Decline of Mercantilism:
The decline of mercantilism had started by the end of the eighteenth century. Adam Smith slashed the mercantilistic ideas and the publication of his book entitled “The Wealth of Nations” in 1776 ruined the prospects of mercantilism. Besides, the factors responsible for the decline of mercantilism are as follows-
(1) Mercantilism laid excessive importance on money. So the people deviated from the actual aim of life and engaged themselves in hoarding money. In order to collect money in the mercantilistic state, the salary of workers was fixed on the bare subsistence level. Labour exploitation became a tool in the hands of businessmen. But in the absence of welfare schemes for people such a state could not survive for a long time.
(2) In the mercantilistic state complete authority vested in the king and his powers swelled gradually. Unfortunately, kings abused their powers. Consequently, a great discontent spread against the mercantilistic system. The tendencies of liberalism intensified this discontent against mercantilism.
(3) In mercantilism, trade got first place, industry the second and at third place was agriculture. As a result, both the farmer and agriculture fell down to a shocking condition. The states neglected the ways of agricultural improvement because great importance was given to foreign trade. Agricultural deterioration resulted from this policy in France. Under these circumstances, heavy taxes were levied upon people in order to replenish the state treasure. It provoked people’s discontent and they openly condemned mercantilism.
(4) As the mercantilistic ideology lacked relative flexibility, it failed to modify in accordance with the changing conditions of the time. The survival of rigid mercantilism was quite impossible in a dynamic world for a long time. The scope and technique of production expanded in keeping with new researches conducted in the field of production. Consequently, several restrictions imposed on trade and commerce were revoked gradually as they had turned impracticable and infertile. Then free trade was considered very profitable. The number of private companies surpassed the government-controlled companies. In this way, the decline of mercantilism was inevitable as the rules and regulations which sustained mercantilism started withering.
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