Bitaran Jang Maden

This is a critical summary of the works of the most notable Mercantilist thinker Thomas Mun.
His work is a revolutionary piece of work as it brings into perspective new ideas for the
problems in the British economy during that time. His work comes as a defense of the east India
company and discusses in details various subject on how the British economy can outperform.
The chapter four of his work comes as a very strong argument against the fear of goods. The
existing mentality that accumulation of gold and silver (money) can only be possible with more
exports and no imports is challenged to a certain level. He argues that the treasure cannot be
increased with no trade. He argues increasing the imports doesnt necessarily mean decrease in
treasure. His argument is for increment of imports without increasing the consumption of foreign
goods in household but to use it for enhancing trade.
I admire the way he thinks that treasure can be increased with more transaction of goods and
trade must be used for increasing the capability of the nation. His concept that with trade with
poor countries, a rich country can gradually increase the demands for its good is in my opinion
what we call today the market creation approach. He is also in favor of trade as a whole than
bilateral trade, as he doesnt mind buying from one country and selling to other, without
considering if the country trade with the British. Similarly, it is very clever argument that goods
at one place can be bought and sold at other place to increase the wealth. This argument must
have a very high impact against the fear of goods mentality.
In chapter ten, he discusses on the importance of statute on trade. He discusses that there should
be legal boundaries on how trade should be carried out. It is the guidelines in which the
merchants can trade and increase commonwealth. However, he emphasizes on focusing on
domestic consumption. His argument is for the formulations of regulations promoting domestic
consumption. He argues for trade of foreign goods that doesnt hurt the domestic industries.
Thus, it can be inferred that thought Mun was an advocator against fear of goods in certain
extent. He was also protectionist and couldnt make an argument for free trade. His argument for
protection of the domestic goods against foreigners make it clear that Englands economic
strategy was to protect the domestic consumption, trade some of the goods and sell as much
goods as possible to the foreign countries.
Chapter eleven is the part where he argues deregulation of the laws forcing the merchant to bring
all the wealth earned to the kingdom. His argument is that such regulation brings inefficiencies.
And even if the merchants the make good deal in the foreign land, such restrictions in trade will
hurt the increase in treasure. It is remarkable to see how he sees too much regulation hurting
trade. He is from the era where everything is argued to be controlled and when most of his
contemporaries believe that more accumulation and inflow of treasure is important for making
the country rich. This argument of deregulation of bringing all the treasure in the country is a
revolutionary idea for building concept of the free markets.
Chapter seventeen discusses an important issue in the field of economics. Mun presents his idea
that the kings cannot always rely on generous gifts or ancestral wealth for treasures. He
specifically argues taxation to be one of the ways to raise the treasure. But his idea is on the
proportionate (equality) in taxes such as people do not despise the policy. Again, he argues that
the beauty of parliament is to maintain the good relationship between the king and his people.
So, instead of direct decree from the king, he argues it is the best option to declare those policies
from the parliament.
The chapter eighteen deals with his ideas of what kings should do with their treasure. He
believes that how the kings use his wealth may vary per the circumstances. He argues that if the
income of the king is high but the kingdom is low, the king should use his part of treasure in
generation of employment and creation of investment. Rather than buying things like jewels and
other, even though they may have the same value and may be precious. Use of wealth for
economic reasons will make the kingdom economically rich and more treasure will flow for the
kings increasing art and craft, defenses and treasure of the country.
The final chapter- chapter 20, deals with his ideas on the balance of trade. I think this is one of
his most important perspective in his writings. He comments on how imports and exports can be
used to increase the treasure. But for that he challenges a very fundamental principle of trade
balance during that era. First, he argues that the exportation must have value (25%) added to the
first cost and second, he argues importation must have reduced value (by 25%). Then in thirdly,
he points that instead of trying to balance the value deducted in the exportation, the value of
other should be added to the importation. In this way, even if there is trade deficit in one good,
there is surplus in general.
I think with concepts of freeing the market (fear of goods) and with concepts of trade being
holistic rather than bilateral opens a new perspective of thinking- a more modern way of viewing
trade being multilateral. Besides, the model of seeking general trade balance, also opens the
concept of specialization of goods. In that way, countries can start producing and exporting
goods with relative advantage and importing goods they dont have relative advantage. Such
philosophies and guidelines, in my opinion, helped economic thinkers to add further and develop
economic theories and thought to modern version.