≡ Menu

Quotation of the Day…

… is from page 546 of Doug Irwin’s excellent essay “Adam Smith and Free Trade,” which is chapter 32 in Ryan Patrick Hanley, ed., Adam Smith: His Life, Thought, and Legacy (2016) (citation omitted; link added):

Smith drew on the notion that the division of labor was the key driver of productivity improvements.  Increasing productivity allowed more output to be produced from the same amount of capital and labor inputs.  Such improvements were the basis for rising living standards.  Because the division of labor is limited by the extent of the market, free trade widened the market and therefore permitted a more refined division of labor that improved productivity.  In particular, free trade facilitated the exchange of knowledge across countries about new production methods and business practices.

While Smith did not adequately emphasize the indispensability of creative, entrepreneurial innovation to mass flourishing – or to the launch of what Deirdre McCloskey calls “the Great Enrichment” – what Smith did emphasis is also vitally important and typically overlooked in political and public discussions of international trade.  Not only are physical resources and human labor put to more productive uses when specialization deepens and when competition for consumer patronage is not artificially muted by economically meaningless political borders, but knowledge itself – that most precious and misunderstood ‘input’ into the operation of any commercial society – is spread more widely, effectively, surely, and quickly when trade is free.

In short, to restrict trade is to restrict the flow of knowledge.  It is to make people less informed and, over time, stupider than they would otherwise be.