What are the problems associated with the mercantilists policies?

Some of the problems associated with mercantilism include its propensity to create wealth inequality, exploitive labor practices, inhumane imperial policies, and violent conflicts.

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Within a system of mercantilism, the banks and large businesses are the primary forces behind public policy. While this focus on financial profits can create large economic growth for a nation as a whole, it often does so at the expense of certain portions of the population. Mercantilism has the effect of concentrating wealth in the hands of a relatively small part of a nation's population while exploiting the labor of a larger part.

Particularly when combined with imperialism, as it was during the 17th and 18th Centuries, mercantilism can lead to atrocities and human rights abuses. For instance, the policies of the British East India Company put profits above anything else and resulted in localized political instability, famine, armed conflicts, and a booming drug trade.

Central to the mercantilist philosophy is that wealth is a finite resource. Pre-capitalist European nations often placed more importance on how much gold and other measures of wealth they possessed rather than on gross domestic product. The goal was to achieve a larger trade surplus than their competitors. This zero-sum mindset led to the pillaging of colonial holding for natural resources, often at the great expense of the local population. This way of thinking also led to armed conflicts between various mercantilist nations as they competed to achieve trade surpluses.

Mercantilism has long had its critics. Adam Smith, for instance, felt that mercantilism benefited the few at the expense of the many. By placing more importance on the accumulation of wealth in a nation's coffers, rather than in the wallets of the people, Smith believed that mercantilist policies were out of alignment with the overall public good.

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