There are three distinct perspectives on the international economy.
I'll call them 'nationalist', 'cosmopolitan', and 'ultraimperialist',
more or less in line with the themes of Bernard Semmel's 1993
book, The Liberal Ideal and the Demons of Empire.
There are nationalist, cosmopolitan and ultraimperialist
arguments for free trade. The classical view of free trade - dating
back to Adam Smith - was inherently nationalist. The midtwentieth
neoclassical and Keynesian views are cosmopolitan, and the contemporary
neoliberal view is ultraimperialist.
Adam Smith mooted free trade as a superior form of pursuing national
economic interests (morally superior and a more efficient use
of national resources) to those of the 'mercantilists' whom Smith
identified with "the commercial system". The commercial
system - the orthodoxy of the seventeenth and eighteenth centuries,
especially in England - was an advocacy of national development
through exportled growth (especially the export of manufactures);
a political economy characterised by strong leadership on the
part of government to further the interest of the merchant capitalists.
Mercantilism was a system in which the sovereign and the capitalists
lined each others pockets. In promoting an export surplus - reflecting
a belief that a nation's wealth was measured by its monetary reserves
- mercantilism favoured import protection as a complement to export
incentives. Thus mercantilism came in the twentieth century to
be equated to 'protectionism', 'interventionism', 'Muldoonism';
even 'selfsufficiency' in the minds of some with a poor
grasp of history.
Mercantilist policies - called "leadership" by those
who stood to benefit from them - overemphasised trade. Where implemented,
they served as a recognition that private capital had usurped
a significant degree of 'economic sovereignty' over a whole nation.
Whereas economic sovereignty traditionally exists at a national
level - as it did in Smith's time, and as it did throughout the
years of the "Pax Britannica" of the nineteenth
century and the "Pax Americana" of the midtwentieth
century - it also exists at an international level.
Cosmopolitan political economy exists where the economic relations
between nations and the citizens of different nations are regulated
by liberal means to maximise the wellbeing of humankind. A cosmopolitan
sovereign acts in the international public interest, to further
the economic interests of all humankind.
On the other hand, ultraimperialism is the international
equivalent of national merchant capitalism, whereby international
capital exerts a de facto sovereignty over the whole globe
as a means of furthering its particular interests. This usurpation
of sovereignty occurs through pressures to align international
institutions with the interests of international capital; just as under the commercial system that Smith described, the
national sovereign promotes the interests of national merchant capital. "What's good for General
Motors is good for America" becomes accepted as a global
proposition.
Ultraimperialism exists because there is a vacuum in international
sovereignty. When there are too few institutions accountable to
the international public, the international marketplace - the
international markets for goods and services, the international
capital market, and the international labour market - becomes
the main regulator and the main disciplinarian.
One key symptom of ultraimperialism is the way national
governments compete against each other to win the favours of international
capital, in particular by pursuing policies that minimise the
costs - taxes and wages - incurred by transnational business,
while raising the price (interest rates) of the factor of production
(capital) that represents the return to private wealth.
While classical mercantilism and ultraimperialism have much
in common, cosmopolitan political economy is distinctly antimercantilist.
The way forward is to find a cosmopolitan understanding of and
solution to the problems of the international economy. Free trade
between fraternal nations is not proving to be the answer- as
it was believed it would be in the decolonising era of the 1950s
- because the benefits only occur in an environment of global
full employment and economic growth.
It is only through 'green' economics that the intuitive approach
is both cosmopolitan and protectionist; fair trade rather than
free trade between the peoples of the world. If there can be nationalist,
cosmopolitan, and ultraimperialist forms of free trade,
then there can also be nonnationalist forms of protected,
politically regulated, managed trade.
Just as national markets fail - as any reputable economics textbook
will explain - so international markets fail. And the ultranational
markets of contemporary globalisation fail too.
It is the economic role of the sovereign to correct market failure,
and to provide public goods. It is not the role of sovereign governments
to provide leadership of a form that is detrimental to outsider
interests. Appropriate - ie cosmopolitan - protectionism is any
form of intervention on the part of any legitimate publicly accountable
sovereign power that helps to redress international market failure
and to provide international public goods. And that does so without
pushing the world economy onto an unsustainable growth path.
A suitable metaphor for economic protection should be a warm blanket and not a nationalist iron curtain. Protection can be a cosmopolitan counterposition to the ultra-imperialist jungle described by Vandana Shiva:
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