A topic that needs to be addressed for nationalists, especially Christian nationalists, is the debate between protectionism and free trade – between economic nationalism and libertarianism. Economic policy is becoming an increasingly relevant issue as the American empire stands on the brink of utter collapse. We are told by everyone within the political and economic mainstream that we live in a “global economy” and that the process of globalization is essentially a fait accompli which we all must learn to embrace. This issue is paramount to our welfare as a civilization and as a people, because many if not all of the policies detrimental to our cultural health are promoted under the paradigm of free trade and of the emerging global economy. Far from being a merely philosophical or technical debate over trade policies, this issue is in fact a central battlefront over how society should be arranged. Free trade vs. protectionism is not merely a question over which policy makes for a healthier economy, but rather a debate over our identity and how we interact with other people and nations. Whatever we may hear about comparative advantage, trade deficits, or other such considerations is subordinate to the philosophical and sociological concerns that underlie the differences between nationalism and libertarianism. The reason for the advocacy of free trade is, in many cases, due to libertarianism’s belief in the absolute primacy of the individual as opposed to nationalism’s belief that individual identity is inseparable from familial, tribal, ethnic, racial, and religious considerations.
Nationalists and libertarians are fellow travelers on many important issues, and these issues shouldn’t be overlooked. Both nationalists and libertarians are opposed to the current state of affairs in the West and particularly in America. We both detest a government that is corrupt, bloated, wasteful, decadent, and harmful to those whom it claims to represent. Both parties desire a smaller, less intrusive government presence, as well as a government that practices greater fiscal discipline and rejects the prevailing cultural and economic Marxism. Because of our common enemy, nationalists and libertarians often find that their views and political advocacy converge. One example of this is how several nationalists, including myself, have been sympathetic towards the presidential aspirations of libertarian Congressman Ron Paul, even while understanding that it is actually better to let liberal incompetents like Barack Obama ruin the system which elected him. At any rate, while libertarians and nationalists are fellow travelers on several important issues, there are critical ways in which we necessarily part company.
While sharing with libertarians a similar outlook against Marxism, nationalists support an economic policy that recognizes the collective interests of the traditional nation. This valuation of familial, tribal, and ethnic loyalty necessarily leads nationalists to advocate for different economic policies than a libertarian would support. The important question before us is, Which system actually works? It stands to reason that whichever worldview has more defensible values will necessarily support the superior economic policy. If libertarians are correct, then their policy of absolute laissez-faire capitalism and free trade policies should yield the best results. If nationalists are correct, then their policy of ethnocentric markets and managed open trade based upon national interests should yield the best results. This group of essays will analyze the classic libertarian case for free trade based upon David Ricardo’s formulation of “comparative advantage,” deconstructing its fallacies and dubious assumptions using Ian Fletcher’s book, Free Trade Doesn’t Work: What Should Replace it and Why.1 We will see that nations who practice a free trade policy inevitably experience economic decline, while nations who practice a nationalistic mercantilist policy, commonly called protectionism,2 inevitably benefit from this strategy. Protectionism endorses a system of taxes on foreign imports and services aimed at protecting domestic industries from foreign competition. Advocates of free trade eschew this strategy, insisting that it hampers competition, drags down the national economy, and stifles global trade. In this first essay, we’ll look at some of the common social and philosophical arguments used by free trade proponents against protectionism. In the next articles, we will show the history of trade and how this history actually supports a protectionist or mercantilist approach, as opposed to an absolute free trade approach. After this, we will summarize Ian Fletcher’s deconstruction of David Ricardo’s free trade theory of comparative advantage and the faulty assumptions upon which the theory is founded. Finally, we’ll conclude with Fletcher’s proposals for a way forward.
Preliminary Arguments Used Against Protectionism
A popular argument utilized by advocates of free trade is that the rationale for protectionism, if taken to its logical conclusion, would restrict not only international trade, but all other trade as well. For instance, see this classic reductio ad absurdum argument provided by paleolibertarian Murray Rothbard:
Suppose that Jones has a farm, “Jones’ Acres,” and Smith works for him. Having become steeped in pro-tariff ideas, Jones exhorts Smith to “buy Jones’.” “Keep the money in Jones’ Acres,” “don’t be exploited by the flood of products from the cheap labor of foreigners outside of Jones’ Acres,” and similar maxims become the watchword of the two men. To make sure that their aim is accomplished, Jones levies a 1000 percent tariff on the imports of all goods and services from “abroad,” i.e., from outside the farm. As a result, Jones and Smith see their leisure, or “problem of unemployment,” disappear as they work from dawn to dusk trying to eke out the production of all the goods they desire. Many they cannot raise at all; others they can, given centuries of effort. It is true that they reap the promise of the protectionists: “self-sufficiency,” although the “sufficiency” is bare subsistence instead of a comfortable standard of living. Money is “kept at home,” and they can pay each other very high nominal wages and prices, but the men find that the real value of their wages, in terms of goods, plummets drastically.3
Gary North is also deeply devoted to free trade and libertarian economics. He provides a similar reductio ad absurdum argument against protectionism:
Think of two men: Jones and Smith. Jones wants to make a voluntary transaction with Smith. Brown is in competition against Smith. He does not want Jones to have a legal right to buy from Smith, because Smith offers lower prices, better quality, or some other advantage which Brown either does not want to offer or is not in a position to offer. Brown goes to the government and demands that Smith not be allowed to make this offer to Jones. He does so in the name of national prosperity. He persuades the government that any price-competitive offer from Smith to Jones will reduce the wealth of the nation. Therefore, he insists, the government has to send out someone with a badge and a gun to stop this kind of trade.
There is one other factor: an invisible line, called a border, which separates Jones and Smith. It is a legal border. It regulates who gets into the country, or who has a right to vote in the country, or who has the right to stay in the country. . . . In this case, Jones lives in the United States. So does Brown. Smith lives in Canada.4
Likewise, paleo-libertarian Hans-Hermann Hoppe argues that the protectionist argument, taken to its logical conclusion, would indict all trade between states, regions, and even families:
If the protectionist argument were right, it would amount to an indictment of all trade and a defense of the thesis that everyone would be the most prosperous and strongest if he never traded with anyone else and remained in self-sufficient isolation. Certainly, in this case no one would ever lose his job, and unemployment due to ‘unfair’ competition would be reduced to zero. In thus deducing the ultimate implication of the protectionist argument, its complete absurdity is revealed, for such a ‘full-employment society’ would not be prosperous and strong; it would be composed of people who, despite working from dawn to dusk, would be condemned to poverty and destitution or death from starvation.5
These arguments all have different flavors, but their central argument has these two premises: (1) national borders are as economically significant as any other borders, which is to say, not at all; and (2) if self-sufficiency is a good reason to restrict trade, then we should take it all the way to restrict all trade. We will deal with these in reverse order.
Promoting Self-Sufficiency Does Not Restrict All Trade
Protectionists gladly admit that national self-sufficiency, based upon the reality of nations as corporate entities, is a good reason to restrict trade (though it is not the only reason). A slight sacrifice in an individual’s standard of living (often merely a short-term sacrifice) is worth the relative increase in national well-being resulting from increased economic self-sufficiency. But the fact that self-sufficiency can be a decisive consideration in some contexts does not entail that it would be so in all contexts. Self-sufficiency, while truly a good thing in itself, is not the most important factor of consideration, and therefore it can be overridden by other factors in various circumstances. Protectionists argue that in the specific context of international trade, and not in the context of intranational trade, self-sufficiency is a good reason (among others) to place restrictions on trade. There are objective, principled reasons to restrict international trade in the name of self-sufficiency, whereas self-sufficiency would not be a decisive factor in trade within national borders. Therefore it would be unlawful of anti-protectionists to argue that because we appeal to self-sufficiency in one context, we must therefore deem it overwhelmingly conclusive in all contexts where self-sufficiency can be selected. Protectionism could still be incorrect – it could be that there is no good, principled difference to distinguish between international and intranational trade, restricting only the former – but if it is incorrect, it would take more argumentation on the anti-protectionist side than simply absolutizing our appeal to self-sufficiency.
The importance of self-sufficiency leads us to a broader principle concerning nationalism and economics: Christianity does not teach the primacy of the individual, but expects individuals to always be willing to subordinate their own interests, including their economic self-interest, for the good of family, clan, tribe, and nation. This much is apparent in precepts such as the Jubilee land law, in which debts could not extend beyond the year of Jubilee and land was returned to the family who held ancestral ownership.6 The Bible also forbids lending on interest except to foreigners7 and prohibits unjust weights and measures so that currency cannot be debased.8 This means that there were certain divinely imposed barriers which prevented the market from allowing wealth to become over-concentrated in the hands of a few.
National Boundaries Are Not Economically Irrelevant or Arbitrary
Ultimately, libertarians such as Rothbard, North, and Hoppe are arguing that national boundaries are no more meaningful than any other type of boundaries. While this isn’t surprising coming from an atheist like Rothbard, it has no place in the thinking of a Christian like Gary North. North has clearly attempted to push the square peg of Austrian-style libertarianism through the round hole of Christian morality. The libertarian position embraced by Gary North ignores these precepts and asserts that national boundaries are arbitrary and therefore unimportant for trade. North writes,
Certain borders in the United States and in most countries have no economic relevance to trade. Borders between counties have little or no economic relevance. Borders between states have little or no economic relevance. . . . Tariff barriers and other import quotas that are established for any purposes other than revenue generation assume that the invisible line known as the national border is completely different, economically speaking, from all of the other invisible lines, also called borders, that exist inside the nation. No one accepts any of the arguments for restricting trade across the internal borders. Yet they accept these arguments with respect to national borders.9
As kinists, we know that the nation is relevant in economic matters because the nation is an outgrowth for organic society. Contrary to those who reduce humanity to a mass of economic consumers, homo oeconomicus, we understand that our primary interpersonal identity is derived from our relationship to our family, church, tribe, nation, and race. The reason that national borders economically matter is because nations are not mere arbitrary distinctions as North or other libertarians seem to think. National boundaries correspond to differences in ethnicity, religion, culture, and language. In the Table of Nations, nations are defined as a cluster of interrelated families.10
Fletcher demonstrates that, far from being irrelevant, the nation-state is very important in economic matters. Even with the modern push for globalization and the emergence of multinational corporations, most of these corporations still largely depend upon the consumers of their home country, even if they have outsourced parts and labor to a large degree. Fletcher writes, “[E]ven multinational companies are still almost always tied to particular nations, and only a few dozen firms worldwide maintain over half their production facilities abroad. According to one study,11 multinational companies ‘typically have about two-thirds of their assets in their home region/country, and sell about the same proportion in their home region/country.’”12 In spite of the weakening of the nation-state in the Western world due to mass immigration, multiculturalism, and cultural Marxism, the nation-state is still relevant. Nations in Asia who have emerged as successful competitors are those who have engaged in nationalistic policies. Conversely, the West has declined as her nations have pursued free trade policies.
Many argue that the fact that we live in a “global economy” renders national borders irrelevant. The reality is that increased global trade has actually rendered national borders and distinctions more important in the context of global competition. Michael Porter of Harvard Business School comments, “Competitive advantage is created and sustained through a highly localized process. Differences in national economic structures, values, cultures, institutions, and histories contribute profoundly to competitive success. The role of the home nation seems to be as strong as or stronger than ever. While globalization of competition might appear to make the nation less important, instead it seems to make it more so.”13
Moreover, the extent to which we live in a “global economy,” or to which such a truly globalized economy is even possible, is greatly exaggerated. Fletcher points out that the idea of a “borderless economy” is a myth. He notes that the United States represents approximately 25 percent of the world economy, such that our imports and exports in a truly borderless global economy would therefore represent 75 percent of our consumption, leading to a trade level (imports + exports) of about 150 percent of our Gross Domestic Product or GDP. In reality, trade represents about 29 percent of our GDP, with imports accounting for 17 percent and exports 12 percent. These figures obviously demonstrate that the American economy is far from borderless. Fletcher predicts that trade will account for even less of the American economy in the future due to a forced import contraction to close the trade deficit.
Borders matter even between nations that are adjacent and similar. Economist John McCallum has documented that trade among the provinces of Canada is 20 times as large as it is between corresponding trade between Canadian provinces and American states.14 It has also been estimated that the cost of international trade (ignoring tariffs) is equivalent to a 170 percent tariff, with 55 percent representing local distribution costs and 74 percent representing international trade costs.15 Most international trade is really just interregional trade, focused on European, East Asian, and North American trade blocs.16 Fletcher describes the world economy as “a thin crust of [a] genuinely global economy (more visible than its true size due to its concentration in media, finance, technology, and luxury goods) over a network of regionally linked national economies, over vast sectors of every economy that are not traded at all (70 percent of the U.S. economy, for example).17 On present trends, it will remain this way for the rest of our lives.18 The world economy in the early 21st century is not even remotely borderless.”19
Gary North will strongly denounce this as “the religion of state worship.”20 The problem is that North fails to distinguish between the nation and the state which ought to be an outgrowth of the nation. Believing in protectionism doesn’t mean that one is engaging in state- or even nation-worship. Rather, protectionism is simply the acknowledgment that the nation-state has a legitimate role in protecting the economic interests of her people. It is certainly possible that the state can become corrupt. This invariably happens when the state ceases to be a natural outgrowth of the people and instead becomes an abstraction seeking to recreate the national population in its own image. This is what is happening in America and other Western countries, but it wasn’t always this way. Ironically, we live in an age of rampant statism, yet Western countries engage in a doctrinaire commitment to free trade. A reason that Western bureaucrats are motivated to pursue free trade policies is because they actively seek to promote globalism as a means of augmenting their influence over deracinated societies. But protectionists advocate a logical and coherent position based upon concrete differences among nations, rather than abstract political differences.
Conclusions for Part 1
Free-trade libertarians believe that national boundaries essentially represent arbitrary political restrictions that have no real social or economic significance. Economic and social nationalists understand that nations and national boundaries represent incredibly significant differences in ethnicity, language, religion, political tradition, and culture, and therefore possess profound social and economic significance. Even today, when Western nations are doing all that they can to devalue their national distinctiveness by promoting cultural Marxism, secularism, and mass immigration, the nation-state remains stubbornly relevant. Why is this so? If nations are merely artificial political constructs, then they should be able to be easily deconstructed. The reason that nations are important is because the God who created these distinctions esteems them as important. National boundaries rooted in ethnic, linguistic, and cultural differences are a part of the innate fabric of our being. To deconstruct this aspect of our nature is to forfeit much of what it means to be human. The reason that people are instinctively attuned to tribal and ethnic identity is because this is the way that God designed us, and we value our identity in this way because God values it as well. Nationalism is entirely natural, and any position that obscures this, whether through individualism or globalism, is unnatural. As we saw above, national boundaries are far from irrelevant in economic matters, for they represent something more than just arbitrary distinctions.
Ironically, while libertarians are often ostensible opponents of the globalist new world order, their position is really just the opposite side of the same coin with globalism. Libertarianism is predicated upon the primacy of the individual to the point that racial, ethnic, and even familial differences are dismissed as unimportant. As a result, libertarianism promotes the idea that we live in a world of deracinated individuals, and globalism becomes a means of deconstructing such “arbitrary” boundaries and distinctions as race and ethnicity. For libertarians, attempts by a nation to protect domestic industries in order to create a competitive manufacturing sector are the actions of a statist society seeking to insulate itself from competition. But this conclusion is unwarranted.
Libertarianism is the wrong answer to the very real problem of secular statism. The siren song of libertarianism appeals to many detractors of statism because it allows for the criticism of what is legitimately broken in our current system without breaking the sacred laws of political correctness. Nationalism is dismissed not so much on rational grounds, as we shall see, but rather on the grounds that nationalists are statist idolaters or – even worse – “racists.” Nationalists do not propose an isolationism that inhibits all trade, but simply seek to keep national identity in its proper economic and social perspective. Mercantilism is a reasonable policy based on the relevance of national identity for economic and social issues. In the next articles on economic nationalism, we’ll see in economic terms how nations have a vested interest in promoting a healthy domestic economy and how tariff policies don’t have the detrimental effects on an economy that free traders believe. After witnessing how nations have fared under protectionist and free trade policies, we will deconstruct the economic arguments for free trade based upon comparative advantage and then propose a way forward towards a saner and healthier economic policy.
For further reading on nationalism and libertarianism:
“Free To Lose: Jews, Whites, and Libertarianism” on The Occidental Quarterly
“Libertarianism and White Racial Nationalism” on The Occidental Quarterly
“White Nationalism: The Only Realistic Solution” on The Occidental Quarterly
“The Solution is State Power” on Counter Currents Publishing
- Quotes are from the second edition of the book, published by the Institute for a Prosperous America in 2011. ↩
- For the purposes of this essay, “mercantilism” and “protectionism” will be used interchangeably, both referring to the position of economic nationalism. ↩
- Murray N. Rothbard, Power and Market (Kansas City: Sheed Andrews and McMeel, 1977), p. 48. ↩
- See Gary North’s Specific Answers, “Clichés of Protectionism.” http://www.garynorth.com/public/department162.cfm ↩
- Hans-Hermann Hoppe, Democracy: The God That Failed (ninth edition, Transaction Publishers, New Brunswick, New Jersey), p. 153. ↩
- Leviticus 25:13-17, 23-34 ↩
- For the biblical basis for the prohibition against interest, see S.C. Mooney, Usury: Destroyer of Nations. ↩
- For more on the biblical understanding of money, see S.C. Mooney, Money: Symbol and Substance. ↩
- See Gary North’s Specific Answers, “Clichés of Protectionism.” http://www.garynorth.com/public/department162.cfm ↩
- See Genesis 10 as to how nations are delineated “after their families.” ↩
- Winfried Ruigrok and Rob van Tulder, The Logic of International Restructuring: The Management of Dependencies in Rival Industrial Complexes (New York: Routledge, 1996), p. 159. See also, Alan Rugman and Alain Verbeke, “Regional Multinationals and Triad Strategy,” Research in Global Strategic Management, vol. 8 (Greenwich, CT: JAI Press, 2003), as well as Alan Rugman and Chang H. Oh, “Friedman’s Follies: Insights on the Globalization/Regionalization Debate,” Business and Politics, August 2008, p. 13. ↩
- Fletcher, Free Trade Doesn’t Work, pp. 24-25. ↩
- Michael Porter, The Competitive Advantage of Nations (New York: Free Press, 1990), p. 19. ↩
- John McCallum, “National Borders Matter: Canada-U.S. Regional Trade Patterns,” The American Economic Review, June 1995, p. 616. ↩
- James E. Anderson & Eric van Wincoop, “Trade Costs,” Journal of Economic Literature, September 2004, p. 694. ↩
- Graham Dunkley, Free Trade: Myth, Reality, and Alternatives (New York: Zed Books, 2004), p. 88. ↩
- Stephen Tokarick, “Quantifying the Impact of Trade on Wages: The Role of Nontraded Goods,” International Monetary Fund, 2002, p. 14. ↩
- Paul Krugman, “A Global Economy is Not the Wave of the Future,” Financial Executive, March 1, 1992. ↩
- Fletcher, Free Trade Doesn’t Work, p. 26 for the information in the two preceding paragraphs. ↩
- Gary North, “Free Trade: The Litmus Test of Economics,” http://lewrockwell.com/north/north1153.html ↩