It’s always worth reminding of the impact of trade on reducing global poverty

When free trade was ‘God’s diplomacy’

by James Pethokoukis




The free movement of goods, services, and investments has an inescapable moral dimension. Yes, most economists agree that decades of trade deals have benefited most Americans. Which is great. But it’s always worth reminding of the impact of trade on reducing global poverty.

As The Economist put it:

The world’s achievement in the field of poverty reduction is, by almost any measure, impressive. … Most of the credit, however, must go to capitalism and free trade, for they enable economies to grow—and it was growth, principally, that has eased destitution. … But the biggest poverty-reduction measure of all is liberalizing markets to let poor people get richer. That means freeing trade between countries (Africa is still cruelly punished by tariffs) and within them (China’s real great leap forward occurred because it allowed private business to grow). Both India and Africa are crowded with monopolies and restrictive practices.

With that in mind, I was most interested in seeing how free trade was viewed during the spread of globalization in the 1800s. As Robert Tombs writes in The English and Their History, that moral dimension was pretty important in Britain:

From the 1820s onward there developed a visionary programme to transform the world by means of free trade — the closest modern England ever came to a national ideology. As a children’s book put it, the aim was that “everybody may … be joined together in love and trade, like one great family; so that we may have no more wicked terrible battles, such as there used to be a long, time ago. ” …

Over the whole period in which it operated, c.1850 to c.1930, free trade probably made Britain slightly poorer. It meant that no British government could use its economic bargaining power to force other governments to accept free entry of British goods, which in spite of confident hopes of idealists and economists, few ever did. Britain simply allowed free access to its domestic market to all …

It may be that this was done partly due to miscalculation … but there is no doubt that free trade seemed genuinely altruistic and was unconditionally supported by religious groups, the anti-slavery movement, trade unions, women’s associations, and peace campaigners in hopes that all would eventually see the light. The dogma was that commercial freedom would eventually bring political freedom and international harmony, and hence the dissolution of empires, the liberation of serfs and slaves, the end of the “antagonism of race, and creed, and language,” and the abolition of “gigantic armies and great navies” — which states would no longer need, or, in the absence of tariff revenue, would be able to afford.

There were indeed some real benefits. As we have seen, workers got cheaper food. More widely, Britain’s commitment to free trade stimulated world trade for more than half a century. … Free traders were universalistic; all mankind was morally and intellectually the same, human values were transnational, racial and ethnic differences were irrelevant, and civilization and progress were the right and destiny of all. … [After the Great Exhibition of 1851], Manchester cotton merchant, Absolom Watkin, noted in his diary: “Our country is, no doubt, in a most happy and prosperous states. Free trade, peace, freedome. Oh happy England.

Source: www.aei.org