What is Autarky?

An autarky refers to the state of self-reliance, and it typically is applied to an economic system or nation characterized by self-sufficiency and limited trade. The definition of autarky comes from the Greek—autos, meaning "self" and arkein, meaning "to be strong enough, to suffice." Fully autarkic states are those with closed economies and without any sources of external support, trade or aid.

A related term, "autarky price," refers to the cost of a good in an autarkic state. International commodity trade takes place in part as a result of differences in autarky prices between countries or areas.

Key Takeaways

  • Autarky refers to the state of self-sufficiency and is typically used to describe nations or economies which are fully closed.
  • Autarkic countries are those which do not participate in international trade and which do not receive any outside support or aid.
  • Very few full autarkies exist today: North Korea and Nazi Germany are two examples from recent decades.

Understanding Autarky

Autarky is a state of independence, achieved when an entity, such as a political state, is self-sufficient and exists without external aid. A country is considered to be in a state of complete autarky if it has a closed economy, one that is functional without partaking in any international trade.

One of the most extreme examples of contemporary autarky is North Korea, which relies on the concept of juche, often translated as "self-reliance."

Autarky is an extreme form of economic nationalism and protectionism. Autarky was first questioned by economist Adam Smith, and then David Ricardo. Smith suggested that countries should engage in free trade and specialize in goods they have an absolute advantage in producing, in order to generate more wealth. Ricardo amended that slightly, saying that countries should also produce goods in which they have a comparative advantage. Free trade and globalization have been seen as superior economic courses of action, generally speaking, and so, autarky involving the elimination of foreign trade has proved unsuccessful, and has become more of a utopian ideal.

Historically, autarkic policies have been deployed to different extents. Encyclopedia Britannica notes that western European countries deployed them under mercantilist policies from the 16th to the 18th century, Nazi Germany used a more extensive form. North Korea is a contemporary example.