What is mercantile theory?

Answer 1

The original definition was outlined by Adam Smith and was no more than the belief that having money constituted having wealth.

Since then it has been given countless additional definitions most of which have a common theme of "limited earth".

Here are a few of the most common ones:

~ The theory of a zero sum world wealth.

~ The theory that the world's resources are limited and the only way to obtain more is to get from a receiver not a producer.

~ The theory that one cannot gain without taking from another.

The general concept behind the modern translations of the theory have largely been disproved as there are resources on earth that are finite and others that are reproductive. In example, oil is finite while wood can be grown in quantities that are only limited by time.

In modern economics wealth is considered to be in the form of assets. Things that increase in value.

These aren't always directly tied to money and can sometimes be worth a lot of money, but impossible to use to obtain money such as rights to public literature. They can also include many things that are impossible "to possess", but can still be used to produce income such as a working knowledge of how to produce technology that is licensed in the public domain like OpenGL.

Further more, inflation of value and interest gained on value increase the world's total value as a whole. The same is true of production. A house is worth much more than the components used to produce it.

The value of production and the interest on value increases the total value of the world as whole every year. Which went from $11 trillion in 1980 to $32 trillion in 2000. As of 2012 it has officially exceeded $70 trillion.