Liberalism and Mercantilism
Liberalism and Mercantilism
International political economy is an important subdiscipline of international relation. It has three main ideologies, Liberalism, Mercantilism and Marxism. In this essay there will be three parts, first part is to demonstrate what the Liberalism and Mercantilism are on the perspective of international political economy and then the second part is to compare and contrast these two ideologies of political economy. At last, give a conclusion to the Liberalism and Mercantilism.
Liberalism
The liberal perspective on political economy is embodied in the discipline of the Western economics (Gilpin, 1987). It emphasizes the individual interests, the freedom and the maximization of economic benefit. Economic liberalism is based on the theory of “invisible hand” of Adam Smith and founded by David Ricardo in the seventeenth century. In the 1940s, Friedrich August von Hayek made a renaissance and a new explanation to it. Moreover, Milton Friedman made great contribution to the economic Liberalism in the 1970s. The basic standpoints of economic Liberalism are that people should be treated as the “rational economic animal” and market emerges spontaneously to satisfy human need. When the market running it develops according to its internal logical rule, rather than people’s will. Even through economic activity can enhance national power, the core of it is to bring beneficial to each consumer. Due to each person are both consumer and producer, so every action of each person should be a rational choice in the market. Because resources are scarce, every decision involves an opportunity cost, a tradeoff among alternative uses of available resource (Samuelson, 1980, p.27). Get something at the cost of giving up something else. Hence everyone’s rational choices contribute to a balance among various powers in the market. The balance of these various powers makes the market have its intrinsic stability. That means the market is not only an automatic
International political economy is an important subdiscipline of international relation. It has three main ideologies, Liberalism, Mercantilism and Marxism. In this essay there will be three parts, first part is to demonstrate what the Liberalism and Mercantilism are on the perspective of international political economy and then the second part is to compare and contrast these two ideologies of political economy. At last, give a conclusion to the Liberalism and Mercantilism.
Liberalism
The liberal perspective on political economy is embodied in the discipline of the Western economics (Gilpin, 1987). It emphasizes the individual interests, the freedom and the maximization of economic benefit. Economic liberalism is based on the theory of “invisible hand” of Adam Smith and founded by David Ricardo in the seventeenth century. In the 1940s, Friedrich August von Hayek made a renaissance and a new explanation to it. Moreover, Milton Friedman made great contribution to the economic Liberalism in the 1970s. The basic standpoints of economic Liberalism are that people should be treated as the “rational economic animal” and market emerges spontaneously to satisfy human need. When the market running it develops according to its internal logical rule, rather than people’s will. Even through economic activity can enhance national power, the core of it is to bring beneficial to each consumer. Due to each person are both consumer and producer, so every action of each person should be a rational choice in the market. Because resources are scarce, every decision involves an opportunity cost, a tradeoff among alternative uses of available resource (Samuelson, 1980, p.27). Get something at the cost of giving up something else. Hence everyone’s rational choices contribute to a balance among various powers in the market. The balance of these various powers makes the market have its intrinsic stability. That means the market is not only an automatic