Classical Mercantilism
Mercantilism
is one of three International Political Economy (IPE) perspectives. As the
oldest perspective,we as a international relations student have to understand
from where this perspective was emerge and what is it exactly? , this article
would like to explain you the historical,explanation and it related to realism.
Classical
Mercantilism is grown and linked to the rise of the modern nation state, it evolved
from 16th-19th century. During this period, in Western
Europe,the idea of state building and intervention in the economy was rising. The
practice of mercantilism gained a fullhead of steam after the Thirty Years War
ended in 1684. While state gradually have a sovereignty to build itself , state
officials promote economy growth and did
several policies like connecting local and regional markets,establishing common
currencies and weights,keeping records in export and promoting infrastructuring
development.
Mercantilist is an economic
political system that is very concerned with international trade with the aim
to increase the assets and capital of a nation.
Mercantilism is an economic theory
which holds that the prosperity of a nation depends upon its supply of capital,
so that the global volume of trade is "unchangeable." Capital, represented by bullion (gold,
silver, and trade value) held by the state, is best increased through a
positive balance of trade with other nations (exports minus imports).
Mercantilism suggests that the ruling government should advance these goals by
playing a protectionist role
in the economy, by encouraging exports
and discouraging imports, especially through the use of tariffs (tariff and non tariff barriers).
In the European state system, no state can guarantee the security of others, therefore each state could look only to itself and its own wealth and power to protect its domain, that situations often resulted a security dilemma whereby other states were easily threatened by the first state’s efforts to increase its war-making capabilities. State officials tended to have a zero-sum outlook about state power whereby absolute gains by one state meant absolute losses by another.
There
is a critic to mercantilist system from David Hume, who said that although
mercantilism make a state become stronger,but state by government policies only
concerned to pilling or collecting money , not to increasing export
capabilities, collecting money too much can result inflation (government failure).
There
is one critic too from Adam Smith and
David Ricardo with their capitalist/liberalist economic system which put
forward that government can’t do intervention to statemarket, the country
must do free trade and country will compete with the others using Absolute
Advantage. They though that system was better that mercantilist economic
system. But , this economic system was not successfully over because The Great
Deppression occurred in 18th century.
We
can conclude that mercantilism concerned
to collect wealth to increase that power, that power was used to make one state
will avoided from external threats, power and wealth through economy for
national security purpose, that was closely related with Realism. We can conclude too that mercantilism is
the economic system with government intervention fully, it means the market was
regulated by the government using their policies.
You
can decide by yourself what is the best economic system , we will explain
clearly and detail about mercantilism in other articles on this blog. Happy
reading !
References :
Balaam
David N. and Dillman Bradford,”Introduction to International Political
Economy,Fifth Edition,“Wealth and Power:The Mercantilist Perspective”pp
81-85.Pearson Education,2011.
Picture
“mercantilism” by www.123rf.com
Picture “David Hume and Adam
Smith” by fictionfanblog.wordpress.com
Noto Suoneto
Thanks
7 comments:
Your article is good
but there are 2 question that i want to ask you
1. What is mercantilism effect on developing countries?
because I know this system is only good for the developed countries
2. If the government interferes too much in the economic sector that it will happen "The Government Failure"
what i want to ask you is, Can you give me an example of Government Failure?
Thank You Before
Hey toto noto, you've said that mercantilism is related to realism, Can you tell us more about it? it isn't clear yet.
Mercantilism suggests that the ruling government should advance these goals by playing a protectionist role in the economy, by encouraging exports and discouraging imports, especially through the use of tariffs (tariff and non tariff barriers) (can you give an example from it?)
and as we know mercantilism is very related to Liberalism and the basic of Capitalism bro tou....
Hey Alvin and The Chipmunk
!, As we know when mercantilism started, there is no one developing country. But colonized state, like Dutch East Indies. But then for now, this system just has little positive effect for developing country when developing country can't estabilish their own company, they need money, developed country also need money. But developing country just want get money instantly, it's sure positive effect for developing country dude....
2. I have same question with ya vin....
Hey Kuncara
Realism is very closely and related to mercantilism because it also same to emphasize threats to the state effort to achieve security, the difference is Mercantilism just focus on the economic threat to a state, Realist emphasize a wider variety of Physical threat and they encourage the use of both military and economic instrument to defend the state. (You Can Read on Your IPE book page 83 Paragraph 2).
Mercantilism is very different with Liberalism Brou!!!
Mercantilism is focus on Export and try to minimize Import this means you can only Export the Goods that you have produce and cannot do many Import. in this system Government do many intervention in the market
But Liberalism is very emphasize in Free Trade this means you can trade as much as you want and because of this, Imports goods will be very easy to get into a state. in this system Governenment is hands-off from market
I think you should read again your book before you ask the question
Maybe Brother Noto Will Explain again more specific
Thank you for your debating action in our blog guys ,
i would try to answer your questions one by one ,
to Alvnz Ernesto : in that time , i think there are no country's categorizing basen on economical development , there is no division of three world as you already know , the first world countries with their liberalize economic system , the second world countries with their communist economic system and the three world countries which are poor and developing countries ,
in that time actually , there is colonization, the countries which have industrial base , will looked for colony , even , many historians similared it with exploration and imperialism ,
As you must to read , Colonialism, the occupation of another territory or state , backed my military power , it was using as a important instrument of states to control trade and generate wealth
and power , colonies served as exclusive markets for the goods of the mother country and as sources of raw materials and cheap labour .. the Dutch were quite successful for doing colonialism , and followed by the British.
Maybe this question actually appropriate for asking the neo-mercantilism , which is happened now in our world economic system , but thank you for your comment , let read and learn together!
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