


A global free market doesn’t care if America remains the preeminent nation on earth, or if it is reduced to one giant soybean farm to feed a Chinese state.
I t’s a new week, and Donald Trump has announced a deal with Europe on tariffs, just 15 percent, with all sorts of side agreements on energy and weapons to be worked out and finalized. As a political figure, Trump’s rise was due to his vandal attitude toward the post-Cold War globalization consensus, which holds that government facilitating the ever-freer movement of goods, capital, and people across borders was not just beneficial, but was really something closer to a mandate derived from our understanding of human rights, upon which democratic publics through their governments should be forbidden from trespassing, like the right of free speech or free exercise of religion.
Consequently, Trump’s rise has inspired many defenses of free trade by politicians, economists, and other writers and influencers. I’ve never been a free trader and have not been persuaded by the recent polemics to budge. From what I can see, the debate between free traders and protectionists is not much different now than it has ever been. Except perhaps that, now, the protectionist side is so browbeaten, and free trade so broadly politically victorious in recent decades, that the latter’s advocates have grown flabbier in their argumentation. We’ll come to that soon.
What is peculiar to our age is that conservatives who do not believe in free trade find themselves on the backfoot. In the grand scheme of things, conservatives warmed up to free trade only recently as they allied themselves with others against socialism and communism. Consequently, many of the arguments against social engineering that were rightly deployed against Marxists apparats have been anachronistically turned on the disciples of Alexander Hamilton and Abraham Lincoln.
Historically, free trade rose among the opponents of conservatives, Whigs, and Manchester Liberals. That is natural, because free trade springs more clearly from classically liberal and Whig premises about human nature and politics, and the horizon of mankind’s future. And conservatives, in the traditional sense, are anti-ideological. They tend to reject dogmatics in politics, having a special allergy to the preemptive insistence that one policy is always optimal in every circumstance of human affairs. “Free trade is not a principle; it is an expedient,” said Tory leader Benjamin Disraeli in 1843. Conservatives are the intellectual party that gives two, not three, cheers to capitalism.
My argument against free trade as an imperative is wholly summed up in two sentences. A global free market is necessarily indifferent to the distribution of goods, skills, technological capacities, and power among nations. Statesman cannot be so indifferent.
Especially if they desire to lead and maintain an independent nation. Hamilton argued in his Report on Manufacturers that unprotected trade with Europe would lock America in as a geopolitical infant, dependent on her foreign mother for essential goods and confined to agriculture. “’Tis for the nations, whose [protective] regulations are alluded to, to judge for themselves, whether, by aiming at too much they do not lose more than they gain. ’Tis for the United States to consider by what means they can render themselves least dependent, on the combinations, right or wrong of foreign policy,” he wrote. It is in the way that Hamilton decisively expands the question beyond economic efficiency to encompass larger political and geopolitical considerations. Trade is political.
The conservative English philosopher and artist Roger Scruton put something like it in the opposite way, and more forcefully, saying, “Free trade is neither possible nor desirable. It is for each nation to establish the regulatory regime that will maximize trade with its neighbours, while protecting the local customs, moral ideals and privileged relations on which national identity depends.”
Secondary arguments can and will be brought up to support or meet counterpoints. Conservatives traditionally held trade, like all economic endeavors, to be a matter of prudence, meant to achieve discrete goods, not universal transformation of mankind. Global free-trade advocates propose their policy as a natural consequence and outgrowth of human reciprocity and creativity with a result of maximal economic efficiency, prosperity, and flourishing. But in history and in reality, free trade looks more like a geopolitical regime imposed from above, a subordinate of the foreign policy of supreme naval powers. The political entanglement of nations that trade with each other is not an unmixed blessing and may present real problems and hazards for democracies in particular. Unilateral free trade with nations of radically dissimilar laws, unfree peoples, or predatory mercantile industrial policy undermines the very virtues upon which the market economy justifies itself. Free trade’s claim to be the most optimal economic policy is akin to universal peace’s claim to be the optimal foreign policy. It simply assumes a lack of conflict that is normal in human affairs and ineradicable. Pursuing such policies naïvely leaves one exposed to predators. Free traders presume peace between nations, or — worse, from the conservative perspective — view their policy as a messianic mission of achieving peace by effacing the existence of nations and need for politics altogether. We see this not just explicitly through their speeches in history, but implicitly in their constant denigration of state power even where it is recognized as legitimate and necessary. This latent utopianism leads free traders not just to dogmatism but to extravagance in argumentation.
None of this is new. As we shall show, a perusal of the great debates in the House of Commons or in the American Congress shows conservatives consistently making the same case against free trade in the past as is made today. They argue against political dogmatism, that incumbent powers benefit most — politically and financially — from free trade, and for considering or privileging geopolitical considerations above economic efficiency. They argue against the free trader’s assumption that commercial relations will overcome international rivalries and usher in a new kind of life for man, defined exclusively by exchange, and without political strife.
Let us illustrate the point about dogmatism and extravagance, while clarifying what the issues really are, with a recent case for free trade made here in National Review.
Dominic Pino begins his case by trying to flip the usual rhetorical charges back on protectionism:
Protectionism is a utopian theory based on the assumptions that individuals and businesses will act contrary to their self-interest, government will act in the national interest, and special interests will stay on the sidelines. Free trade is how you live your everyday life.
Citation very much needed. This is nonsense along the lines of saying that free trade is a theory of clown car propulsion. Protectionism is premised on the assumption that individuals and businesses will act in their self-interest. That’s the whole mechanism by which it works. Protectionists raise taxes on imports, restrict their entry on regulatory grounds, or provide subsidies or bounties to domestic industry in order to make it more attractive for businesses and individuals to buy, develop, or invest in domestic alternatives. This will not be the last time our interlocutor will assert a definition or premise of protectionism that has no foundation in history, or in the rhetoric of a single protectionist or substantial politician.
Adding the concern “special interests” does not meaningfully augment the question at hand. It only illustrates one expected and normal challenge in serving the national interest in any domain. The more curious contention is earlier. Is the assumption that “government will act in the national interest” a “utopian theory” or is it really just normal? Is it not the only and proper expectation we should or can have of a government by, for, and of the people? What would be the alternative? Presumably when the government signs a free-trade deal that Pino likes, it is doing so because it is attempting to act in the national interest. There is no other job for government but to act in the national interest.
This is a characteristic overstatement by free-trade advocates. What they are trying to imply is that governments are not infallible stewards of the national interest, as if this disqualified them from the necessity of caring for it. This is an implication that Pino will continue to hammer even if the nail never penetrates. No economic actor — not a single firm, hedge fund, father, or laborer — could survive this demand to prove themselves infallible calculators before qualifying themselves to make economic decisions. Because economic miscalculation is possible does not mean that it should be impermissible. Most people and firms make mistakes. That is how they gather information and learn and adapt.
And if Pino’s statement is not about perfectionism, then what other interest does the author have in mind that policy should serve? Perhaps it’s not one that has the interest of the nation in mind at all. (We’ll return to that thought later.)
Pino takes a detour into Adam Smith while considering divisions of labor, and makes observations about North Korea, saying, “Countries where people grow their own food, make their own clothes, build their own houses — are the world’s poorest.” What he means is countries where individuals try to provide everything for themselves are poorest. But I’ve yet to find a single protectionist who objects to the division of labor per se. Pino writes:
This is the first area where protectionism’s utopianism shows. Protectionism says that the natural human regard for self-interest that undergirds trade is actually a disease in need of treatment. It posits that people need to act contrary to human nature to really thrive and that therefore their desires and preferences must be reformed. The agent of that reformation is the government. Protectionists must hold a very idealistic view of government and must place an extraordinary amount of trust in government to execute their plans. If the government is not as competent or as beneficent as they believe, their plans won’t work.
Again, citation needed. Show us a single protectionist who ever said anything like, “Self-interest is a disease that can only be treated by government.” Or that human desires need to be “reformed?” The weird detour into the idea of humanity without the division of labor has nothing to do with the case for protectionism. Protectionists don’t raise their policy ideas to that level of dogma to be followed by all individuals against each other. Notably, Disraeli also said, “Protection is not a principle, but an expedient.” But the habit of thinking only in abstract systems is a trained one for classical liberals.
What’s stranger still about our free trader’s rhetorical strategy is that what makes Adam Smith such an important figure is that he did take on a reigning suspicion of self-interest as a disease, inherited from Christian theology through Augustine and Aquinas, who hold that “self-love is the cause of every sin,” if it be inordinate. Smith’s whole theory of the invisible hand is that the institution of a market economy, governed by law, dams and channels man’s self-interest into productive work that serves and benefits others. This is not just a matter of man’s natural creativity, industriousness, and sociability. Without law and order, without a shared framework for reciprocity and lawful process for redress, economic activity dwindles and brigandage returns over a shrinking share of resources. The free trader is no less dependent on or needful of a competent and beneficent government than the protectionist. For any market economy to work, government must run impartial courts and not let cases succumb, as a matter of course, to special interests or mere incumbents, it must stop piracy and theft, and in most cases it will provide the infrastructure to support this economic activity.
Pino holds that protectionists must have a “romantic view of government.” He writes:
It’s hard enough to get the government to focus on the national interest in military matters, which is the most fundamental purpose of government, and military members have sworn oaths to renounce their self-interest and serve the country. Citizens at large have sworn no such oath, nor in a free country should they be expected to, and government is very unlikely to be able to redirect their economic activity for their benefit.
Yes, governing is hard. Again, soldiers must be sent with effective orders on missions that achieve a strategy. This is no more different or romantic or abnormal than having judges to adjudicate complex contracts, or cops to police intransigent thieves. The failures of governance are not a justification for anarchy. Secondly, protectionists don’t ask citizens to swear oaths and renounce their self-interest. They simply expect governments — elected officials — who are in charge of military policy as much as trade policy to think more broadly. Again, any alternative to this expectation is the utopian. Our Founders taught us that governments are instituted in such manner and form as “most likely to effect their Safety and Happiness.” If government is not for us, what is it for?
Much of the rest of Pino’s case is a restatement of this problem — governing can be difficult, and beset by special interests or fallible legislators. The author makes an exception for academic textbooks, which can furnish a definition of an optimum tariff. This “works on paper,” he admits. But he notes that this does not resemble any real-world tariff. Again, this restates in a new way the author’s presumption that only infallible calculation can be legitimated. But the distance between theory on paper and the “real world” is just as much a challenge for free traders.
Pino grounds the case for free trade in the division of labor itself, as if international free trading arrangements were arrived at by individuals simply exchanging goods. Sometimes it almost looks like it works this way. I recently found a Russian guitar pedal maker through his self-promotion on Instagram, and we found a way to legally trade through the postal service, despite rather severe impediments to trade between our two nations.
But ask yourself why Koreans make dishwashers with instructions and buttons in English to export to America, and why, say, Papua New Guineans, don’t. It hasn’t anything to do with human nature. There are many facets to the answer. One of them is the history of industrial policy in South Korea, which hewed closely to Hamilton’s recipe of subsidy, selective tariffs, preferred credit treatment, and infrastructural support. But the decisive factor is that the strategic importance of South Korea in the Cold War changed our relations with that nation. Our strategic relations were the basis for our trading relations. There is a reason so many of our largest trading partners — particularly those who manufacture complex goods — are countries that were former enemies who turned into allies in a global struggle. “The economic argument was always marginal,” wrote free-trade advocate C. Fred Bergsten of the Peterson Institute. “It was the foreign policy case which provided the real impetus for liberal trade policies in the United States in the postwar period.”
Indeed, in this way the United States was partly recapitulating the history of the British Empire it had succeeded. Paul Kennedy, in The Rise and Fall of British Naval Mastery, explains the geostrategic logic in which free trade became a consequence of British naval supremacy:
Britain enjoyed effortless naval supremacy in the years following 1815 not only because every one of the other powers found it impossible to build and man the same number of warships, had an insufficient merchant marine to back it up in time of war, lacked adequate overseas bases and possessed an industrial strength that was infantile by comparison, but also because they made little effort, either individually or collectively, to mount any sort of prolonged challenge to this mastery.
Even more spectacular was the British adoption of a revolutionary system of commercial interchange — free trade — and the success they had in persuading many other nations to copy this, at least to a certain extent. The Mercantilist doctrine of fostering wealth through monopoly and state power, which had been the ideological driving force behind so much of Britain’s expansion in the previous two centuries, had been overthrown by the followers of Adam Smith, Ricardo and their school. To some, this reversal of policy, precisely at the point when Britain had the power to enforce a crushing mercantilist victory, seemed incredible. To the Free Traders it was purely commonsense. Britain depended upon a growing world trade — the more, the better. Furthermore, with her great industrial lead, her large merchant marine, her financial expertise, she above all was uniquely suited to benefit from the greater exchange of commodities; whereas a rigorous mercantilist attitude would merely force other states to build up their own industries quickly behind tariff walls, thus hitting international commerce.”
Many British free traders of the 19th century understood as well as Hamilton and their critic Friedrich List did that their industrial incumbency, naval supremacy, and financial dominance could be augmented and enhanced by freer trade, keeping important industries out of competitor nations.
But of course Britain did not convince everyone, particularly the Americans, who did build their industrial capacity from behind some of the 19th century’s highest tariff walls. The other reason I cannot be a doctrinaire free trader is because the lesson I draw from this history is that the massive profits from productive manufacturing supremacy attracts and strengthens financial institutions — the trading floors where capital markets are made and prosperity expanded. And attaining both industrial and financial dominance is the prelude to geopolitical supremacy. Britain surrendered all three in that order to the United States, managing only to triage a strong second place in finance in the City of London. The United States took the industrial lead in the early 20th century, the financial lead after World War I when dominance passed from London to Wall Street, and the geopolitical lead after World War II when the British Empire went into receivership. So far the United States has only partly surrendered industrial dominance to China. But Tim Cook’s comments that China is a far better place to find industrial engineers than America should have been a giant warning klaxon to those who hope for another American century. China’s ability to drop naval vessels into the Pacific at the speed some cooks drop dumplings into soup is a consequence of its industrial prowess. Our years-long delays in naval shipbuilding speak to our policy incompetence and relative global decline in manufacturing. Somehow, despite the lack of infallible regulators, Chinese industrial policy and mercantilism have succeeded in a massive transfer of knowledge and technology from America to make it a serious rival — or even a global leader.
The distaste Pino expresses for government in his case for free trade has strong antecedents in his tradition. At their most ecstatic, free trade’s major advocates vow their policy will cause peace, the collapse of empires, and even the union of all humanity in a world governed by markets rather than governments. Frédéric Bastiat is credited with saying, “If goods don’t cross borders, soldiers will.” Though the source hasn’t been found for this quote, it does fit with his view, and also with one expressed by Montesquieu: “Commerce is a cure for the most destructive prejudices,” he wrote. “Peace is the natural effect of trade. Two nations who traffic with each other become reciprocally dependent for, if one has an interest in buying, the other has an interest in selling and thus their union is founded on their mutual necessities.”
The most famous opponent of conservative protectionism was Parliamentarian Richard Cobden, who is not shy on this point:
I look farther; I see in the Free-trade principle that which shall act on the moral world as the principle of gravitation in the universe — drawing men together, thrusting aside the antagonism of race, and creed, and language, and uniting us in the bonds of eternal peace. . . . I believe that the desire and the motive for large and mighty empires; for gigantic armies and great navies — for those materials which are used for the destruction of life and the desolation of the rewards of labour — will die away; I believe that such things will cease to be necessary, or to be used, when man becomes one family, and freely exchanges the fruits of his labour with his brother man.
This is the historical horizon liberals and Marxists share, when they imagine man can be liberated by some economic relations from the corrupting loyalties to his family, his religion, and his nation. This residue of Cobden’s utopianism is detectable throughout free-trade advocacy, even in the conclusion of Milton Friedman’s famous pencil speech.
Economists from the protectionist American school of economics, some with an Irish background, could only laugh at such naïveté and historical innocence. Henry Carey, an early and influential advocate of protection in the American Republican Party, retorted in the 1850s, “Look where we may, throughout history the trader and the soldier are found marching by each other’s side.” He’s right.
Sometimes tragically, one follows the other. On the eve of World War I, Britain was the world’s leading trader and lender. This did not cause peace. Germany, its second-largest trading partner, went to war with the Empire. It has been obvious for decades that one of America’s largest trade partners, China, is a potential geopolitical rival, and that it is building a military to either beat us or deter us in the Pacific, or globally, as it seeks geopolitical hegemony. Sometimes political considerations trump reciprocal dependence.
Contrast the idealism of free traders with the fundamental moderation and historical common sense of protectionists. Critics of dogmatic free trade throughout history, whether Friedrich List or Henry Clay, have not argued that trade itself is bad, but held that the relative development of one nation vis-à-vis others would determine the political and economic outcomes of a free-trade policy. Countering the utopian Anglo-theorists, List wrote, “The result of a general free trade would not be a universal republic, but, on the contrary, a universal subjection of the less advanced nations to the predominant manufacturing, commercial and naval power, is a conclusion for which the reasons are very strong.”
While Pino continues to insist on arguing with a protectionist as ideological as himself, one who would apply their principles between states in the U.S., or between cities, or to the point of becoming a personal North Korea, the historical advocates of protection often acknowledge at least the theoretical soundness of free trade, under qualified conditions. “Of the advantage of perfect free trade there can be no doubt. What is good between the states ought to be good the world over,” said Carey. List imagined that after a kind of apprenticeship behind protection, nations could compete freely and productively in a more optimal free-trade system.
Other protectionists, viewing political conflict and inequality as inevitable and irremediable, abandon this notion as impossible. “To be free, it should be fair, equal and reciprocal. . . . Equal and reciprocal free trade never has existed; [and] it never will exist,” said Henry Clay, coming to something like Scruton’s conclusion.
There is something to be said for Clay’s recognition about fairness, equality, and reciprocity. It is these very features that undergird the moral case for free markets made by Adam Smith. But international trade with countries that have radically different patterns of subsidy or regulation, or have subjected and enslaved people, undermines the very virtues that market competition is supposed to elicit. Capital competes for return. But American laborers cannot compete on the same terms as Chinese laborers, hundreds of millions of whom have extremely circumscribed legal rights that are subordinated to China’s mercantile policy. What virtue is produced when an American firm like Nike outsources shoe production and its related pollution to China because it gets access to indentured labor, and minimal environmental regulations, then aggressively lobbies for stricter environmental regulations on its American competitor while collecting awards and recognition for environmental stewardship? The answer is that no virtue is produced. And it neatly illustrates that lobbyists can be just as problematic for advocates of free trade, when their game is making money off regulatory arbitrage. The fact is that Montesquieu is not entirely wrong that trade relations make nations “reciprocally dependent” and cause some kind of “union.” Opening markets to China means the effect of China’s oppressive labor practices or anti-social environmental laws bleeds across our system as lost jobs, as resentment, as a just sense of unfairness, or as political pressure to conform regulation down to CCP norms. Democratic peoples naturally blanch at this prospect, just as the early American Republicans hated the idea of free labor competing with slaves domestically.
Advocates of protection admit of the costs of their policy. Hamilton freely acknowledged that his policy caused “an increase of price” but argued in the long run that once domestic manufacture has attained maturity, “it invariably becomes cheaper.” It does so for the very simple reason of price theory. A foreign import that costs $10 might be passed over by consumers when it is subjected to tariffs for a more expensive American-produced good that is produced at $14. But the price signals remain. Other domestic actors will know that there is a market for the same good at a cheaper price, and have incentive to move into that space and innovate to produce it at that market-clearing price. We know from long experience how powerful our continental-sized open domestic market is.
Protection is an expedient, it is not a principle of absolutist autarky, and attacks on it in those terms speak to a certain shyness or discomfort with politics itself which rarely trades in global ideals, but deals in present necessities. An economist who pronounces that “there is no economic case against free trade” has not really engaged protectionist arguments. It would be like saying “there is no economic case for war”; indeed, war has costs, but the case for it can only be deciphered or understood in political or geopolitical terms.
Theorists are free to imagine Cobden’s world where armies disappear and the angel bands lead the merchant marines. But statesman must engage occasionally in some zero-sum thinking of winners and losers. They must consider the skills and resources their people have which can be deployed in extremis. They must confront the fact that in the modern period, manufacturing and technological dominance, financial preeminence, and geopolitical supremacy are heavily correlated. A global free market doesn’t care if America remains the preeminent nation on earth, or if it is reduced to one giant soybean farm to feed a Chinese state that politically dominates Eurasia and the Pacific rim. The very virtues its defenders identify in such an arrangement preclude consideration of these matters. If you’re not indifferent about America’s power and independence, you may, with Hamilton, abjure free trade as the notionally optimal policy for global economic growth, and seek to discover those things that render us “least dependent on the combinations, right or wrong, of foreign policy.” Independence and liberty have a price, but most of us will be glad to have paid.