Mercantilism Never Went Away
August 5, 2014 in Economics
By Ryan McMaken
The debate over the Export-Import Bank continues, with the bank’s friends in Congress and other high places claiming that the Bank serves an indispensable function in the American economy. Larry Summers, for instance, defends the bank on the grounds that foreign authoritarian and “mercantilist” countries subsidize trade more aggressively than does the United States, therefore the bank is necessary. Summers also seems to be under the impression that the US and the West practice something called “open market capitalism.” This exchange exhibits a way of thinking among some mainstream economists in which The US economy is capitalist while “mercantilism” is something that foreigners or people of ages past engaged in.
In this article, however, political scientist Dani Rodrik at Harvard states what we have long already known: “mercantilism never really went away,” and perhaps inspired by people like Summers, he observes that “Today, mercantilism is typically dismissed as an archaic and blatantly erroneous set of ideas about economic policy.” Rodrik is no enemy of mercantilism, though, and then goes on to sing the praises of mercantilism, which he regards as under-appreciated. It is no doubt true that many scholars (either honestly or dishonestly) claim mercantilism to be dead and buried in the West, but many who are familiar with the details of economic history will be forced to find mercantilism all around him. We can engage in semantic debates over whether or not modern “third way” economies are mercantilist, strictly speaking, but if these modern economic systems — that happily employ central banks, state corporations, and trade policies designed to benefit a certain group of people — are not mercantilist, then it’s hard to see what else they could be. Michael Heilperin defines mercantilism as a subspecies of “economic nationalism,” but we might also say this is a distinction without a difference. John Cochran, for example, has explained how the debate between libertarians and interventionists is essentially just a continuation of the historical debate between mercantilists and classical liberals.
Apparently unknown to Rodrik, mercantilism has received plenty of good press before. Writing in 1963, Rothbard discussed the ongoing non-death of mercantilism. Prior to World War II, mercantilism was disparaged often by the free-marketeers, but following the rise of Keynesian orthodoxy, people began to discover that there were many similarities between their own system and the mercantilists:
Mercantilism has had a “good press” in recent decades, in contrast to 19th-century opinion. …read more
Source: MISES INSTITUTE
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