Relationship Between Power And Wealth Maximization In Mercantilist Thought
The emergence of mercantilism in the 15th century in Europe caused to build a strong connection between government and its population, because there was feudalism in the Europe in this time, which lord feudal controlled and owned all income, property and agriculture, and the people only serviced the lord feudal for living, so by coming mercantilism the feudalism was cancelled (Pariona, 2017).
This concept is not a political system, but it is an economic policy as an economic pamphlet. State must have an economic policy to regulate its economy, and also state must possesses economic sector, not individual possesses the sector, another side this concept is a first concept which talks about international political economy (Falker, 2011, p.21). It means that there was not any economic policy in this time to regulate state’s economy, so wealth and economy were in the hands of feudal and the people lived as slave in their hands.
The concept of mercantilism was used in academia for the first time when Adam Smith came in the 18th century and said that this economic policy which states used it, is mercantilism theory and it is an old economic policy. He also said that the economic policy must be changed to liberal economic system and individual owns state’s economy and wealth, not state owns the economy (Britanica Group Plc, n.d.). In other words mercantilism concept was an essential to arise a modern economic (The Economist, 2013). These points say that when Adam Smith came the international economic system divided into two theories, mercantilism theory and liberal economic system.
The term of power and authority are used interchangeably, another side wealth is the collection of all resources (Lahaye, n.d.). Mercantilists “viewed power and wealth as interrelated and interdependent objectives of state policy” (Falker, 2011, p.21). It says that the state power cannot be strong without wealth, and also wealth cannot be achieved without a powerful state. For example, Syria has a weak economy, so its power or authority is weak, that is why Syria told Russia to inter the country and keep Syria power, another side Iraq has gas and oil, and can buy weapons to keep and protect Iraq power (Gjoza, 2016).
In the beginning, mercantilists saw the power of state in saving of gold and silver, and for achieving these gold and silver, they emphasized exporting more goods with less import. And the import things were gold and silver (Pariona, 2017). This point tells us, for continuing internal production and strengthening the power of state, the import things had to be gold and silver, not goods.
The idea of saving gold was interesting by some countries such as Britain, so Britain started to collect gold, because it caused to strengthen the power of country, for that Britain put a limited trade with its colonies to import gold towards export goods (The Economist, 2013). For instance, Africa was the colony of Britain, and had much gold, but was not important for them. And Britain only imported gold in front of exported goods with Africa (Lahaye, n.d.).
Some mercantilists alarmed the idea of saving gold, and said that the state can not only rely on saving gold to strengthen country’s wealth, but state must do investment and sharing people in manufacturing. As well as, the state does not only rely on domestic trade, but must promote external trade because of achieving money and these goods which not have in mother state (The Economist, 2013).
Mercantilists believe that state must increase its wealth to make its power and military strong to keep its security towards any aggression, because the international system is anarchy (Falker, 2011, p.21). It tells that during happening any war, there is no guarantee to keep state, so in order to keep state security, the state needs a strong military. For example, Qatar is a rich country of oil, and in the threat of any aggression the state bought weapons by about 10 billion dollars to protect its country (Ahmed, 2018).
Another side, mercantilists argued that the military and power of state must service of achieving and keeping of the state wealth (Falker, 2011, p.21). This point seems that which place is in the interest of the state, the military of state must go there to keep there as state’s market. For example, Turkey sees Qatar as an important place to sell its production, so Turkey Army went to Qatar to protect its economic interests (Aljazeera, 2017).
They emphasized that the government has to increase the tariff on imports goods to increase their values, and also support the national production to heighten national goods (Pariona, 2017). This shows that if the external goods inters the country easily, they will compete with national goods and will cause to stop national production. For instance, the USA in order to keep its national steel production, the USA increased 266% tariff on China steel, because China leads of production of a lot of steel (Pattinger, 2017), another side, there are 9 factories of steel in Kurdistan region of Iraq, last year the Kurdistan Regional Government decided to heighten 100% tariff on foreign steel production, but until now the decision has not applied, this will cause to lose national production (Rudaw, 2018).
Mercantilists believe that in order to stabilize and promote infant industry, the state has to support it and also increase tariff on the same import goods (Pattinger, 2017). According to this point when the factory of tomato paste in Harir was built, the Kurdistan Regional Government could not support the factory and did not put tariff on the foreign tomato paste, as result the factory failed (Rudaw, 2018).
In the out of the view of mercantilists, according to Akam Ahmed (2018) the infant countries must use the concept of mercantilism to stabilize state wealth and have more saving wealth, then they can share to free market (Ahmed, 2018). For example, free market was the interest of Europe countries because they had used the concept of mercantilism for 300 years to stabilize state wealth and after that they went free market (Ahmed, 2018). In contrast, Kurdistan Regional Government has not been any economic policy since 1991, and not applied the concept of mercantilism, otherwise the Kurdistan Regional Government went to free market directly in these last years with no stabilizing and saving wealth, so the KRG involved an big economic crisis (Ahmed, 2018).
Mercantilists also believed that it is the duty of state which has national economy and products internal productions, and will find external market to sell its production (Falker, 2011, p.21). For instance, in 1933, Hitler took authority in Germany, and Germany had an economic crisis in this time because of World War first, so Hitler decided to regulate economic sector. After four years, Germany could have national economy, and its economy was promoted, parallel with promoting economic sector, the Germany military became stronger, so Germany told Britain and France to give them colonies, they agreed, but later Germany wanted Britain and France to have two European countries with their charcoal. Finally, in order to stop developing Germany the Second World War happened (Ahmed, 2018).
State must control all these ways and channels which are concerned with trade and shipping, and also the state must control its colonies country in order to control its colonies wealth (Pattinger, 2017). According to this point of theory, Iraq is Britain’s colony with Kirkuk’s rich oil, so these treaties which were done by KRG with Turkey and Russia was not acceptable by Britain, so the result of 16 October in Kirkuk returns to these treaties (Hopwood, 2003).
In order to have a powerful state, the state has to rely on the keeping of national security and national wealth against any aggression (Lahaye, n.d.). This point refers that each country has its own national security. For example, one of the Russia’s national security is Syria, because Russia has gas and the market of selling of Russia’s gas is Europe. Syria is an alternative way to transport Saudi Arabia and Iraq’s gas to Europe, for that Russia sees the situation as a big aggression on its national gas, so they protect current Syria (Ahmed, 2018).