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Mercantilism versus Marxism

Presented by:

Marco Di FrancoMarta GregoriMichael Wyss

Huang Wei

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Table of Content

Introduction Mercantilism

– 3 main types of Mercantilism– Mercantilism and globalization

Marxism– view of Capitalism– Structuralism

Comparison of Mercantilism and Marxism Discussion

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Introduction

IPE Perspectives– Mercantilism– Marxism– Liberalism

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„Mercantilism is the oldest perspective of IPE and arguably the most

powerful“

Mercantilism

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Definition

„Mercantilistic states try to create wealth and power in order to

preserve and protect their national security and independence“

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Types of Mercantilism

Classical Mercantilism 15th-18th

Economic Nationalism 18th-19th

Neomercantilism since WW II– Modern Neomercantilism– Statism

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Classical Mercantilism

State intervention in the economy

security

wealth power

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Classical Mercantilism

Main goals:– Trade surplus– Independence– Wealth as a key to power

State policies:– Protectionist trade– Monetary measures– Colonialism

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Economic Nationalism

Main goal:– Internal development of the national

economy

Advocates:– Alexander Hamilton (USA, 1755-1804)– Friedrich List (Germany, 1789-1846)

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Economic Nationalism

State policies:– Trade protection– Protection of infant industries– Promoting of domestic industries

• Subsidies internal and external competitiveness

Manufacturing was considered more important than agriculture

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Neomercantilism Main goals:

– International peaceful trade– National economic security– National independence

State policies:– Export subsidies– Import tariffs and quotas– VER and NTV– Consulting, loans, and investment promotion

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Modern Neomercantilism

„The capacity to generate wealth is as important as the capacity to produce military weapons“

Three major benefits:– Military weapons– Jobs, consumption and technology– Self-sufficiency and political autonomy

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Statism

Mercantilism as an economic management

„States must subordinate economic policies to political objectives“

Mostly used in communistic countries

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Globalization and Mercantilism

There are two ways states can deal with:

Defensive mercantilism (benign) Offensive mercantilism (malevolent)

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Who is Karl Marx?

Born in Prussia (now Germany) 1818 Studied philosophy Member of „Communist League“ He wrote with Engels „The

Communist Manifesto“ Studied concepts of Adam Smith Died in 1883

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Why do we study Marxism in the context of IPE?

Famous personality in history and political economy

His ideas are still alive today

Theories about class struggles, exploitation and technical change

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Class struggle

He was interested in the forces which lead to economical crisis

He revealed deep class cleavages

Pressure of competition and profit-maximization leads to exploiting workers

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Class struggle

Quote out of „The communist‘s Manifesto“:

„...the bourgeoisie has left no other bond between man and man than naked self interest...”

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Marx and crisis of capitalism

Quote:

„ The bourgeoisie, by the rapid improvement of all instruments of production, by the immensely facilitated means of communication, draws all nations, even the most barbarian, into civilization.“

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Marx and crisis of capitalism

The capitalism contains the seeds for self-destruction

Three laws– Falling rate of profit– Disproportionality– Concentration

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The law of falling rate

Unemployment increases

Profit decreases

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The law of disproportionality

Overprduction

Underconsumption

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The law of accummulation of capital

Inequality in income wealth because of exploitation

More money goes to lesser people

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Aspects of structuralism

Economic structure – it influences the distribution of wealth and power

Security structure – it links rich countries with poor countries

Knowledge structure – it creates exploitation

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Structuralism in the modern World

Economy provides the means of organization in the international system– A single division of labor, nations are

dependent on economic exchange– The sales of products are good for the

sake of profit– Socioeconomic units

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Structuralism in the modern World

Being dependent– Colonial dependence– Financial-industrial dependence– Structure of dependence

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Structuralism in Perspective

Country has been defined by the political, economical and intellectual forces of nationalism, liberalism and structuralism

Global capitalism dominates the world and tends to be at a global level

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Is Marxism worthwile today?

The answer is „Yes“

Three reasons to study Marxism– Provide us with powerful ideals– Important to understand communism

practiced in former Soviet Union– Understand that the world has been

reached the beginning of the next conflict over the natural capitalism

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Questions & Answers

Friedrich List would agree that „free trade“ is a myth!

Can a country be independent if it exports?

Which of the three perspectives is more likely to have a „comeback“?

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Sources

International Political EconomyDavid N. Balaam Michael Veseth

www.econlib.org www.lucidcafe.com www.marxist.org