Autarky

Autarky

Key takeaways

• Autarky denotes a policy or state of economic self-sufficiency with minimal reliance on international trade.
• No modern country is fully autarkic; even highly isolated states participate in some external trade or receive aid.
• Historical and contemporary examples include mercantilist Europe, Nazi Germany’s wartime policies, and North Korea’s juche-driven isolation.
• Economists warn autarky carries high opportunity costs by foregoing gains from specialization and trade.

What is autarky?

Autarky comes from Greek roots meaning “self” and “to suffice.” It describes an economy that seeks to produce the goods and services it needs internally rather than relying on imports or foreign support. Complete autarky—a totally closed economy with zero external contact—is effectively unattainable in the modern global system; policies that aim for self-reliance operate only on a spectrum.

Why governments pursue autarky

Motivations include:
* Securing access to strategic resources and essential goods.
* Reducing political or economic influence from other countries.
* Retaining domestic spending and limiting capital outflows.
These rationales can appeal across the political spectrum, often framed as protecting national sovereignty or keeping wealth at home.

Economic drawbacks

Autarky conflicts with core economic principles of specialization and comparative advantage. Adam Smith argued that free trade and specialization increase national wealth by allowing countries to focus on goods they produce most efficiently. David Ricardo refined this with the idea of comparative advantage—mutual gains arise when countries specialize even if one is more efficient at producing all goods. In practical terms, pursuing everything domestically imposes large opportunity costs: resources devoted to self-sufficiency could often generate greater value if allocated according to comparative strengths and traded internationally.

Real-world examples

• Mercantilist Europe (16th–18th centuries) implemented protectionist, self-sufficiency–oriented policies that later prompted defenses of free trade.
• Nazi Germany pursued policies aimed at securing domestic production and strategic supplies for wartime needs.
• North Korea represents the most prominent contemporary example, driven by the ideology of juche (self-reliance) and reinforced by international sanctions that limit trade.

Autarkic price

The autarkic price is the domestic price of a good in a closed-economy scenario. It reflects the full domestic cost of production without trade. Comparing autarkic prices across goods provides a theoretical means to assess comparative advantage, though actual comparative advantages are normally revealed through market interactions and trade.

Conclusion

Autarky emphasizes political and economic independence, but it comes with significant trade-offs. While attractive for strategic or ideological reasons, self-sufficiency tends to reduce overall economic welfare by preventing specialization and the mutual gains that trade can provide. Most modern states therefore balance domestic resilience with participation in international markets.