A Marxist Study of Mercantilism

The Marxist Project
9 min readMay 20, 2022

To understand mercantilist thinking is to understand the historical circumstances of a transition between modes of production. Few traditions of economic thought more clearly demonstrate the determinant effect of social and material conditions on theoretical development. Mercantilism presents itself as a focal lens into the world of a decaying feudal order, an emerging capitalist mode of production, and, relatedly, a revolution in the sphere of thought itself. The world in which the mercantilists were birthed was riddled with a multiplicity of critical shifts and boiling points. It is precisely the totality of this heterogeneous and dynamic transitory period, the complex sum of the moving parts, that yielded the practice and “theory” of the mercantilists. The mercantilists’ inability to conceptualize value outside the point of exchange, their insistence on state-enforced monopolies and regulations, and their export-oriented doctrine were all features structurally determined by broader forces unfolding throughout the European landscape. The following analysis will contextualize and investigate the development of mercantilist thought. The purpose of the investigation will be to not only offer a general overview of mercantilist thinking, but to demonstrate how its evolution was determined by a transitory and heterogeneous social totality.


Mercantilism developed in tandem with an ever-expanding commercial capital in medieval Europe. Commerce, and the urban centers that punctuated it, had existed in Europe since antiquity. Nevertheless, the feudal mode of production that dominated Europe for much of its medieval history was firmly based in the institution of the manor (Hunt and Lautzenheiser 2011, 8). The feudal economic system relied on custom and tradition, as opposed to the rule of law and contractual relations that crystallized in capitalist societies. The traditionalist ideology legitimized and reinforced a particular form of expropriation of surplus labor (Resnick and Wolff 1979, 13). The primary class dichotomy of feudalism — the lords and the serfs — existed in the manor.

It was the gradual dislodging and dismemberment of this primary class tension that brought about new conditions in Europe, which would eventually set the stage for the rise of mercantilist thought. Resnick and Wolff identify the development of “short and long-distance trade, of final and intermediate goods production for that trade, and of towns as sites of such trade” as a catalyst for the dissolution of the old order (17).

There were other factors that played significant roles in the destabilization of feudalism. Demographic crises that severely depopulated much of the continent produced labor shortages, which in turn drove the cost of labor up (Hunt and Lautzenheiser 2011, 16). The violent struggles between the peasantry and the old ruling class, particularly in England and Germany, demonstrated the growing weakness of the feudal system. The inability of the feudal ruling class to reinstate labor obligations on the peasantry proved to be one of many fatal blows to an already declining manorial socio-economic structure. Rapid technological changes and the expansion of trade brought urban manufacturing to the foreground. Every inch of the countryside conquered by the market was an inch lost by the old feudal order. Though the capitalist mode of production was yet to fully take hold, feudalism was drawing its final breaths.

The decline of the manor was unequivocally connected to a critical shift in thought. As the market replaced the manor, customs and traditions were replaced with a legal-contractual framework. The ascriptive legitimation of feudal class hierarchies could only be an anachronism in the emerging capitalist mode of production. Moreover, the center of gravity of the economy itself shifted from the countryside to the flows of commodities between cities.


Mercantilism reflected this exact movement from the countryside to the city, from feudal appropriation of the products of labor to the production of commodities for ever-growing markets and the distribution of those commodities via merchant capital. Before industrial capital subsumed economic activity under its banner, merchant capital, and therefore the processes of exchange, appeared to be most important. For this reason, early mercantilist thought insisted that the site of exchange was the source of profit (Hunt and Lautzenheiser 2011, 23–24). Mercantilists abandoned the medieval notion of just prices and had little concern for adequate remuneration for the craftsman. The value of commodities was their actual market value, determined banally by supply and demand. For a time, this approach was sustainable solely by the conditions of Europe’s economy. The flow of gold and silver, combined with exploitable differences in production costs across geographic distances, allowed merchant capitalists to realize consistent profits through the calculated transport of goods from one point to another. From the perspective of the merchants, such conditions had to be protected. Special interests of key groups advocated for heavy regulations, both on domestic production and on export policies in order to maintain tight monopolies. The early mercantilist period was also especially interested in the accumulation of bullion (20). Consequently, mercantilist writers advocated for protectionist and export-oriented policies. The strong presence of the state in mercantilist policy prescriptions coincided with the lasting Christian paternalistic ethic, which called on powerful government interventions to mitigate sharp inequalities and maintain general welfare.

Inevitably, the conditions that permitted merchants to enrich themselves through the exploitation of geographic differences faded. Price differences smoothed over with intensified competition between merchant groups, resulting in a climbing pressure to secure control of the sphere of production itself (28). This transitional conjuncture[1] was first and foremost a reconfiguration of already existing elements within the social structure. Marx (1991) argues that commercial capital, already present before the advent of capitalism, underwent a transformation of function during the transitory stage:

Within the capitalist mode of production — i.e. once capital takes command of production itself and gives it a completely altered and specific form — commercial capital appears simply as capital in a particular function. In all earlier modes of production, however, commercial capital rather appears as the function of capital par excellence, and the more so, the more production is directly the production of the producer’s means of subsistence (444).

Marx focuses on the path commercial capital took from its proto-capitalist function to its position within the capitalist mode of production. The passage of commercial capital from the proto-capitalist to the capitalist mode of production is characterized by its subjugation to a new economic structure — one where industrial capital is the central paradigm. Commercial capital is now a component of a larger process. Its functions pertain to the larger process and though it has a history of its own, its history within the capitalist mode of production refers specifically to the distributive role it plays for industrial capital. This reconfiguration is a defining break between the old mercantilist world and the new world of industrial capital.

The proletarianization of craftsmen and the transformation of merchants into industrial capitalists radically altered attitudes about the role of the state in the economy and indeed the fundamental economic paradigms of the social system as a whole. The concrete shift in the center of gravity from the space of exchange to the place of production necessitated a reconceptualization of value theory. Production increasingly came to be viewed as the source of values (and prices). Additionally, the new capitalist class found the restrictive and heavily-regulated system of the early mercantilists to be a detriment to the development of their enterprises. Individualism rose to finally challenge the influence of Catholic theology, attacking not only the role of the state in society but the very fabric of ethics as they were understood in that time. Self-interest, individual autonomy, and the right to property became virtuous slogans in the new intellectual revolution (Hunt and Lautzenheiser 2011, 29–30). Backed by Protestant doctrine, these attitudes reflected the interests of a different capitalist class, one that definitively departed from its mercantile origins.

In many ways, the theories that followed the mercantilists were diametrically opposed both in their central tenets and in their prescriptive features. Starting with the Physiocrats, production-based value theories dominated economic discourse (36–37). Market economies begot market societies, which in turn nurtured a new mythos of humanity, nature, and social systems (Polanyi 2001, 73). The libertarianism of the classical school hardly resembled the fairly short-sighted motivations of the merchant capitalists. Moreover, the maturation of the capitalist mode of production allowed the classical economists, beginning with Adam Smith, to systematize their study of the economy — an opportunity that simply could not have existed for the mercantilists. The heterogeneity of the mercantilist literature, both across time and space, demonstrates the unique particularities of various European economies (Wiles 1987). It is important to remember, however, that theoretical rigor and cohesiveness were not the focus of the mercantilist writers. Piero Mini (1974) notes that “the Mercantilists could not discover ‘laws’: the detached view that is expressed by the many classical comparisons of economics with astronomy was not theirs, for they felt that they were not spectators but actors in the economic drama” (36).

Theory and Practice: The Mercantilist Experience

This final assertion regarding the fundamental nature of mercantilist thought with respect to the realities of the corresponding historical era can be further explored by considering the relationship between the thought-concrete and the concrete-real (Wolff and Resnick 1979, 5). Though the scope of this investigation does not allow us to thoroughly unfold epistemological nuances, it is observable from the mercantilist experience that thinking is a material process. The thesis put forward by Wolff and Resnick suggests that thinking, like all other material processes, is overdetermined by all the processes in the concrete-real. It is evident from the above overview that mercantilism was determined by a dynamic restructuring of class society. Mercantilism was therefore the product of technological changes, displacements of social contradictions, contestation between theological doctrines, the emergence of new class conflicts, the specific material ramifications of colonialism, the rise of nation-state competition, unforeseen demographic crises, and many other contingent forces. Conversely, mercantilism played a clear role in the development of the very forces that created it. Mercantilist policies exacerbated nation-state tensions, accelerated the development of long-distance trade, spurred the inevitable rise of industrial enterprises, broke down old class structures, and ultimately laid the groundwork for the crystallization of the capitalist mode of production.

What set the mercantilists apart from their predecessors and their successors was precisely the complex of conditions that overdetermined their existence. The classical economists were not mercantilists because the social totality that overdetermined their theoretical process had changed. The subsumption of merchant capital into industrial capital radically altered both the object and subject of economic thought. The advent of capital par excellence sparked the homogenization of the various economic conditions of Europe, bringing the region out of transition and into capitalism as a distinct mode of production. It was the absence of this structure that defined the amorphous body of mercantilist writings, with their preference towards export surpluses and state-backed control of key economic sectors. It is certainly true, as Piero Mini argues, that the mercantilists could not benefit from the power of abstraction discovered in the Cartesian revolution (36). They lacked the means of knowledge production to fashion a coherent theory. However, they equally lacked the raw materials to do so. It is with this Marxist lens that the mercantilists can be most lucidly understood.


  1. The definition of “conjuncture” provided by Wolff and Resnick (1979) is useful to our discussion of the mercantilist era: “A conjuncture is the social formation at a specific time and place. When a conjuncture involves the overwhelming masses of the population in one type of class relation, say feudal, then the entire formation takes the name of the primary relation: a feudal social formation. Other types of class relations present in a feudal social formation are secondary. A transitional conjuncture involves a situation where class struggles within and among class relations have developed to a point where a previously secondary class relation seriously threatens to become primary” (10).


Hunt, E. K., and Mark Lautzenheiser. 2011. History of Economic Thought: A Critical Perspective. 3rd ed. Armonk, NY: M.E. Sharpe.

Marx, Karl. 1991. Capital: A Critique of Political Economy. Compiled by Friedrich Engels. Translated by David Fernbach. Vol. 3. 3 vols. N.p.: Penguin Group.

Mini, Piero. 1974. Philosophy and Economics: The Origins and Development of Economic Theory. Gainesville, FL: University Presses of Florida.

Polanyi, Karl. 2001. “The Self-Regulating Market and the Fictitious Commodities: Labor, Land, and Money.” In The Great Transformation, 71–81. Boston, MA: Beacon Press.

Resnick, Stephen, and Richard D. Wolff. 1979. “The Theory of Transitional Conjunctures and the Transition from Feudalism to Capitalism in Western Europe.” Review of Radical Political Economics 11 (3): 3–22. https://doi.org/10.1177/048661347901100302.

Wiles, Richard. 1987. “The Development of Mercantilist Economic Thought.” In Pre-Classical Economic Thought: From the Greeks to the Scottish Enlightenment, edited by S. T. Lowry, 147–183. N.p.: Springer, Dordrecht.

Wolff, Richard D., Antonino Callari, and Bruce Roberts. 1984. “A Marxian Alternative to the Traditional ‘Transformation Problem.” Review of Radical Political Economics 16 (2/3): 115–35.