Mercantilism VS Laissez-Faire Liberalism Promoted the acquisition of precious metals, like gold and Promoted by Adam Smith, in his book Wealth of Nations, in silver to measure a nation's wealth. opposition to Mercantilism in the mid 1700s – said that the government should, within the bounds of morality, leave their 5 Point Plan citizens to conduct their own economic affairs.(This book, along with 1. Exploration - New sources of gold and silver The Communist Manifesto by Karl Marxx, was foundational to our 2. Trade – Increase exports & decrease imports modern economic system. (that is called a Favorable Balance of Trade) 3. Domestic Manufacturing - to produce more to Major Traits sell abroad. 1. Personal Responsibility 4. Colonization – New territories to acquire new 2. Limited Government supplies (factors of production) These were then 3. Profit Seeking only sold to the mother country. 5. Alliances, Treaties & Conquests - a foreign According to Smith relation tool to eliminate competition. Wealth: Smith said that wealth was items that provide some measure of utility, not necessarily silver or gold. Functions of Government: Smith said that the function of the government was to provide the Public Goods (Things individuals would not support because they were not profitable.) 1. Military 4. National Parks 2. Courts 5. Roads 3. Public Schools 6. Monetary System Primary Criticism of Smith's Solution: Laissez-Faire Liberalism would create a nation of selfish, greedy and antisocial people. Smith's Response: He said that as long as the government prevented crimes like theft and fraud people would choose to find and meet the needs of others for a profit because it was in their best interest in order to make a profit. Invisible Hand - Smith said that free economies are lead by an “invisible hand” that promotes the public interest. When each business works independently for their own profit, but in doing so, they work together to ensure consumers have what they want. (ex. A grocery store. Each vendor provides what is needs and customers are happy.) .