The Three IPE Theories and Appropriateness of Marxism
Within international economic policy, there are three main ideologies. International economic policies tend to fall under mercantilism, liberalism, or Marxism. As the study of economics, technologies, and organizations all evolved, these ideas came into being. Each way of thinking comes with assumptions, policies, pros, and cons.
Mercantilism’s most basic assumption is that a country’s only true measure of strength and wealth is the amount of money that it possesses. This line of thinking leads one to believe that a country must establish a trade surplus in order to become more powerful and ensure prosperity. Since a trade surplus is valued highly, foreign trade is preferred to domestic trade. There are some good points of Mercantilism. Mercantilism is especially helpful if a country is trying to protect its domestic economy and raise tax income through tariffs. (Tenney)
Mercantilism is overly concerned with power through trade surplus. Mercantilism is often associated with Imperialism. This is because countries need to acquire more resources and more markets. Imperialism allows countries to acquire …show more content…
In a completely free trade environment, poor countries which can produce cheap goods are advantaged. Particularly, countries where labor is cheap have the advantage. This leads and maintains several problems. For example, countries with cheap labor may have cheap labor because of human rights abuses or because of lower standards. For example, countries with cheap labor costs may have child laborers or laborers who work ridiculous hours. These emerging markets may also hurt domestic markets. It is conceivable that goods produced abroad may be cheaper than locally produced goods. If this is the case, then the local producers are set up for failure. Liberalism advocates for little regulation of business and this can be harmful as well.
Within international economic policy, there are three main ideologies. International economic policies tend to fall under mercantilism, liberalism, or Marxism. As the study of economics, technologies, and organizations all evolved, these ideas came into being. Each way of thinking comes with assumptions, policies, pros, and cons.
Mercantilism’s most basic assumption is that a country’s only true measure of strength and wealth is the amount of money that it possesses. This line of thinking leads one to believe that a country must establish a trade surplus in order to become more powerful and ensure prosperity. Since a trade surplus is valued highly, foreign trade is preferred to domestic trade. There are some good points of Mercantilism. Mercantilism is especially helpful if a country is trying to protect its domestic economy and raise tax income through tariffs. (Tenney)
Mercantilism is overly concerned with power through trade surplus. Mercantilism is often associated with Imperialism. This is because countries need to acquire more resources and more markets. Imperialism allows countries to acquire …show more content…
In a completely free trade environment, poor countries which can produce cheap goods are advantaged. Particularly, countries where labor is cheap have the advantage. This leads and maintains several problems. For example, countries with cheap labor may have cheap labor because of human rights abuses or because of lower standards. For example, countries with cheap labor costs may have child laborers or laborers who work ridiculous hours. These emerging markets may also hurt domestic markets. It is conceivable that goods produced abroad may be cheaper than locally produced goods. If this is the case, then the local producers are set up for failure. Liberalism advocates for little regulation of business and this can be harmful as well.