Interest in growth theory was paralleled by concern about whether a market economy would
lead to full employment and whether the government should intervene in the economy to
help maintain a full utilization of resources. Mercantilists specifically wanted to understand
the forces that determine the capacity of an economy to produce goods and services and to
ascertain whether the actual level of output reached the potential level. Many mercantilists
perceived a fundamental conflict between private and public interest and therefore believed
that the economy would fail to achieve its output potential unless the government intervened.
Their argument was twofold: first, following Jean Bodin, they believed that private interest
led to monopoly and that monopoly restricted output; second, they believed that when
individuals either saved or bought foreign goods, a shortage of demand for domestic goods
ensued, which weakened the economy. The mercantilist position was that the government
should regulate domestic and foreign trade so that the economy would show a balance-ofpayments
surplus and increase the country’s gold, which served as its money supply.