[Ed: continued from Part V which was published here on UKIP Daily yesterday, containing links to the earlier parts]
“Free trade” today
If “free trade” was a gigantic gamble for an industrially, commercially and politically dominant Britain in 1850, it is vastly riskier for any country now. Transport even after the arrival of railways and the steamship was still expensive, slow and cumbersome compared with now. The electric telegraph was the height of sophistication. Most parts of the world could not engage in international trade on their own terms because they were colonies, under the practical control of foreign powers or unindustrialised.
Today physical transport is fast and cheap. In place of the telegraph, we have the internet. Many countries have industrialised. The age of formal empires is over.
But there is more than political and technological change which makes a difference between our own time and the last outbreak of “free trade” mania. The “free trade” being advocated now is doctrinaire to the point of idiocy, namely the god of comparative advantage (the idea that each nation should concentrate on those products which are most profitable and forget the rest) is to be applied to everything, even (in the EU) to all public contracts, including those for weaponry. Childishly doctrinaire as they were as they played with their untried intellectual toy, even the most extreme “free traders” in the 1830s and 1840s saw that some parts of the economy could not be reasonably opened to competition for strategic reasons, military supplies being the prime case.
Let us suppose that we had a perfect “free trade” world now, a world in which there were no tariffs or quotas or embargoes or “standards” to meet; that all the artificial restraints on trade were removed; that no government subsidized productive employment in any way and all that remained to differentiate countries were market decided labour rates, carriage costs and the cost of nonproductive public works such as justice and the army. What then?
The consequences would be extremely dangerous for the West. Farmers in the First World would be on their knees and mass production of virtually anything in general demand would quickly become impossible because whatever a company’s efficiency, it simply would not be able to compete with labour which was a tenth or less of the cost of its own native workforce. All such countries could do is try to make high-value goods,
Even if the redundant working populations of the First World could find alternative employment, which is dubious, their countries would be left utterly at the mercy of those who now produced their food and most of the manufactured goods they consumed.
Does “free trade” deliver? The lessons of economic history
Free traders base their case primarily on the increase in prosperity which they believe will only come through increased global trade. The general answer to that claim is that Man does not live by bread alone. Moreover, even if there is a general rise in the global product at present, it does not necessarily follow that the same or better result could not be achieved by other means. The experience of all industrialised countries to date is that industrialisation is best achieved – perhaps can only be achieved by protecting the national economy. Indeed, there is a powerful logic in the idea that developing nations today require protection more than the early industrialising states because the early industrialising nations had little competition.
But even if it could be shown indubitably that the global product is increased more by “free trade” than by protection, it does not follow that it is in a particular country’s interest to adopt free trade. Consider the position in a national market which operates “free trade” within that market, but protects its trade and industry from foreign competition. Companies go bust if they do not compete. But successful companies take their place and continue to provide employment at broadly similar rates of pay. The logic of global “free trade” is that countries which cannot compete will go bust and not be replaced by others in the domestic market. There will be no replacement jobs within the bankrupt country because the successful competitor is abroad.
The most lethal ammunition to discharge at “free traders” is the fact that no country in the history of the world has industrialised successfully without very strong protectionist measures being in place. That includes the first industrial nation, Britain, which spent a couple of cosy centuries behind the Navigation Acts, the first of which was passed in 1651, before becoming a free trader. Not only that, but Britain only adopted “free trade” principles after she had become heavily industrialised and did so at a time when the country was still the dominant industrial power in the world by a long chalk and her exports were more or less guaranteed to sell in foreign markets.
Before Britain dropped her old colonial protectionist system in the mid 19th Century, she had industrialised in the modern sense from scratch and expanded her GDP massively. Perhaps most impressively she had managed to continue to largely feed herself without the price of corn going sky high, despite the fact that the UK population almost doubled between 1801 (the first Census) and the repeal of the Corn Laws in 1846.
[Ed: to be continued tomorrow with Part VII]