What about...?

the fact that large portions of manufactured goods are made in large factories, in China by more or less slave labor, national security issues when we can't make our own, fiat currency, fractional reserve banking and a debt-based economy?

Are these characteristic of capitalism, or of mercantilism?

My answer; neither. Some of this is inherent in any economic system, and the rest is classic statism--of which mercantilism, fascism, socialism and communism are variants.

Regarding "offshoring" and fractional reserve banking, you'll find those everywhere except where the state explicitly bans them. This is where Adam Smith and his followers are at their best, pointing out that certain things are, economically speaking, nearly inevitable. Banks loan out money, and manufacturers don't like to spend more money than they need to.

Along these lines, bigger factories occur whenever transportation is cheap and economies of scale are to be had. They're associated with mercantilism and socialism because these "isms" tend to subsidize transportation.

Worthless fiat money and debt based economies have been implemented by all statists (mercantilists, totalitarians, kings, socialists, fascists, etc..) since paper money was invented by the Chinese, but I'd suggest that the Keynesian debt-based economy is connected primarily with socialism.

And we still do have hints of mercantilism in our economy today. Whenever we read about a trade deficit, we are absorbing the mercantilist arguments that Smith and Bastiat did their best to refute. Subsidies for industries are also mercantilist policy--though also socialist. They are, again, both forms of statism.

How to counteract these problems? Next post.