The Tradition of Free Trade

The Tradition of Free Trade

The Tradition of Free Trade

The Tradition of Free Trade

Synopsis

Investigation of the invention of "free trade versus protectionism" debate in the nineteenth century is the aim of this new book. It looks at how the ideas of Smith and Ricardo and the classical economists were interpreted by later writers in Britain, Sweden and America.

Excerpt

The coming of the industrial revolution in Britain was one of the most important events of the late eighteenth and the nineteenth century, and it shaped the political economy of the rest of the world for a long time to come. Not only did it have an impact on 'real' economic events-how growth occurred, the development of new forms of production, the distribution of income and the level and organisation of world trade-it also influenced economic thinking and the way people thought about economic phenomena. It also shaped the policies of national states. in America, as we saw, the so-called American system developed from a feeling of inferiority: the aim of economic policy must be to develop industry in order to catch up with Britain-and hopefully to pass her in the longer run. It was acknowledged, as we saw, by most economic writers in the United States during this period that such a catching-up effect could only be achieved through the visible hand of the state. To this effect protectionist measures were argued for (and accepted) from the point of view which would, after Mill, became known as the infant-industry argument.

In this chapter we will see how such ideas were also widespread outside America. Here we will deal with the case of Sweden. However, in other countries too a similar feeling of inferiority led to the same political economical conclusions: an active role for the state in achieving industrial growth and transformation. It was argued that only by catching up with Britain and establishing an industrial economy could the state and its powers flourish. Industry was seen as the basis for modernity. Hence, political as well as military strength grew out of the industrial revolution.

The impact of the industrial revolution on the economic thinking and the different polities in Europe and elsewhere is, of course, well known. However, what might be still unclear is how economic thinking was shaped in different parts of Europe in order to argue for a more visible role for the state. To some extent this was done by developing an alternative to the free trade version of classical political economy which, as we saw, emerged in

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