Essay on Mercantilism vs. Communism

Indeed, similarly to communism in Eastern Europe of the 20^th century, mercantilism of the 15^th-17^th centuries was a politicized economic system in which the behavior of entrepreneurs was strongly regulated. The state did not allow the consumer decide what should be produced, it reserved the right to select and develop the economic activities that were considered desirable, and prohibit or suppress what seemed inappropriate, preventing what Drakulic calls “individual responsibility in every single area of life”[1]. Mercantilist governments considered justified the intervention in the field of private interests, since at the time it seemed inconceivable that a nation could prosper by spontaneous efforts of its citizens. From this point of view, the prosperity and order could only be imagined in the form of subordination of the activities of individuals and their associations to the highest interests of the state. In addition, often perceived as a synonym to protectionism, Voltaire’s mercantilism[2] not only suggests the need to increase the import of wealth in the country, but at the same time to limit its exports from the country by means of high duties. In turn, the collectivist economies of Eastern Europe also proceeded from the position that the resources and natural wealth of the country should belong mainly to the society living in it[3].

Overall, neither mercantilism nor communism is their real implementations could be proud of being a practice that worked better. Thus, in most of Western Europe countries mercantilism collapsed in the late 19^th – early 20^th century, when the controversy of the system no longer able to manage complex urban society reached the limit. Although mercantilist societies and the circumstances of their decline were similar in many countries, the results were not always the same. Those European countries that managed to reconstruct the law began to develop much faster than those that resisted changes. Governments more inclined to compromise adopted the rules which gave way to the creative energy of citizens. Encouraging interdependence and specialization, facilitating access to the property and entrepreneurship, reducing the obstacles created by over-regulation, and opening up the access to government and legislation circles, the Western countries thus made the transition to a market economy with minimum violence, and maximum welfare, through the inclusion of the free trade, fair competition and democracy mechanisms.

In turn, the countries resisting changes and insisting on maintaining the mercantilist institutions did not manage to adapt their legal systems to the new reality and continued to confront the needs and aspirations of its people, turning them into “non-smiling culture”[4]. Almost all of East European countries experienced violent revolutions which led to the bloody totalitarian system and collectivist economy sharing economic instability and social unrest. In this perspective, Drakulic compares the nature of the communist system with the standard non-civilized Romanian toilets characterized with the absence of any improvement[5]. The access to market was obstructed, and the main negative features of destabilization in the existing economic structure were maintained. This led to a drop in GDP growth and overall stagnation. For this reason, as Drakulic marks throughout her work, the economy and social sphere by the end of the 20^th and early 21^st centuries were infected with de-industrialization, negative facts of “resource curse”, and frequent events provoking destructive growth; and social consciousness was exposed to total conformism and stubborn aberration, and further smashed by the pillbox effect[6].

At the same time, it should be recognized that modern capitalism emerged in the 18^th century under the domination of European mercantile system; it was then that the world’s first industrial revolution occurred. In its turn, the utopist concept of socialism and communism of Eastern Europe experienced a major failure in its very implementation and due to the limitation of market exchange, private property and competition together with excessive state regulation (also inherent in mercantilism) significantly postponed the development of market economy and the general welfare of East-European societies.