Hi, guys. Welcome back to Global Business Environment. This is module five, and this will be part one, or lecture one, in which we continue to ask the question, what are the benefits or gains from trade for nations and societies? Or, better said, are there any benefits to trade across borders? Recall that we have defined trade as exports and imports. Or engaging in commerce across borders. And we also emphasize the fact that it's generally companies or individuals who are actually conducting the commerce or trade across borders. Even though, for, brevity's sake we typically refer to countries as if they were the ones actually engaging in the trade. So we asked the question, what are the benefits from trade? And we talked about the protests and how different parts of society view trade as being positive or negative depending on their point of view and their experiences. Where does that come from, and, and how does that, how did we get here? If we go back in history, once again, to the 1500s, 1400s, we see a particular philosophy, that developed, which still has, some impact, even today in the 21st century in the mindset of individuals and policymakers and others, and affects our society still, and that philosophy is known as mercantilism. And it's, it was a very powerful philos, philosophy, very popular for many centuries, up to the 1700s, and many countries, nations, societies conducted their affairs, or their policies, based on these, ideas. The ideas rooted in mercantilism. Let me try to explain to you briefly, the idea behind mercantilism. First of all, the idea was, that there was a fixed amount of wealth in the world. So, for example, if you look at this picture of this, this pile of gold bars the idea was that there was a fixed amount of gold in the world, and other minerals and, and things like oil or other natural resources. And so the idea was for any society to get ahead, you needed to get more of whatever natural resource was valuable. And it was a win-lose proposition for one country to win another country, or group, had to lose. Here is another way to think of, mercantilism. It really is the idea behind the creation of colonies that existed for many centuries, up to the recent past. And the idea was, what, a colonizing country, and there were many wanted to do was to develop colonies or conquer colonies and bring raw materials into the col, colonizing country and ship back processed or refined or manufactured goods. The idea here is that exports or sales going in this direction are better than imports. And so what countries wanted to do was to maximize exports. And you can see here, this map of the world from over 100 and some odd years ago. And you see the idea here where you see exports and imports represented exports by the red line and imports by the blue line. All these societies or countries are trying to maximize their exports. Because the idea is, there's a fixed amount of natural resources and the more that we can get, process, and then export sell back to you, the richer our society will be. And it really was a mindset that I like to call zero some game or a fixed pie mindset. And the idea is that if, if I cut a piece of the pie from an entire pie, and eat it, obviously, there's less for you. And so, by definition, if we're going to share a pie, there's going to be winners and losers, someone who eats more, and someone who gets less, perhaps. And so another way to think of this, mindset, or this, philosophy of mercantilism is to think of it as a, a zero sum game, or a fixed pie, situation. Or a win-lose situation in which there has to be a winner and there has to be a loser. A different way to look at colonialism and mercantilism is to think of the human tragedy that was caused by, trying to protect, the very powerful economic benefits, of of the system and it led to wars, which are depicted in this image that were obviously tragic in terms of human life, but also very costly to societies, and they're progress. And so, again the idea was that, trade by itself, is not necessarily a good thing. Trade only benefits some and hurts others. And so, you want to be the one who's selling and not buying. And so, it really wasn't, any part of the modern idea of free trade, at all, this, this idea of mercantilism. It didn't have any aspect, either of growing the pie, as depicted in this image. If you look at this, smaller pie, when we were talking about win-lose, and a fixed pie mindset, if you think about this pie, we cut it up and there's winners and losers. It took time, but eventually society became, aware of a new philosophy, which was the idea that the pie could actually get bigger. It could grow in size, and that was based on the idea that trade was a positive thing and it took a long time for these ideas to develop but if the pie gets bigger then there are more slices to go around and we can all benefit. And that's the idea behind a win-win mindset which we will explore further in the next part of this module. So we will continue to talk about the development of ideas and the evolution behind the idea of mercantilism in part two. Thank you very much.
