Mercantilism versus Marxism

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Mercantilism versus Marxism

• Presented by
• Marco Di Franco
• Marta Gregori
• Michael 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

• Mercantilism is the oldest perspective of IPE
  and arguably the most powerful

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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 communists 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