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CHAPTER 3
WEALTH AND POWER: THE MERCANTILIST PERSPECTIVE
Overview
We have not made major revisions to the version of this chapter in the 6th edition of
Introduction to International Political Economy. We continue to stress the main features
of mercantilism and contrast it with the other three IPE perspectives. There is a new box
on U.S. complaints about China’s industrial policies. Mercantilism continues to be one of
the mainstays of IPE perspectives and frameworks. Even though it is not as popular an
idea as it was in the past, it has always been a tool states use to achieve a variety of
economic and political objectives.
Later in the chapter we examine how states are using a host of sophisticated technologies
to defend their economies in an era where it has become increasingly difficult to
determine whether or not competitors intend to physically harm one’s state and its
businesses. Complicated linkages between major international problems and states’
interests make it increasingly difficult for states to resolve disputes through negotiations.
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In cases of mercantilism and especially neomercantilism, intentions mean a lot.
Curiously, Trump also often claims that he dislikes globalization and associates it with an
elitist corporate outlook, which is strange given his plethora of investments around the
Key Terms
•
mercantilism
•
classical mercantilism
•
zero-sum
•
neomercantilism
•
nation
Teaching Tips
• Begin with an issue such as Trump’s willing to start a trade war to help U.S. businesses and
industries that he says have been treated unfairly. He also claims that some kinds of imports
• There are two strong themes interwoven in this chapter, and it is a good idea to use them
explicitly to help students organize the large amount of information contained here. The first
theme is that mercantilism is three different things: a philosophy, a period of history, and a set
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• Explain the relationship between mercantilism and realism. How are they similar and
• There is a lot of historical detail in this chapter, and some specifics will be covered again later
in the text. Since students often know little of modern history, they may need some help with
this material. You can be most helpful if you choose a particular historical issue that you are
• As you work through this chapter, stress the continued relevance of mercantilist–realist ideas,
especially related to globalization, the global financial crisis, or trade policies of the Trump
• A good class debate can be had over whether or not President Trump is truly a
neomercantilist. (See also a related essay question below.) Such a debate might clarify for
• Point out to students that states sometimes enact ostensibly mercantilist policies in pursuit of
non-military and non-economic goals. In this chapter we point to examples of the EU and
1. Explain the different ways that the term mercantilism has come to be used, both theoretically
and with regard to two specific policy problems. Cover the reading for the class on the
subject and use at least one newspaper, magazine, or journal article for support.
2. Brief quotations from the writings of Alexander Hamilton and Friedrich List are given in this
3. Kenneth Pomeranz and Steven Topik state that, historically, “bloody hands and the invisible
hand often worked in concert.” What do they mean? What examples do they provide to
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4. What major changes in the international economy and security structure caused states to
adopt more neomercantilist policies?
7. Balaam and Dillman argue that Trump is not a “genuine” neomercantilist, even though he
supports significant trade protectionism and increased military spending. What beliefs and
policies of President Trump appear to be inconsistent with the mercantilist perspective?
Sample Multiple-Choice Questions
1) Which period of history is often called the “mercantilist period”?
a) the fourteenth century
2) Which political economist stated that “the power of producing is infinitely more important
than wealth itself”?
3) Which is the best statement of the relationship between wealth and power according the
d) If a nation has a large army, it will be wealthy.
4) Alexander Hamilton and Friedrich List both wrote that a strong state is necessary if a nation
intends to compete with the manufactured goods of the leading industrial power of its day.
The dominant industrial power at the time they wrote was
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d) Japan.
5) A mercantilist would most likely agree with which of the following statements about trade?
a) Specialization in comparative advantage benefits all the parties engaged in trade.
6) Which of the following U.S. policies before World War II could be considered mercantilist?
a) Creating land-grant colleges
7) Which of the following nations have at various times used strongly neomercantilist policies
to achieve economic growth in the post-World War II era?
8) Neomercantilism differs from economic nationalism in that
9) Which of the following neomercantilist policies is most likely to be viewed as malevolent?
a) Voluntary export agreements
10) The United States has a strategic stockpile of which resources?
a) Oil
11) The United States uses DARPA as an instrument of
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12) According to Patricia Goff, which non-traditional mercantilist goal have Canada and the EU
pursued in recent decades?
13) Some experts believe that the conflict over rare earths between Japan and China in 2010 was
really about control over resources in
a) the Mediterranean.
14) Most members of the Arctic Council are eager to exploit oil and natural gas resources in the
Arctic region as its ice cover disappears. Which of the following countries is not a member of
the Arctic Council?
Suggested Readings and Links
Bremmer, Ian. The End of the Free Market: Who Wins the War between States and Corporations?
New York: Portfolio, 2010.
Gilpin, Robert. Global Political Economy: Understanding the International Economic Order.
Princeton, NJ: Princeton University Press, 2001.
Goff, Patricia. Limits to Liberalization: Local Culture in a Global Marketplace. Ithaca, NY: Cornell
University Press, 2007.
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2018.
Norris, William J. Chinese Economic Statecraft: Commercial Actors, Grand Strategy, and State
Audiovisual Resources
Crouching Tiger. Peter Navarro, dir. 2016. A five-episode series on China’s rising military
