Comparing Mercantilism and Liberalism - Global Political Economy.pdf

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9/8/2018 Comparing two of the main ideologies of Global Political Economy: Mercantilism and Liberalism | 1/10 Comparing two of the main ideologies of Global Political Economy: Mercantilism and Liberalism S EPTEMBER 25, 2014 | ANH DIEP | LEAVE A COMMENT In the sphere of political economy, a question may emerge toward specific economic policies choice made by a government, for instant, why do some governments keep the currencies floating whereas others uphold fixed exchange rates? In answering such a question, it is important to come back to the three traditional schools of thought of political economy – Mercantilism , Liberalism , and Marxism . In fact, each of these three schools of thought gives distinctive explanations to the above question. These differences have become a debating ma±er when they are brought into comparison. Particularly, when it comes to comparison between Liberalism and Mercantilism, there are contrary viewpoints. From one point of view, Mercantilism is a political economy paradigm that was later overtaken by Liberalism at the end of the 18 century. On the other point of view, however, the Mercantilist thought is still being implemented today. Mercantilist and Liberalist believe that economic activities enhance the power and security of the state. However, these two ideologies have different approaches in operating economic activities. This paper will examine as well as compare Liberalism and Mercantilism within their historical and practical perspectives in order to prove that both Mercantilism and liberalism have certain strength and weakness. Although the tension between their mindsets remains with economists until today; the two ideologies had given economists an insight of market system throughout history of political economy. The first part of the paper will go through the historical perspectives of the mercantilist school following with their rationales, strength and weakness. The second part of the paper will highlight the liberalist school and its innovation idea on market system, as well as its strength and limitation. In the process of illustrate the strength and weakness of the mercantilism and liberalism, the paper a±empt to show how tension between Mercantilist and Liberal thinking still remain until today. Mercantilism and its rationale From historical viewpoint, mercantilism is the oldest and can be considered as an important theory in international economy[1] since it accounts for the basis compulsion of all nation-state. The development of classical mercantilism was associated with the rise of the modern nation-state in Europe during 15 18 century. This was the period of time when the idea of state building and state intervention in the market for the purpose of strengthening nation-state security dominated political economic thought.

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