Why did the laissez-faire liberals see mercantilism as undesirable?

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pohnpei397 | College Teacher | (Level 3) Distinguished Educator

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Laissez-faire liberals such as Adam Smith disagreed with the idea of mercantilism because they felt that it was not efficient.  They felt that mercantilism was a system that favored domestic firms and industries regardless of whether they were the best producers.  This system helped the politically powerful industries even as it hurt consumers.

Laissez-faire theorists feel that governments should stay out of economics as much as possible.  They believe that the economy is most efficient when left to run itself.  When it is left to do this, consumers will get the best possible goods at the lowest possible price.  Mercantilism detracted from this.  Mercantilism protected the industries and firms of one country by discriminating against those of other countries.  This was bad for consumers because it meant that domestic industries did not have to compete.  It was a system that rewarded companies for their geographical location and their political connections, not for their economic characteristics.

Proponents of laissez-faire believed that everyone would be better off if the government stopped pursuing mercantile principles and, instead, allowed free trade.

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