#207 in the Moʻolelo series
- : the theory or practice of mercantile pursuits : COMMERCIALISM
- an economic system developing during the decay of feudalism to unify and increase the power and especially the monetary wealth of a nation by a strict governmental regulation of the entire national economy usually through policies designed to secure an accumulation of bullion (see BULLION sense 1), a favorable balance of trade, the development of agriculture and manufactures, and the establishment of foreign trading monopolies (see MONOPOLY sense 1)
“Mercantilism is economic nationalism for the purpose of building a wealthy and powerful state. Adam Smith coined the term “mercantile system” to describe the system of political economy that sought to enrich the country by restraining imports and encouraging exports.”
Many contemporary scholars and observers deride the contact between Hawaiians and capitalism as a devastating, even genocidal encounter. But the Hawaiian encounter with Western economies predates widespread capitalism practices, and is roughly contemporaneous with Adam Smith’s articulation of the capitalist political economy. Hawaiian engagement with Western economies (and also China) was squarely in the little-understood period known as mercantilism.
Mercantilism was an economic system that preceded free-market capitalism, and differed from it in that in a mercantile system, the goal of nations was to increase its capital, which was represented by gold and silver bullion (usually coins) through a positive balance of trade. This was accomplished by favoring export of goods and discouraging imports and by the use of government (usually royal) monopolies on traded goods.
The sandalwood trade in particular was a mercantilist trade, as its purpose, through a series of trades, was the accumulation of precious metals in European national coffers. Traders would exchange sandalwood cut by makaʻāinana for various, usually luxury, items, such as silks, cloth, even vessels. Kamehameha had a warehouse full of this cargo at Honolulu Harbor. The traders would take the sandalwood to China and exchange it for metals, usually gold, and the return the gold to the sponsor of their royal monopoly.
Indeed, when William Richards became the reluctant teacher of capitalism for the chiefs, he was somewhat at a loss as to how this system was to work in its details. The line that became the subtitle of Lilikalā Kameʻeleihiwa’s book Native Land and Foreign Desires, “pehea lā e pono ai?” was the question the chiefs put to Richards – what is the right (pono) thing to do? Richards admits he was not able to satisfactorily answer the well-put question. This may be in part because capitalist practice was still very new.