The fallacy of ‘free’ trade is more than a fallacy of ‘free’ trade

Now that Donald Trump has begun a trade war that has, among other things, prompted Harley Davidson to shift some production overseas to avoid European Union tariffs,[1] it would seem that at least some so-called “free traders” may be rethinking.

It’s a bit overdue: Controversy in the U.S. over the North American Free Trade Agreement and the TransPacific Partnership turned largely on job losses that followed NAFTA.[2] Ana Campoy cites Catherine Novelli, writing that “[n]o one really wants to get rid of NAFTA, or trade. What they want is a job that allows them to support their family and live with dignity.”[3] And, for a decade following the 2003 Doha round on trade, Megan McArdle writes in retrospect,

it was free-traders who were fighting a holding action, earnestly debating the merits of better-than-nothing bilateral or regional trade agreements. Then came Brexit. And Trump. Suddenly we’re no longer even thinking about minor advances; we’re thinking about how to manage the retreat.”[4]

It’s too soon at least to point even to a stream of self-criticism; this is more like a couple drops out of a spigot. But Campoy looks to Zen Buddhism, writing that “globalists” (advocates of economic globalization) need to “let[] go of notions of how things should be, to instead accept things as they are.”[5] She needn’t have gone quite so far, either in antiquity or in culture: She quotes sixth century Zen master Seng-ts’an, but she’s in fact talking about the naturalistic fallacy:

[David] Hume himself drew the distinction, in a famous passage, between judgments about how things are and judgments about how things ought to be. Normative judgments naturally come with views about what one ought to think, do, or feel. And the Positivist picture is often thought to be Humean in part because Hume insisted that the distinction between “is” and “ought” was, as he said, “of the last consequence.” Like desires, oughts are intrinsically action guiding, in a way that is isn’t. And so, kin the familiar slogan, “you can’t get an ought from an is.” Since we are often tempted to move from what is to what ought to be, this move, like many moves philosophers think illicit, has a disparaging name: we call it the naturalistic fallacy.[6]

I’m more skeptical. As a critical theorist, I look at the words “free trade” and immediately demand to know, ‘free’ for whom? to do what? to whom? I see the inherent inequity of an exchange system: Max Weber labeled it “the most elemental economic fact” that the market inherently favors whomever has the greater power to say no, that is, to decline a deal, or to hold out for a better one. Further, he explained, the benefits and handicaps that accrue from each transaction are cumulative. “Other things being equal,” Weber wrote,

the mode of distribution monopolizes the opportunities for profitable deals for all those who, provided with goods, do not necessarily have to exchange them. It increases, at least generally, their power in the price struggle with those who, being propertyless, have nothing to offer but their labor or the resulting products, and who are compelled to get rid of these products in order to subsist at all.[7]

Ask anyone who works for tips, who is least generous? They’ll tell you it’s the rich—the filthier they are, the stingier they are. From the robber barons of the industrial revolution to today’s neoliberals, the refrain is always the same: To be “competitive,” ‘we’ (meaning all of us) must be “efficient,” that is, ‘we’ (meaning the rich) must extract the maximum at the least possible cost, cruelly devaluing human beings, society, and the environment along the way.

McArdle wants to treat the situation today as unique, blaming China:

The analytical mistake was underestimating the effect that China’s accession to the WTO would have on domestic industries in the rich world. When workers complained about trade displacement, we free-traders pointed out that trade creates jobs as well as destroys them, leaving workers generally better off. That’s usually true. But China was a special case. Most trade liberalization occurs slowly, giving workers time to adjust, but when trade barriers to Chinese goods fell, manufacturing workers in the 37 nations of the Organization for Economic Cooperation and Development were suddenly exposed to competition from millions of low-wage workers. Recent research by economists David H. Autor, David Dorn and Gordon H. Hanson suggests that the “China shock” destroyed jobs faster than they could be created.[8]

Campoy is a little smarter, writing that “[t]o undo the damages from trade—and the backlash they are generating—free traders have to start by acknowledging their connections to the people who are bearing the costs of free-trade policies.”[9] But these connections are not merely economic. The problem here is more fundamentally of arrogance, most obviously of assuming that it’s okay to treat people like machines, but also of elites—political, economic, and academic—substituting their own notions of what’s best, the same notions that feather their own nests, for the lived experience of the subjects they rule.

  1. [1]Bob Tita, “Harley-Davidson to Shift Production Overseas to Offset EU Tariffs,” Wall Street Journal, June 25, 2018, https://www.wsj.com/articles/harley-davidson-to-shift-production-overseas-to-offset-eu-tariffs-1529927301
  2. [2]Dave Johnson, “NAFTA At 20: 1 Million Lost Jobs, 580% Increase In Trade Deficit,” Campaign for America’s Future, December 30, 2013, http://ourfuture.org/20131230/nafta-at-20-1-million-lost-jobs-580-increase-in-trade-deficit; Democracy Now! “NAFTA at 20: Lori Wallach on U.S. Job Losses, Record Income Inequality, Mass Displacement in Mexico,” January 3, 2014, http://www.democracynow.org/2014/1/3/nafta_at_20_lori_wallach_on; Public Citizen’s Global Trade Watch, “NAFTA at 20,” Public Citizen, January, 2014, http://www.citizen.org/documents/NAFTA-at-20.pdf; Yves Smith [Susan Webber], “Administration Peddling Increasing Blatant Canards on Proposed ‘Trade’ Deals,” Naked Capitalism, January 6, 2014, http://www.nakedcapitalism.com/2014/01/administration-peddling-increasing-blatant-misdirection-proposed-trade-deals.html;
  3. [3]Ana Campoy, “The economics case for using Zen to think about trade,” Quartz, June 15, 2018, https://qz.com/1268544/donald-trumps-china-tariffs-to-stop-trade-war-free-traders-need-zen/
  4. [4]Megan McArdle, “How free-traders blew it,” Washington Post, June 27, 2018, https://www.washingtonpost.com/blogs/post-partisan/wp/2018/06/27/how-free-traders-blew-it/
  5. [5]Ana Campoy, “The economics case for using Zen to think about trade,” Quartz, June 15, 2018, https://qz.com/1268544/donald-trumps-china-tariffs-to-stop-trade-war-free-traders-need-zen/
  6. [6]Kwame Anthony Appiah, Cosmopolitanism: Ethics in A World of Strangers (New York: W. W. Norton, 2006).
  7. [7]Max Weber, “Class, Status, Party,” in Social Theory: The Multicultural and Classic Readings, ed. Charles Lemert, 4th ed. (Boulder, CO: Westview, 2010), 120.
  8. [8]Megan McArdle, “How free-traders blew it,” Washington Post, June 27, 2018, https://www.washingtonpost.com/blogs/post-partisan/wp/2018/06/27/how-free-traders-blew-it/
  9. [9]Ana Campoy, “The economics case for using Zen to think about trade,” Quartz, June 15, 2018, https://qz.com/1268544/donald-trumps-china-tariffs-to-stop-trade-war-free-traders-need-zen/

Author: benfell

David Benfell holds a Ph.D. in Human Science from Saybrook University. He earned a M.A. in Speech Communication from CSU East Bay in 2009 and has studied at California Institute of Integral Studies. He is an anarchist, a vegetarian ecofeminist, a naturist, and a Taoist.

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