Mercantilist Stirrings in the Land of Laissez Faire

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Mercantilist Stirrings

Mercantilist Stirrings in the Land of Laissez Faire
Max Fraad Wolff is a Doctoral Candidate in Economics at the University of Massachusetts, Amherst.

We are known throughout the world as the second and more aggressive generation of free traders. Starting after World War II and following the oil shocks and global downturn of the 1970’s, America began a global crusade to liberalize markets and financial flows. The changing role of Bretton Woods Institutions and our trade policy announced and supported an international return to deregulated late nineteenth and early twentieth century style capitalism. Academics and analysts called upon to discuss and debate these processes termed them “globalization.”

The history of the rise and fall of earlier waves of globalization was lost in the rush to celebrate or condemn a new world economy. Underpinning this has been the meteoric rise of free marketeering, of rhetoric and reality. Neo-classical economics and its policy prescription have swept into dominance in boardrooms and the halls of state power. The fall of the Eastern Block and the great equity boom of the last two decades heaved fuel on the blaze.

A global economy with the US as ideological, military and economic leader took shape. Leadership was based on free trade credentials and general openness to imports- particularly from friends and strategic allies. Our dominating ivory towers, corporations and state apparatus blared Adam Smith’s wisdom utilizing power bestowed by wealth, position and the latest innovations in transport and communication. Mercantilist tendencies toward state meddling, preferential access to contracts and granted domain were to be relegated to history’s dustbin. Alongside the banishing of such discredited and inefficient tendencies, America would topple those who would obstruct the market’s light from penetrating the darkest corners of a shrinking world. I would argue we have lost this momentum and are slipping toward just those mercantilist tendencies that inspired Smith’s epoch making critique.

It is about belief in a set of rules, when they work for you and when they cause pain. As the stern physician administering painful doses of austerity medicine around the globe, we are assumed to be willing to submit to our own intellectual commitments- regardless of immediate impact. Across the last few years we have begun to ignore our own rules at home- while pushing them increasingly selectively around an unstable world. In so doing we have begun to set in motion the impulses and musing that may well end the recent era of US led globalization. The Smithian torch risks being snuffed out by its guardians in a panicked rush to safeguard privileges and gain advantage. So it was that past eras of globalization degenerated into chaos, trade and military conflict. If this last comment strikes you as ludicrous, you might try a brief look back at the period leading up to WWI. ...Link