CM 2 Flashcards
Ancient plea for free trade
17th C. “Classical” English liberal philosophers argued to open borders of trade & ideas
superior virtues of laissez-faire - “laissez faire les hommes, laissez passer les merchandises”
French authors - only legitimate mission of State is to protect individual freedoms
Montesquieu’s beliefs
Freedom of trade is the condition of peace between nations
‘De l’esprit des lois”
trading predisposes to dynamism & economic growth - Latin “negotium,” in negation with idleness
unions based on mutual needs
Recent pleas for free trade - Yagdish Bhagwati
free trade promotes global economic development
opposing it does not better protect social rights & environment
protectionist temptations (antimondialisation) to detriment of prosperity in all countries
Recent pleas for free trade - Paul Samuelson
free trade creates a shareable global surplus of wealth
only area that pits all economists against all politicians
all economists for it, even those who seek to amend traditional theories of international trade
free trade allows better allocation of resources - Ricardo’s model
poorer, less productive countries can gain from trade liberalisation
practitioner’s point of view - Pascal Lamy
trade creates continuity between underdevelopment & development
2012: developing exceeds developed countries trade
‘mondialisation’ has lifted billions from poverty, but growing inequality
irrelevance of protectionism & economic patriotism
the share of foreign components in the national product sold abroad was at 20% twenty years ago, 40% today, 60% in future
if economic patriotism means wanting to consume & export as much national product as possible - no longer makes sense
2030 - developing countries GDP
will represent almost 60% of global GDP
due to ‘mondialisation’ of economy & financial/economic crisis encouraging global economy’s transformation
consequence of participation & influence in global economy
pleas against freedom of trade - enrichment of nation by protectionism
Trade as a war for for money/another way of waging war
Colbertism : based on mercantilism’s objective to allow State dominance
Mercantilist doctrine legitimises prohibitionist practices, like ban on importation of foreign finished products
pleas against freedom of trade - ‘mondialisation’ penalises rich countries
competition between unequal countries negative for developed market economy countries
due difference in wage & social protection levels
favour establishment of negotiated protections, social, & environmental standards
virtues of free trade are exaggerated - Dani Rodrik
‘comparative advantage” (international specialisation) locates exchange gains at import level
function of export only to finance import (giving up domestic production)
assumes all countries play the game by importing in proportion to national wealth
liberalisation expected to boost exports, wealth, & job creation
assumes all countries simultaneously manage to export
countries that manage to increase exports gain
trade agreements create jobs in certain countries at the cost of destroying them in others
free trade assumes trade grows in a strong & balanced manner
free trade as instrument of Southern enslavement
reality of trade is exploitation of nations by other nations
Samir Amin
colonialism & capitalism fundamentally inseparable
Free trade enriches & improve efficiency
increase production efficiency
each country develops more productive activities & abandons those less so
result is greater management of global available resources
improves well-being
supports growth and generation of distributable wealth surplus
increases welfare in participating countries
productivity - division of labour - efficiency - growth - jobs/income
free trade fortifies well-being & social justice
benefits consumers
stimulates competitions with increased variety of goods & lower prices
losses of certain companies/sectors offset by other gains, esp. consumers
corrects international inequalities
distribution of trading gains take place spontaneously, to benefit of the poorest countries
rich countries receive smaller gain due to importance of their demand increasing the price of imported goods
free trade frees us from risk of “capture of public authorities”
serves the general interest, non-discriminatory
restrictions limit import & export
limited supply artificially raises prices allowing abnormally high profits
protectionism serves particular interests, risking “capture by public authorities”
Bastiat’s petition from the candle makers asking for protection against unfair competition form the sun
free trade pacifies relations between nations & protects environment
ensures social peace
in event of recession, improvement of one social class in detriment to another - conflictual wealth distribution
growth facilitates reconciliation of interests
free trade promotes growth & distributable surplus
guarantees better environmental protection
poverty exerts strong pressure on planet’s resources, not prosperity
protectionism strengthens nation’s cohesion & independence
free trade as the gateway to trade wars
international relations remain conflictual
free movement implies that producers of goods may choose the countries where they sell/invest, i.e. where work is cheap & tax standards are low
perfect mobility of goods leads to competition of workers & economic systems, allowing “best economic & ecological” countries
