Quotation of the Day…

by Don Boudreaux on May 6, 2020

in Doux Commerce, Philosophy of Freedom, Trade, War

… is from pages 287-288 of the 1981 Liberty Fund edition of the 1936 J. Kahane translation of Ludwig von Mises’s masterful 1922 work, Socialism; as used here by Mises, “imperialists” encompasses also what we today call “economic nationalists”; one page earlier he calls it the “nationalist-imperialist doctrine”:

The fact, that all the arguments it [the nationalist-imperialist doctrine] used to prove the incompatibility of national interests could with equal justification be used to prove the incompatibility of regional interests and finally even of the individual’s personal interests, was quite overlooked. If the Germans suffer from consuming English cloth and Russian corn, the inhabitants of Berlin must, presumably, suffer from consuming Bavarian beer and Rhine wine….

Imperialists delude themselves fatally when they suppose it possible to strengthen the cohesion of members of a nation by rejecting cosmopolitanism. They overlook the fact that the basic anti-social element of their doctrine must, if logically applied, split up every community.

DBx: Economic nationalists scoff at this idea. They allege that those of us who hold it are unrealistic dreamers who are blind to the reality of national conflicts right before our eyes.

Economic nationalists misunderstand free-trade cosmopolitans’ position. Free traders of course recognize that there is much actual or latent conflict across borders. The vile government in Beijing, for example, often acts in ways that are counter to the interests of Americans.* But such conflict becomes less likely the more economically integrated are two economies.

Economic nationalists observe the (often very real) hostilities and conflicts that exist in a world in which governments artificially restrict their citizens’ freedom to engage commercially with foreigners. Economic nationalists then claim that these hostilities and conflicts are more or less natural and permanent features of the relations between citizens and foreigners. The conclusion drawn by economic nationalists is that these hostilities and conflicts are reason enough for the home-country government to restrict fellow-citizens’ freedom to engage commercially with foreigners.

Free traders respond by noting that the more economically integrated are two countries, the lower are the prospects for hostilities and conflicts between those two countries.

Such prospects of war never fall to zero, of course; it’s not in the nature of any government to swear off ever flexing its military muscles. Nevertheless, reducing the likelihood of belligerence is better than not reducing it. And trade reduces it.

Much is made by economic nationalists of “us” being made by trade “dependent” on “them.” Well, in most cases, when “we” trade with “them,” “they” become “dependent” on “us” to the same degree that “we” become “dependent” on “them.” If the Chinese truly are enriched by selling to us their exports, then their enrichment depends, to the degree that they trade with us, on us buying their exports. Yes, we thereby come to depend on their exports, but they thereby necessarily come to depend on our exports.

Put differently, as we Americans come to depend on goods and services produced by citizens of some other country, citizens of that other country come to depend on goods and services produced by us Americans. Remember that trade doesn’t enrich the Chinese by shoveling their way more U.S. dollars or other currencies. Trade enriches the Chinese only by increasing their access to real goods and services. If the Chinese burned or simply sat on all of the dollars they receive by selling exports to us Americans, they’d impoverish themselves as they enrich us.

The bottom line is that a great deal of observed, existing international hostilities are the consequences of trade barriers rather than good reasons to maintain or to erect trade barriers. While I don’t deny that in a handful of particular cases plausible questions might be asked about the wisdom of reducing some tariff or of maintaining no or low specific tariffs, I do insist that it’s mistaken to point to disagreeable artifacts of the absence of international economic integration as reasons to avoid international economic integration.

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* It must, though, be said that some of Beijing’s actions that are commonly interpreted in the United States as being hostile to Americans’ interests – and likely intended as hostile by Chinese-government officials – actually serve the interests of Americans and harm the interests of the Chinese people, if not necessarily those of the Chinese government. When the Chinese government subsidizes Chinese exports to America, we Americans are enriched at the expense of the Chinese people. Such is the perversity of mercantilist myths that they lead governments that are hostile to each other often to unwittingly impoverish their own economies while enriching those of foreign countries.
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Pictured above is Otto T. Mallery (1881-1956). Mallery, an American supporter of Secretary of State Cordell Hull, published a book in 1943 titled Economic Union and Durable Peace. In that book – as reported by David Hart – Mallery wrote that

  1. Economic bargains which are likely to be kept are preferable to political agreements which are likely to be broken.
  2. If soldiers are not to cross international boundaries on missions of war, goods must cross them on missions of peace.
  3. Unless shackles can be dropped from trade, bombs will inevitably drop from the sky.

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