‘Is Mercantilism Passé?’

The Global Studies Seminar welcomes Denison professors Xiao Jiang and Sohrab Behdad presenting “Growth, Distribution & Foreign Trade: ‘Is Mercantilism Passé?’”

Almost every modern international trade textbook presents mercantilism as an obsolete boutique in its beginning chapters. Students are seldom reminded that mercantilists were the first practitioners of economics concerned about an inherent contradiction in capitalism: micro level wage-suppression that leads to macro level sluggish aggregate demand. To mercantilists, exports were the solution to this contradiction.

During this discussion, Jiang and Behdad argue that in today’s world, mercantilism is not passe, even if it is not what it once was. In the name of export-led growth, the mercantilist system is still effective in suppressing wage share around the globe, while confronting the challenge of making a wage-led growth attainable.

They will illustrate this argument by using a Post-Keynesian trade-focused model. Furthermore, using China as an example, they will explicate the challenges countries might be facing while trying to break out from the mercantilist growth path, and some possible strategies to face these challenges.