What the Mercantilists Got Right

Dani Rodrik

No 20710, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: Economics students today learn about mercantilism through Smith’s prism, as a series of logical and policy errors that Smith clarified and settled for good. But far from settled doctrine, mercantilism encapsulated a variety of pragmatic practices that survived Smith’s critique, often to good effect. It found echo in a continuous tradition of what later came to be called “developmentalism,†running from Alexander Hamilton and Friedrich List’s advocacy of trade protection to Hans Singer and Raul Prebisch’s ideas on import-substitution and, more recently, to East Asian models of export-oriented industrialization. Three of its core tenets hold continued appeal: the primacy of production and jobs (and of their composition) over consumption; preference for close, collaborative relationship between business and government over an arms’ length relationship; and the need for contextual, pragmatic, and often unorthodox policies over universal remedies and “best-practices.â€

JEL-codes: B1 F1 O1 (search for similar items in EconPapers)
Date: 2025-10
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