In the history of economic thought, Merchantalism” is considered to be a link between the medieval period and the modern period.
Almost all the trading nations adopted this economic policy of mercantilism with a view to increasing national wealth and power by encouraging exports of goods in return for gold.
Such policies often resulted in rivalry between nations, though they gave rise to rapid economic growth and full utilisation of national resources.
Such a mercantile policy also implied that these countries had always to be in a state of war preparedness and had to keep down the production cost of goods through a great deal of exploitation of labour. Inevitably, such a policy led to inflation. 11
For an effective implementation of this mercantile policy, the size of the population was an important asset. As stated by Eli Heckscher, “An almost frantic desire to increase population prevailed in all countries.”
An explanation for such a desire can be found in the philosophy of the mercantilist theory, according to which a nation’s wealth consists in the quality of precious metals that is, gold and silver in its possession.
Some scholars even date the beginning of mercantilism to 1550, when a group of extremists, known as “balloonists,” appeared in England.
If a country did not possess gold or silver mines, it could earn such wealth only by achieving a favourable balance of trade, that is, by exporting more goods than importing them and thus adding gold and silver to its national coffers.
Such balance of trade required the production of goods for export, which meant that the importance of industry rather than that of agriculture had to be emphasised.
In such a situation, the demand for workers was bound to increase and, therefore, a large sized population was considered to be an essential factor in the economic and political power of a country.
Here, again, the number of workers rather than their quality or skill was the main consideration. Sometimes this principle was stretched to such an extent that, in France, even children above the age of six were recruited.
The general opinion at that time was that birth rates should be increased for purposes of economic and political gains by the adoption of such measures as (a) placing various disabilities on celibates; (b) encouraging marriages directly; (c) encouraging fertility; (d) making punishment for illegitimate births less severe or abolishing such punishment entirely; and (e) encouraging immigration and preventing emigration.
Among the early mercantile writers the most important are Niccolo Machiavelli (1469-1527) and Giovanni Botero (1540-1617). Machiavelli was perhaps the first to view population from the modern angle, by observing that excessive population would diminish through want and disease.
In the sense that he saw the relationship between population growth and resources, he may be considered one of the precursors of Malthus.
Giovanni Botero, an Italian citizen, was also one of the first to study population phenomena in a broad scientific manner. Along with Machiavelli, he may be considered one of the precursors of Malthus, as his work contained the basic thoughts of the Malthusian doctrines.
He expounded that a population, after increasing for some time, cannot continue to increase at the same rate; it may grow slowly or may even start declining.
In his opinion, the limitation of the means of subsistence was the reason why population growth had to be limited.
He regarded limited means of subsistence as the primary check to population growth, while the secondary checks were sterility of the soil, bad climate, disease and epidemics.
Though Botero was convinced that food for subsistence was necessary for any population, he still regarded a large population a source of strength for a country.
The physiocratic school of economic thought, evolved in France about the middle of the eighteenth century, may be considered as the expression of a reaction against the mercantilist ideas and politics.
While the mercantilists had neglected agriculture in their enthusiasm for the acquisition of gold and silver through trade in manufactured goods, the basic assumption of the physiocratic school was that land was the source of all wealth and hence it was necessary to emphasise the importance of agriculture and internal tax reforms.
As a reaction against the population’s tenets of the mercantilists, the physiocrats did not favour population increase at the cost of standards of living. They approved of such increase only if it was possible to expand agricultural production.
Quesney (1694-1774), the founder of the physiocratic school, maintained that a large population was desirable only if it could be made comfortable; Mirabeau (1715-1789), another French economic thinker, was of the opinion that a larger population would be desirable for the state, but agricultural must be encouraged because this population would have to be fed.
Similar views were expressed by Mercier de la Riviera, though he maintained that in a well-administered state, population would not increase faster than the means of subsistence.
Cantillon, who is looked upon as a mercantilist in many respects, also shared some of the opinions of the physiocrats for he viewed land or soil as the chief factor in the production of wealth, and believed that the size of agricultural production would determine the size of the population.