Economic Liberalism and Mercantilism

The theory of economic liberalism and mercantilism are two extreme forms of trade policies. Economic liberalism can be achieved by liberating commerce and operating markets free from state regulation, claiming that free trade yields efficiency, creativity, and growth. Economic liberalism endorses free trade, specifically comparative advantage, where countries produce goods and services that they are optimum at, which benefits all the countries involved in the trade (Pevehouse & Goldstein, 2017).

This approach promotes worldwide collaboration and stimulates economic growth as companies can compete globally. Eliminating trade barriers makes it easier for consumers to access various goods and services at cheaper prices. Also, economic liberalism encourages foreign investment, fostering economic growth and technology expansion.

Mercantilism appears as a more nationalistic approach to enrichment through exporting goods, using tariffs and subsidies to protect the native industries, and aiming to accumulate capital for the state. This view of negotiations treats trade as a zero-sum game, where the gain of one country is commensurate to a loss by another. Mercantilism as a political economy philosophy states that governments should encourage domestic production and minimize reliance on exports.

These policies often include strict control of imports and exports and promoting selected local industries to ensure competition. Mercantilism results in tension in international relations since the nations seek to protect their economies through tariffs and other barriers to protect their economies (Ikenson, 2021). Even today, many countries continue to follow mercantilist policies to improve the relative position of their economy and guard key sectors. While economic liberalism promotes more integration and cooperation in the global economy, mercantilism strives toward autarchy and protection.

As the Chair of the Council of Economic Advisers, I would suggest that the United States adopt an economic liberalism model of the trade policy through the year 2032. It will facilitate free trade, liberalization of markets, and minimal government intervention, thus fostering economic development and internationalization. The politically calculated free trade policy deregulates trade, allowing American industries to substitute goods and services, increase production, and make them less expensive through comparative advantage.

This means that access will engender diplomatic relations, resulting in economic interdependence and thus dissuade aggression. Additionally, free trade promotes the advancement of technology and investment so that American industries acquire the strength to compete in the global markets.

While seeking to make the economy more efficient, economic liberalism guarantees consumers affordable prices and a large selection of products. Globalization has various advantages, such as cheaper products and services for consumers in America that would improve their standard of living. Additionally, an open trade policy is beneficial for the increase in foreign direct investment (FDI) in employment and the fostering of emergent industries.

These liberal trade policies enable America to maintain its partnerships and dominate the global economy. Keeping balance worldwide is all about integration, and America has much to gain from adopting economic liberalism.

Another beneficial effect of economic liberalism is the promotion of competition and enterprise, expanding the American business presence abroad. The removal of all these excessive regulations is also good since it can help organizations cut expenditures, work efficiently, and even attract more clients. It is beneficial to small and medium-sized enterprises (SMEs) because customers themselves move across borders to get the products and services they need without encountering high trade barriers.

In an open-market global system, collaboration in research and nurturing economic policies and innovations sustain the growth and sustainability of countries. Lastly, this emerging economic liberalism contributes to creating a more potent economy to address demand in the future of America.

References

Ikenson, D. (2021). Mercantilist reciprocity or free trade: Globalization at a crossroads. https://www.wita.org/wp-content/uploads/2021/10/Mercantilist-reciprocity-or-free-trade-Hinrich-Foundation-Dan-Ikenson-October-2021.pdf

Pevehouse, J. C. W., & Goldstein, J. S. (2017). International relations, brief edition (7th ed.). Pearson.

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• While trade policy is typically a source of conflict in American politics, the issue has recently become even more controversial. Using content from the textbook and PowerPoint presentation, please provide an overview of economic liberalism and mercantilism.
• The good news is the winner of the 2028 presidential election has selected you to be the Chair of the Council of Economic Advisers. Compensation for your new job will be $179,700 per year! The president is requesting that you submit your recommendation for the approach to trade (economic liberalism or mercantilism) that should be the foundation for our trade policy until 2032. Please select economic liberalism or mercantilism and justify your decision.
  

  Economic Liberalism and Mercantilism

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