This is an interesting question. I don't think too many people here are frightened by the A-word.
Essentially, we agree that markets coordinate human activity, security can be provided with means outside the state.
So everything else is kind of a technical disagreement on how far this can go.
Murray Rothbard once, in an effort to prove his moderation,
said that for the time being he would settle for the US government getting by on the same budget that it got by with under George Washington.
This was his compromise plan.
And we're so far at the present moment from even that level of freedom that it's sort of academic,
where they want to press the argument all the way to complete purism.
But the other term that needs defining, of course, is globalism.
And we hear a lot about this, and it's hard to tell the slogan and pretense from anything substantive.
I'm reminded of Newt Gingrich, who discovered around 1992 that there was a world market.
And he went around proclaiming this in every possible venue as if it was his personal discovery.
Now, many people thought there was a world market from maybe sometime in the 16th century,
The
discussion in which globalization is the cutting edge of a terrible thing called neoliberalism.
In a way this is true, but first we have to decide what liberalism is and whether we like
it or not in its modern forms. So the whole neoliberalism discussion is interesting, not
conclusive. And finally we have some further damage done to the case for the free market
by all sorts of recent politicians who for 20 years have been proclaiming their dedication
and Love for the Free Market, and doing pretty much the opposite kind of program and practice
and thinking maybe Thatcher, there may be others, neoconservatives and so on.
And all this does is strengthen the rhetorical case of the left.
In the post-Cold War world, everyone is for, or very many people at least, there are some
and Die Hard Marxists. Everyone seems to be for free trade. This is where the problems begin. They don't agree on what this means.
Now one thing that many people mean when they talk about free trade or globalization is what's called embedded liberalism.
I prefer to call it embedded corporatism. Political scientists talk a lot about this.
It's essentially saying that given that every country is going to have all sorts of internal welfare programs and interferences with markets and interrupt the global division of labor, the only way to have any trade at all or any activity of any consequence is to then create on top of these statist systems big clunky international institutions that coordinate all these bad policies into something that's at least remotely workable. And so this could be called liberal neo-institutionalism. In any event, it's not free trade classically understood.
Mercantilism is partly just a fiscal matter. The king wants revenue. The king realizes there is a lot of trade. He wants to find out how to tax the trade. Then his advisers tell him he can channel trade, or he can harm foreigners by denying them trade.
and you get the notion of economic warfare, all sorts of things come into play and of course the king is not just deciding this, you know, advised by one clever fellow.
The king has raised interest groups and social allies who want him to do things that help them make a better living, enhance their wealth at somebody else's expense.
So American Tailism claims me for the general good of the Kingdom and in fact does have a lot to do with specific interests in forcing trade into particular channels.
I used to tell my students that one reason we have a Fourth Amendment about search and seizure was that a lot of the founders were touchy about search and seizure because they had been themselves smugglers.
The Liars for Smugglers are the friends and relatives of smugglers when Americans weren't cooperating completely with British mercantilist restrictions on trade.
So let's take it as given then that once people have had a chance to observe the workings of the market economy and global trade
Free Trade as it's developing and causing various places to visibly flourish.
A lot of people concluded that trade was a good thing and more of it was better.
And we tend to refer to this as early liberalism, early liberal movement.
Again, some of the actual early advocates of free trade were, in fact, in the Tory party.
But we don't need to worry about that detail.
So you have Tory free traders, you have Adam Smith, you've got Immanuel Kant, at least some of the time,
I'm Cobden, Bright, Eugen Richter in Germany, Say and Bastiat in France, Moulinari in France, although I guess he's Belgian, and early American Republicans like Thomas Jefferson, John Taylor of Caroline, Condé Regay, John C. Calhoun, William Goode and so on, and at the end of the 19th century, people like Henry George, despite his faults in some areas, very good on free trade, William Graham Sumner and other latter-day advocates,
of Free Trade
He's reading an interesting law review article by someone named Douglas Sylvester discussing
some of the early American doctrine on international law.
He argues that early American statesmen, and this is
in the Confederation period and also in the early period of the Constitution,
early American statesmen tended to think it would be nice if
the rights of neutrals could be respected during a war
It would be less damage to commerce. It would be nice if you could write the laws about contraband in such a way as the international rules so that more trade would remain in existence even during a war.
And at the same time they had a general favorable attitude towards trade.
Now again, I'll say with these early American statesmen, there is again with them some holdovers from mercantilism, including the idea that it's sometimes wise to cut someone's trade-off to make them do something that you want them to do.
James Madison famously got into all sorts of trouble trying out this strategy with the embargo and so forth.
But nonetheless, a pretty clear notion that commerce is good, there should be more of it, and it should be largely unrestricted.
One of the things that Sylvester says in the Law Review article is that in the case of these early American statesmen,
they were kind of driven to a kind of idea of centralization, because they'd make agreements in the name of United States with foreign powers,
or about capture and seizure and other practices, and then they'd be frustrated because Pennsylvania or Georgia or some place
I think I was looking at one article, raising the question whether or not regional trade blocks are a net gain for free trade, or if they're a net loss, so we enter into a trade agreement with neighboring countries.
Okay, there's freer trade between us, but does it also, at the same time, become a way of restricting the trade of those countries with everybody else outside that block?
and I don't want to give an answer to that, just raise the question.
So in any event, there's sort of an era in which free trade is practiced some of the time
and certainly there's a lot of discussion to the effect that this is a good thing
and this is generally the main trend that we spot in the 19th century,
in particular with the repeal of the Corn Laws in England in the 1840s and so forth and in the United States with the Democratic Party typically running on a platform of tariffs for revenue only, that is low tariffs then opposed by various interests that wanted a tariff who were coalesced, coalesced roughly in the tradition of Federalist Party, Whig Party, Republican Party and so on.
Now, this raises some other questions. If we think of the 19th century as a great era of free trade, and of course relative to some later eras it is, what's causing it? What's behind it?
And here I want to mention an interesting article by John Vincent Nye, which is a bit revisionist, in that he says it's a myth to think that the British sort of uniquely and all by themselves invented free trade,
of Money, The Theory of Money and State, The Theory of Money and State, The Theory of Money
The Theory of Money and Credit
to make their trade freer in the 1840s onward.
What does that mean?
Well, there's an important implication here
because as he points out,
a whole school of political science
and international relations theory
has arisen on the idea that the British
and the British alone knew how to practice free trade
because of the interesting coincidence
that the British had an empire.
So this seems to mean for these writers
that you have to have an imperial power
to Enforce Free Trade, and we're hearing a lot of this sort of thing these days, that free trade is impossible, globalization in any good sense is impossible.
If you don't have a single hegemonic power to go around knocking heads together and making people obey the rules, apparently trade will just cease to take place if you don't have a benevolent empire on hand.
And so free trade suddenly becomes a sort of global public good and to be supplied in the only way a public good can be supplied on this argument by some state or empire.
Well, of course, around here, we're a bit skeptical about public goods theory even internally.
And so this, again, argument doesn't undercut how we might look at these problems.
The gold standard is important to know that other people have built a whole school of political science on some of these equations.
Well, what is going on? One thing that is going on in the 19th century is that you still have the gold standard.
Admittedly, you have fractional reserve banking, and that has some downsides.
But with the gold standard, there's a penalty to pay.
In fact, there's a book by a fellow named Ferdinand Lips who argues that the gold standard was a great factor for peace,
or at least limiting political opportunism.
Because you want to have a war, you've got to raise some money.
And very often, the political leaders who would like to have a war,
have to think this over because, well, okay, we really can't go to the assembly
and ask for more money right now, that would be difficult.
Maybe people don't want to be taxed to pay for this war.
And when it comes to borrowing, which is the other way out,
The Bank of England was limited to that because if you've borrowed a lot to finance your war, you have the net gold outflow.
This is a famous exchange mechanism and this is bad. This has consequences that people don't necessarily want to put up with.
So, rather than liberalism or republicanism or democracy per se being a relative cause of peace at various times, maybe it was the gold standard.
This is worth contemplating.
Okay, so let me fast-forward through some history.
I was thinking about doing a kind of genealogy of some of the traditions.
Let's see if I can...
I'll do an approximate handwriting to try to read it.
Okay, well we have the free traders, but there's a counter-credition.
We might start with Hamilton in the United States and then the economist Kerry and his son.
And this is picked up by Friedrich West in Germany.
And pretty soon you've got a whole set of consequences.
You've got all kinds of social nationalists in Germany by the late, I think that's a fair term, late 19th century.
They get people saying, well, of course, it's good to have an array of resources in an economy and we can have some trade, but really, we'd be much happier if we only traded within a small closed block and so on.
So the only way to do that, maybe it's to annex neighboring territory, and you're getting this argument that somehow it would be wrong to trade with the British or the French or foreigners, then all trades are going to be internal.
But then the other variety of resources, you have to go and capture some markets, you have to have colonies and so forth.
And a person's market comes up in all of the venture countries, and you have people owning colonies, so they can have a secure capital market.
So rather, in fact, it's free trade, so it's kind of costly in a way to not consider the virtues of doing these things just by trading with people who want to trade with you.
and so on. I could mention some other people on the American line there.
Actually, there's a straight line through the Hamilton, Lincoln, all high-tariff guys down at the present.
You know who the tariff guys are now. Pretty straight line.
So I want to fast-forward and just say that in the United States, a number of strange ideas were circulating in the 1890s to the effect that the market economy just somehow naturally ran down, and there was overproduction and under-consumption, and again, we had to have colonies and export markets to preserve our prosperity.
Well, of course, they could have just thought, well, gee, if we lowered these tariffs, maybe we'd just have some more trade, and we don't need these foreign markets to be acquired by political means and so forth.
So, in the interest of saving time, we'll just fast-forward through World War I and say that it was a great disaster, a huge waste of time, a catastrophe, as Schumpeter called it, further destroyed the International Division of Labor.
and of course it also kills off the gold standard and various attempts to put this
all back together in the interwar years fail we have the wars of course because
everyone's adopted a target policies and high tariffs around empires and this
has direct helping cause World War two so after the war the Americans say well
it's time to fix all this so we have to fix all institutionally because we can't
expect people to we can't restore the gold standard so we'll create a whole
and so on. They even attempt to create an international trade organization which was defeated because Congress wasn't interested in supporting this, partly because there were still some protections left, but also on better arguments and so on.
and so on. So I've got to, bringing us up to the present moment, we still have this big embedded liberalism, these big institutions in place,
but I think the costs are more and more apparent. And the Bretton Woods, of course, system is broken down, Nixon closed the gold window,
and everybody's sort of on their own in the monetary field.
The present American policy is only workable as long as people keep taking dollars.
And now there is competition from the Euro and so on.
I have a quote from this Ferdinand Lips.
He says, The structure created in Bretton Woods gave Americans the appalling monopoly to settle their debt with paper, ticket, token money they had printed.
Nobody could have resisted such temptation.
So it isn't hard to conclude that if you have an ambitious foreign policy, and it certainly
has been ambitious lately, pay for money, they're going to run up against limits eventually.
Now the trick is we don't really need them taking us with them, and this is the point
of the critique.
So the radicalism comes in saying that perhaps we should build free trade from the bottom
up.
I refer to a book, an article by Rezine Salli, who particularly praises Wilhelm Rybka, someone
who thought a great deal about free trade in the genuine sense of simply people trading
with other people, no large international institutions necessary to make this possible,
this country by country restrictions are lifted and a pattern of trade arises and I think
I think that's radical enough. Thank you.