Protectionism

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Protectionism

 

an economic policy used by a state to support the national economy. Protectionism is carried out by means of commercial and political barriers that protect the domestic market from the import of foreign goods and lower the competitiveness of foreign goods with domestically produced goods. It characteristically involves financial encouragement of the national economy and the stimulation of exports. V. I. Lenin stressed protectionism’s link with a certain historical structure of public economy and with the interests of the class that is dominant in this structure and that relies on the support of the government. “Protection or Free Trade is an issue between entrepreneurs (sometimes between the entrepreneurs of different countries, sometimes between different factions of entrepreneurs in a given country)” (Poln. sobr. soch., 5th ed., vol. 2, p. 190).

The nature of protectionism and thus the elements of trade policies (prohibition of imports, duty rates, structure of tariffs, quantitative restrictions) varied depending on the general economic policy of a given epoch. In the period of the primitive accumulation of capital and the emergence of capitalist relations, the theorists and practitioners of protectionism were the mercantilists, who demanded that state authority protect domestic industry from foreign competition. Protectionism was widespread in France (Colbert’s protectionist tariffs of 1664 and 1667), the Austrian monarchy, many German states, and Russia (first under Peter I). Customs protection played an important role in the development of the manufacturing and factory industry. Under the banner of protectionism, Napoleonic France waged an economic struggle against Great Britain and declared the continental blockade of 1806–14. The era of pre-monopoly capitalism was characterized by “defensive” protectionism in most countries of Western Europe and in the USA. Defensive protectionism sought to protect national industry from the more developed industry of Great Britain, which pursued from the 1840’s a policy of “free trade.” K. Marx and F. Engels provided a profound analysis of protectionism and free trade in their works. The period in which capitalism entered the monopoly stage was characterized by “offensive” protectionism. Offensive protectionism protects from foreign competition not the weak industries but the most developed and highly monopolized ones, in order to win foreign markets. If monopoly profits are obtained within a country, it becomes possible to sell goods in foreign markets at low, dumping prices.

The present-day protectionism of developed capitalist states expresses primarily the interests of large national and international monopolies. It mainly involves the capture, division, and redistribution of markets of goods and capital. It is carried out with the aid of a complex system of state-monopoly measures, which control and regulate foreign trade. The increase in internationalization of capitalist production and the further development of state-monopoly capitalism lead to the point at which, in addition to traditional methods of border regulation, increasing use is made of domestic economic and administrative levers for protectionist purposes. In addition, currency-financing and monetary-credit restrictions are used to limit the use of foreign goods. One component of present-day protectionism is agrarian protectionism, which arose during the world agrarian crisis at the end of the 19th century and which protects the interests of national monopolies.

The development of capitalist integration has led to the appearance of a kind of “collective” protectionism, which is carried out through coordinated activity by groups of developed capitalist countries. An example is the foreign-trade policy of the Common Market countries. A specific feature of present-day protectionism is the adaptation of the capitalist states’ trade policies to the new situation that has evolved in the world.

The protectionism of developing countries is of a fundamentally different character. Their foreign economic policy is aimed at protecting the branches of the national economy that are developing from expansion by the imperialist powers. This protectionism helps the young sovereign states achieve economic independence.

REFERENCES

Marx, K. “Rech’ o svobode torgovli.” In K. Marx and F. Engels, Soch., 2nd ed., vol. 4.
Engels, F. “Protektsionizm i svoboda torgovli.” Ibid., vol. 21.
Lenin, V. I. K kharakteristike ekonomicheskogo romantizma. Poln. sobr. soch., 5th ed., vol. 2.
Lenin, V. I. Imperializm, kak vysshaia stadiia kapitalizma. Ibid., vol. 27.
Mileikovskii, A. G. “Mezhdunarodnoe razdelenie truda i burzhuaznaia politicheskaia ekonomiia.” In Burzhuaznaia politicheskaia ekonomiia o problemakh sovremennogo kapitalizma. Moscow, 1965.
Mezhdunarodnye ekonomicheskie otnosheniia. Edited by N. N. Liubimov. Moscow, 1969.

I. I. DIUMULEN

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