A review of economic theory by Edwin Cannan

By Edwin Cannan

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P. 416). of It is obvious that Smith could not have meant either or both cc two principles " to be cc the principle " of the mercantile CAMERALISM AND POLITICAL ARITHMETIC 13 system, and there can be little doubt that he understood the principle to be that to which those two lead up, namely, the encouragement of exportation and discouragement of importation. In accordance with this, the "mercantile theory" should be the doctrine that States must not leave the balance of trade to take care of itself, but must encourage exportation and discourage importation, and "mercantilism" should be (according to the context) either this theory or the practice which it recommends.

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1 In face of so clear a conception of the national capital and income and of the smallness of the aggregate stock of money compared with the whole of the capital, the modern reader may feel surprised that general economic theory did not spring into existence in Petty's lifetime or soon afterwards. It seems to us, in our environment, so natural and easy to visualise this "40 millions" of "expense" as a collection of commodities and services valued at £4o million, and to discuss intelligently the general causes of its increase or decrease.

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