According to the dominant historical narrative, mercantilism was the economic theory prevalent in early modern Europe, until it was replaced when Adam Smith and other Enlightenment thinkers founded the current economic paradigm.
This is a somewhat plausible explanation for what happens in my home country of Bangladesh. Bangladesh has had a historically a very weak state. Currently it collects about 7-9% of taxes (one of the lowest in the world) and about half comes from consumption taxes. About 30% of all tax revenues come from tariffs.
Most businesses are small and "informal" which just means that they don't pay taxes. Hence most of the direct taxes come from a very small segment of the population.
The USD basically functions like what gold did in early modern Europe. The government subsidies exports and also some domestic production to reduce imports and hence maximise dollar reverses to pay for energy imports and/or pay back loans to the world bank and IMF.
By giving special favours to the domestic industrialists in the form of tariff protection and export subsidies, the government is actually expanding tax revenues since the size of the formal sector is increasing.
So your idea of mercantilsm as a natural outcome of a weak state trying to collect taxes seems plausible to me.
This is a somewhat plausible explanation for what happens in my home country of Bangladesh. Bangladesh has had a historically a very weak state. Currently it collects about 7-9% of taxes (one of the lowest in the world) and about half comes from consumption taxes. About 30% of all tax revenues come from tariffs.
Most businesses are small and "informal" which just means that they don't pay taxes. Hence most of the direct taxes come from a very small segment of the population.
The USD basically functions like what gold did in early modern Europe. The government subsidies exports and also some domestic production to reduce imports and hence maximise dollar reverses to pay for energy imports and/or pay back loans to the world bank and IMF.
By giving special favours to the domestic industrialists in the form of tariff protection and export subsidies, the government is actually expanding tax revenues since the size of the formal sector is increasing.
So your idea of mercantilsm as a natural outcome of a weak state trying to collect taxes seems plausible to me.