Before the arrival of 1776, the European economic mind was locked in the rigid grip of Mercantilism—a philosophy that viewed the world not as an expanding frontier of prosperity, but as a finite pie of precious metals. To the Mercantilist, commerce was a battlefield where one nation's enrichment required another's depletion. This was the era of the 'philosophy of hoarding,' where the true measure of a kingdom's greatness was not the comfort of its people, but the weight of the gold in its state vaults.
The Architecture of Restriction
Central to this era was the Thomas Mun doctrine. Writing in the 17th century, Mun established the golden rule of the trade balance: "to sell more to strangers yearly than wee consume of theirs in Value." In this world, the Chancellor of the Exchequer acted as the grand micro-manager, wielding high tariffs and monopolies like surgical tools to ensure that the stream of bullion flowed in, but never out.
However, the Mercantilist philosophy had a darker undercurrent regarding the domestic population. Theorists like Bernard Mandeville, particularly in his 1742 writings, explored the cynical logic of "how to keep the poor poor." The reasoning was cold: low wages were seen as a strategic necessity. If the working class earned more than a pittance, it was feared they would 'waste' their income on imported luxuries or, worse, choose leisure over the export-oriented toil required to fill the King's coffers.
This rigid world of walls and hoards was the reality that Adam Smith sought to dismantle. It is said that Adam Smith's vision became the prescription for the spectacles of generations; he changed the very lens through which we view the purpose of an economy, shifting it from the stagnation of the vault to the dynamic well-being of the consumer.