Empires Don’t Practice “Free Trade”

In a recent commentary at The Future of Freedom Foundation, Richard Ebeling celebrates the “triumph of free trade” in 19th century Britain (James Mill, David Ricardo and the Triumph of Free Trade,” Jan. 23). As Ebeling frames it the British political elite, under the influence of classical liberal economists like Mill and Ricardo, realized that mercantilist policies (“beggar thy neighbor”) had been mistaken all along, and — acting on their newfound enlightenment — adopted free trade policies which resulted in “wonderful opulence.”

But when capitalist states change their policies, it’s usually not so much because they suddenly have a better understanding of the world. It’s because policies which previously benefited the ruling coalition of economic classes served by the state ceased to work, or because the makeup of the ruling class coalition shifts. Britain didn’t abandon mercantilism because it finally dawned on them that it didn’t increase prosperity. Policymakers were interested mainly in the “prosperity” of the propertied interests who controlled the state; they pursued mercantilist policies so long as they served those interests and abandoned them when they no longer did. British political elites in the mercantilist era didn’t give two hoots and a damn about the prosperity of the majority of people. In fact Mandeville’s Fable of the Bees describes one of the main themes in ruling class economic thought as keeping the working classes poor so they’ll work as hard as the propertied classes want them to, for as long as they want, and as little as they want. That’s why they stole their land in the Enclosures — because people with independent access to means of comfortable subsistence aren’t willing to be worked like animals.

Britain adopted so-called “free trade” in the nineteenth century, first of all, because the composition of the ruling class coalition had changed. The Corn Laws served the agrarian capitalist interests of the Whig landed oligarchy that controlled the government. The Corn Laws blocked grain imports so that the landed aristocracy could fetch monopoly prices on the wheat that went into the people’s bread. As the Industrial Revolution progressed, industrial capitalists became an increasingly important part of the ruling class, and they were incorporated into the state; the franchise for the House of Commons was expanded to include Manchester mill owners in addition to the landed elites. And it was in the interests of these industrial capitalists for the bread their workers ate to be cheap, so they could pay them less.

Second, Britain abandoned mercantilism because it had already served its purpose — Britain no longer needed to fight trade wars because it had already won. Thanks to a long series of mercantile wars, British merchant fleets had mostly supplanted those of the Netherlands and France, and controlled most of the world’s ocean-going commerce. And the British empire had forcibly suppressed competition from the Indian textile industry and gained control of most of the world’s cotton production.

The whole framing of “beggar thy neighbor” vs. “free trade” evokes images of lots of equal nation-states erecting tariff barriers, or engaging in trade with one another, as the case may be. But in the real world, for a global empire to engage in “free trade” is impossible by definition. Britain may have dropped its tariff barriers against other, junior imperial powers. But its economic policies continued to firmly center on beggaring its neighbors — those neighbors in the Global South who had been forcibly incorporated into its empire. As the capitalist nations of the Global North carved up all of Africa and much of the rest of the world between themselves, they continued the people within their respective imperial dominions.

The policies that were to be called “free trade” in the United States were more accurately called, in William Appleman Williams’s phrase, “Open Door Empire.” America didn’t want to stop imperial exploitation of the colonial world; it wanted the European powers and the United States to cooperate in collectively exploiting the rest of the world. That’s what the “Open Door” policy in China meant — rather than dividing up China on the same pattern as Africa, the capitalist powers would all have a free hand in extracting its resources and exploiting its people. That’s why Japan fell so afoul of the US in occupying first Manchuria and then China proper — it was violating this gentleman’s agreement.

America’s victory in WWII, and its replacement of Britain as world hegemon, meant adoption of Open Door Empire as an official global policy enforced by the Bretton Woods institutions, the UN Security Council and the US Armed Forces. The old colonial empires were dissolved, but Western corporations continued to control the land and resources they’d looted, and Western capital continued to extract wealth from the Third World under neo-colonialism exactly as it had done before — and backed up by the same Western armies, when needed.

What capitalist states call “free trade” is just mercantilism on a higher level.

Free Markets & Capitalism?
Markets Not Capitalism
Organization Theory
Conscience of an Anarchist