The Surplus Delusion: Why the Real Enemy Is Not Mercantilism but the Credit State
by Jaffa Levy
·
This article is a work of economic commentary and analysis. It expresses a critical perspective on prevailing interpretations of global trade and monetary policy and is intended as opinion.
The Surplus Delusion: Why the Real Enemy Is Not Mercantilism but the Credit State
In a respected finance broadsheet of the United Kingdom, a senior economics columnist now argues that the world has lost its way. Nations, we are told, have abandoned wisdom. Trade has been corrupted by power. Surpluses have become weapons. Tariffs are a relapse. Conflict is the logical endpoint unless a new global settlement is built by cooler heads.
It is a soothing diagnosis. It is also a misdirection.
What is being described as an ideological failure can be understood instead as the predictable output of a system built on fiat money, state directed credit, and politically administered prices. The problem is not that countries have forgotten free trade. It is that they never allowed it to operate in the first place.
An Austrian economist sees through the fog.
Claim One: Trade surpluses are not acts of aggression
A trillion dollar trade surplus is presented as a provocation, almost a threat. It is neither. It is the mechanical consequence of suppressed domestic consumption, financial repression, capital controls, and credit allocation by political instruction rather than market judgment.
Calling this mercantilism assigns intent where structure suffices. Remove the surplus figure and the distortions remain. Remove the distortions and the surplus dissolves without diplomacy.
Claim Two: Tariffs are a delayed reaction to monetary abuse
Tariffs are condemned as ideological regression. In reality, they are a crude political response to decades of monetary and regulatory policy that favoured asset inflation over productive capital.
Tariffs are bad economics. But they are not irrational politics. They emerge when monetary distortion outruns social consent.
Claim Three: The zero sum conflict lies in money, not trade
Voluntary exchange is positive sum. Zero sum logic enters only when states seize control of money and credit. When interest rates are decreed and losses are socialised, trade becomes politicised because prices no longer speak truth.
Without profit and loss, capital allocation becomes political performance. Excess capacity is renamed strategy. Losses are rolled forward as investment. This is capital consumption disguised as national strength.
Claim Five: New trade treaties repeat the original error
The proposed cure is managerial. A new settlement. Reciprocal liberalisation. Coordinated restraint. This assumes the same policymakers who created the distortions can now fine tune them away.
What the Mainstream Gets Right
State driven trade and credit policy increases global friction.
Persistent surpluses and deficits signal deep distortions.
Trade weaponisation raises the risk of political conflict.
The current trajectory is unstable for smaller economies.
The Real Culprit
The danger is not that the world has rediscovered mercantilism. The danger is that it never abandoned the credit state.
Fiat money made chronic imbalance survivable. Central banking postponed liquidation. Political credit replaced market coordination.
Trade did not fail. Prices were silenced.
This is not fixed by better treaties. It is fixed by discipline. Sound money. Market interest rates. Liquidation of bad capital. Unilateral openness, not negotiated permission.
Until then, much of the prevailing financial commentary will continue to diagnose mercantilism while the real engine of instability hums quietly in the background.
You may also like to read other economic articles on Telegraph.com
