Ian McDonald
FREE TRADE is the ideology of the age and protectionism the discarded evil. But in the real flesh and blood world of profit and loss bits of both, at one time or another, are essential human devices to organise production and trade most beneficially.
In the final analysis free trade is less an economic strategy than it is a cultural doctrine. It assumes that the highest good is to shop. It assumes that progress is synonymous with increased economic activity. The exchange of material goods and capital takes complete precedence over protecting the autonomy and sovereignty, and the culture, of local communities. Rather than promoting and sustaining the intricate social relationships that create valuable and vibrant communities, free trade theology relies on a narrow definition of comparative efficiency to guide all conduct.
OBSESSION WITH BIGNESS
In a world dominated by free trade theology bigger is better and huge is best - the economist Lester Thurow argues that even giant IBM is not big enough for the global marketplace. This obsession with bigness leads logically to that great postulate of free trade: the need for global markets. And another tenet of free trade is that each community and, naturally, each nation must specialise in what it does best to the virtual exclusion of otherwise worthwhile activities.
Just when the doctrine of globalised free trade seems so dominant, the absurdities it gives rise to are becoming more evident. A presumed benefit of free trade is a higher standard of living. Well, whose standard of living is being considered? Inequality between, and in most cases within countries has increased and is increasing. In 1930 the per capita GNP ratio between developed and undeveloped countries was 4 to 1; now it is 8 to 1.
BOATS ARE SINKING
Never mind, we are told, vast wealth is being created by unfettered free trade and a rising tide lifts all boats - to use that hideously misleading cliché so often employed by the new cultists. But the share of world trade captured by the United States over the last 20 years has increased dramatically while the least developed countries have seen their share cut in half. A great many boats are sinking, not floating higher.
Nor is the problem limited to inequalities among nations. Increasingly the dominating economic entity in the world is the huge transnational corporation. Two-thirds of international trade now involves transnational corporation and one-third involves trade within single transnationals.
FARING BADLY
And, as UNCTAD has noted, small and medium-sized enterprises employing the majority of the world's workers are faring badly against the giant transnationals.
Free trade is favoured by those who have power. Can there be any doubt that by far the chief beneficiaries of free trade theology now are the developed countries, principally the U.S.A., and the huge transnational corporations? Why on earth then is this theology so unthinkingly accepted by nearly everyone else as well?
As the evidence mounts that unbridled free trade and market forces as supreme arbiters in human affairs brings increasing misery to a huge majority of people in the world, still too many of our spokesmen go about in a trance of self-delusion declaring that we must surrender our lives and the future of the world to this awful juggernaut.
TRADE PROTECTION
The historical evidence from countries that have sustained fast growth and those that have not suggests that trade protection can be one of a number of powerful instruments for nurturing new activities and higher value-added processes in existing activities, provided it is brought down pari passu with the rise in producers' production and marketing capacities.
Civilisations do best when they engage in a careful balance between freedom and order. Free trade in certain circumstances in certain areas can be a boon for many people. In others, it will be a disaster and provoke disorder and suffering.
On the other hand, carefully and precisely used, protection can promote growth, particularly among the weaker parties in international competition. But used as a general principle it is a recipe for local exploitation.
Free trade and protectionism, once stripped of their ideological extremes, are useful tools which can be balanced for general benefit, social stability and community development suited to each nation's traditions and needs. Finding an ideology in between is the art we have to learn.
Ian McDonald is a freelance writer who is based in Georgetown, Guyana.
