ABSTRACT
ECONOMIC THEORY AND ECONOMIC LAW Before World War II, in comparison with postwar development, we can speak only of rudimentary international economic law. No overarching international economic regime existed, although agreements like the Berlin Act of 1885 (Congo and colonial expansion in Africa) did govern some limited areas. 1 Even though many states had adopted economic policies based upon the ideas of liberal political economy that had developed over the past 150 years, 2 the Great Depression witnessed a return to neo-mercantilist policies based upon the narrow, self-interested “every state for itself” mentality. Understanding the genesis of post-World War II economic law requires that we first briefly explore the roots of many of the theories underlying the propositions that promote “globalism” and “globalization” as the central goals of state policy. 3
Mercantilism Mercantilism emerged as a dominant economic theory during the state-building era in Western Europe (a.d. 1500-1800). “National” kings began to centralize
governmental functions (authority) in an effort to diminish the power of regional and local magnates (earls, dukes, counts, viscounts, barons) over important matters such as justice and tax collecting. As a doctrine, mercantilism had a twofold purpose: (1) to make the interests of the “state” paramount in the economic realm and thus increase the power of the state and (2) to reduce the vulnerability of the state, particularly in times of war, by achieving self-sufficiency or autarky. Because of the prevalence of war as a method of resolving disputes, being able to generate the resources necessary to support war-making on a regular basis and reducing the ways in which an adversary might weaken you were both important goals. In this sense, mercantilism as a doctrine of political economy formed a complement to the ideas of political realism. 4
Mercantile system theorists postulated that Earth had only a fixed quantity of resources. Economic competition thus was a zero-sum game. One state’s gain represented an absolute loss to others. From this perspective, there can be no mutual net gain from trade with other countries. Protectionism rather than competition in the marketplace was the rule. The goal was to maximize exports while minimizing imports. States maintained high tariffs on imports and discouraged the import of luxury goods. This attitude also underlaid the drive for colonies. Colonies provided raw materials and food as well as a closed market for goods. This situation explains the benign attitude of English authorities toward the activities of men such as Sir Francis Drake and Sir Henry Morgan, who essentially made their reputations and fortunes in the sixteenth and early seventeenth centuries by robbing Spanish ships carrying gold from Spanish colonies in the New World. It also explains the drive by Spanish explorers to find sources of gold and silver in the New World because presumably the size of a state’s treasury and accumulation of bullion were measures of its power.
