Mercantism and Liberalism
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Mercantilism and Liberalism:
The question of what role government should play in a nations economy has been a topic of endless debate ever since the nation-state first appeared. History illustrates the incessant struggle between the state and the market from the origin of mercantilism and liberalism to the present day neomercantile and neoliberal systems. The differences and similarities between mercantilism and liberalism with respect to the roles of the state and market are clearly seen in their theoretical foundations, their progression throughout history, and their performance as political economic systems. Although mercantilism and liberalism both exercise international trade as their basis for economic gain, they share few other similarities in theory. Mercantilism is based on the theory that people are like animals and need a strong government to control them. Liberalism, on the other hand, assumes people are cooperative and when one pursues their own interests the nation will benefit respectively. Mercantilism and liberalism both originated in Europe with a common goal to maximize wealth and economic performance, but have evolved into obviously different political economic systems. At present, neomercantile nations use primarily a state driven economy to ensure economic security, whereas neoliberal nations rely mostly on the market. When analyzing the performance of the two systems it is clear that neither shows an extreme advantage under all circumstances; however, mercantilism tends to perform well in developing nations and liberalism shows consistent performance in developed nations.
Apart from their reliance on international trade, the theories behind liberalism and mercantilism share very few traits...