Contrast Liberal and Mercantilist Theories of International Political Economy and Consider Which Approach Is Most Apparent in the Contemporary World.
The following seeks to contrast liberal and mercantilist theories that have developed to describe and analyze the international political economy. Once the contrasts have been made conclusions as to which theory is the most apt or apparent in the contemporary world will be drawn. Both liberal and mercantilist theories have advantages and disadvantages when used to understand the international political economy in the present global system. Perhaps it would be more apt to describe the liberal theory as being neo-liberal as it has undergone a recent revival in popularity.
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Liberalism was apparently strongest in the international political economy during the 19th century as Britain dominated world trade removing barriers in it's way to free trade. Liberal capitalism seemed to be unstoppable during this period. The economic elites of the less developed states were content to play a subordinate role as they were still making profits for themselves (Hobsbawm, 1975, p. 38). However, there were moves away from free trade towards a more mercantilist or restrictive trade practices most notably in Germany and United States whilst even the British started to doubt free trade. After World War One liberal theory seemed to decline in prominence within the international political economy (Hobsbawm, 1987, p. 54).
It was a great paradox that liberal theory would regain some of its prominence in international political economy after 1945 just as the free market within most of the world was either tempered by welfare states or communist takeovers. The United States promoted freer trade both