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Tending Towards a Culture

by Peter Stead

Erasmus Forum Bulletin / Volume III 2019

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Erasmus Forum

Historical and

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Bulletin

Volume V / Autumn 2020

The Truth about Free Trade

Erasmus Forum Bulletin / Volume V 2020

Erasmus Forum | Bulletin V | Autumn 2020

The contributors to this issue of the Erasmus Forum Bulletin, under the editorship of

Professor Nicholas Crafts, consider an issue of fundamental importance in the history of

political economy: the persistence of ‘protectionism’. The emergence by the 1830s of a

substantial body of opinion in favour of ‘free trade’, more especially so in the United

Kingdom of Great Britain and Ireland as well as in other countries where the manufacturing

sector was flexing its organisational muscle, marked a decisive moment in economic, political

and social history. Measures designed to protect certain sectors of the domestic economy,

chiefly the agricultural interest , were subject to a sustained and hostile critique.

‘Protectionism’ has never recovered, intellectually speaking, from the banner waving impact

of the mid-nineteenth century free trade lobbyists. It was, and is, associated with the defence

of economic activity that would wither on the vine were it not for governmental intervention

such as high tariffs imposed on otherwise competitively priced imports. A litany of

protectionist delinquence merges moral fervour and political passion with the nicely

calculated lore of less and more: high prices, artificially sustained, show the power of the

cabal- interest groups with a grip on the levers of governmental power; economic activity,

believing itself to be ‘protected’ from competition, ceases to invest in its own enterprises and

the consequent lack of innovation will lead sooner or later to a collapse in demand ; the idea

of a ‘guaranteed market’ is delusional since the tides of taste, together with the evolution of

goods and services, are inherently unpredictable. Sleazy deals and backhanders, corruption-

fiscal and intellectual, an oligarchic subversion of the public interest: these are the disfiguring

hallmarks of protectionist policy. This list of charges should surely have secured a guilty

sentence, followed by a swift burial, for the arraigned defendant. And yet-when it comes to

economic history periods of free trade- so clearly the winner over its depraved adversary- are

very much the exception and not the rule. Why?

Issues discussed include:

I. Protectionist impulses, and populist reflexes, in U.S. history from the candidature of William

Jennings Bryan for the Presidency (1873) and the Louisiana Governorship of Huey Long

(1928-32) to the Presidency of Donald Trump.

II. The mercantilist legacy. European statecraft in the early modern era was governed by

mercantilist doctrines. National wealth was equated with the possession of bullion (gold and

silver) and sovereign princes, their courtiers and representative assemblies alike, equated the

‘national interest’ with the maintenance of a favourable balance of trade, pursued through

the imposition of tariffs and the granting of monopolies. The arguments of David Ricardo

(1772-1823) in favour of free trade delivered, it is supposed, the coup de grace to

mercantilism. Successive crises in the post-1945 British economy’s ‘balance of payments’,

together with a short-lived ‘I’m Backing Britain’ campaign (1968), showed mercantilism’s

continuing appeal to the public mind and its legislators.

III. When does a ‘free trade area’ become a protectionist zone? A survey of economic policy

pursued by the Europe’s continental powers from the formation of the ‘Coal and Steel

Community’ (1950) to the European Union structures authorised by signatories to the

Maastricht Treaty (1992) reveals a commitment to some typically ‘free trade’ goals. These

include restrictions on governmental subsidies to individual companies and businesses as

well as a promotion of a tariff -free exchange of goods and services across national borders.

These internal measures have nonetheless proved to be compatible with the maintenance of