Free trade: the necessary foundation for world peace

FREE TRADE: The Necessary Foundation for World Peace (Foundation for Economic Education, Irvington-on-Hudson, N.Y. 10533; $5.95), edited by Joan Kennedy Taylor, is a timely, and for the most part interesting, collection of essays dating from as early as 1847 and as late as 1985, marred here and there by an excessive intellectual stringency (as in Ludwig von Mises' statement that "What generates war is the economic philosophy almost universally espoused today by governments and political parties") attributable to the project's heavy indebtedness to The Freeman, in which many of the essays were originally printed. In addition to von Mises, the list of contributors includes William L. Baker, Frederic Bastiat, Clarence B. Carson, Frank Chodorov, W. M. Curtiss, Bettina Bien Greaves, Henry Hazlitt, Samuel H. Husbands, Gary North, David Osterfeld, E. C. Pasour Jr., and Hans F. Sennholz. According to the publishers: "This is the first volume in The Freeman Library, a new series of books that will, from time to time, bring together in permanent form a group of essays that illuminate a single topic."

"Today," the editor states, you will find neoliberals and neoconservatives who support the economics of free trade, as well as classical liberals, libertarians, and conservatives. But this is often a shaky alliance, vulnerable to the pleadings of special circumstance and the perceived threat of war. A free-trade policy is seen by many as a luxury in which we can indulge ourselves when things are going well internationally. This leads politicians to hesitate to divest the United States of the ability to wage economic warfare; which means, to devise schemes to prosper at the expense of other countries, which means, to be protectionist.

Contrarily, the premise of the essays following these remarks is that free trade, far from being a "luxury," is both an economic and a moral law, crucial to the health of the economies of all nations, as well as to that economic freedom which is itself a fundamental human right.

Writing in 1962, Bettina Greaves observed that "The philosophy of protectionism dominates both political parties" and "now pervades almost every aspect of human life," the justification for this obsession being nothing less than the national interest. But Frederic Bastiat, a founder of the first French free-trade association and a friend of Richard Cobden of the British Anti-Corn-Law League, saw through this myth a century and a half ago:

In war, the stronger overcomes the weaker. In business, the stronger imparts strength to the weaker. . . . our conclusion must be, then, that domination through industrial superiority is impossible and self-contradictory, since every superiority that manifests itself in a nation is transformed into low-cost goods and in the end only imparts strength to all nations. Let us banish from political economy all expressions borrowed from a military vocabulary: to fight on equal terms, conquer, crush, choke off, be defeated, invasion, tribute. What do these terms signify? Squeeze them, and nothing comes out. Or, rather, what comes out is absurd errors and harmful preconceptions. Such expressions are inimical to international cooperation, hinder the formation of a peaceful, ecumenical, and indissoluble union of the peoples of the world, and retard the progress of mankind.

In what is perhaps the best of the collection, "Protectionism and Unemployment," Hans F. Sennholz, after observing that "Most of the arguments in favor of restriction stem from the distant past," concludes that

The neomercantilism of the 1970s and 1980s differs from the 1930s version in two important aspects: It is devoid of the blatant nationalism of the first half of the century and its beggar-my-neighbor attitude; but it is saturated with the notions and doctrines of full employment by government fiat. . . . it does not aim at economic autarky for nationalistic ends, but at income and employment in favored industries.

In point of fact, Sennholz argues, mass unemployment is a "self-inflicted evil" created chiefly by the demands of labor organizations for government protection; and, further, that trade barriers, so far from offering the solution to unemployment, have the effect of creating it among other, unprotected, industries. And David Osterfeld, in his essay, "The Nature of Modern Warfare," makes the striking argument in furtherance of the classic free-trade argument that liberal trade agreements produce peace between nations, and that it is the rise of the welfare state through interventionist policies on the part of governments, and not any law inherent in capitalism, that has made the twentieth century the bloodiest in history.

In a planned, autarkic economy, territorial boundaries are of supreme importance. An isolated nation must possess all of its required resources. The larger the area under control, the better it can provide for its wants and needs. Yet, no country is blessed with a provision of complete economic self-sufficiency. Autarky, accordingly, must manifest itself in aggressive nationalism, in the desire of every country for the control of ever larger areas.