Kamis, 07 Oktober 2010

Mercantilism and Physiocrat

A. Merkantilisme
Mercantile economic system in the period between liberalism and feudalism. Mercantilism describe an economic system prevailing at the beginning of capitalism, and before the industrial revolution.There are two ways to analyze the economic system mercantilism, namely:
1.    Doctrinal Approach
This approach considers mercantilism as a static notion, that frame of mind that summarizes the events on one day and think that man and his ideas arranged in series with the Mercantile extreme and liberal.

2. Policy Approach

This approach saw mercantilism as an important historical process, which focuses on competitive dynamics and the role of political institutions and economic explanations. Policy approach also considers that there are forces working to pull away in the economic system that completes the change of power and wealth.

In his book, Adam Smith said: "The commercials or Mercantile System." He stated about the weakness of the mercantilist system and expose it to the free economic system. According to mercantilist system is a fraud committed by the business in society.
The term comes from the regional mercantilism Mirabeau in 1763, in order to describe systems that are not in accordance with economic ideas that dominate discussion about the economy since the early sixteenth century until almost the end of the XVIII century. Mercantilist adherents are mostly traders. Overall, there is little continuity and consistency among adherents adherents understand mercantilism with Scholastic in the days before. In general, mercantilism, based on some similar ideas, namely the principle and policy statements that look and that comes back over that period.
The main doctrine of mercantilism is thinking about the "balance of trade" which says about that export commodities better than imported from another country, so it can be ascertained that the stock of the kingdom will rise to balance of trade must be returned in the form of money or gold.
The essence of mercantilism is that progress and prosperity of a country depends on the existence of a surplus of exports and imports and increase the reserves of precious metals gold and silver. This reserve is the principal strength of the state of economic progress, so the government must uphold the fundamental strength of the country's economic progress, so the government must enforce its power through military force to expand its influence to other continents to conquer by military force.
Academic problems that arise regarding the mercantilist notion that is the question: does money equal to the capital or the same as prosperity. In terms of balance of payments, balance must be balanced while the trade balance does not, therefore the trade balance is not balanced it should be the gold inflows or export of capital in the form of lending abroad. Therefore, the mechanism of gold flow causes a natural distribution of gold that a country's exports will be equal to imports. Static concept of economic activity as a zero sum game needs to be understood in an atmosphere of pre-industrialized economy is relatively static.
Answers about mercantilist dilemma was raised also by Cantillon who argue that the rise in domestic gold because gold mines increased yield, it will affect the income of miners, which then increase their spending on consumer goods.
Regarding interest rates, the mercantilist emphasizing that interest rates should be kept at a low level to increase trade. Due to the increase in price will increase the amount of money it will not be achieved if the equilibrium interest rate unchanged.

B. Physiocrat

Thought of the French state fisiokrat in emotion is seen as a reaction to the mercantilist policies of Colbert that enhance the industry, but the effects are negligible agricultural sector. Though major tax is a tax imposed by the government land. When Louis XIV and Louis XV died and lost the war with Britain, then France decreases its position in Europe, the loss of colonies of Canada and other countries. Circumstances that caused the movement back to nature that emphasizes the agricultural sector. Compared with Britain, agriculture in France only consisted of a small ownership in ways that ancient, plus the tax burden that caused the French could not match the agricultural revolution in England. Fisiokrat program is eliminating barriers of ownership and limitations in agricultural areas, improve the tax system by reducing the tax becomes just one kind of rent, combining agricultural lands are small and free trade in food ingredients (corn), emulating the British system.
Francois Quesnay a French surgeon suggests the importance of agriculture in the economy of the country. At that time there sucking farmers and determination and levy taxes on agricultural products are carried from one area to another area. Heavy land tax must be remitted to the king and church, while the collection left to the merchant so inefficient. In his Tableau Economique he described the concept of a closed economy as a stationary circular flows are repeated every time. The table was very simple and described the expenditure of a landowner but to describe the essence of a matrix of flow circulation and the reproductive process is repeated, this business can be expressed as a first step the application of scientific methods to the phenomenon of economic problems and thoughts of input-output analysis Vasili Leontieff century XX using the pattern as it approaches and methodologies.
Turgot argued that the essence of agricultural production suffered a setback does not comply with the capital increase to that level. Law of diminishing returns was later developed by David Ricardo and Robert Malthus in the next century. The relevance of the thinking of experts physiocrat for policy issues to do with the stance on such things as the following: the suggestion to eliminate all sorts of regulations that impede trade within and outside the country, particularly on the trade of agricultural materials, free competition in production and trade by removing all forms of monopoly and special things and or easiness of a special nature, simplifying the fiscal system and the enactment of only one type of tax, which taxes the earth in general that the size is determined in proportion to the size of the net product.


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