Mercantilism

Wealth and Power: The Mercantilist Perspective

Introduction

  • Quote by Sun Yat-sen (1920): Emphasizes the need for state power to protect and promote industry to recover economic rights.

Economic Rights and State Power

  • Context: The role of state power in promoting industry and providing employment is critical for ensuring national security and economic stability.

Historical Context of Mercantilism

Financial Crises and Liberal Economics

  • Shift in Liberal Perspectives: Economic liberals now advocate for increased state regulation of banks and financial markets due to financial crises.

  • Concerns about Security: States fear that integrated global economies threaten national security, with rising issues like unemployment and environmental harm.

Definition and Characteristics of Mercantilism

  • Mercantilism as the Oldest Perspective: Deeply embedded in state behavior, it focuses on wealth and power creation to ensure security.

  • Historical Usage: States traditionally promoted exports and limited imports to generate trade surpluses.

  • Relation to Realism: Both emphasize state security but differ in focus; realism includes military threats, while mercantilism emphasizes economic ones.

Neomercantilism

  • Definition: A modern adaptation accounting for interdependence and complexity of today's global economy.

  • Focus on State Instruments: Modern states utilize a mix of economic tools to safeguard societal interests.

Evolution of Mercantilist Ideas

Historical Development (16th-19th centuries)

  • Nation-State Formation: The rise of modern nation-states during this period emphasized economic policies for security.

  • Charles Tilly's Analysis: War motivated states to organize societies and adopt protective measures.

  • Political Centralization: Development of bureaucracies consolidated national political authority.

Economic Policies and State Responses

  • Industrial Policies in Britain: Strategies from Tudor monarchs highlighted the importance of state-planned industrial policies to capture key industries.

  • Mercantilism After the Thirty Years' War: Increased bureaucratic efforts to connect markets, establish currencies, and develop infrastructure.

Security Dilemma and Competition

  • Zero-Sum Perspective: States viewed each other’s gains as threats leading to increased military capabilities.

  • Colonialism and Economic Expansion: Control over colonies and resources was vital for states seeking wealth and power.

Economic Liberalism vs. Mercantilism

Emergence of Economic Liberalism (1840s-1870s)

  • Shift in British Politics: The ideas of Adam Smith became prominent, advocating for free trade and competition.

  • Regulatory Practices: Even proponents of free trade supported protectionist measures for certain industries.

  • Ricardo's Comparative Advantage: Suggested specialization in production to optimize efficiency and trade benefits.

Responses to Economic Liberalism

  • Countermovement: Rising competition led to protective measures by various interest groups, emphasizing continued relevance of mercantilism.

  • Economic Nationalism and Imperialism: Growing identification with national interests exacerbated tensions leading up to WWI.

Neomercantilism - Contemporary Practices

Responses to Economic Shifts

  • Global Economic Changes: The 1973 OPEC oil crisis prompted states to reassess energy dependencies and security measures.

  • Shift from Bipolar to Multipolar Structure: Greater emphasis on national economic security amidst global competition.

Modern Neomercantilist Strategies

  • Instruments of Economic Policy: Government spending, regulation, and subsidies targeted to protect local industries.

  • Examples of State Intervention: Promotion of export-led growth strategies in countries like Japan and South Korea.

Contemporary Issues with Neomercantilism

  • Energy Independence and Strategic Resources: The U.S. response to oil dependencies showcased classical mercantilist behaviors.

  • Global Competition for Resources: Strategic alliances and investment in domestic capabilities to ensure resource security.

Conclusion

Enduring Nature of Mercantilism

  • Deep-Rooted Mentality: Mercantilism remains a powerful ideology influencing state behaviors in a globalized world.

  • Interconnection with Economic Liberalism: Many contemporary states blend liberal policies with mercantilist practices to fortify economic stability.

Key Takeaways

  • Protectionist Measures: States still implement various strategies to safeguard industries, which complicate global trade dynamics.

  • Balancing Act: Nations must reconcile the benefits of globalization with the need for self-protection against external vulnerabilities.