Mercantilism dominated European thinking on international economic policy in the 17th and 18th centuries. Mercantilists’ underlying belief was that international economic policy is primarily a tool of state power. Since power, unlike prosperity, is relative, mercantilists think of international economic engagement as “zero sum”: you win, I lose. Mercantilists also treasure domestic production and love trade surpluses and protection against imports. Adam Smith, wrote The Wealth of Nations in the 18th century as an argument in favour of free trade, against just such mercantilism.
Thus, one could imagine an effort (albeit not under Trump) to design a new multilateral economic treaty. In the process, one could even include something John Maynard Keynes wanted to achieve at Bretton Woods, namely, a way to combat huge structural trade surpluses. These, he believed, imposed ruinous constraints upon others. In the 1940s he could not persuade the US, then a huge surplus country. Today, not only the US, but perhaps the Chinese, too, might see that its mercantilism creates serious macroeconomic and microeconomic difficulties.
The dangerous triumph of neo-mercantilism
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