Mercantilism is a type of trade and manufacturing system that was employed by almost all the kingdoms in Europe roughly from the 16th to 18th centuries. In some countries it was more strongly applied than in others, but all countries had the same basis: control.
Mercantilism was the opposite of a free market. The two had very different mindsets. Mercantilists thought of a pie. One merchant or another could get a bigger piece than the other. For free marketists, the pie could get bigger, thus everyone can get a bigger piece.
Most countries were focused on exporting, not importing. When a country exports goods, it means that it ships its own goods internationally. Thus, other countries buy their goods and the money comes in. When a country imports, it receives goods from other countries. Thus, this country buys other countries’ goods and the money goes out.
Let’s make a character and go through his day. André was a merchant who lived in Paris and had a family. He owned a shop on the main street and he sold lace, which meant that he was a licensed lace seller. To be licensed he had to pay money to the king every so often, and in return he could sell lace. There were ten other lace vendors in Paris and every vendor had to have the same prices. André wanted to sell his lace cheaper, because he wanted more customers. But he couldn’t do this, because no price cuts were allowed.
A poultry truck drove by, scattering chicken feathers over the streets. They entered André’s shop. The feathers got into his hair and his clothes and one of them tickled his nose. He felt a sneeze coming. He ran out of his shop and into another street and sneezed there. He couldn’t sneeze in his shop because that would attract customers and that wouldn’t be fair to the other vendors, according to the petty law. This is an example of the rules of mercantilists.
France, in the 17th century, about the time of André, decided to produce luxury goods. Lace was one of them. Like André, all lace vendors had to be licensed. Otherwise the government would do something about it.
A new kind of buttons was being produced. The old fashioned button makers did not like this, so they complained to the king. The king ordered everyone to stop wearing the new buttons. Everyone wore them anyway.
Printed calicoes were in fashion. Other cloth-makers did not like this. Again, they protested to the king. In the end, thousands of people died over the printed calicoes because people fought over this issue.
Mercantilism was a society of merchants and goods that was very tight, restricted and unhappy. Whereas the free market made everyone happy and it was more useful to everyone. Those countries that did not adopt mercantilism thrived economically. Although it did not make many people happy, mercantilism thrived until the end of the 18th century, when kings finally realized that it was not the best way.