It’s wishful thinking to believe that free trade can solve geopolitical strife, notes professor Jacob Soll in this thought-provoking essay. History shows that the idea that free markets can rein in bullying regimes has little substance. Rather than leading governments to seek peace and harmony, free trade has most often come about through coercion – sometimes from behind the barrel of a gun. Soll’s sobering assessment reckons that geopolitical tensions are now testing democracy, as the world teeters on the brink of recession.
- The notion that free markets foster peace has historical roots.
- The reality is that governments’ coercive behavior often drives trade.
- The current state of geopolitical hostilities is undermining free markets.
The notion that free markets foster peace has historical roots.
The idea that open trade leads nations to pursue mutual interests rather than impassioned conflict surfaced in the 1600s in humanist philosophy. Humanists endeavored to understand the rights of individuals and commerce through a reading of classical doctrine.
“The idea that trade brings peace has its origins in humanist thought, which looked to understand natural rights and trade through classical philosophy.”
Proponents argued that free trade would control human avarice and bring prosperity to all. The 17th-century Dutch jurist Hugo Grotius contended that the divinely bestowed elements of air and water were accessible to all, permitting all countries to trade with whomever they chose. A century later, the French philosopher Montesquieu posited that “‘gentle commerce’ would replace the warring instincts of personal and national pride.”
The reality is that governments’ coercive behavior often drives trade.
While free markets can be the cornerstone of friendly geopolitical relations, their record at keeping the peace and preserving democracy has been, at best, mediocre. The Wealth of Nations author Adam Smith contended that free trade had to occur between like-minded governments. He viewed the British Empire as a “free trade zone,” with its colonies as an open trading bloc. But Britain’s free trade zone, achieved through military force and colonial exploitation, set off a century’s worth of conflicts. Britain’s hegemony led Russia, America, Italy, Germany and France to erect tariffs as a defense against the British Empire’s stranglehold over global trade. That led to two world wars and the rise of nationalism, expressed through the militarization of Germany, Japan and Russia.
“The Pax Britannica of the Empire was based on gunboats, violent coercion and the pillaging of riches from colonialized nations.”
The aftermath of World War II saw the United States use its power and influence via the Marshall Plan to reconstruct Europe and impose democracy on former enemies. The Cold War pitted communism against capitalism, leading to government intervention to encourage democracy and free markets through institutions such as the General Agreement on Tariffs and Trade (GATT).
The current state of geopolitical hostilities is undermining free markets.
The collapse of communism at the end of the 1980s heralded the potential for peaceful relations, but military budgets skyrocketed in America, which engaged in wars in Iraq and Afghanistan that cost trillions of dollars, even as the world welcomed more open trade.
“History shows that free trade is often in the eye of the beholder….Ultimately, a military-based pax or deeper common interest might be necessary to keep commerce and the world on gentle terms.”
Global tensions are rising. China has reverted to nativist authoritarianism and saber rattling against the United States. Both nations have weaponized trade. Russia is currently at odds with much of the world over its incursion into Ukraine, notwithstanding the former free trade in Russian oil. Despite 20 years of globalization, geopolitics are now fraught with danger, as democracy becomes increasingly imperiled and the world’s economy seems poised for recession. Free trade is being put to the test.
About the Author
Jacob Soll is a professor of philosophy, history and accounting at the University of Southern California.