The Neo-Mercantilists

A lot of fingers have been pointed at various segments of our society as the cause of the
current economic and financial downturn, but in reality the problem goes much deeper than one,
or even a few, groups. We can blame the greedy Wall Street traders, negligent bankers, over paid
and incompetent CEO’s, or undercapitalized home buyers, but these causes are only symptoms
of the actual problem we’ve been facing for almost a generation. More than anything, it has been
the culture of neo-mercantilism that has been so pervasive in our society since the Great Bull
Market burst onto the scene in 1982 and changed the way we viewed the relationship between
work and real production and wealth.
The mercantilists of old felt the wealth and strength of the state took precedence over the
wealth and well being of the individuals which comprised the state. They believed that nothing
could provide for the strength of the state as much as massive amounts of precious metals in their
coffers. After all, it took gold and silver to finance their wars of exploitation and that was what
made a nation strong.
Modern technology has eliminated the necessity of gold and silver. In the age of
computerized, paperless money and bank and financial market transactions, precious metals have
lost their importance as money and wealth: they are merely another commodity to trade. To the
neo-mercantilists, the wealth of the nation is the size and strength of its financial markets: It=s
not the goods and services that improve the daily lives of the average citizen, it=s the volume of
stocks, bonds, options, and the dozens of fancy financial derivatives that make a nation strong.
This doesn’t mean a neo-mercantilist doesn’t care about the production of real, beneficial
goods and services. Of course they do. But they only care about actual production because it
affects the bottom line of the highly capitalized international corporations and that=s what
drives the financial markets. The real goods and services are merely an unfortunate, but
necessary, by-product of the economy as viewed by a neo-mercantilist.
Over 200 years ago Adam Smith spoke out against the mercantilists of his day and gave us a
somber warning
Adam Smith described the neo-mercantilists as well as the mercantilists of his era when he
wrote
... itis by no means for the benefit of the workman, that they endeavor either to raise the price of
the complete work, or to lower that of the rude materials. It is the industry which is carried on for
the benefit of the rich and the powerful, that is principally encouraged by our mercantile system.
That which is carried on for the benefit of the poor and indigent, is too often, either neglected, or
oppressed.
(Wealth of Nations; Book IV, Chapter VIII)
Smith offered some wise words to the mercantilists of his day and they are just as important
now:
Consumption is the sole end and purpose of all production; and the interest of the
producer ought to be attended to, only so far as it may be necessary for promoting
that of the consumer. ...in the mercantile system, the interest of the consumer is
almost constantly sacrificed to that of the producer; and it seems to consider
production, and not consumption, as the ultimate end and object of all industry
and commerce.
Yes, in reality it=s not the financial markets that matter most but the goods and services
consumed by the average people. Our quality of life is not improved by a soaring Dow but by the
goods and services we use every day of our lives. We are naive if we think we can all benefit
from booming stock and bond markets. It is a simple mathematical impossibility for all to be
wealthy from profits produced from the trading of paper.
It is important to note that Smith did not suggest that all producers profit from a mercantile
system. Smith realized some producers suffered more than the consumers:
AIt cannot be very difficult to determine who have been the contrivers of this
whole mercantile system: not the consumers... whose interest has been entirely
neglected; but the producers, whose interest has been so carefully attended to; and
among this latter class our merchants and manufacturers have been by far the
principal architects. In the mercantile regulations... the interest of our
manufacturers has been most peculiarly attended to; and the interest, not so much
as the consumers, as that of some other sets of producers, has been sacrificed to
it.@
And who are these other producers whose interest has been most sacrificed to the interests of
the merchants and manufacturers? He mentioned them briefly in an earlier quote: the producers
of the Arude materials@whose prices the mercantilists try to lower. These are the real producers
of real wealth. They are the producers of the raw materials which the manufacturers turn into
finished goods and the merchants sell. They are the workers who produce the labor which turns
the raw materials into finished goods for the manufacturer. They are the clerks who operate the
cash registers and the workers who stock the shelves with the finished goods the merchants sell.
Now, 232 years after Adam Smith published Wealth of Nations, how little things have
changed. The neo-mercantilists of today have bought the government and written the rules to
benefit themselves and they completely neglect the interests of the consumers, the workers, and
any business person whose business isn’t a major international corporation. The manufacturing
neo-mercantilists send jobs overseas in search of less expensive labor so they can sell their
products at a lower price than their competitors. But the primary goal isn’t to benefit consumers
with lower prices but to gain market share and fatten their bottom line. The merchant neo-
mercantilists, like Wal-Mart, force their suppliers to lower their prices using any and all means
possible. They import profusely from low wage, no benefit countries. They pay their own
employees low wages and work them less than full time to avoid paying benefits. Is their
primary concern to provide consumers with the lowest prices possible? Don=t be silly. Once
again, their primary goal is to gain market share and fatten their bottom line
Sure, lower prices benefit consumers. But lower prices only benefit those consumers who
haven=t lost their jobs to a low wage worker in a third world country. Lower prices only benefit
those consumers who aren’t forced to take a job at low pay, no benefits and less than 30 hours
per week of work: the very conditions Wal-Mart likes to offer their employees. Low prices mean
nothing to the unemployed whose unemployment compensation is gone and they don=t mean
much more to the underemployed who have to work two or three jobs just to stay afloat while the
CEO=s of the neo-mercantilist corporations are raking in millions upon millions of dollars .

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A lot of fingers have been pointed at various segments of our society as the cause of the

(Wealth of Nations; Book IV, Chapter VIII)

(Wealth of Nations; Book IV, Chapter VIII)

(Wealth of Nations; Book IV, Chapter VIII)

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