Mercantilism And Industrial Policy Works

From Critiques Of Libertarianism
Jump to: navigation, search

Merchantilism, protectionism and industrial policy (AKA dirigisme) have a long history of being effective in the US, Great Britain, postwar France, etc. with free trade being adopted only after dominance is achieved. These policies are responsible for the huge reductions in poverty in India, China, Korea, and the rest of eastern Asia. Government support of export industry is key.

Links

Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism (book, online)
Exposes revisionist myths of free trade and development of nations. Free trade tends to harm developing nations, and is generally not adopted unless it is forcefully imposed by other nations or a dominant position in markets is established.
China Isn’t the Only Reason to Question Free Trade [More...]
"If nudging companies to export can raise productivity, the U.S. has work to do. The country’s domestic market is so big that lots of companies don’t bother to compete globally..."
Concrete Economics: The Hamilton Approach to Economic Growth and Policy (book) (1 link)
History, not ideology, holds the key to growth. Brilliantly written and argued, Concrete Economics shows how government has repeatedly reshaped the American economy ever since Alexander Hamilton’s first, foundational redesign.
Does mercantilism "work"? [More...]
Noah Smith points out that free trade versus mercantilism could be like a prisoner's dilemma. Unless you have a world government to enforce cooperation, defecting to mercantilism would be the dominant strategy.
Finding Better Ideas to Rebuild America [More...]
A review of Concrete Economics: The Hamilton Approach to Economic Growth and Policy. "DeLong and Cohen walk the reader through a series of historical examples of economic policies that seemed to work well. Thus, this short, almost casually sketched book is really the opening shot in a long campaign... That campaign is the quest to build a New Industrialism -- an approach to economic policy that respects the power of the private sector but isn’t afraid of an activist government."
Free Trade Delusions versus the Real World [More...]
China’s success is not due to free trade, but an aggressive, interventionist, beggar-thy-neighbour mercantilist strategy.
Libertarians: Still a cult [More...]
Claims that the US between Reconstruction and FDR was "libertarian" show an amazing ignorance of history.
My Take on the Seven Things We Need to Focus on for Equitable Growth in America [More...]
Brad DeLong presents seven progressive ideas that promote growth and simultaneously reduce inequality.
Protectionism and US Economic History [More...]
"The case for selected protectionism and also “infant industry protectionism” is a strong one. First, all the theoretical arguments in favour of complete free trade fail [....]"
Reading Hamilton From the Left [More...]
An excellent overview of how Alexander Hamilton's Federalist, dirigiste vision of state-supported capitalism was the basis for the growth of American capitalism. As opposed to Jefferson's large, patrimonial, slave-owning, agrarian elites who exported primary commodities and imported finished manufactured goods from Europe.
Rescuing Economics from Neoliberalism [More...]
A refreshing antidote to neoliberal ideology, stuffed with more excellent writing and economic ideas than are easily appreciated. "The fatal flaw of neoliberalism is that it does not even get the economics right. It must be rejected on its own terms for the simple reason that it is bad economics."
The Case for Protecting Infant Industries [More...]
"Shielding young companies helped the U.S. economy flourish once. It wouldn’t hurt to revisit the idea."
The Great Transformation: The Political and Economic Origins of Our Time (book, online) (1 link)
Explains the socially constructed nature of "free markets", as opposed to "spontaneous order". A major work of economic history.

Quotations

[...] the counter-mercantilist pattern imposed by Marshall's unusual Pax Americana favored transferring low level, labor intensive industries (e.g. textiles) en masse to poor regions around the globe in a cascade sequence that uplifted, successively, Germany and Japan, then Korea and Taiwan, then Malaysia and Singapore and so on, until right now this program of "foreign aid via WalMart" is raising up more than a billion people in China and India at the same time.
David Brin, "American Exceptionalism... versus what has made America exceptional"
We are going to need a bigger and better government. The private unregulated market does not do well at health-care finance, at pensions, or at education finance. The private unregulated market does not do well at research and early-stage development. The private unregulated market does not do well with commodities that are non-rival, or non-excludible, or produced under conditions of greatly-increasing returns to scale. We are, in all likelihood, moving into a twenty-first century in which these sectors will all be larger slices of what we do. Thus in the twenty-first century a well-functioning economy will need a larger government share in the economy than was needed in the twentieth century.
Brad DeLong, "My Take on the Seven Things We Need to Focus on for Equitable Growth in America: Thursday Focus"
Without question, Pax Americana was the best and least hated of all grand paxes. [...] the U.S. defense umbrella has, since 1945, allowed most nations to spend far, far lower fractions of national income on warriors than at any time in history, allowing them to divert more to education and development. Look up the stats and be amazed! And Steven Pinker's proof that violence has plummeted under the era of Pax Americana.
David Brin, "Pondering Pax Americana and the government shut-down"
The state is the necessary but not sufficient pre-condition for capitalism’s development. There is no creative destruction, competition, innovation, and accumulation without the “shadow socialism” of the public sector and state planning.
Christian Parenti, "Reading Hamilton From the Left"
[...] a huge part of the problem is the Jeffersonian notion that “the government that governs best is the one that governs least.” While that is true as regards individual liberty, it is absolutely dangerous to think that way as regards the economy.
Christian Parenti, "Reading Hamilton From the Left"
The fatal flaw of neoliberalism is that it does not even get the economics right. It must be rejected on its own terms for the simple reason that it is bad economics.
Dani Rodrik, "Rescuing Economics from Neoliberalism"
A journalist calls an economics professor for his view on whether free trade is a good idea. The professor responds enthusiastically in the affirmative. The journalist then goes undercover as a student in the professor's advanced graduate seminar on international trade. He poses the same question: Is free trade good? This time the professor is stymied. "What do you mean by 'good?'" he responds. "And good for whom?" The professor then launches into an extensive exegesis that will ultimately culminate in a heavily hedged statement: "So if the long list of conditions I have just described are satisfied, and assuming we can tax the beneficiaries to compensate the losers, freer trade has the potential to increase everyone's well being." If he is in an expansive mood, the professor might add that the effect of free trade on an economy's long-term growth rate is not clear either and would depend on an altogether different set of requirements.
Dani Rodrik, "Rescuing Economics from Neoliberalism"