Apuntes de MERCANTILISM - Topic 3 (Profesor Robert Robinson)

 

TOPIC 3

 

THE MERCANTILIST- ECONOMIC NATIONALIST PERSPECTIVE

 

 

Overview

 

We stress the main features of mercantilism and contrast it with the other three IPE perspectives. Mercantilism continues to be one of the mainstays of IPE perspectives and frameworks. Even though it is not as popular an idea as it was in the past, it has always been a tool governments use to achieve a variety of economic and political objectives. 

 

We begin by defining classical mercantilism and explaining its role from the sixteenth until the nineteenth centuries. States focused on generating trade surpluses that were supposed to contribute to state security and protect public and private groups within society. Mercantilism complemented Realism because in an international system of potential anarchy, a state could not count on other states to guarantee its territorial security and thus it had to look to its own military power for protection, supported by its economy and wealth.

 

Mercantilist-protectionist policies played a major role in escalating interstate tensions and violence during World War I and World War II. After 1945 they placed a premium on defending the state and national firms without resorting to force. In the 1970s “neomercantilism” came to signify more subtle defensive economic policies that states used to safeguard their societies in an increasingly interdependent and competitive global political economy. We explore how and why nations increasingly used neomercantilist policies in the face of increasing globalization since then.

 

The presidency of Donald Trump has accelerated the weakening of the postwar international political-economy structure founded and supported by the United States and its allies. Instead of the more subtle and acceptable neomercantilist polices states have adopted in support of businesses and social groups, President Trump has used intentionally aggressive mercantilist policies such as high tariffs in an effort to force other states to drop their already low tariffs on U.S. imports, thereby helping him “Make America Great Again.” He still seems to be averse to cooperating with other countries to produce win-win situations for all states involved.

 

In cases of mercantilism and especially neomercantilism, intentions mean a lot. Curiously, Trump also often claims that he dislikes globalization and associates it with an elitist corporate outlook, which is strange given his plethora of investments around the world. Many critics of globalization are also critical of its free market outlook that rewards the rich at the expense of the working class in many nations. After his presidency Trump’s brand of mercantilism is less about protecting the United States than an effort to support placate his base of supporters under the guise of defending the United States. 

 

 

Key Terms

 

•  Mercantilism: it’s a philosophy and at the same time a policy practice focused on the state power and national security, advocating for a strong role of the state in the economy, typically by maximizing imports, and accumulating wealth in gold and silver. It sees economic interactions as a zero-sum game, where one nation’s gain is another loss.

•  classical mercantilism: this phase of mercantilism coincides with colonialism, where major powers, through war and conquest, sought to accumulate wealth and limit the economic power of rival nations. It emphasized building national wealth through protectionist policies and direct control over colonies.

•  zero-sum: one state’s economic gain is necessarily another state’s loss.

•  Neomercantilism: when states use policies like tariffs, import quotas, and subsidies to support domestic industries, manage economic security, and reduce dependency on foreign resources.

•  Nation: is viewed as a political and economic unit, focused on maintaining sovereignty and self-sufficiency in a competitive international environment.

•  State: the center of economic policy, emphasizing its role in directing economic resources to build national wealth and power.

•  economic nationalism: the prioritization of national economic interests, often through protectionist policies and opposition to foreign influence in key industries. It seeks to secure economic independence and strengthen national industries.

•  infant industries: newly established or emerging industries that are considered vulnerable to international competition. Mercantilists support protecting these industries through tariffs and subsidies until they can compete on a global scale.

•  Keynesian compromise: a post-World War II approach that sought to balance market liberalism with state intervention to support economic recovery, employment, and international stability, forming the basis for institutions like IMF and World Bank.

•  malevolent and benign mercantilism: Malevolent mercantilism refers to aggressive and offensive policies to harm other nations, while benign mercantilism uses defensive policies to protect a nation's own economy from external threats

•  industrial policies: Government strategies to promote specific industries through subsidies, investments, and regulations. These policies are aimed at fostering national economic growth and independence

•  DARPA: The U.S. Defense Advanced Research Projects Agency, an example of how states invest in strategic innovation for military and technological advantage, aligning with mercantilist goals of national security.

•  Procurement: The acquisition of goods and services by the state, often domestically sourced, to strengthen national industries and secure resources critical for economic and military needs​.

•  strategic resources: Essential resources, such as oil or rare minerals, that countries protect or stockpile to prevent dependency on foreign suppliers and ensure national security

Class discussion question

Balaam and Dillman argue that Trump is not a “genuine” neomercantilist, even though he supports significant trade protectionism and increased military spending. What beliefs and policies of President Trump appear to be inconsistent with the mercantilist perspective?

CLASS NOTES

MERCANTILISM

-       The policy approach is protectionism.

-       Liberalism was a rejection to Mercantilism.

-       The actual represent is Trump with his nationalist economy.

 

It’s a philosophy and ALSO a policy practice, it’s a way of doing economy:

1.     Protecting the national economy from competition.

Tariffs are applied – NOT OPEN ECONOMIES, NOT FREE TRADE TO SECURE THE NATION.

2.     The wealth is seemed in terms of ACCUMULATION OF GOLD AND SILVER. (Note to compare: Liberalism- Adam Smith saw the wealth of the Economy as strength of the country- AS PRODUCTIVITY: ability to produce things).

 

CLASSICAL MERCANTILISM

-       Interaction was in the form of Empires.

Example- Colonies

Spanish case: in Bolivia (Potosi)- there are silver deposits.

16^th cent. Problem in Spain with the discovery of gold and silver: inflation- where a lots of imports but not offer its. So, there was more money in circulation.

 

18^th cent. The British Empire: based to search bigger markets and more resources to produce more. Reform of the Corn Law: U.S. and the Germany followed until the 19^th cent. (were protectionism policies).

 

CHARACTERISTICS:

1.     A metallic understanding of wealth.

How to get gold and silver? 1. Extraction or 2. Find foreign markets to pay you for production (exports).

 

“A favorable balance trade”: EXPORTS> IMPORTS- Importing was seen as a bit of a weakness. So, colonies created armies to conquer territories.

 

2.     Role of the state- was the unit of analysis, the State is the CENTER.

The State: 1. Protects, 2. Creates army and 3. Conquers territory.

 

There was a fundamental Governmental role: it facilitates the exports of domestic goods and limits the imports.

Government approved companies: East India Company and Dutch East India Company. They stablished monopolies and control trade relations.

 

From the 15^th cent. Countries construct their nation- IDENTITY-STATE NATION BUILDING ACROSS EUROPE.

       Britain (very late political entity- huge problems), Spain (incomplete State- nation process), The            Netherlands, France or Sweden.

Puedes repasar este tema con este multichoice test. 

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