autarky

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Autarky is the quality of being self-sufficient. Usually the term is applied to political states or their economic policies. Autarky exists whenever an entity can survive or continue its activities without external assistance. Autarky is not necessarily economic. For example, a military autarky would be a state that could defend itself without help from another country. Autarky can be said to be the policy of a state or other entity when it seeks to be self-sufficient as a whole, but also can be limited to a narrow field such as possession of a key raw material.

Origin of the term

The word "autarky" is from the Greek αὐτάρκεια, which means "self-sufficiency" (derived from αὐτο, "self," and ἀρκέω, "to suffice"). The term is sometimes confused with autocracy, government by single absolute ruler. Libertarian theorist Robert LeFevre used "autarchy" and "autarchism" in the sense of self-government to describe his own political philosophy and to distinguish it from anarchism.

Modern examples

Mercantilism was a policy followed by empires, especially in the 17th and 18th centuries, forbidding or limiting trade outside the empire. In the 20th century, autarky as a policy goal was sought by Nazi Germany in the 1930s, by maximizing trade within its economic bloc and minimizing trade outside it, particularly with the then world powers - Britain, the USSR and France - with whom it would eventually go to war and thus must not rely upon. In 1930s Germany, this economic bloc consisted primarily of economically weak countries such as those in South America, the Balkans and eastern Europe (Yugoslavia, Romania and Hungary)'^[1] who had raw materials vital to Germany's recovery. Trade with these countries, which was negotiated by then Minister of Economics Hjalmar Schacht, was based on the exchange of German manufactured produce directly for these materials rather than currency, allowing Schacht to barter without reliance on the strength of the Reichsmark^[2]. However, although food imports fell significantly between 1932 and 1937, Germany's rapid rearmament policy after 1935 proved contradictory to the Nazi Party autarkic ambitions and imports of raw materials rose by 10% over the same period.

Today, complete economic autarkies are rare. A false example of a supposed current autarky is North Korea, based on the government ideology of Juche (self-sufficiency), which is concerned with maintaining its domestic localized economy. However, even North Korea has extensive trade with the Russian Federation, the People's Republic of China, Syria, Iran, Vietnam, and many countries in Europe and Africa. Bhutan, seeking to preserve an economic and cultural system centered around the dzong, has until recently maintained an effective economic embargo against the outside world, and has been described as an autarky. With the introduction of roads and electricity, however, the kingdom has entered trade relations as its citizens seek modern manufactured goods.

Historical examples

• Afghanistan under the Taliban, from 1996-2001.
• Albania became a near-autarky in 1976, when Communist Party leader Enver Hoxha instituted a policy of what he termed "self-reliance".^[3] Outside trade increased after Hoxha's death in 1985, though it remained severely restricted until 1991.^[4]
• Austria-Hungary (1867-1918) was an exclusive economic and monetary union with a population of more than 50 million people. It was independent of the world market, thus autarkic.^[5]
• Burma followed a policy of autarky known as the Burmese Way to Socialism under dictator Ne Win, who ruled the country from 1962 to 1988.
• Cambodia under the Khmer Rouge, 1975-1979.
• India had a policy of near-autarky that began after its establishment as an independent state, around 1950, and ended in 1991.^[6]
• Italy, Benito Mussolini claimed to be an autarky,^[7] especially after the 1935 invasion of Abyssinia and subsequent trade embargoes. However, it still conducted trade with Germany and elsewhere.
• Japan was partially an autarky during the era known as the "Edo period", prior to its opening to the west in the 1850s, as part of its policy of sakoku. There was a moderate amount of trade with China and Korea; trade with all other countries was confined to a single port on the island of Dejima.
• Romania in the 1980s Nicolae Ceausescu proposed such goals as paying the entire foreign debt and increasing the number of items produced in the country and their quality. The aim of these policies was to reduce dependency on foreign imports, as the relationship of Ceausescu with both Western and Communist leaders was worsening.^{[citation needed]}
• Spain, under dictator Francisco Franco, was an autarky from 1939 until Franco allowed outside trade again in 1959, coinciding with the beginning of the "Spanish miracle".^{[citation needed]}
• The United States, while still emerging from the American Revolution and wary of the economic and military might of Great Britain, came close to complete autarky in 1808 when President Jefferson declared a self-imposed embargo on international shipping. The embargo lasted from December 1807 to March 1809.^[8]

Economic dilemmas of an autarky

A self-sufficient economy can experience diseconomies of scale in the public and private business sectors. It is evident that several nations in the world do not have direct access to certain raw materials such as oil, coal, gas, wheat or fabric-related items such as wool due to geographical boundaries including climate, location, land size or population numbers.

Therefore the production of scarce resources becomes relatively expensive and a large cost to consumers and firms that need to pay a higher price for these goods and services. In the long-term it can create an inefficient market and the domestic government may not be able to maximise economic capacity.

The globalisation process has reinforced the concept of comparative advantage as economy's in the world decide to lose barriers that minimise productivity such as self-sufficienct methods. Cheaper input costs, access to a variety of products and an improvement in the standard of living are motivational factors to the reduction in complete self-sufficiency.

References

External links

• Autarky in Spain - Article discussing Autarky under the Franco dictatorship.