By Donald Marron
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Extra info for 30-Second Economics
Ultimately, a controlled and constant increase of the money supply will keep inflation low while expanding economic activity and employment. 3-SECOND CRASH Control your money and the rest will follow! 3-MINUTE BOOM The application of monetarist policy is often associated with a significant reduction in the money supply as a means to reduce growing inflation rates. The argument is that in the long term, stability and growth will result, as happened after the United States’ successful battle against inflation in the early 1980s.
In today’s world, mercantilism mostly goes by the name of economic nationalism or as the theory of export-oriented growth. Many critical economists, such as Ha-Joon Chang, use mercantilism to criticize globalization. He argues that globalization and the free market have “kicked away the ladder” of state intervention and protectionism that rich countries once used to develop strong economies from beneath the feet of today’s poor and developing countries. 3-SECOND CRASH Keep the foreigners out and your money in and make sure you always sell abroad more than you buy—it’s nationalism for the economy.
This way, both the principle of state ownership of the means of production and the efficiency of the market mechanism coexist. This model has never been applied as such, although some Soviet-style economies, including the USSR under Mikhail Gorbachev, attempted in the 1970s and 1980s to adopt its main idea—by limiting central planning and allowing individual state-owned firms managerial autonomy. Today, China—since the late 1970s under Teng Hsiao-p’ing—Vietnam, and Laos are the economies that come closest to market socialism, although they have a significant private sector and no price-setting authority.