In an earlier article, "Contrasting Views of the International
Economy", I suggested that free trade could be argued
for from three quite different points of view - nationalism, cosmopolitical
economy, and ultraimperialism - and that protectionism could
be argued for from both national and cosmopolitan perspectives.
We have trouble understanding globalisation as a process of imperialism,
in part because discourse in international economics has become
confused by enduring myths that equate nationalism with protection
and free trade with cosmopolitical economy.
Understanding the modern international economy - that of the real
world rather than that of the undergraduate textbooks - can be
enhanced through the appreciation of the nationalist origins of
the free trade paradigm.
The founder of free trade theory - Adam Smith, the son of a Customs
official who became a professor of Moral Philosophy at the University
of Glasgow - was very much an economic nationalist. Smith's nationalism
can be presented through the lens of the neoliberal Chicago political
economist Douglas Irwin, the author of Against the Tide; an
Intellectual History of Free Trade (1996, Princeton University
Press).
Irwin says "Smith created such a compelling and complete
case for free trade that commercial policy could no longer be
seriously discussed without contending with his views.... Smith's
case for free trade was based on its being in the national economic
interest, not on some cosmopolitan ideal as he was later accused
of by Friedrich List and others."
It was List and others, labelling themselves as economic nationalists, who
did more than most to propagate the myth of Smith and his 'classical
liberal' acolytes as cosmopolitan thinkers. List (The National
System of Political Economy, 1841) regarded classical "cosmopolitical
economy" - which claimed to maximise the economic wellbeing
of all nations - as a covert way of legitimating a theory really
intended to preserve Britain's dominance. Though his view was
a valid characterisation of the free trade movements in 1840s'
England, it was List, in promoting nationalism as a means of development
for all nations towards an "economy of mankind" who
was the more cosmopolitan of the two.
Smith set out his premises in his first major book, The Theory of Moral Sentiments (1759):
Smith saw the "Invisible Hand" (which he only mentioned once in his major work, The Wealth of Nations, 1776) as being a reflection of man's innate patriotism. People when not subject to government intervention on behalf of a "commercial system" strongly biased towards exportled growth - a "Restrictive and Prohibitory Commercial System" in the words of Jeremy Bentham in 1821 - would follow that form of patriotism otherwise known as enlightened self-interest:
Smith's "project of empire" [Wealth
of Nations, Book 5] in fact favoured a strong domestic economy
that incorporated Britain's colonies in Ireland and America; a
commonwealth whose "natural" productive powers would
bury Holland. For Smith, the Dutch commercial system of monopoly
trade conducted through the East India and West India Companies
represented everything that that wrong - that was "artificial"
- about the international economy of his time.
Smith favoured free trade as a better means of dealing to the Dutch than the protection which prevailed in Britain during the industrial revolution that separated Smith in time from List. He spelt out his contempt for the "dour" Dutch, without mentioning them by name, in one memorable passage of The Wealth of Nations:
Smith was actually a Francophile, incorporating much of French
economics into his paradigm, as well as being a connoisseur of
French wine. He was vehemently opposed to bilateral trading arrangements,
such as that between England and Portugal, in part because he
hated Portuguese wine!
Adam Smith favoured free international trade, despite his advocacy of domestic trade, as being preferable to the manipulated trade that epitomised the commercial system [Wealth of Nations, Book 4]:
Smith was no ultraimperialist. But nor did he mean to create
a cosmopolitan vision. His vision was of a world naturally dominated
by a great Anglo-Celtic empire; a fraternal transAtlantic
empire rather than an empire of tribute such as those of classical
imperialism, of Dutch imperialism, or of 1990s' ultraimperialism;
a commonwealth founded on its natural resources, its domestic
trade, and its superior "arts" (ie technology). Free
trade arguments evolved, nevertheless, in the nineteenth and twentieth
centuries, to serve the interests of the leaders of the industrialised
commercial system; leading nations whose dominant interests have
been essentially the same as those of the "odious" nations
of Smith's time.
To follow through this story, a useful book is still Bernard Semmel's The Rise of Free Trade Imperialism (1970), which interestingly gives Edward Gibbon Wakefield a seminal role in the propagation of free trade empire. Indeed it was Wakefield's heavily annotated edition of Smith's Wealth of Nations, that was read by Victorian Britons.
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