Europe, German Mercantilism and the Current Crisis

Europe has not been distinguished by an assertive and cooperative economic policy stance in the aftermath of the current crisis, to the point that pundits have looked at the so-called G2 as the most authoritative global body. German mercantilist policies are said to be behind the European policy stance and a source of regional and global imbalances. After a brief examination of the main pillars of European economic policy and German behaviour during the present crisis (sections 1 and 2), these notes suggest an embryonic interpretation of the origins of mercantilist behaviour, dwelling on the nature of mercantilism in economic theory and commercial practice (section 3), and of the allegedly German mercantilist model (section 4). The thesis I suggest is that in the German case, the national mystique of a trade surplus may have had a role in disciplining the labour market and at the same time assuring profits. Mercantilism can also be a natural course once it is recognised that absolute and not necessarily relative advantages may determine participation in international trade.