Econ Notes #8: Pax Economica, p. 50.

SPORADICAL CHIC -

A boring title, an intriguing subtitle - « Left-wing visions of a free-trade world » - , but what exactly makes it so intringuing? After all, we know that « left-wing » can mean a lot of different things and that funny business happens to it when applied to the 19th century. Elizabeth Anderson's « Private Government » had put the same irritation to work, when it asked the question why so many « left-wing » progressives were in favour of liberalization and laissez-faire markets. The question is somehow more surprising than the answers: Market liberalization was « liberalization » from slavery capitalism and made markets dynamic, opening the possibility for change (although the examples to illustrate that, e.g. Adam Smith, very stunning). Marc-William Palen is going for a very similar line of argument here, however, it is taking the other direction: It deviates from the « wer hat uns verraten » storyline, and heads rather to the « who did we forget »? It is stunning, in a way, how the idea of free-trade seems incompatible with almost any permutation of left-wing poilitics.


Marc-Willliam Palen (2024): « Pax Economica. Left-Wing Visions of a Free-Trade World. » Princeton NJ: Princeton University Press.

Introduction

  1. Imperialism of Economic Nationalism: Globalizing the American System of Protectionism
  2. The Anti-Imperialism of Free-Trade: The Liberal Radical Critique of Imperialism and War
  3. Marx and Manchester: The Pacifistic Evolution of the Socialist Internationalist Free-Trade Tradition
  4. Free-Trade Feminism: The International Feminist Fight for Free Trade, Anti-imperialism, and Peace
  5. Free Trade, Fraternity, and Federation: The Economic Cosmopolitanism of Christian Pacifism
  6. Pax Economica vs. Pax Americana: The Left-Wing Free-Trade Fight against Neocolonialsm, Neomercantilism, and Neoliberalism, 1945-2022.

The Introduction and the first Chapter are very straight forward as the book is based on one cartoonish, but interesting dichotomy. Already on the first five pages the contention of « left-wing » is sacrificed as a mushy «spectrum of left-wingers broadly encompass[ing] those whose politics were left of center. » (4) But « all shared the believe that economic interdependence could foster democratization, economic and social justice, and world harmony. » Well, but (totally understandable) historical ignorance is not a political stance, is it? Maybe they could just not really grasp what free trade would mean for the world? But not so fast, this would be too easy, because, as will become clear, free trade remains still in the realm of imagination. And:

« ‹Free trade› and ‹protectionism› also had meanings particular to the century preceding the Second World War. This was a time when governments relied largerly on tariffs for generating revenue. Pax Economica's cast of characters accordingly understood free trade to mean low tariffs for revenue purposes only, rather than their near absence as free trade is commonly thought of today. Left-wing free traders back then sought to lower government expenditures on imperial defence and militaries to keep revenue traiffs as low as possible for the consumer — with imperial devolution, peace, and prosperity a natural by-product. » (5)

This speaks for a very systematic and powerful approach which I am eager to learn more about. But before the chapters 2 to 5 will follow different strands of free trade schools and our hero, the « Manchester school », the very first chapter will roll out the origin story of the villain: The « American system » which is a very Anglo-German system but with a logistical twist. The German-born US-citizen Friedrich List wrote « The National System of Political Economy » in 1841, a pamphlet for more nationalism and economic protectionism. Already in the years before he had influenced important policy makers in Pennsylvania like Henry Charles Carey. With a clear aggression against Great Britain that had « kicked away the ladder » and was only defending free trade to « downplay the power of political and economic nationalism at their own peril» (18), List argued for a protectionist plan to save especially the « infant industries » of other empires at home, for subsidies of these industries, higher tariffs and for new colonies (for the US, Germany, Belgium, and France) « to obtain national security, raw materials, and new export markets for surplus capital ». Germany and the US saw Britain with its colonial advantage as their main enemy, « strangling rival nation's infant industries in their craddle ». (18) (This peculiar wording - «infant industry» - is a remarkable constant in these arguments.)

After its success, many - almost all - countries followed in its footsteps. First other empires in a « transimperial exportation of the American system, 1861-1890 ». In these years List's book was translated into many European and Asian languages.

  • France: When List's friend Adolphe Tiers became premier in 1840, his impact became visible and punched through against the likes of Frédéric Bastiat. He declined an offer to oversee France's new built railway network to return to Germany. Result: Tariff protection from foreign markets in Algeria 1884 and in French Indochina 1887, the empire-wide Méline Tariff 1892 came in response to the US and their McKinley Tariff. (20)
  • Germany: Here in the Zollverein, Friedrich List was appointed US consul für the Kingdom of Württemberg and here he published 1841 his  « National System », the « blueprint ». Some years later it would be institutionalized with the German Historical School (GHS), but Friedrich List would never live to see it as he commits suicide in 1846. He was quoted and referenced by von Bülow and the Berliner Kolonisationsverein which aimed at Costa-Rica and produced the short-lived colony of Angostura. As in the plans to colonize St. Thomas, Timor, and the Philippines, or, in the mind of « Weltpolitik »-madman Hübbe-Schleiden, Ethiopia and South-America. After the Franco-Prussian war there was - in parallel to the GHS - the Verein für Sozialpolitik which enforced the colonial programme, now aimed at African colonies for the supply of raw materials for the home industries. Here, the ideology is again more clearly positioned, explicitly an « anti-Manchestertum » combined with anti-Semitism: « Jewry is applied Manchestertum carried to its extreme », writes Otto Glagau. The GHS was extremly prominent in the academic landscapes as many students went to Germany to study social sciences, among them W.E.B. Du Bois. (20-23)
  • Canada/Britain: Reimport of American system to the British empire via Canada (Isaac Buchanan). (24)
  • Australia/Britain: Intellectual and economic battles between free traders from New South Wales and new nationalist protectionists. Decided in favour of American system after McKinley tariff 1890, hitting the wool exports.
  • Britain: In the metropolis, Sampson Samuel Llyod took up the ideas of List, translated his book and promoted it within England.

In « the Imperialism of Economic Nationalism, 1890-1945 » almost all countries followed suit. US protectionists opposed the League of Nations, Britain followed the closed door politics of the US with Chamberlain's Tariff Reform movement 1903-1913. The Russian empire (with Manchuria and Lenin and Stalin as followers of List), Italy (with Ethopia and the fantasy of « wheat autarky »), France (with the Maghreb custom's union and the famine that most colonial subjects experienced before World War 2) Germany (with new fantasies about Mitteleuropa and the Bagdadbahn as an answer to the Trans-Siberian Railway), the Ottoman Empire (with the Damascus-Hijaz Railway, the « Buy Ottoman » campaign in the 1890s and the « New Turkish Economic School » after 1929), the Japanese empire (after the 1868 Meiji Restoration, the translated « National system »from 1889 at the request of Bank of Japan governor Tomita Tesunosuke, extension of Japanese « tariff walls » to Taiwan 1898 and Korea 1920).

  • Special cases: China, Ireland, India, Egypt. Despite being colonies in some way or another, these states adapted List's ideas for emancipation. The « US pan-Africanist » W.E.B. Du Bois plays an exemplary role as he has studied at the German Historical School and was a member of the Verein für Sozialpolitik. He argued that this protectionism could be applied to « Black America » and colonies, because they needed to build their own « infant industries » to emancipate themselves, while Britain's free trade ideology was just used for prolonged suppression. Same arguments arose by thinkers in Egypt and China (while also based on economic traditions on their own). Of special interest to me are Ireland and India and especially the connection between the two. With the foundation of the Sinn Féin Party in 1905 protectionist ideas became an Irish weapon against Britain, always explicitly invoking the name of Friedrich List. In India, after important anti-British boycotts (« Boycott » being named after an Irishman) in the 1880s and 1890s, the Swadeshi movement explicitly quoted Ireland and their struggles. Mahatma Ghandi referred to them and a newspaper even wrote: « The new policy is called « Sinn Féin » policy, which is only another name for Swadeshi policy » . (43f.) The Fiscal Autonomy Act from 1919 allowed India to raise tariffs on British-made textiles (what they did, reaching twenty-five percent) and the new Bombay school, heavily influenced by German scholars, but also inspired by the « backward country » Japan that could progress thanks to a rigid tariff wall, cemented a new and very interestingly mixed approach to the once imperial Listian « American system ».

This chapter encompasses a whole map of the « villains » and a strange and interesting logistics of their ideas, but are we ready for the hero, I ask unsurely.