What does the term "Mercantilism" refer to in early modern Europe?

Mercantilism refers to an economic theory that emphasizes the need for governmental regulation of a nation's economy to enhance state power. During the early modern period in Europe, this theory held that a country's wealth was measured by its stock of precious metals, primarily gold and silver. To acquire and maintain this wealth, nations implemented policies aimed at maximizing exports and minimizing imports, often through government intervention. This included tariffs, subsidies for local industries, and monopolistic practices that restricted foreign competition.

The emphasis on active government involvement in trade and commerce distinguishes mercantilism from other economic systems. In contrast to ideas promoting unrestricted trade, mercantilism advocates for a protective role of the state in economic affairs, which aligns with the choice about governmental regulation. Other economic systems, such as free trade or early forms of capitalism, do not place the same level of emphasis on state intervention as a means to enhance national wealth. Thus, the fundamental principles of mercantilism are in strong contrast to ideas centered around free-market operations or agricultural sustainability.