Both in the ideology of marcantilism and liberalism, of course, each has its own strengths and weaknesses. On the basis of thinking the market system in these two ideologies is that it can increase strength as well as security within the state, however, it should be noted that the approaches in the two ideologies to the market system certainly have their own differences and tensions that still exist today.
When viewed from a historical perspective, according to Robert (2008) marcantilism is the oldest ideology and is considered important in the international economy, this is because this theory contributes to the idea of a system of "coercion" as the basis of all nation-states. The development of classical marcantilism theory is associated with the rise of the modern state in Europe in the 15th-18th centuries, which is a period of time when the idea of state intervention in the market was aimed at strengthening a country's security. In marcantilism states that the prosperity of a country is determined by the amount of investment and assets owned and the size of its foreign trade.
According to the theory of marcantilism, states will be able to achieve wealth and power by relying on their efficient military and economic capabilities to protect themselves from foreign invaders. Wealth and also power are considered as two inseparable parts in the process of building a prosperous and secure nation and state. In a sense, wealth and power revolve in a vicious circle until the ultimate goal is to generate wealth, which in turn will increase power. Therefore, if a country fails to protect itself from threats and foreign invaders, then that country will easily be overthrown and end up in weakness and poverty. It means, a country must be rich to make a nation rich and inhabited by rich people, for people who are poor, weak and marginalized will be considered strange and also different. The most important key in achieving wealth and power from a marantilist perspective is to promote export activities and limit import activities in order to produce a trade surplus value which then becomes wealth and strength for a country. The wealth and strength of this country or nation can be evaluated based on the accumulation of gold and silver owned. Therefore, a profitable trading system will reduce imports and increase export activities. The most important key in achieving wealth and power from a marantilist perspective is to promote export activities and limit import activities in order to produce a trade surplus value which then becomes wealth and strength for a country. The wealth and strength of this country or nation can be evaluated based on the accumulation of gold and silver owned. Therefore, a profitable trading system will reduce imports and increase export activities. The most important key in achieving wealth and power from a marantilist perspective is to promote export activities and limit import activities in order to produce a trade surplus value which then becomes wealth and strength for a country. The wealth and strength of this country or nation can be evaluated based on the accumulation of gold and silver owned. Therefore, a profitable trading system will reduce imports and increase export activities.
The most visible strength of marcantilism ideology is the domination of states as a means of economic development and the main actors in international relations. Because national production in a country will become stronger and the country's trade balance will experience a surplus. Meanwhile, the weakness of marcantilism is that the government views state power in terms of a "zero-sum game", which means that if a country gains, then other competing countries will lose. In this perspective, trade, investment, and also economic relations enter into a conflict conception. This assumption assumes that it does not have true international economic relations because there are possible benefits for all if cooperation occurs. This mindset believes that dependence on other countries will lead to countries that are weak and also vulnerable if import provisions are cut. This kind of thinking will create a hostile environment as well as conflict as all nations will seek wealth and power. Seeing the nature of international economic relations as a zero-sum game, the basic assumption in marcantilism is that the core of economic relations is conflict. Therefore, the struggle between countries for economic resources is inherent and inevitable. However, all arms race activities as well as military exercises would be very expensive and could lead to budget deficits and economic inefficiencies. Not only that, development of the industrial sector without regard to market conditions or comparative advantage can weaken the people's economy. This is in accordance with Adam Smith's statement that currently the tendency to identify industries with strength can cause suffering to the country's economy.
Marcantilism and liberalism are opposites of each other. Marcantilism places more emphasis on the role of national policy in operating economy, while liberals, on the other hand, distinguish economics from politics and assume that each domain operates independently because of certain rules and logic. The idea of liberaism emerged in Great Britain, the United States, and also Western Europe in the 18th century to challenge the domination of marcantilism in the government sphere. Adam Smith in Eisenbrauns (2007), the state must try to direct its officials, its human resources in any way, they must use state power to facilitate their people,This view is then reflected in the assumptions of liberalism developed to challenge the mercantilist proposition.
The theory of liberalism challenges the framework of mercantilism with the following propositions:
First, liberal economic theory is committed to free markets or free trade, Smith adds that economic growth is a function of the degree of division of labor, which then depends on market scale. Smith strongly opposed barriers such as import substitution and import tariffs imposed by mercantilists that prevented the exchange of goods and market enlargement. Thus, to achieve wealth, countries do not have to produce manufactured goods but they have to focus on primary commodities. By doing so, countries can make better use of it by producing the goods they can produce at relatively low cost and trading them for commodities that require high production costs at home. Therefore, according to liberalism, government should take minimal intervention in economic activities to achieve maximum efficiency. Second, liberals assume that the market will increase unexpectedly to meet societal needs, once operational it will work well with its internal logic to facilitate exchange and enhance the social economy. Third, liberalists assume that in a harmonious relationship of interests there is competition between producer and consumer markets, which will result in economic growth and efficiency maximization.
In a sense, liberalism assumes that markets operate in a society in which individuals can obtain complete information and thus choose the most profitable thing. This shows that liberalism reflects a commitment to equality and individual freedom. Thus, the value of goods and services is determined individually because market dynamics and this creates a flexible economy where any change in price will lead to changes in patterns of production, consumption, and economic institutions.
Meanwhile, liberalism continues to dominate the discipline of economics. Economists continue to make good comments about the power of Liberalism, they continue to provide analytical tools and policy frameworks that can help a country to acquire scarce natural resources by exchanging hands with other nations. Then there is the pricing mechanism (the natural price of free competition) that liberalism guarantees for mutual benefit and so on, and creates social efficiency. However, there have also been critics against economic liberalism. The main criticism is that the proposition is basically that there are no economic actors and there is no competition in economic markets that reflects reality. That is, if liberals claim that economic liberalism guarantees equality and freedom private, and the exchange is voluntary. But in reality these exchanges are rarely free and similar, but rather on the basis of being imposed by other political factors such as monopoly or monopsony. As a result, liberals ignore the influence of factors non-economic effects on exchange as well as exchange effects on politics. Another limitation of liberalism is the separation of economics from other aspects of society and accepting the socio-political framework it has been given, including the division of powers and property rights. In other words, liberals don't look at the global situation, they focus on the economy and try to maximize profits. Because, some argue that liberal economic analysis is biased by statics in the dynamics of contemporary international political economy. The fact is that the major changes in business, technology and policy are very powerful and go beyond the framework of unanimous economic analysis of liberalism.
From the explanation above, it is very clear that marcantilism and liberalism certainly have their respective weaknesses and strengths. This ideology is actually not the only ideology that dominates the global economy today, due to the development of science. Other ideologies such as communism, Marxism, and others are also one of the other ideologies that also have a major influence on the global economy. Of course, every country has its own goals and interests before deciding to implement this ideology in its economic and political world. returning to marcantilism and also liberalism, these two market systems are none other than to increase the strength and security of the state, but it should be noted that the approaches given are of course different. For liberalism wants to promote the operation of free markets and also assumes that the success of an individual as a supporting actor for the welfare of universal society. Meanwhile, marcantilism always considers the priority of the country's security. Marcantilism has the opinion that in order to achieve prosperity, justice, peace, economic activity must be under the goals of state development and also the interests of the state. It should also be noted that in the contemporary world, liberalism continues to gain a more dominating position in the discipline of economics, because it has the support of NGOs, IGOs, and also the WTO.
