Economics [closed economy]

In economicsautarky is a kind of political policy that aims to nullify a country’s economic dependence on foreign countries by encouraging internal production of all goods needed by the national community. The pursuit of these objectives leads on the one hand to neglect the advantages of importing goods at a lower cost than those produced internally, and on the other to stimulate the search for substitute goods, that is, those capable, in part, of replacing goods that are unproducible internally.

Examples of autarkic policy occurred in Germany and Italy in the 1930s . In Germany it led to the development mainly of the chemical industry so as to replace imported raw materials with substitutes (rayon instead of cotton, aluminum instead of copper, synthetic gasoline and rubber obtained from lignite and coal).

An autarkic economy that also will not or cannot conduct outside trade is known as a closed economy. In a closed economy, internal demand is composed of private consumption and investment and public consumption and investment. Internal production thus goes only to satisfy internal demand. It follows that in a closed economy any public deficit must be offset by a reduction in investment or an increase in private savings. A closed economy should be clearly distinguished from a small open economy; the latter, in fact, is an economy that trades with the rest of the world, but because of the extent of its output and foreign trade it does not have a significant influence on international variables, such as real exchange rates, interest rates and so on.


From Greek autarchía, from autós itself+árchō, to command. Self-rule; in a political sense, absolute government. In the legal sense, special ability to administer its own interests by itself, granted to certain public law entities. Constituent elements of autarchy , in addition to legal personality, are the pursuit of common purposes and economic self-sufficiency.


The term autarky, from the ancient Greek αὐτάρκεια, “self-sufficiency,” composed of αὐτός “same” and ἀρκέω “to suffice,” in philosophy assumes prominence especially in the Cyrenaean school where it expresses the ideal of “being self-sufficient,” being master of oneself, seeking to depend as little as possible on the conditioning of worldly things in order to achieve happiness. With the same meaning the word is also found in Cynic, Stoic, skeptical and Epicurean philosophy.

In fact, the term is already mentioned in earlier philosophy where it is related to the ideal of eudemonism, the attainment of happiness (εὐδαιμονία) through knowledge, which for Socrates leads to rational dominion over the passions.

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