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Libertarian Lessons: Free Trade

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Trade is commonly understood to be an economic activity carried on between countries, which is incorrect. Trade takes place between individuals, or groups of individuals, both domestically and across international boundaries. At its core it is the voluntary exchange of private property.

Human beings must act to sustain their lives. Before industrialization the vast majority of people lived in shared poverty, their agrarian lifestyles defined by scarcity, hardship, and the rule of feudal overlords. Herding and farming were carried out with little or no concern for (or knowledge of) cosmopolitan influences, and the hazards and burdens of rural peasant life meant that a few miles was enough to isolate a villager from even a glimpse of the larger world.

Greater prosperity in the late Middle Ages brought the products of distant markets to the market towns of Europe, even the most backward and removed. Along with the arts and humanities, trade and travel flourished, extending beyond customary limitations. More individuals and groups were brought into contact, increasing the benefits to be had from interaction with those in foreign locales. Historical, cultural, and national animosities were broken down, spreading competing ideas about religion, law, tolerance, and individual rights.

Kings and their nobles were of course threatened. Monopolies on certain occupations and products, and royal imposts, kept aristocrats and government officials busy in their efforts to control economic activity, placing barriers on trade or actively suppressing competition in their domains. The ability of common people to improve their daily lives through greater access to “bourgeois” pleasures (and attitudes) was considered irrelevant, possibly even dangerous; trade was a source of revenue and power for the elite.

But as Western Civilization became more market-oriented, and the localized and provincial attitudes of rulers slowly gave way to the demands of consumers, economists and philosophers saw the advantage of removing obstacles to trade. Enlightenment thinkers like David Hume and Adam Smith praised trade as a means to greater prosperity, peace, and liberty, for everyone. Later, classical liberals like Richard Cobden and John Bright argued that peaceful, unrestrained competition among a variety of producers would allow the best to rise to the top. Those who succeeded in satisfying consumers would profit by their actions, encouraging them to proceed. Those who failed would be forced to cut costs (and therefore prices), or find another market. Either way, consumers won.

When the U.S Constitution was ratified in 1789 it created the largest free trade zone in the world, consistent with the desire to protect people’s natural right to life, liberty, and the pursuit of happiness. Article 1, Section 9 of the Constitution specifically prohibited a “Tax or Duty…on Articles exported from any State,” and “No preference” was to be “given by any Regulation of Commerce…to the Ports of one State over those of another: nor shall Vessels bound to, or from, one State, be obliged to enter, clear, or pay Duties in another.” Old World restraints on trade in the interests of certain producers – and the elite – dissolved in favor free trade. The result was a general diffusion of liberty and wealth.

The advantages of free trade within a country apply equally when trade takes place between individuals from different countries. Tariffs and subsidies designed to stifle foreign competitors or reward domestic producers are the equivalent of the heavy duties and controls levied by feudal rulers. The freedom of an individual to trade his property, in the form of goods and/or services, for the goods and/or services of others should not end at an international border, any more than it should end at a state border. The relationship between producer and consumer is a voluntary exchange, and as such requires no action from politicians or bureaucrats – except that they get out of the way.

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