What economic theories emerged during the Enlightenment?

During the Enlightenment, key economic theories that emerged include Mercantilism, Physiocracy, and Classical Liberalism.

Mercantilism was a dominant economic theory during the early Enlightenment period. It advocated for a positive balance of trade, where exports exceed imports, and accumulation of bullion (gold and silver) as a measure of a nation's wealth. Mercantilists believed that the world's wealth was finite, and nations should strive to accumulate as much wealth as possible. This theory led to the establishment of colonies and monopolies, and the imposition of tariffs to protect domestic industries. However, it was criticised for its zero-sum game approach and its disregard for the welfare of consumers.

Physiocracy, which emerged in France in the mid-18th century, was a reaction against Mercantilism. The Physiocrats, led by François Quesnay, argued that wealth did not come from the accumulation of gold and silver, but from the land. They believed that agriculture was the source of all wealth and that trade and industry were only secondary. The Physiocrats advocated for a laissez-faire approach to the economy, where the government's role was minimal, allowing the 'natural order' to prevail. They also introduced the concept of the 'economic table', a precursor to the modern idea of the circular flow of income.

Classical Liberalism, championed by Adam Smith, emerged towards the end of the Enlightenment. Smith's seminal work, 'The Wealth of Nations', criticised Mercantilism and proposed free trade, competition, and self-interest as the drivers of economic growth. He introduced the concept of the 'invisible hand', where the market, if left to its own devices, would naturally regulate itself. Smith also emphasised the division of labour and specialisation as key to increasing productivity. His ideas laid the foundation for modern economics and continue to influence economic policy today.

In summary, the Enlightenment was a period of significant economic thought, with theories such as Mercantilism, Physiocracy, and Classical Liberalism emerging. These theories challenged existing ideas about wealth and trade, and introduced new concepts that continue to shape our understanding of economics.