Mercantilism, Liberalism, And Marxism In International Political Economy

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Mercantilism, liberalism, and Marxism all play an enormous role in international political economy. Each have their own ideas of the major actors, state-market relationships, and the overall international cooperation between states. Neo-mercantilists and Liberals both agree that 1979 was a significant year for China because of its economic growth, but both have a different reason as to how it happened and through what methods. A

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Proponents of liberalism look to china because of its prior state. It was economically useless before 1979. The liberal position argues that “individuals like the nation-state – pursue or act in their own self-interests”. This may partially explain China’s market revolution in 1979 as it reformed its market. China was looking for what it benefitted from most rather than not. They point to China because they exercised a free market in order to become this capitalistic economy they are now. Liberalism emphasizes absolute over relative gains, free trade, free capital, and essentially an open world economy. It can be presumed China used some of these ideals to build such economy. They argue that China’s embrace of this market reform is due to the “unleashed market forces,” therefore being, liberal economic principles. Laissez-faire being the most notable along with comparative advantage. They argue that these principles bring a mutual advantageous trade which ultimately leads to the greatest good for all countries and people. They say this does not take place with coercion but instead because they want to.

On the other hand, neo-mercantilists argue that China came to be because of mercantile policies. The “productive power” China has had definitely influenced its economic power. It has sacrificed a measure of material prosperity, the capacity to make or manufacture a good rather than simply possess it, in order to “gain culture, skill, and powers of united production”. This developed skills, new technologies, and industrial expertise necessary for prosperity. China has done exactly this under the Chinese Communist Party (CCP) which “protect and subsidize Chinese companies.” Even then, China has become one of the largest economies in the world. China exports more than it imports, which is a major principle of mercantilism. Through these principles, mercantilists argue China’s economy has become extremely successful. China’s economy has been built by their openly mercantilist economic policies.

The most compelling of the three traditional perspectives is liberalism. Liberals believe in the ‘invisible hand’ that the market economy “offers.” The invisible hand essentially self-regulates the market economy and places it where it belongs. They call for little to no government intervention in economic affairs with whatever the case may be. According to liberal theory, natural laws of supply and demand work better than any government-made law. The types of players in liberalism are states that interact with each other and the market, which is increasingly becoming a single market help. States interact with each other because they believe in the positive sum gains, that by working together, both sides may gain. Unlike mercantilism which believes that one country has to lose in order for the other to win. Mercantilists believe that sates and markets help each other stay prosperous. Similar to the ideology of “if you scratch my back, I will scratch yours’. In Liberalism neither side has to lose for the other to win. The market acts alone, for the most part, without the need for state intervention. Liberalism calls for little to no interference in the markets and they feel that the government should have no interference in the state. John Keynes changed liberal viewpoints with his studies in economics when he found that markets naturally balance at a level that has poor utilization of production and consumption. Keynes felt that some government guidance through monetary and fiscal policies, was necessary to keep a market steady. Liberals feel that cooperation between states and markets is necessary for all to make positive gain. Just like liberalism has its upside, it also has its downside. It does not necessary explain exactly how the notion of free markets create economic order or how well the this “invisible hand” works. Both mercantilism and liberalism believe in hegemony, except that in the liberal view of hegemony, the hegemon and everyone else is benefitting. Whereas mercantilism the sole benefiter is the hegemon itself.

Although liberalism may not be the most effective traditional perspective to some, it is as important as mercantilism and Marxism. All have impacted the economy in some way or the other and will continue to do so as long as markets and states are around.

16 December 2021

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