Well, a monarchy is where there is a sovereign head of state such as an emperor or king. This would imply that there would be a ruling class that would control things already, including economic transactions. Mercantilism would definitely work best in this case for the monarch as it would help them keep control of the wealth. But for a long lasting and free society and economy capitalism truly works better.
Some Basic Tenets of Mercantilism:
1. Gold and precious commodities must stay within the mother country
2. If gold leaves the mother country it makes it less powerful and another country more powerful
Some Basic Tenets of Capitalism:
1. People are free to trade whatever with whomever they wish
2. Trades if done correctly should be win/win not win/loose because one person values the object the other person has more than the commodity he has and therefore chooses to make the transaction.
For a free people Mercantilism is not the way to go, but for a strong monarchy it is smart, for a while.
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