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 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 Economy

David N. Balaam
Michael Veseth
 www.econlib.org
 www.lucidcafe.com
 www.marxist.org

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