"Globalization is a fact, not a policy option." - Xavier Becerra (Context: Summarizing the bipartisan neoliberal consensus that dominated American politics from Reagan to Clinton.)
"A country serves its own interests by pursuing free trade regardless of what other countries may do." - Paul Krugman (Context: Highlighting the "intellectual arrogance" of the free trade dogmas that ignored geopolitical realities.)
"[Neomercantilism is] a belief in the need for strategic trade protectionism and other forms of government economic activism to promote state wealth and power in the post-Smithian age." - Eric Helleiner (Context: Defining the core philosophy of the intellectual tradition discussed in his book.)
"The proponents of globalization resemble children in their binary way of thinking: they cannot imagine any intermediate approaches between total openness and autarkic entrenchment." - Emmanuel Todd (Context: Criticizing the lack of nuance in neoliberal economic thought.)
"The best 20 years of American economic growth took place in a period when its trade policy was protectionist while that of the United States’ major competitors was liberal." - (Context: Debunking the myth that protectionism inherently hinders economic growth.)
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The article argues that the neoliberal order, characterized by a religious-like devotion to free trade and global marketization, has effectively collapsed due to the "China shock" and the hollowing out of American industrial capacity. In its place, a "neomercantilist moment" has emerged, where states prioritize strategic trade protectionism and industrial policy to secure national power. By revisiting the works of thinkers like Friedrich List, Alexander Hamilton, and Henry C. Carey, the author illustrates that neomercantilism is a pragmatic, diverse tradition—successfully utilized by the 19th-century United States and modern China—that offers a roadmap for a "New American System" to combat current economic stagnation.
Key Takeaways
The End of Neoliberal Hegemony: The 2008 financial crisis and the 2016 election of Donald Trump signaled the death of the neoliberal consensus; the Biden administration has largely continued this shift toward protectionism.
The "Kicking Away the Ladder" Theory: Historical records show that Great Britain and the U.S. reached economic dominance through protectionism, only advocating for free trade once their industries were unrivaled.
Social Neomercantilism: Protectionism is not just about industry; it is a solidaristic policy intended to harmonize the interests of workers, farmers, and manufacturers to maintain social cohesion.
China’s Listian Strategy: China prioritizes "productive forces" (technological capacity) over simple GDP targets, using the state as a "venture capitalist" to dominate global markets.
The Cost of Free Trade: The pursuit of low-cost imports led to financialization and debt, replacing waning domestic incomes with credit while eroding the "world of atoms" (manufacturing).
Strategic Industrial Policy: Success stories in France and the U.S. demonstrate that temporary protection can foster long-term comparative advantages in high-value industries.
Detailed Summary by Topic
1. The Collapse of the Neoliberal Consensus
The author posits that the neoliberal era—architected by Reagan and facilitated by Clinton—regarded the market as infallible. However, the reality of the "China shock" destroyed these illusions. Millions of Americans lost high-end jobs, falling into "deaths of despair," while the U.S. lost its ability to build complex technology like state-of-the-art semiconductors. The political order has shifted; both Trump and Biden have abandoned the Trans-Pacific Partnership (TPP) in favor of reshoring jobs and reducing dependence on China.
2. Debunking the Myths of Protectionism
The essay challenges the neoliberal claim that protectionism always leads to ruin. Using the research of Paul Bairoch, the author shows that the most protectionist countries in the late 19th century experienced the greatest expansion.
The American Example: The U.S. was the "mother country and bastion of modern protectionism" during its most rapid growth phase (1870–1896).
The French Example: Regions shielded by Napoleon’s blockade developed lasting industrial advantages over those exposed to free trade.
3. The Intellectual Genealogy of Neomercantilism
The article traces the "Third Current" of economic thought, distinct from socialism and liberalism.
Alexander Hamilton: The first to challenge Adam Smith, advocating for state activism to build national power.
Friedrich List: Developed the theory that fledgling industries need "infant-industry protection."
Henry C. Carey: The "forgotten" American neomercantilist who advised Lincoln. Carey argued that free trade led to "barbarization" by treating humans as mere "instruments of trade," whereas protectionism fostered a healthy, diverse internal market.
4. The Chinese Neomercantilist Challenge
China is identified as the world's leading practitioner of neomercantilism. Following the 2008 crisis, Chinese leadership concluded neoliberalism was a failure and launched massive state-funded innovation programs.
Shift in Priority: China's Fourteenth Five-Year Plan abandoned specific GDP targets to focus on self-reliance in technology and raw materials.
Market Dominance: Through aggressive industrial policy, Beijing has suppressed Western R&D in sectors like telecommunications (Huawei/ZTE).
The Financialization Trap: China’s trade surpluses allowed U.S. consumers to borrow heavily, creating an "illusion of prosperity" while American manufacturing was supplanted.
5. Conclusion: Building the New American System
The "neomercantilist moment" has arrived, but a new American policy paradigm is not yet fully formed. The author argues that for the U.S. to survive, it must stop trading away jobs for a "vague concept of a new international order" and instead focus on rebuilding its wealth-producing forces.
Data & Figures
Data Point
Value
Context
High-Growth Protectionist Era
1870–1896
The phase of most rapid U.S. growth occurred during high protectionism.
Liberal Trade Period
1860–1892
The brief era of liberal trade in Europe, which ended in a great depression.
China Industrial Spending
~2x
China spends double the amount on industrial policy compared to South Korea.
Telecom R&D Loss
20%
Estimated global R&D increase if Ericsson/Nokia held Huawei/ZTE's market share.
5G Essential Patents
75%
Estimated increase in essential patents if Western firms controlled the market share currently held by Chinese firms.
U.S. Growth Rank
#1
The U.S. was the world's most protectionist country during its rise to industrial supremacy.
Stories & Anecdotes
"Kicking Away the Ladder": Friedrich List used this metaphor to describe the British. Once they used protectionism to climb to the top of the economic mountain, they "kicked away the ladder" by telling other nations that protectionism was a sin, ensuring no one else could challenge them.
Napoleon's Blockade: A case study by Reka Juhasz showed that French regions accidentally protected from British competition by the Napoleonic Wars developed superior industrial technology that persisted for decades after the wars ended.
The "Hefei Model": A modern Chinese anecdote where local governments act like venture capitalists, investing state funds into private tech projects and exiting only once the companies are mature and successful.
The "American System" in Japan:Henry Carey's neomercantilist theories were a primary inspiration for the Meiji era reformers who modernized Japan.
References & Recommendations
Books:
The Neomercantilists: A Global Intellectual History, Eric Helleiner - The primary subject of the review; explores the diverse global roots of neomercantilist thought.
The Rise and Fall of the Neoliberal Order, Gary Gerstle - Discusses the ideological "constellations" that shaped U.S. politics.
The National System of Political Economy, Friedrich List - A foundational text on infant-industry protection.
Economics and World History: Myths and Paradoxes, Paul Bairoch - Provides the statistical data debunking free trade myths.
Articles/Research Papers:
"Temporary Protection and Technology Adoption", Reka Juhasz - Proof of the benefits of the Napoleonic blockade on French industry.
"Red Ink: Estimating Chinese Industrial Policy Spending", CSIS - Quantitative analysis of China's massive state subsidies.
People Referenced:
Robert Lighthizer: Former U.S. Trade Representative; a modern "heretic" who advocated for tariffs.
Sun Yat-sen: Chinese revolutionary who viewed infrastructure as "weapons for the promotion of industry."
Dani Rodrik: Harvard economist who identifies China as the "mercantilist torchbearer."
Speakers & Credentials
Krzysztof Tyszka-Drozdowski (Author): A writer and analyst focusing on political economy, history, and the intersection of technology and statecraft.
Eric Helleiner (Primary Source): Professor of Political Science at the University of Waterloo, specialized in international political economy.
Actionable Next Steps
Re-evaluate Industrial Policy: Policymakers should move beyond the "binary" choice of free trade vs. autarky and explore sector-specific protectionism for critical technologies (e.g., chips, 5G).
Study the "Hefei Model": Western local and state governments could explore acting as venture catalysts for domestic manufacturing startups.
Monitor the CHIPS Act: Analyze the CHIPS and Science Act as a potential first step toward a New American System.
Prioritize "Productive Forces": Shift corporate and national focus from short-term asset value maximization toward long-term growth and self-sufficiency in the "world of atoms."
Jun 1, 2026
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