Free Trade? A Historical Critique

December 27, 2007

By Andrew Hartman

The trade issue is central to the 2008 election.  I think some Democrats have improved their outlook on trade, namely John Edwards.  However, we could all benefit from a more historical and international perspective.  

I am not against trade in its crude sense.  You have apples, I have oranges, let’s trade.  But this is not the issue.  The common claim that free trade leads to more peace and prosperity is patently false. This argument, most famously known as Thomas Friedman’s “golden arches” theory, goes like this: countries that have McDonalds, McDonalds being symbolic of a country committed to free trade, don’t bomb each other.  Of course, Friedman’s cutesy formulation—part of his sloppy apologetics for corporate globalization, The Lexus and the Olive Tree—was blown to bits when US-led NATO bombed the crap out of Belgrade, golden arches and all (it should be noted that US planes also bombed the Chinese Embassy and Serbian television during that war).  But regardless of the Belgrade bombings, Friedman is easily unmasked as a charlatan with no concept of international economic history, which would be fine if he wasn’t so damn influential.

Let’s momentarily ignore the domestic consequences of free trade—NAFTA—and instead look at its international history, focusing on the nineteenth century.  In this larger historical context, free trade should be thought of as a euphemism for unfettered capitalistic expansion, which has also been called imperialism, or globalization (pick your poison).
 
Historians John Gallagher and Ronald Robinson, in a famous essay “The Imperialism of Free Trade,” argue that a distinction between free trade and imperialism is made by those who only conceptualize empire as something formal—people who study “those colonies colored red on the map, [which] is rather like judging the size and character of icebergs solely from the parts above the water line.”  Take Britain in the 19th century, which the US now models itself after in many ways.  Throughout the nineteenth century, Britain maintained its hegemony in a vast array of regions by either informal, indirect means, or by formal, military means, which included annexations—a means usually associated with the later stages of the nineteenth century, which included the “scramble for Africa.”  As Gallagher and Robinson point out, “refusal to annex are no proof of reluctance to control.”  We need to think about US trade policy in this context, in the context of the US as an imperialist power.  This will allow us to get over the false assertion that “free” trade brings peace and prosperity, which is one of the central counters to those who critique NAFTA-like legislation for destroying the wages of American workers.

Karl Polanyi, in his epic The Great Transformation, best refutes the standard argument that a free market unleashes the forces of progress and innovation.  For him, human innovation is at its best when it is organizing new forms of protection against the intrusiveness of capitalism, when it is raising barriers against the unstoppable beast—innovative barriers like unions!   The worst element of the nineteenth century, which is now the worst element of the twenty-first century, was its crude utilitarianism—in Polanyi’s words, “the self-healing virtues of unconscious growth.”  This was the thinking behind the gold standard—the international monetary system created according to the (il)logic of a self-regulating market.  This (il)logic worked something like this: the Gold Standard was a way for each country’s accounts to balance without the heavy hand of government; a system that regulated according to the “market” rather than according to democratic processes, which, the theory went, disrupted the efficiency of the system.  But the Gold Standard system, although considered the heyday of global capitalism (until the 1990s), was inherently unstable, and is, according to Polanyi, what led to the world wars.  The shock of contracting economies led to new protective barriers, which led to imperialist expansion (overseas barriers), which in turn led to war.  Some peace and prosperity. 
 
I would suggest reading Eric Hobsbawm’s four-volume history of the modern world.  The titles alone refute the argument that “free” trade brings peace and prosperity.  1) The Age of Revolution: 1789-1848 (which details how the bourgeoisie came to rule European society, and eventually the world, which meant “free” trade was about to be globalized). 2) The Age of Capital: 1848-1875 (this was the first heyday of global capital, the age of the Gold Standard).  3) The Age of Empire: 1875-1914 (when informal empire—“free” trade—failed to take hold everywhere, formal empire stepped in).  4) The Age of Extremes: 1914-1991 (the cost of globalized capitalism… a century of war like none other). 
 
Let’s hope the 21st century proves to be more peaceful than the last.  But… no justice, no peace. 

 

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