Adam Smith’s policy of international trade : trade policy in a mercantilist world
Part of : Αρχείον οικονομικής ιστορίας ; Vol.XXV, No.2, 2013, pages 7-16
Issue:
Pages:
7-16
Author:
Abstract:
One of Adam Smith’s foremost contributions to economic science is his compelling case for free trade. In the paper we do give Smith’s framework for thinking about the economics and politics of international trade in a mercantilist world. A world that is hostile to the competitive market economy or what he called “an obvious and simple system of natural liberty”. For Smith the goal of economic policy of a country was not to increase exports to its colonies and other nations and to limit imports from them, and in this way to end up with a favorable balance of trade. In other words, the goal was not an increase in the amount of precious metal for the sovereign (bullionism). For Smith the goal should be to open up new free-trade markets and to increase competition. International trade not only increases the division of labor, but it decreases also the likelihood of domestic monopolies. In general, trade does increase “the exchangeable value of the annual produce of the land and labor of the country” for everyone. The paper is meant as a historical reconstruction of Smith’s ideas on international trade. The terms, problems, and theoretical approach of Smith are described as they were intended in their original context. Hence we do stay close to Smith’s original writings.
Subject:
Subject (LC):
Keywords:
Adam Smith, international trade, protectionism, mercantilism.
Notes:
JEL Classification: B310, F13, F60
References (1):
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