In Defense of the Free Market

Reference article on free trade and libertarianism by commentator Patrick Buchanan.
http://www.humanevents.com/article.php?id=19590

There is not much argument from me about Buchanan's particulars. In my viewpoint, however, his general philosophy is just as wrong as his statistics are probably right. Economic nationalism as Buchanan is the path to poverty and dictatorship. What he fails to mention is that the British Empire did not become a truly rich global empire until it implemented liberal trade policies and released itself from Imperial Preference. The date he mentions when Great Britain turning from economic nationalism, 1860, was about the time it disbanded the merchantilist monopolies like the East India Company and opened their much of their empire to "free trade." In perhaps the greatest lesson of the catastrophic effects of the type of economic nationalism Buchanan wants to see for the US is the dogged pursuit of merchantilism that drove Spain in 17th Century from being the first true global power to a third rate power in Europe--under the tyranny of land-rich nobles and clergy.

Younger libertarians, and a few others outside of the philosophy, get confounded when I tell them that "Capitalism and so-called free-trade are not anything near a true 'free and fair market.'" My friend Jim used to ask everyone else what I meant. He said he could find no arguments from anyone, professors included, to support my belief that capitalism is not a free-market. I always referred him to Adam Smith as a primary source for free markets. While Smith talks of capital accumulation as a main engine of economic expansion, the "pure" market system that Smith dissects in his philosophy is far from the managed, regulated, and organized "capitalist" system the world has had from the late 1880s through the present.

Our government leaders, on both sides of the divide, seem to think that the "structured, organized, and legally-sanctified free trade institutions" they create are good for the US economy. The best moniker for a "pure" market I've ever heard comes from my anti-statist libertarian friend Tom. He once used the words "market anarchist" to describe himself. Market anarchy is not a chaotic, exploitive, and destructive economic system. It is simple and "pure" market that is governed by the immutable law of supply and demand.

What about free trade, like NAFTA, GATT/WTO, CAFTA, etc? In a "pure" market sense, there wouldn't need to be a treaty, regulations, the IRS, the Interstate Commerce Commission, the SEC, or an international governmental organization (IGO) like the WTO if it were "free." If the market were free, it would give everyone a level playing field; everyone would have the same opportunity--especially the small entrepreneurs and the wage-earning workers. The smallest most humble digger of ditches would be able to survive and prosper in a "pure" market. Advantages of legal monopolies and subsidies (like those given mega-oil companies), legalized theft through income taxation, special interest regulations and exemptions from the effects of consumer and investor dissatisfaction (like shown in the Enron affair)--all of these things would not exist if the governments of the world's nations did not give the rich and the super-rich these uncompetitive protections and transfers of wealth. At the risk of sounding a conspiracist, the free trade agreements we've made since the implementation of GATT in 1944-45 have benefited a small, rich, elite section of the US and world economies.

What about China? It is outperforming the US in the growth of its global export market share and GDP growth because they are a command economy, with many features of economic nationalism, run by an authoritarian state, using many concepts and advantages of a managed capitalist system. It is only successful because it is based on near slavery of the worker population and the submission of the individual to the dictates of the state. China is succeeding because they are using the temporary advantages of economic nationalism along with their communist structure of government to exploit their own people. Remember, Spain in the 1500s rose to global power based on a mercantilist model; but adherence to the model caused its fall. In much the same vein, China's model is not sustainable in the long-run. It will face either revolution for freedom, at which point it will lose its current advantages or fall into the merchantilist trap. In that case, it will in turn fall prey to other poorer nations with even cheaper labor and more oppressive political systems. A "freer" system like the US will always be at a disadvantage if we let the totalitarians use our rules when dealing with us and keep their own "rules of the game" in their own country. In short, the only way that economic nationalism like Buchanan wants for the US is to become a slave-based dictatorship, impoverished in the long term. By definition, China cannot engage in "free trade" because China is not a free country. Without true freedom, markets are not fair. Do we play by the rules of closet Marxist? It is only poverty and scarcity in the end.