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Understanding autarky With Real-World Examples

Photo: Autarky Photo: Autarky

What is autarky?

A country that practices autarky is self-sufficient. Countries that practice autarky are known for their self-sufficiency and minimal commerce with other countries. The Greek words autos, which means “self,” and arkein, which means “to ward off” and “to be strong enough, to suffice,” are the origin of the word autarky. An utterly autonomous country would have no foreign trade, assistance, or support and a closed economy.

But in reality, no contemporary country has attained this degree of Autarky, not even in the face of harsh sanctions. This is because complete economic isolation has become difficult due to the global supply network. Therefore, any autarky strategy is more of a matter of degrees than total isolation.

Recognizing Autarky

Consider Autarky as a severe manifestation of protectionism and economic nationalism. Securing the supply of essential products and a general desire to lessen reliance on other countries are often the driving forces behind an autarky strategy. Reducing dependence on other countries may or may not be associated with decreasing the impact of rival political and economic systems, depending on the political structure of the country. Nonetheless, parties from various political backgrounds have supported Autarky throughout history. Tartarky draws on populist themes and seems reasonable when phrased in terms of preventing the transfer of riches to corrupt government figures or maintaining domestic expenditure.

But in reality, Autarky has adverse economic effects that are not immediately evident from the populist justifications. The first person to question Autarky was the economist Adam Smith, then David Ricardo. To increase prosperity, Smith recommended that nations engage in free commerce and focus on creating items with a clear competitive edge. One of the main points Smith made in The Wealth of Nations in support of free trade was this: In a minor revision to this thesis, Ricardo stated that nations ought likewise to manufacture things in which they are comparative advantages. Countries can cooperate to increase prosperity in the international trade system by utilizing their comparative advantages.

Stated differently, there is a significant potential cost for people and governments when choosing to forgo international commerce to conduct business entirely locally. For instance, a family that spends all their time farming their food, making their furniture, and sewing their clothes would inevitably have less time to work outside the home and earn money. Because of this high level of self-sufficiency, the household’s income will probably decrease, and the number of workers for surrounding firms will likely fall. This will ultimately lead to a smaller economy. Additionally, this holds on a global level.

Examples of Real-World Autarky

Different levels of autistic policies have been implemented in the past. From the sixteenth to the eighteenth centuries, Western European governments used them in their mercantilist agendas. As a response, economists such as Smith, Ricardo, and Frederic Bastiat improved their theories of free trade and the free market.

Additionally, Nazi Germany used a type of autarky to guarantee the strategic supplies required for its military campaigns. North Korea is now the primary illustration of an autarky policy. Intentional self-reliance to lessen outside political influence and imposed self-reliance due to being shut out of international commerce owing to sanctions combine to create North Korea’s economic isolation.

North Korea is one of the most severe instances of modern Autarky; it is based on the idea of Juche, which is sometimes translated as “self-reliance.”

The Autarkic Price and Autarky

The price of a good in an autarkic state is referred to as the autarky price, sometimes known as the autarkic price. In a closed economy, the product’s price must cover the cost of production. For that country’s economy, the autarky price is a fatal loss if the cost is more significant than in other countries. When approximating the location of a country’s comparative advantages, the autarkic price is occasionally employed as an economic variable. Comparative advantages are, however, really found through market processes as opposed to economic models.


  • The term “autarky,” which denotes a self-sufficient state, is generally employed to characterize countries or economies that want to lessen their reliance on outside commerce.
  • In the current world, there are no completely autarkic countries because even the most remote ones engage in some form of international commerce and get assistance from other countries.
  • North Korea and Nazi Germany are two countries that have adopted an autarky strategy.
  • The argument for autarky, which keeps money domestically and out of the hands of politically hostile countries, is frequently based on populist premises.

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