Eli F. Heckscher, Mercantilism. London: George Allen and Unwin, revised, second edition, edited by Ernst F. S?derlund, 1955, 2 volumes. (Originally published as Merkantilisment: Ett led i den ekonomiska politikens historia. Stockholm: P. A. Norstedt and S?ner, 1931.)

Review Essay by John J. McCusker, Departments of History and Economics, Trinity University.

Heckscher: Mercantilism Redivivus

Eli Filip Heckscher (1879-1952) obviously wrote one of the seminal books of twentieth-century economic history. Originally published in Swedish in 1931, it was translated into German the next year and, from the German edition, appeared initially in English in 1934. (Heckscher reviewed and revised the English translation himself [1]). It attracted immense critical attention from the first, partly because it touched a nerve among economic historians of his era, many of whom were vexed as much by its contemporary political ramifications as they were by its implications for economic history (2). The book and its subject had less play in the second half of the twentieth century when the worries of the world shifted from a fear of totalitarianism of the right to a fear of totalitarianism of the left. Indeed, by mid-century, some were prepared to deny that mercantilism as an economic doctrine had ever existed, effectively reducing Heckscher to insignificance. At the end of a devastatingly horrendous century of world wars, hot and cold, perhaps we can better assess Heckscher — and mercantilism — less in the shadows of fascism and communism and more for the monumental work of scholarship that it was and is.

To begin it is important to understand mercantilism as a set of beliefs — a doctrine — about how the components of modern western society (workers, business and the state) should be organized for the common good. Mercantilism privileged the nation. The argument ran that, without a strong central government, society would revert of the chaos of feudal parochialism, a dark age. (One may or may not accept the characterization of that which people needed to fear in order to accept that “dark ages” worked well as a negative reference point.) It followed then, as day follows night, that the balance in society must be tipped in favor of the central government in order to avoid such a sorry fate. The interests of business and workers were secondary; everything had to be channeled to the interests of the nation. In pursuit of the common good, the nation must come first.

It may also be pointed out that the successor doctrines competing for custodianship of that common good later argued for the primacy of business (capitalism) and the primacy of workers (socialism). Observe that none of them denied the importance of the others, asserting only primacy. Note, too, that government’s role as the organizing agent is central in all three doctrines. In reality there was never any such thing as laissez-faire. In all three modes government is to do all that it can to protect, to promote, to encourage. Under mercantilism, government is to organize the economy in the best interests of the nation; under capitalism, for the best interests of business; and under socialism, for the best interests of workers — all for the common good. The critical question was cui bono? (3)

Heckscher strove simply and successfully to spell out the premises and workings of mercantilism the doctrine as it developed over time. Based on what he wrote, one can define mercantilism as a set of policies, regulations and laws, developed over the sixteenth through the eighteen centuries, to support the rising nation states of Atlantic Europe by subordinating private economic behavior to national purposes. The key to that goal, quickly identified, was government promotion of overseas trade because that trade could be taxed to the benefit of central government much more efficiently and with very many fewer negative domestic consequences thanany other activity.

The neatness of the definition disguises the inchoateness of a doctrine that was the creation of business leaders and government leaders who found common ground in certain practical policies. There was no single evangelist of mercantilism who authored its tenets nor codifier who formulated them. Adam Smith came as close as anyone to lending the “modern system” a patina of cohesion but he did so after the fact, the better to argue its faults. All have agreed that mercantilism contributed little to advance economic science — as if that were some kind of benchmark to establish either the reality or the importance of such a doctrine. The policies that mercantilists pursued were the designs of people who shared the notion that all were better off in a nation that was strong enough to protect them. Such strength cost money. The best way to raise that money was by taxing overseas trade. Government could increase its revenues by promoting the expansion of overseas trade. A strong nation benefited all of its people, especially those who engaged in overseas trade.

The elevation of foreign trade meant the relegation of other sectors of the economy — not their elimination, just their relegation to a secondary status. All modes of economic enterprise — agriculture, fishing, manufacturing, domestic trade, overseas commerce — were necessary in an economy but under mercantilism the overseas commercial sector was the favored child. If push came to shove, if a choice among competing interests had to be made, that which was the most necessary to a taxable foreign trade won out. Those who were less favored naturally complained about the tyranny of trade — just as, under a capitalist regime, workers learned to lament the overweening power of big business.

In telling the tale of Europe’s journey from medieval chaos to the modern nation state Heckscher’s book ranged widely across the continent beginning in the late middle ages and ending “after mercantilism” with a discussion of nineteenth-century liberalism. He discovered evidence of the origins of a mercantilistic impulse in early interaction between the guilds and the monarchies of France and England. A realization that internal economic regulation benefited both business and government translated readily into a broader sense that foreign trade provided even richer possibilities for mutual aggrandizement. Portugal and Spain, The Netherlands, England and France all, successively, adopted and profited from mercantilist policies that offered the central government regular funds through taxes on the trade and emergency monies through borrowing from the very merchants whose trade government promoted. Stronger central governments could more powerfully protect those same businesses who bought and sold the produce of the land and put workers to work, all to the improvement of society. The acquisition of gold and silver was the means to that end; the balance of trade was the measure of success. Other, smaller states followed the leaders, emulated their goals, envied their triumphs. The richer the nation, the stronger the nation; the stronger the nation, the better for every member of that kingdom. Or so preached mercantilist doctrine, according to Heckscher’s exegesis.

Heckscher, in detailing the origins, development and workings of mercantilism, may have sounded a bit too triumphalist a note but the simple fact is that mercantilism accomplished what it proponents promised. Over the three centuries down to the middle of the eighteenth century, many of the parochial domains of feudal Europe had coalesced into mercantilist nation states, creating a political map dominated by leviathans. Each of these nations in its turn had established an empire to expand its overseas trade the better to fund its political aspirations (a subject not developed by Heckscher), the most successful of the lot being Great Britain. That mercantilism, in its victory, sowed the dragons’ teeth of capitalism, does not for one moment diminish the presence or power of mercantilist doctrine in its own day (4).

Heckscher’s readers in the 1930s had barely survived the first half of a two-part world war between nations created under mercantilism and they felt the second half of that struggle looming ever closer. His critics may be forgiven if they took issue with his analysis of a doctrine, however out-dated, that visited its own brand of chaos upon them and their children. Even though the doctrines of capitalism had won out a century earlier and business interests had learned to control the levers of power in those nations, the frightening echoes of mercantilism resonated in its invocation by totalitarian nations that sought legitimacy by conjuring up the tenets of the dead doctrine. Many perceived in Heckscher’s rational exposition of the origins and development of mercantilism a rationalization for those who sought to justify the domination by the state of the lives of its citizens, a totalitarianism of the state (5). Still, as Heckscher himself argued (1936), he and most of his critics agreed on the basic elements of his work, however much they may not have liked his persuasive summary of what mercantilism was all about. It is always dangerous to be the bearer of an unwelcome message (6).

As World War II came and passed, many thought they saw the future in an even newer and now victorious doctrine, socialism. For them Heckscher was even less relevant — or, better put, mercantilism was irrelevant. After the demise of the world of nation states, it seemed to some best forgotten and, with it, the doctrine that had served to underpin its foundation. By the middle of the twentieth century more than one writer on the early modern period of Western European history was prepared to deny mercantilism’s very existence. Heckscher’s exposition of this doctrine thus came to be less and less read or referenced. The most extreme of these writers, D. C. Coleman (1980, p. 791), classed mercantilism with other “non-existent entities.” It was an invention, conjured up “to prevent the study of history from falling into the abyss of antiquarianism” (7). With hated capitalism under attack from the bastions of academe, mercantilism suffered the even worse face of being ignored. It is only at the end of the twentieth century, as capitalism and socialism seem willing to entertain a peaceful co-existence, that writers can with some dispassion once again explore the origins and nature of the doctrine that preceded them both: mercantilism (8). As a consequence Heckscher’s star has risen in the firmament, a guiding light to the economic doctrine preached and practiced over the sixteenth through the eighteen centuries as the nation states of western Europe struggled to establish themselves — and did, for better or worse.

John J. McCusker is the Ewing Halsell Distinguish Professor of American History and Professor of Economics at Trinity University in San Antonio, Texas. He has written many books and articles on the economic history of the early modern Atlantic World. If all goes according to plan, in the year 2001 — the first year of the next century — he will publish The Early Modern Atlantic Economy (Cambridge, England: Cambridge University Press), co-edited with Kenneth Morgan; a second edition of How Much Is That in Real Money? A Historical Price Index for Use as a Deflator of Money Values in the Economy of the United States (Worcester, Massachusetts: American Antiquarian Society); and Mercantilism and the Economic History of the Early Modern Atlantic World (New York: Cambridge University Press).


1. The translation from the German was done by Mendel Shapiro. The revised edition has since been reprinted and reissued at least twice, most recently in 1994 with an introduction by Lars Magnusson.

2. Many but not all. For a partial list of Heckscher’s contemporary critics and a summary of their comments, see Magnusson (1994), p. 32.

3. These themes are elaborated in McCusker (2001).

4. For the beginnings of the end of mercantilism as the dominant doctrine during “the pre-classical period” prior to 1776, see Hutchison (1988).

5. See especially Judges (1939).

6. It did not help Heckscher’s case that many of his insights were grounded in the scholarship of nineteenth-century German writers interested in the processes of national unification. Such efforts culminated in Schmoller (1884), the second part of a twelve-part exposition of the progress of the German state between 1680 and 1786. See also Schmoller (1896).

7. Beginning in 1957, Coleman had authored several attacks on mercantilism — and on Heckscher in particular. See Coleman (1957) and (1969), especially the editor’s introduction to the latter.

8. Foremost among such efforts is Magnusson (1994). Compare Allen (1987). See also Ekelund and Tollison (1981). Unfortunately in their exploration of the subject Ekelund and Tollison offer little more than “poor history,” “circular arguments,” and a disinterest “in what the mercantilist writer actually wrote,” according to Magnusson (p. 50), an evaluation with which I can only agree, sadly.


William R. Allen. 1987. “Mercantilism,” in The New Palgrave: A Dictionary of Economics, edited by John Eatwell, Murray Milgate, and Peter Newman, 4 vols. London: The Macmillan Press Ltd. Volume III, 445-449.

Donald C. Coleman. 1957. “Eli Heckscher and the Idea of Mercantilism,” Scandinavian Economic History Review, V, no. 1, 3-25.

Donald C. Coleman, editor. 1969. Revisions in Mercantilism. London: Methuen and Co., Ltd.

Donald C. Coleman. 1980. “Mercantilism Revisited,” Historical Journal, XXIII (December).

Robert B. Ekelund, Jr., and Robert D. Tollison. 1981. Mercantilism as a Rent-Seeking Society: Economic Regulation in Historical Perspective. College Station, Texas: Texas A & M University Press.

Eli F. Heckscher. 1936. “Mercantilism,” Economic History Review, [1st Series], VII (November): 44-54.

Terence W. Hutchison. 1988. Before Adam Smith: The Emergence of Political Economy, 1662-1776 Oxford: Basil Blackwell.

Arthur V. Judges. 1939. “The Idea of a Mercantile State,” Transactions of the Royal Historical Society, 4th Series, XXI: 41-69.

Lars Magnusson. 1994. Mercantilism: The Shaping of an Economic Language. London: Routledge.

John J. McCusker. 2001. Mercantilism and the Economic History of the Early Modern Atlantic World. Cambridge: Cambridge University Press.

Gustav F. Schmoller. 1884. “Das Merkantilsystem in seiner historischen Bedeutung: St?dtische, territoriale und staatliche Wirtschafts-politik,” Jahrbuch f?r Gesetzgebung, Verwaltung und Volkswirtschaft im Deutschen Reich, VIII: 15-61

Gustav F. Schmoller. 1896. The Mercantile System and Its Historical Significance Illustrated Chiefly from Prussian History, translated by W. J. Ashley. New York and London: Macmillan & Company, Ltd.