And why do many believe that such state economic policy leads to an increase in citizens’ welfare? And why are they actually mistaken?
Top Kripto #FreeNavalny
I’m being nudged here to speak out on the Ukrainian issue, but I’d rather answer this one instead.
Mercantilism is any policy based on the idea that free trade is unacceptable and should be regulated. In the past, one of the justifications for such a policy was the notion that trade is a war where one party loses and the other profits, and if the profiteering trader is not kept in check, he will rot everyone else while gorging himself on the people’s blood. This strange view of trade was accompanied by a belief in the harm of competition: supposedly, under competition, a merchant or craftsman cannot concentrate on one assigned area of activity, and due to meaningless fighting among themselves, there will be complete chaos in production and trade. Finally, this was accompanied by the idea that low prices for goods are harmful, just as high prices for labor are harmful—because there are “fair prices,” and every producer or trader is obliged to observe them.
It is no surprise that where such notions were strictly followed, humanity had little chance of becoming wealthy or developing technology. But this was also accompanied by the postulate of the benefit of poverty for the salvation of the soul, so no problem was seen in this.
Finally, mercantilism implied that it was extremely foolish for a ruler to allow people to buy foreign goods with money, because it was far more useful to accumulate money in the treasury—it would always come in handy for buying luxury items, but most importantly, for paying for wars. And this meant that trade should be subject to the highest possible tariffs.
A more or less systematic explanation of the errors of mercantilist views was provided by Adam Smith in his Wealth of Nations, which
Why then, 246 years after the publication of The Wealth of Nations and 150 years after the marginalist revolution, is mercantilism still alive in people’s heads and actively applied in politics?
Because politics is war. It is a zero-sum game where those who gain power diminish the power of others. But fighting hot wars has become a faux pas, and instead, trade wars are actively used. Want to tell another regime “to hell with you”—introduce trade sanctions against it.
Politics is not only external but also internal. Fighting hot internal wars is even more of a faux pas, but representatives of certain industries can lobby for trade preferences for themselves and restrictions for their competitors, both inside the country and abroad. The slogan of protecting the domestic producer is as effective as the slogan of protecting the homeland, and it leads to the same consequences: the domestic consumer becomes poorer.
Moreover, take even the quite libertarian Montelibero project. We also primarily try to hire project participants rather than freelancers for the project’s work. Mercantilism is psychologically comfortable: you give up a bit of personal gain, but you do a good deed for a neighbor from whom you buy a more expensive product, ignoring cheaper analogues from those you dislike. Similarly, agorists may fundamentally trade only with those who do not pay taxes, even if the effect of scale and the cost of security measures would make it cheaper to deal with taxpayers. But then the state won’t get a single agorist penny.
So what is the difference? Why do libertarians consider their own behavior moral, but state regulations criminal? Of course, it’s a matter of voluntariness. You personally have every right to sacrifice profit for the sake of moral superiority. But to demand the same from others by force—that’s a no-no!