Abstract

Mercantilism is the old system of global trade and commerce that directly preceded modern standard economics. Mercantilism is usually criticized because of the restrictions on free trade and free markets imposed by governments. In this article I have developed a deeper criticism of mercantilism as an extension of the basic strategy for operation of an individual household or business to a set of principles for running an entire economy. Although intuitive, the extension in thinking is seriously flawed. Nowadays, mercantilist thinking is largely officially absent from modern international trade relations, but the deeper criticism discussed in this article clearly implies that mercantilist thinking more or less completely dominates the organization of the domestic economies of most nations worldwide. I have given this phenomenon the name “domestic mercantilism.” Once the groundwork is done, I argue that several “wisdoms” in standard economics on topics such as the role of taxation, the value of resource extraction, foreign investment, and the relationship between public and private are clearly bad economic science, because they are based on the error of mercantilist thinking in the domestic economy. Finally, I have discussed ways in which the new sustainable economics is, quite rightly, eliminating mercantilist thinking from the organization of sustainable economies, making sustainable economics the greatly preferable model (over standard economics).