favor. This concept, best summarized by the quote from Pirates of the Caribbean movie “take what you can and give nothing back”, dominated European economic/political policy for centuries. This policy leads to several continental wars, a race for colonies that culminated in two World Wars; all in an attempt to balance the trade in one countries favor and to create consumers to buy goods. A country only cooperated with another country, or a business with another business, in order to compete and dominate a perceived adversary.
This was the economic policy that Adam Smith argued against. He argued that countries can cooperate in business transactions. Each one has its strengths and talents. He used English wool and Portugal wine (I think), where both could have a mutually beneficial transaction without a winner or loser.
Europe was not the only society with this Zero Sum Game attitude. What differentiates Europe and other mercantile-like societies is being in a position to force this economics on other countries with the full backing of their respective governments.
An interesting point, Adam Smith mentions that we developed Embassies and sent Ambassadors to other countries when they started trading with each other in earnest and needed someone, in each other’s countries, to negotiate the balance of trade.
This paradigm explains so much the attitude and policies we have seen in the past. It makes perfect sense then to colonize, enslave and kill over the resources. If one wanted to succeed in life it was at someone else’s expense. Not everyone can be winners and there had to someone who was a loser. If you did not want to be a loser, you had to take advantage and exploit someone else to be a winner. It explains a class system and later the social Darwinism the developed towards the end of the 19th century.
Adam Smith published Wealth of Nations in 1776, the same year that the US declared its independence. It had some influence in English Government, especially since it justified the government relaxing some of its expensive protectionist policies. US President John Adams was a merchant steeped in the mercantilism ideology and I don’t know if Adam Smith had any influenced on our second president’s policies or not.
I don’t see a revolution in business practices since Adam Smith’s day. In our early American history we see huge railroad companies, being subsidized by the government, linking America from coast to coast, making millions of dollars for the rail road companies yet exploiting the work force, both Chinese and European, leaving them with little but the experience. We have fought many wars over business interest. When Admiral Perry “opened” the doors to Japan, he did it by sailing the US Naval fleet, guns and all, into Uraga Harbor and demanded that Japan open its borders to trade.
Mercantilism justified the view of the Great Plans, where the buffalo and Native Americans roam, was land not being put to productive use, thus spurring our great pioneer movement to make this land productive. It justified exploiting the Appalachian Mountains, taking a tremendous amount of wealth in coal and timber, to fuel the industrial revolution, and leaving the inhabitants broke and ailing. To this day those communities are some of the poorest in America. It doesn’t take much of a leap for most 18th and 19th century Americans to accept the idea of enslaving a whole race, even with Adam Smith proving that owning slaves is not economical (not to mention immoral), because somebody has to lose and somebody has to win.
Like I said earlier, I don’t see a revolution in business practice. There is no incentive for it. If you go into business to make money then you don’t want Adam Smith’s free market system, you want the protectionist mercantile system, with its government subsidies and monopolies. Mercantile is not a term that is popular now, mainly because Adam Smith pointed out its flaws, but it doesn’t mean that we don’t live under it. The Mercantile system has been with us since the Renaissance and continues to this day.
jrschenck
