(Note: The term "state capitalism" may in other areas of economic theory have a meaning different from what is described here: All that is implied in this context is that mercantilism was essentially a capitalist system in which the mechanisms of trade were heavily controlled by the state rather than by market forces. Adam Smith's The Wealth of Nations, published in 1776—a very interesting date for the history of capitalism—was an argument against mercantilism and in favor of free-market capitalism.)
Mercantilism was a system by which the government deliberately controlled the economic affairs of the state in order to accumulate national wealth. The ultimate purpose of mercantile policy was to enhance national strength, provide self-sufficiency, and pay for military power. Mercantile theory came to include the notion that no nation could be great without colonies as sources of markets and raw materials. The British became especially dependent upon their colonial empire.
Intemational economics was based on the idea of a zero sum game—at any given moment, only a finite amount of wealth exists in the world; therefore, the only way for a nation to increase its wealth is to fight for a bigger share. If one pictures all the wealth in the world or within a group of nations as a large pie chart, and acknowledges that although the whole pie may get larger, thereby increasing everyone's wealth, those changes at best are likely to be only incremental, at least in the short term. To rapidly increase one's wealth in the immediate future, one must accumulate new wealth at the expense of someone else. In other words, get a bigger share of the pie.
World History
