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Project 2000: Significant Works in Twentieth-Century Economic History 
 
Eli F. Heckscher, _Mercantilism_. London: George Allen and Unwin,  
revised, second edition, edited by Ernst F. S÷derlund, 1955, 2  
volumes. (Originally published as _Merkantilisment: Ett led i den  
ekonomiska politikens historia_. Stockholm: P. A. Norstedt and S÷ner,  
1931.) 
 
Review Essay by John J. McCusker, Departments of History and  
Economics, Trinity University. <[log in to unmask]> 
 
 
Heckscher: Mercantilism Redivivus 
 
Eli Filip Heckscher (1879-1952) obviously wrote one of the seminal  
books of twentieth-century economic history. Originally published in  
Swedish in 1931, it was translated into German the next year and,  
from the German edition, appeared initially in English in 1934.  
(Heckscher reviewed and revised the English translation himself [1]).  
It attracted immense critical attention from the first, partly  
because it touched a nerve among economic historians of his era, many  
of whom were vexed as much by its contemporary political  
ramifications as they were by its implications for economic history  
(2). The book and its subject had less play in the second half of the  
twentieth century when the worries of the world shifted from a fear  
of totalitarianism of the right to a fear of totalitarianism of the  
left. Indeed, by mid-century, some were prepared to deny that  
mercantilism as an economic doctrine had ever existed, effectively  
reducing Heckscher to insignificance. At the end of a devastatingly  
horrendous century of world wars, hot and cold, perhaps we can better  
assess Heckscher -- and mercantilism -- less in the shadows of  
fascism and communism and more for the monumental work of scholarship  
that it was and is. 
 
To begin it is important to understand mercantilism as a set of  
beliefs -- a doctrine -- about how the components of modern western  
society (workers, business and the state) should be organized for the  
common good. Mercantilism privileged the nation. The argument ran  
that, without a strong central government, society would revert of  
the chaos of feudal parochialism, a dark age. (One may or may not  
accept the characterization of that which people needed to fear in  
order to accept that "dark ages" worked well as a negative reference  
point.) It followed then, as day follows night, that the balance in  
society must be tipped in favor of the central government in order to  
avoid such a sorry fate. The interests of business and workers were  
secondary; everything had to be channeled to the interests of the  
nation. In pursuit of the common good, the nation must come first. 
 
It may also be pointed out that the successor doctrines competing for  
custodianship of that common good later argued for the primacy of  
business (capitalism) and the primacy of workers (socialism). Observe  
that none of them denied the importance of the others, asserting only  
primacy. Note, too, that government's role as the organizing agent is  
central in all three doctrines. In reality there was never any such  
thing as laissez-faire. In all three modes government is to do all  
that it can to protect, to promote, to encourage. Under mercantilism,  
government is to organize the economy in the best interests of the  
nation; under capitalism, for the best interests of business; and  
under socialism, for the best interests of workers -- all for the  
common good. The critical question was cui bono? (3) 
 
Heckscher strove simply and successfully to spell out the premises  
and workings of mercantilism the doctrine as it developed over time.  
Based on what he wrote, one can define mercantilism as a set of  
policies, regulations and laws, developed over the sixteenth through  
the eighteen centuries, to support the rising nation states of  
Atlantic Europe by subordinating private economic behavior to  
national purposes. The key to that goal, quickly identified, was  
government promotion of overseas trade because that trade could be  
taxed to the benefit of central government much more efficiently and  
with very many fewer negative domestic consequences than any other  
activity. 
 
The neatness of the definition disguises the inchoateness of a  
doctrine that was the creation of business leaders and government  
leaders who found common ground in certain practical policies. There  
was no single evangelist of mercantilism who authored its tenets nor  
codifier who formulated them. Adam Smith came as close as anyone to  
lending the "modern system" a patina of cohesion but he did so after  
the fact, the better to argue its faults. All have agreed that  
mercantilism contributed little to advance economic science -- as if  
that were some kind of benchmark to establish either the reality or  
the importance of such a doctrine. The policies that mercantilists  
pursued were the designs of people who shared the notion that all  
were better off in a nation that was strong enough to protect them.  
Such strength cost money. The best way to raise that money was by  
taxing overseas trade. Government could increase its revenues by  
promoting the expansion of overseas trade. A strong nation benefited  
all of its people, especially those who engaged in overseas trade. 
 
The elevation of foreign trade meant the relegation of other sectors  
of the economy -- not their elimination, just their relegation to a  
secondary status. All modes of economic enterprise -- agriculture,  
fishing, manufacturing, domestic trade, overseas commerce -- were  
necessary in an economy but under mercantilism the overseas  
commercial sector was the favored child. If push came to shove, if a  
choice among competing interests had to be made, that which was the  
most necessary to a taxable foreign trade won out. Those who were  
less favored naturally complained about the tyranny of trade -- just  
as, under a capitalist regime, workers learned to lament the  
overweening power of big business. 
 
In telling the tale of Europe's journey from medieval chaos to the  
modern nation state Heckscher's book ranged widely across the  
continent beginning in the late middle ages and ending "after  
mercantilism" with a discussion of nineteenth-century liberalism. He  
discovered evidence of the origins of a mercantilistic impulse in  
early interaction between the guilds and the monarchies of France and  
England. A realization that internal economic regulation benefited  
both business and government translated readily into a broader sense  
that foreign trade provided even richer possibilities for mutual  
aggrandizement. Portugal and Spain, The Netherlands, England and  
France all, successively, adopted and profited from mercantilist  
policies that offered the central government regular funds through  
taxes on the trade and emergency monies through borrowing from the  
very merchants whose trade government promoted. Stronger central  
governments could more powerfully protect those same businesses who  
bought and sold the produce of the land and put workers to work, all  
to the improvement of society. The acquisition of gold and silver was  
the means to that end; the balance of trade was the measure of  
success. Other, smaller states followed the leaders, emulated their l 
goals, envied their triumphs. The richer the nation, the stronger the  
nation; the stronger the nation, the better for every member of that  
kingdom. Or so preached mercantilist doctrine, according to  
Heckscher's exegesis. 
 
Heckscher, in detailing the origins, development and workings of  
mercantilism, may have sounded a bit too triumphalist a note but the  
simple fact is that mercantilism accomplished what it proponents  
promised. Over the three centuries down to the middle of the  
eighteenth century, many of the parochial domains of feudal Europe  
had coalesced into mercantilist nation states, creating a political  
map dominated by leviathans. Each of these nations in its turn had  
established an empire to expand its overseas trade the better to fund  
its political aspirations (a subject not developed by Heckscher), the  
most successful of the lot being Great Britain. That mercantilism, in  
its victory, sowed the dragons' teeth of capitalism, does not for one  
moment diminish the presence or power of mercantilist doctrine in its  
own day (4). 
 
Heckscher's readers in the 1930s had barely survived the first half  
of a two-part world war between nations created under mercantilism  
and they felt the second half of that struggle looming ever closer.  
His critics may be forgiven if they took issue with his analysis of a  
doctrine, however out-dated, that visited its own brand of chaos upon  
them and their children. Even though the doctrines of capitalism had  
won out a century earlier and business interests had learned to  
control the levers of power in those nations, the frightening echoes  
of mercantilism resonated in its invocation by totalitarian nations  
that sought legitimacy by conjuring up the tenets of the dead  
doctrine. Many perceived in Heckscher's rational exposition of the  
origins and development of mercantilism a rationalization for those  
who sought to justify the domination by the state of the lives of its  
citizens, a totalitarianism of the state (5). Still, as Heckscher  
himself argued (1936), he and most of his critics agreed on the basic  
elements of his work, however much they may not have liked his  
persuasive summary of what mercantilism was all about. It is always  
dangerous to be the bearer of an unwelcome message (6). 
 
As World War II came and passed, many thought they saw the future in  
an even newer and now victorious doctrine, socialism. For them  
Heckscher was even less relevant -- or, better put, mercantilism was  
irrelevant. After the demise of the world of nation states, it seemed  
to some best forgotten and, with it, the doctrine that had served to  
underpin its foundation. By the middle of the twentieth century more  
than one writer on the early modern period of Western European  
history was prepared to deny mercantilism's very existence.  
Heckscher's exposition of this doctrine thus came to be less and less  
read or referenced. The most extreme of these writers, D. C. Coleman  
(1980, p. 791), classed mercantilism with other "non-existent  
entities." It was an invention, conjured up "to prevent the study of  
history from falling into the abyss of antiquarianism" (7). With  
hated capitalism under attack from the bastions of academe,  
mercantilism suffered the even worse face of being ignored. It is  
only at the end of the twentieth century, as capitalism and socialism  
seem willing to entertain a peaceful co-existence, that writers can  
with some dispassion once again explore the origins and nature of the  
doctrine that preceded them both: mercantilism (8). As a consequence  
Heckscher's star has risen in the firmament, a guiding light to the  
economic doctrine preached and practiced over the sixteenth through  
the eighteen centuries as the nation states of western Europe  
struggled to establish themselves -- and did, for better or worse. 
 
 
John J. McCusker is the Ewing Halsell Distinguish Professor of  
American History and Professor of Economics at Trinity University in  
San Antonio, Texas. He has written many books and articles on the  
economic history of the early modern Atlantic World. If all goes  
according to plan, in the year 2001 -- the first year of the next  
century -- he will publish _The Early Modern Atlantic Economy_  
(Cambridge, England: Cambridge University Press), co-edited with  
Kenneth Morgan; a second edition of _How Much Is That in Real Money?  
A Historical Price Index for Use as a Deflator of Money Values in the  
Economy of the United States_ (Worcester, Massachusetts: American  
Antiquarian Society); and _Mercantilism and the Economic History of  
the Early Modern Atlantic World_ (New York: Cambridge University  
Press). 
 
Notes: 
 
1. The translation from the German was done by Mendel Shapiro. The  
revised edition has since been reprinted and reissued at least twice,  
most recently in 1994 with an introduction by Lars Magnusson. 
 
2. Many but not all. For a partial list of Heckscher's contemporary  
critics and a summary of their comments, see Magnusson (1994), p. 32. 
 
3. These themes are elaborated in McCusker (2001). 
 
4. For the beginnings of the end of mercantilism as the dominant  
doctrine during "the pre-classical period" prior to 1776, see  
Hutchison (1988). 
 
5. See especially Judges (1939). 
 
6. It did not help Heckscher's case that many of his insights were  
grounded in the scholarship of nineteenth-century German writers  
interested in the processes of national unification. Such efforts  
culminated in Schmoller (1884), the second part of a twelve-part  
exposition of the progress of the German state between 1680 and 1786.  
See also Schmoller (1896). 
 
7. Beginning in 1957, Coleman had authored several attacks on  
mercantilism -- and on Heckscher in particular. See Coleman (1957)  
and (1969), especially the editor's introduction to the latter. 
 
8. Foremost among such efforts is Magnusson (1994). Compare Allen  
(1987). See also Ekelund and Tollison (1981). Unfortunately in their  
exploration of the subject Ekelund and Tollison offer little more  
than "poor history," "circular arguments," and a disinterest "in what  
the mercantilist writer actually wrote," according to Magnusson (p.  
50), an evaluation with which I can only agree, sadly. 
 
 
References 
 
William R. Allen. 1987. "Mercantilism," in _The New Palgrave: A  
Dictionary of Economics_, edited by John Eatwell, Murray Milgate, and  
Peter Newman, 4 vols. London: The Macmillan Press Ltd. Volume III,  
445-449. 
 
Donald C. Coleman. 1957. "Eli Heckscher and the Idea of  
Mercantilism," _Scandinavian Economic History Review_, V, no. 1, 3-25. 
 
Donald C. Coleman, editor. 1969. _Revisions in Mercantilism_. London:  
Methuen and Co., Ltd. 
 
Donald C. Coleman. 1980. "Mercantilism Revisited," _Historical  
Journal_, XXIII (December). 
 
Robert B. Ekelund, Jr., and Robert D. Tollison. 1981. _Mercantilism  
as a Rent-Seeking Society: Economic Regulation in Historical  
Perspective_. College Station, Texas: Texas A & M University Press. 
 
Eli F. Heckscher. 1936. "Mercantilism," _Economic History Review_,  
[1st Series], VII (November): 44-54. 
 
Terence W. Hutchison. 1988. _Before Adam Smith: The Emergence of  
Political Economy, 1662-1776_ Oxford: Basil Blackwell. 
 
Arthur V. Judges. 1939. "The Idea of a Mercantile State,"  
_Transactions of the Royal Historical Society_, 4th Series, XXI:  
41-69. 
 
Lars Magnusson. 1994. _Mercantilism: The Shaping of an Economic  
Language_. London: Routledge. 
 
John J. McCusker. 2001. _Mercantilism and the Economic History of the  
Early Modern Atlantic World_. Cambridge: Cambridge University Press. 
 
Gustav F. Schmoller. 1884. "Das Merkantilsystem in seiner  
historischen Bedeutung: StSdtische, territoriale und staatliche  
Wirtschafts-politik," _Jahrbuch fnr Gesetzgebung, Verwaltung und  
Volkswirtschaft im Deutschen Reich_, VIII: 15-61 
 
Gustav F. Schmoller. 1896. _The Mercantile System and Its Historical  
Significance Illustrated Chiefly from Prussian History_, translated  
by W. J. Ashley. New York and London: Macmillan & Company, Ltd. 
 
 
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