Question

Several different approaches outlined in the readings and notes were used to analyze the market system once it developed (e.g., Mandeville, Mun and the other Mercantilists, the Physiocrats, etc.). Which approach do you find most compelling and applicable to our understanding of the economy today? Why? Be specific.

Answer 1

All of these approaches do not give us the correct explanation of the contemporary economy. Like, mercantilists recommended the active actions of state and trade was considered as a zero-sum game.

On the other hand, physiocrats advocated the free market system and there should not be the participation of government in economic activities. Present-day, Physiocrats prescription is relatively more relevant. We are following the free market model but side by side, minimum government intervention is also required to correct the intermittent disequilibrium in the economy. Further, nowadays, inward-looking policies of government also borrowing some ideas from mercantilists. Thus, there are some glimpses of mercantilism as well.