Vulgar Libertarianism Watch, Part XI

Cameron Carswell at the Globalization Institute:

There is a myth that the status of the richer countries of the world has somehow come at the expense of the poorer ones, and that the only way for the poorer nations to climb the ladder is for massive transfers of wealth to occur.

This conflates two separate claims. If the status of the richer countries has come at the expense of the poorer ones through state intervention in the market, then the only way for the poorer nations to climb the ladder is to replace neo-mercantilist institutions like the World Bank, IMF, and WTO, and other forms of political intervention by the West, with a genuine Cobdenite free market. What the neoliberals call "free trade" is really Palmerstonianism: state loans to subsidize foreign capital investment by underwriting the operating expenses of plants overseas, and gunboat diplomacy to prop up anti-labor governments and protect investments at taxpayer expense. Once again, I quote Joseph Stromberg:

For many in the US political and foreign policy Establishment, the formula for having free trade would go something like this: 1) Find yourself a global superpower; 2) have this superpower knock together the heads of all opponents and skeptics until everyone is playing by the same rules; 3) refer to this new imperial order as "free trade;" 4) talk quite a bit about "democracy." This is the end of the story except for such possible corollaries as 1) never allow rival claimants to arise which might aspire to co-manage the system of "free trade"; 2) the global superpower rightfully in charge of world order must also control the world monetary system....

The formula outlined above was decidedly not the 18th and 19th-century liberal view of free trade. Free traders like Richard Cobden, John Bright, Frederic Bastiat, and Condy Raguet believed that free trade is the absence of barriers to goods crossing borders...

Classical free traders never thought it necessary to draw up thousands of pages of detailed regulations to implement free trade. They saw no need to fine-tune a sort of Gleichschaltung (co-ordination) of different nations’ labor laws, environmental regulations, and the host of other such issues dealt with by NAFTA, GATT, and so on. Clearly, there is a difference between free trade, considered as the repeal, by treaty or even unilaterally, of existing barriers to trade, and modern "free trade" which seems to require truckloads of regulations pondered over by legions of bureaucrats.

Carswell continues:

When a rich country trades with a poor one, the rich one gets richer, the other gets poorer. There is, according to this view, a fixed quantity of wealth....

Nonsense. All that "this view" requires is a state-enforced system of unequal exchange. By definition, state intervention in the market creates a zero sum game in which one party uses coercion to benefit at the other's expense. The mutually beneficial, Pareto-optimal form of trade requires uncoerced exchange--about as far from the neoliberal regime as you can get.

Rather the development of China occurred due to a simple combination of a move toward free markets coupled with an opening of the country to foreign trade and investment. In short, China embraced globalization rather than trying to fence the world out, engaging in a massive programme of unilateral liberalization.

And political repression to keep sweatshop labor docile (there's a reason the only union Wal-Mart likes is the Chinese state labor federation--you know, the one that belonging to won't get you committed to a mental hospital); to protect industrial polluters from liability to local communities; and to suppress protests against the seizure of ordinary people's land to give to politically connected businesses:

Each week brings news of at least one or two incidents, with thousands of villagers in a pitched battle with the police, or bloody crackdowns in which hundreds of protesters are tear-gassed and clubbed during roundups by the police. And by the government's own official tally, hundreds of these events each week escape wider public attention altogether....

Last week, for example, the government announced it was setting up special police units in 36 cities to put down riots and counter what the authorities say is the threat of terrorism....

The entire campaign appears to have been kicked off with a strongly worded recent editorial, published in People's Daily, the Communist Party's mouthpiece, under the headline "Maintain Stability to Speed Development." The commentary warned citizens to obey the law, saying threats to social order would not be tolerated.

In the last two weeks, the demonstrations have come to Shanghai, a showcase city that is among the country's most tightly policed, and where public protests are relatively rare.

Day after day recently, the angry complaints of citizens could be heard in the heart of downtown here, especially across the street from the elegant exhibition center where city government was in session. In one protest, middle-aged residents invoked rebellious slogans from their youth during the Cultural Revolution, reportedly saying things like "to rebel is just" as they denounced summary evictions to make way for high-rise developers and demanded fair compensation....

In China, cases of dangerous industrial pollution are rife, even if their full human toll is not yet known. But local authorities often side with industrial interests, and the courts provide little relief....

Golly, aren't "free markets" grand?

This serves as a reminder that those countries that accept the globalization process can expect to be rewarded with higher living standards and rates of economic growth, and illustrates the fact that a country can create wealth, and such gains do not come at the expense of other nations.

Another mindless identification of "the globalization process" with free trade and free markets, regardless of who's paying for it. Get this through your head: increased "trade" is good only if it's worth it to people voluntarily spending their own money, and internalizing all their own risks and costs, without government protection or subsidies. "Trade" that exists because of government efforts to make it artificially profitable is nothing but parasitism and theft.

I close with a quote from Sean Gabb:

If you think that I came here tonight to defend multinational corporations and the international government institutions, you have chosen the wrong person. These are dishonest. They are corrupt. They are incompetent. They have blood on their hands.

But do not suppose for a moment that the world trading order as it actually exists is liberal or more than incidentally connected with free markets. A free market is a place where individuals and groups of individuals come together to transact voluntary exchanges without any backing of government force. To call the actually existing order liberal – or “neo-liberal” – is as taxonomically accurate as calling the old Soviet Communist Party syndicalist. That order is based on tariffs, subsidies and a web of other often invisible regulations. The international institutions are a projection of Western states. The multinational corporations are creatures of these states. They shelter behind the privilege of limited liability. They get their political friends to cartelise markets, and do favours in return.

This is not market liberalism. It is a fraud played on us all by our ruling classes – these being those politicians, bureaucrats, educators, lawyers and media and business people who derive wealth, power and status from an enlarged and activist state.

Please note, Mr. Carswell: that is what free market advocacy--as opposed to by-the-numbers corporate agitprop--looks like!