A piece of news recently became popular in China: Germany is now the world’s largest trade surplus “bogeyman,” thanks to its persistent adherence to mercantilist policies. Germany’s high trade surplus – the biggest ever recorded in German history – attained amidst a wobbly economic recovery in Europe reminds China that the latter is hardly alone in pursuing economic policies that prioritize national interest over global and regional considerations of economic efficiency and political stability.
The classic mercantilism, the one associated with the idea that the precious metals obtained through a favorable balance of foreign trade were essential to a powerful nation, may be historically obsolete. The core of the mercantilist view, namely that self-interested states maximize economic development by optimizing political control to strengthen national power, is very much alive and well. Indeed, the vitality of mercantilism as a state of mind may have infiltrated every corner of the international political economy. If one considers the essence of mercantilism through Robert Gilpin’s definition – the attempt of governments to manipulate economic arrangements in order to maximize their own interestsREAD MORE