Category: Mercantilism

Mercantilism is one of classical theories in international political economy (IPE) along with economic liberalism and neo-Marxism. Mercantilism believes the world is in struggle of power and security between each national interest, in order to grow their economy, they need to limit the imported goods by using tariffs while at the same time increasing their export instead (List, 1841), and also without the existence of hegemonic power the liberal world economy will not exist (Gilpin, 1987). This theory is the oldest among the other three, it was speculated already exist in 16th century but one of the most popular works regarding this theory is ‘The National System of Political Economy’ by Friedrich List in 1841. Despite being the oldest, mercantilism gained its own revival after the World War II in 20th century. The noticeable example is how Japan emerged as a successful economic superpower in a few decades after World War II, some people argue they executed neo-mercantilism in almost the perfect way, following Japan other states were also started to adopt the same strategy such as China, South Korea, and Taiwan (Lim, Timothy, 2014).

There are some characteristics and function of mercantilism. Robert Jackson & Georg Sorensen (2013) have summarized the main characteristics of mercantilism. Firstly, they put economy beneath political power, supports the hegemonic stability theory, limiting imported goods while maximizing exports and see economic and military power as a complimentary to pursue national interest (not a goal) (p.164-180). Mercantilism is a suitable strategy for states that seek protection to their infant industries from external competitors, which already proved by Japan after World War II, and for states that pursue national economic interest like what European did in imperialism era where they coercively imperialized Asia and Africa to expand their markets (Lim, Timothy, 2014).

Like any ideology, mercantilism has its obvious pros and cons. They are closely related from one to another. Analyzing the pros, first of all, it should be noted that mercantilism encourages the development of natural resources, as it encourages more exports than imports, ensuring that the country enjoys better balances of trade. Moreover, it enhances trade deficits for foreign countries. Secondly, as mercantilism improves the levels of innovation in the country, an increase in job opportunities becomes inevitable. So, it helps to reduce the unemployment rate. Thirdly, it improves foreign relations, since with the focus on international trade, there is always a need to maintain cordial relationships with other states in the long run. All this, in turn, contributes to the economic development of the country and its prosperity.

Although in the context of advantages, mercantilism offer to be a suitable strategy to pursue economic development, but on the other hand, to guarantee such a plan to success they (states) must have a fairly high capacity of political–administrative sector, which eventually means this strategy is not generally apply-able to every states. Taking example from Japan that succeeded to explode their economy by using mercantilism, but in sub-Saharan Africa where corruption widely spread and the governmental people is rotten, instead of improving this strategy will most likely halting their growth (Robert Jackson & Georg Sorensen, 2013, p. 193). Moreover, mercantilism is completely focused on making money, forgetting that people have rights. This is a huge minus of this system in social terms, since it is difficult to determine the well-being of any country without taking into account the will and rights of the people.

In conclusion, mercantilism has its pros and cons. In general, it is aimed at enriching various people and developing the country. While this is an easy approach for those who want to use natural resources, it does not seem easy in the long run. Moreover, this system does not pay due attention to the rights of workers, which makes it socially imperfect.

Mercantilism is one of classical theories in international political economy (IPE) along with economic liberalism and neo-Marxism. Mercantilism believes the world is in struggle of power and security between each national interest, in order to grow their economy, they need to limit the imported goods by using tariffs while at the same time increasing their export instead (List, 1841), and also without the existence of hegemonic power the liberal world economy will not exist (Gilpin, 1987). This theory is the oldest among the other three, it was speculated already exist in 16th century but one of the most popular works regarding this theory is ‘The National System of Political Economy’ by Friedrich List in 1841. Despite being the oldest, mercantilism gained its own revival after the World War II in 20th century. The noticeable example is how Japan emerged as a successful economic superpower in a few decades after World War II, some people argue they executed neo-mercantilism in almost the perfect way, following Japan other states were also started to adopt the same strategy such as China, South Korea, and Taiwan (Lim, Timothy, 2014).

There are some characteristics and function of mercantilism. Robert Jackson & Georg Sorensen (2013) have summarized the main characteristics of mercantilism. Firstly, they put economy beneath political power, supports the hegemonic stability theory, limiting imported goods while maximizing exports and see economic and military power as a complimentary to pursue national interest (not a goal) (p.164-180). Mercantilism is a suitable strategy for states that seek protection to their infant industries from external competitors, which already proved by Japan after World War II, and for states that pursue national economic interest like what European did in imperialism era where they coercively imperialized Asia and Africa to expand their markets (Lim, Timothy, 2014).

Like any ideology, mercantilism has its obvious pros and cons. They are closely related from one to another. Analyzing the pros, first of all, it should be noted that mercantilism encourages the development of natural resources, as it encourages more exports than imports, ensuring that the country enjoys better balances of trade. Moreover, it enhances trade deficits for foreign countries. Secondly, as mercantilism improves the levels of innovation in the country, an increase in job opportunities becomes inevitable. So, it helps to reduce the unemployment rate. Thirdly, it improves foreign relations, since with the focus on international trade, there is always a need to maintain cordial relationships with other states in the long run. All this, in turn, contributes to the economic development of the country and its prosperity.

Although in the context of advantages, mercantilism offer to be a suitable strategy to pursue economic development, but on the other hand, to guarantee such a plan to success they (states) must have a fairly high capacity of political–administrative sector, which eventually means this strategy is not generally apply-able to every states. Taking example from Japan that succeeded to explode their economy by using mercantilism, but in sub-Saharan Africa where corruption widely spread and the governmental people is rotten, instead of improving this strategy will most likely halting their growth (Robert Jackson & Georg Sorensen, 2013, p. 193). Moreover, mercantilism is completely focused on making money, forgetting that people have rights. This is a huge minus of this system in social terms, since it is difficult to determine the well-being of any country without taking into account the will and rights of the people.

In conclusion, mercantilism has its pros and cons. In general, it is aimed at enriching various people and developing the country. While this is an easy approach for those who want to use natural resources, it does not seem easy in the long run. Moreover, this system does not pay due attention to the rights of workers, which makes it socially imperfect.

Mercantilism is economic framework created amid the rot of feudalism to bring together and increase the influence and particularly the money related abundance of a country by strict administrative guideline of the whole national economy as a rule through policy strategy intended to verify accumulation of bullion, an ideal equalization of exchange, the improvement of agribusiness and manufactures, and the foundation of outside restraining infrastructures and monopolies. Around then, mercantilism thus assumed that potential of making their motherlands rich. It was thought of regarding amassed valuable metals or bullion (gold and silver).

The sugar plantations of the West Indies exhibit political-financial and insightful mercantilist convictions. They were made to feel the urgent need to keep up and make imposing business models, and drive benefit for the mother country, regardless of the human expense cost. Slavery made the sugar plantations work beneficially, and having those ranches implied you had sugar, a profitable popular ware to produce bullion. Similarly, as significantly it implied that you didn’t need to get it from obnoxious competitors and discharge your valuable bullion all the while. Having protected and ideally manufactured their riches (bullion) European economies had the methods to pay their armed forces, and battle your wars, and stay powerful and independent. All things considered, could society not legitimize away slavery, or the numerous different types of frightful moves made to guarantee the positive parity of trade and collection of bullion.

Beforehand, Europeans had utilized honey as a sugar sweetener; however, before long they ended up unquenchable customers of sugar. Somewhere in the range of 1690 and 1790, Europe couldn’t create its own, yet needed to import 12 million tons of sugar which approximately one ton of every African enslaved in the Americas. Sugar provided riches to their motherland countries. As motherland’s monopoly and restraining infrastructure expanded European states developed rich enough to wage practically expanding war against one another. The clearest case of mercantilist struggle is the first two of the Anglo-Dutch Wars, battled in two stages. The first stage was between 1652-1654 and the second was between 1665-1667. These somewhat English Dutch threats arrived at an end after the brilliant 1688 insurgency in Britain which brought Mary and her significant other, William of Orange, the stadtholder of Holland (the true de facto head of the Dutch Republic) to the English position of authority. Mercantilist framework required a coalition between the state and its vendor merchants.

The land would be an accelerator for wars and the labor force would need to originate from slavery. Slavery was financially cheap. The resources (sugar) would not be monetarily plausible. Further, it was the riches made by the new colonies around the globe that paid for the ocean and land wars, for example, the Seven Years’ War, and gave products that animated the emergence the economies of the different countries. Early sugar plantations utilized slaves since sugar was viewed as a cash crop that displayed economies of scale in development; it was most proficiently developed on substantial estates with numerous specialist workers. Slaves from Africa were imported and made to take part at the ranches. Without the slave work, the whole framework crumples as could the economies of that most dependent t to them guaranteeing that slavery would be guarded as an economic prerequisite. The colonies all through the world experienced varieties of mercantilism as Wilberforce postulate that, “A rationale – the supposed inferiority of the Negro – was readily available for the de- development of the vast system of Negro slavery. Domination and outright exploitation would have been unacceptable without the assumption that the black man was more akin to the brutish animal than to the human being, assumption which gave the white master every moral and legal right to own and use his slaves as he owned and used his animals”.

Due to obstruction on slavery, resistance starts to rise in eighteenth century. Numerous illumination ideologues ended up unforgiving faultfinders of organization and the Help for abolishment develops. The slavery alternative turned into the riches and influence of sugar grower (sugar barons) made them impressive adversaries.

In spite of the fact that the search for valuable metals or water courses to Asia had at first compelled English, French and Dutch endeavors to build up new world colonies, Spanish and Portuguese discovered that by exploiting assortment of yields, for example, tobacco, wheat, grain and rice additionally helped in patching up its economy. This was new model of economy that was to be adopted.

To reach into my conclusion, slave trade had a noteworthy increment in the 17th and 18th centuries because of the sugarcane ranches. It was viewed as a financial need to the pro-slavery lobby subjection. Slave exchange was leaving high benefits to England and it was a need for ranch proprietors to leave out the slavery trade and adopt other better means.