In Das Kapital, Karl Marx outlined a historical progression of socioeconomic systems: tribal communism, slave societies, feudalism, capitalism, socialism, and communism. However, one notable omission from this framework is mercantilism. Why was it left out? While mercantilism and capitalism overlap, they are distinct systems with different economic policies, modes of production, and underlying principles. By omitting mercantilism, Marx could attribute its exploitative practices—particularly colonialism—directly to capitalism, reinforcing his ideological critique.
Mercantilism
Conquest and Colonization
Mercantilism was closely tied to imperial expansion. European powers sought to accumulate wealth by establishing colonies, extracting resources, and monopolizing trade.
State Intervention
Mercantilist economies were highly regulated. Governments imposed tariffs, subsidies, trade restrictions, and protectionist policies to bolster domestic industries and maintain favorable trade balances.
Accumulation of Precious Metals
Mercantilism—like feudalism before it—emphasized amassing gold and silver to increase national wealth and military power. The goal was to maximize exports while minimizing imports to maintain trade surpluses and finance military expansion.
Capitalism
Market-Based Economy
Capitalism is characterized by free markets in which prices are determined by supply and demand. Private ownership of the means of production and profit-driven enterprises are central features.
Limited State Intervention
Classical capitalism functions best under minimal government interference and no cronyism for special interests. Adam Smith’s “invisible hand” metaphor suggested that broad economic prosperity would emerge as individuals pursued their own interests within a rule-of-law framework. Further, humans acting peacefully and cooperatively, increase the wealth of all through mutually beneficial exchanges.
Wealth Creation through Production
Unlike mercantilism, which focused on accumulating wealth through conquest and trade monopolies, capitalism emphasizes wealth generation through production, innovation, free exchange, and investment.
Debunking Mercantilism
David Hume’s 1752 essay, On the Balance of Trade, discredited mercantilism’s key tenet—the notion of a favorable balance of trade. He pointed out that as gold flowed into a country, prices would rise, reducing exports and increasing imports, which would, in turn, send gold back out.
In The Wealth of Nations, Adam Smith echoed his friend’s argument, adding, “Nothing, however, can be more absurd than this whole doctrine of the balance of trade.” Smith further dismantled mercantilist doctrines, arguing that national wealth should be measured by productive capacity and the well-being of citizens, not by the accumulation of gold and silver or a favorable balance of trade. Smith contended that mercantilist policies were inefficient because they prioritized conquest and monopolization over voluntary exchange and economic specialization.
Smith also observed that maintaining colonies was often more costly than beneficial. The expenses of conquest, administration, and military enforcement frequently outweighed any financial gains. Instead, he advocated free trade, allowing nations to specialize in industries where they had a comparative advantage, leading to a greater division of labor, more economic efficiency, and mutual prosperity.
Marx was well aware of Smith’s arguments—he quoted The Wealth of Nations extensively in Capital and other writings. Yet he deliberately omitted mercantilism as a distinct stage in his historical framework—instead lumping it together with capitalism.
Why Did Marx Ignore Mercantilism?
Marx’s primary goal was to criticize capitalism, particularly his perception of its contradictions—the exploitation of labor and tendencies toward crisis and monopoly. By omitting mercantilism as a separate phase, he could more easily link colonial expansion directly to capitalism, portraying imperialism as an inherent feature rather than a historical antecedent.
Marx’s concept of primitive accumulation described how pre-capitalist systems transitioned to capitalism—often through violent dispossession, including land seizures, expropriation of peasants, and colonial expansion. However, by collapsing mercantilism into capitalism, Marx falsely attributed these processes to capitalism itself, ignoring Smith’s observation that imperialism was often unprofitable.
By conflating mercantilism’s exploitative policies with capitalism, Marx sidestepped Smith’s argument that free trade—not conquest—was the more efficient path to economic prosperity. His framing conveniently ignored that capitalism does not require colonization or coercion to function. Instead, Marx’s omission served his ideological purpose: Capital was not an objective analysis—it was a polemic designed to indict capitalism.
