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In Economics, what is Autarky?
Mary McMahon
Mary McMahon
Autarky is economic independence or self sufficiency, and should not be confused with autarchy, a separate political concept. Historically, some nations have exhibited autarky, but today, it is extremely rare. There are a number of disadvantages to an entirely closed economy which force most nations to abandon attempts at autarky. There are also, of course, some distinct advantages.
The idea behind autarky is that when an economy is self sufficient, it can theoretically be stronger. When a nation can provide all of the goods and services it needs internally, it is not forced to rely on other nations. This can be a political strength for a nation which does not want to make concessions in order to establish or maintain trade relations. If a country has a closed economy, for example, economic sanctions from other governments which are intended to force that country to address something will have no effect.
Another reason for a closed economy to be appealing is that it can allow a country to control the supply of technology, goods, and services. For example, development of weapons systems may be done in an entirely closed economy for the purpose of keeping such systems out of the hands of other nations. A country with a supply of a rare resource can use autarky for political clout by keeping supplies of that resource out of other countries.
One major drawback to autarky, however, is that very few nations can actually accomplish it. Trade with other countries allows nations to access products and services they cannot produce on their own. For example, a country without a supply of timber needs to be able to get wood from somewhere. In nations which have tested autarky as an economic system, citizens can experience privation, and often black market activity gets intense as citizens attempt to access goods from outside the country clandestinely.
Other issues with a supposedly self-sufficient economy can include diseconomies of scale which are caused by limitations on the supply of raw materials. In this case, per unit costs of production go up as a result of economic limitations. It can also be hard for a nation to develop new technology, new services, and new approaches to doing business when the economy is isolated and people cannot exchange products and ideas with the outside.
Cases in which autarky have been effective have primarily involved nations with numerous colonies. In these instances, a nation can meet its needs from within its borders and the borders of the colonies it controls.
Mary McMahon
Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a SmartCapitalMind researcher and writer. Mary has a liberal arts degree from Goddard College and spends her free time reading, cooking, and exploring the great outdoors.
Learn more...
Mary McMahon
Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a SmartCapitalMind researcher and writer. Mary has a liberal arts degree from Goddard College and spends her free time reading, cooking, and exploring the great outdoors.
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![Practicing autarky allows a country to control what is sold, because goods are not imported.]()
By: cvallePracticing autarky allows a country to control what is sold, because goods are not imported.
Discussion Comments
I am Indian. The US nowadays has lost its manufacturing base and my country has gained that opportunity. However, in the US, manpower costs will go down. It is the last option for the US.
The same thing is happening. The US has capital and India has reasonable manpower costs. Working together, both countries will become equal in both sectors.
@SkyWhisperer - I am not an isolationist, but I do bemoan the fact that America has lost its manufacturing base.
I realize that people cite the high goods of materials, but surely we can innovate somehow. Can’t our leaders think of ways to make stuff here that is still fairly affordable once again, and which can be exported to other nations?
Right now all I hear about fixing the trade imbalance is through the use of tariffs, which doesn’t bode well for international relationships in my opinion.
@hamje32 - I agree. The world is tightly integrated with the supply of goods and services. Buying stuff from other nations, has, unfortunately become a necessary evil.
Right now the United States is more of a service economy, and if you are looking for major “exports,” that’s it. I also think the U.S. is still dominant in the Information Technology sphere as well.
@NathanG - I used to think that OPEC nations like Saudi Arabia were completely self sufficient, because they controlled a lot of the world’s oil reserves.
We needed them more than they needed us. But then I thought about it; that didn’t make sense. What good is having all the world’s oil if the world doesn’t want to buy it from you?
It’s like the Midas touch. Everything you touch turns to gold, but if that’s the case you can’t so much as eat food; it turns to gold, too. So Saudi Arabia needs us! It thrills my heart to say that.
Actually, I believe that we should get off of fossil fuels permanently, by going completely into alternative energy sources. While we will not become completely isolationist as a result (nor should we want to be, I would think) it would make us more independent as a nation.
So I guess now we have the clearest explanation as to why we will always be forced to buy goods from China. We simply cannot compete with them on a price per unit scale.
While I sympathize with everyone who espouses a philosophy that we should be completely self sufficient, as the article correctly points out, producing everything ourselves will mean that we pay higher prices. I don’t think anyone is in favor of that.
So I don’t recommend that we embrace the autarkic model; but at the same time, I am not in favor of the astronomical trade imbalance between us and our other trading partners. We need parity, in my opinion, not complete isolation.
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