Paleo-libertarian Hans-Hermann Hoppe is aware of the history of trade policy within countries like Britain and America as presented in the previous articles, yet he remains committed to free trade. He writes,
[I]t is nonsense to claim that England lost its former preeminence because of its free trade policies. It lost its position despite its free trade policy, and because of the socialist policies which took hold in England during the last third of the nineteenth century. Likewise, it is nonsense to claim that the rise of the United States to economic preeminence in the course of the nineteenth century was due to its protectionist policies. The United States attained this position despite its protectionism, and because of its unrivaled internal laissez-faire policies. Indeed, America’s current economic decline, which Buchanan would want to halt and reverse, is not the result of her alleged free trade policies, but of the circumstance that America, in the course of the twentieth century, gradually adopted the same socialist policies that had ruined England earlier.1
In order to unpack all of what Hoppe says here, we have to understand the relationship between free trade, globalism, and Marxism. First, it should be noted that Hoppe tacitly admits that England did lose its preeminent position atop global commerce after embracing free trade policies. Hoppe downplays the importance of England’s transition to free trade and away from protectionism, and instead lays the blame at England’s implementation of socialist policies. While it is true that correlation doesn’t necessarily equal causation regarding free trade’s correspondence with economic decline, Hoppe doesn’t prove his case by offering counterexamples. Surely, Hoppe could easily provide examples of nations embracing free trade and prospering, but he doesn’t. Perhaps this is because such examples don’t exist.
Hoppe contends that while Britain’s decline correlated with her transition into free trade, it was caused not by this, but rather by embracing socialism. Likewise, Hoppe claims that while America’s economic emergence correlated with America’s protectionist policies, and while her decline has occurred after embracing free trade, this too is an example of correlation differing from causation. Hoppe instead asserts that America became prosperous due to engaging in free trade among the several states and, like Britain, she declined by implementing socialism. This is a good representative argument displaying how libertarian proponents of free trade deal with the monolithic history of free trade’s failure. Before delving into the history of socialism and its implementation in Britain and the United States, I’d like to address what Hoppe says about free trade within the United States.
A common theme among libertarians is that national distinctions are merely arbitrary political distinctions that can easily be deconstructed. This is not the Christian position. Christianity teaches that nations are linked by common heredity and thus that they do matter. This was also the position of the Founding Fathers and the justification for the Constitutional Union in the first place. Describing the homogeneity of the American republic, John Jay wrote,
Providence has been pleased to give this one connected country to one united people — a people descended from the same ancestors, speaking the same language, professing the same religion, attached to the same principles of government, very similar in their manners and customs, and who, by their joint counsels, arms, and efforts, fighting side by side throughout a long and bloody war, have nobly established general liberty and independence.2
Earlier, Fletcher made a compelling case that national distinctions are economically relevant; this makes sense because nations are not arbitrary, but based upon real differences. The reason trade was able to be so free among the American states is because the people of these states were so ethnically, religiously, and culturally similar to each other. America was a large nation, not merely a large free trade zone. If Hoppe’s observation about free trade were accurate, we would expect the expansion of free trade between the United States and other countries to benefit America even more than the restricted trade of the past. The reason that this didn’t happen, according to Hoppe, is due to socialism. It is this issue that we must now investigate.
The Transition from Protectionism to Free Trade and Socialism
Libertarians are rightly opposed both to government intrusion in areas where it does not belong and to the high taxes and spending that invariably accompany the welfare state. Unfortunately, almost all of these same decent and well-meaning libertarians often believe that protectionism is simply an extension of this same government intrusion as applied to trade and commerce. The reality is that the historical abandonment of protectionist policies drained the national economy to the point where liberals (the same ones who argued for the abrogation of mercantilist policies) argued that a socialist redistribution of wealth was necessary to offset the effects of free trade on the working classes.
Great Britain and the United States, as noted in the previous articles, were able to maintain their positions of preeminence for a period of time after transitioning from protectionism to free trade. This didn’t last long, however, and eventually other nations surpassed them after these nations abandoned the practices that had established their prosperity in the first place. The history of the emergence of socialism in Western societies closely tracks the history of the transition from protectionism to free trade. The major benefit of tariffs (taxes on foreign imports) is that they protect domestic industries from foreign competition, but an additional advantage is their collection of revenues. Conservatives should typically seek to lower or eliminate taxes whenever possible, yet historically, conservatives have favored tariffs. Why is this? The reason is that once tariffs were repealed, an alternative source of revenue had to emerge in its place. Until fairly recently, government revenue was almost entirely generated from tariffs. This benefited the public by avoiding other unnecessary forms of taxation while protecting domestic production, which in turn increased national wealth and productivity.
After the tariffs were rescinded, governments began to tax the property and income of their own citizens in order to make up for the lost revenue. This began a vicious cycle that continues to plague our societies to this day. The loss of protective tariffs undermined the jobs of workers, and taxes on property and income increased the financial burden of the middle class. As workers lost their jobs and income due to outsourcing, the government stepped in with additional spending measures until this burgeoned into the modern welfare state, complete with socialized medicine, housing projects, food stamps, and pork-barrel expenditures. Today these government spending programs are considered essential by the mainstream political establishment, and neither the Republicans nor the Democrats have any interest in rolling back the massive welfare state and its accompanying bureaucracy in any significant way. While libertarians are correct in decrying the corrosive effects that socialism has had on the economy, they don’t perceive that the abandonment of mercantilism is what led us to this point.
In Great Britain, socialism began as a utilitarian measure to raise revenue for war against Napoleon. After war with revolutionary France concluded, the temporary income tax was allowed to expire. The income tax became a permanent staple in British affairs in the 1840s under the faux-conservative Prime Minister Sir Robert Peel. Incidentally, Peel is also the same prime minister to transition Britain away from protectionism towards free trade by repealing the Corn Laws. The same political forces that championed free trade were involved in promoting socialist spending and taxation. This is by no means ironic or coincidental, since the liberals who had been agitating for the removal of trade barriers found themselves in a position in which they were required to endorse welfare measures to alleviate the working class that they had harmed. The welfare state emerged in earnest in the early twentieth century during the tenure of David Lloyd George as prime minister.3
America followed suit by introducing the income tax as a permanent staple during the tenure of free trader Woodrow Wilson in 1913. Again, this is not a coincidence. America’s descent into socialism was accomplished during what has become known as the Great Depression under President Franklin Delano Roosevelt. The welfare state steadily expanded and became a central pillar of the Presidency of Lyndon Johnson in what he called his “Great Society” programs. The welfare state has continued to progress, and today government debt, spending, and taxation levels are all worse than anyone in the early twentieth century could have ever imagined.4
The Marxist Agreement with Libertarians on the Deconstruction of the Nation
Given the extent to which libertarians protest against Marxist policies of taxation, spending, and collectivism, an accusation that Marxists and libertarians are in agreement on anything substantial might appear scandalous! Yet it is undeniable that the libertarian belief in the primacy of the individual and the Marxist belief in the primacy of the proletariat are two sides of the same coin – in much the same way that tyranny and anarchy are opposite sides of the same coin. Marx aimed to create a world in which all distinctions between people were deconstructed, leaving behind a generic humanity whose sole identity was found in the collectivist state. The well-intentioned libertarian opprobrium for Marxist collectivism has led to a rejection of any collective identity, no matter how natural. Consequently, libertarianism inadvertently arrives at the same generic humanity to which Marxism aspires, for the libertarian strips away any form of collective identity as a supposed hindrance on a person’s individual identity.
Traditionalists and nationalists can acknowledge the importance of individual rights as they are established in the Ten Commandments. For example, everyone has rights derived from the second table of the Decalogue, including the right not to be murdered, the right to protect one’s property, and the right not to be deceived or defamed. While individual rights are important, many of these rights are derived from the individual’s place in his family, clan, tribe, and ethnic group. Historically, Marxists have been able to piggyback on the movement of classical liberals to deconstruct traditional collectives and to commandeer liberalism in the service of an alternative collectivism based upon class warfare against the wealthy. Undoubtedly, the classical liberals of the nineteenth century would have had a difficult time perceiving the consequences of liberalism into the twenty-first century.
While modern-day libertarians fail to understand the detriment that absolute individualism has played in the collapse of organic society and the rise of the nanny state, Marxists are not so ignorant. Karl Marx himself understood how liberalism and free trade in particular would help to bring about the proletarian revolution. Marx wrote, “The protective system of our day is conservative, while the free trade system is destructive. It breaks up old nationalities and pushes the antagonism of the proletariat and bourgeoisie to the extreme point. In a word, the free trade system hastens the social revolution. It is in this revolutionary sense alone, gentlemen, that I vote in favor of free trade.”5
The reason that libertarianism in general and free trade in particular are destructive is that the rights which libertarians purport to defend can only be sustained by an organic society comprised of healthy families and respect for the natural order established by God. Good economies arise from healthy societies that are tailored towards the welfare of their people. Libertarians want to live in a prosperous society of economic efficiency in which everyone can do whatever he wants, utterly unhindered by legal restrictions, social conventions, parental approval, or religious prescriptions. The problem is that healthy societies and, by extension, healthy economies do not develop in a moral vacuum. Good workers, good businessmen, and good magistrates come from good families who raised them well with roots in strong homogeneous communities. Private property does not exist in a vacuum because, historically, property was transferred from father to son, generation after generation, as a means of protecting a family’s livelihood.
How Individualism Leads to Marxist Socialism
Gary North believes that the greatest contribution made by Adam Smith to the theory of economics is the idea that an individual acting in his own self-interest is actually beneficial to the nation as a whole. North writes of the contribution of Smith to economic theory:
The system of natural liberty would maximize the wealth of nations, he said, but far more important, it would maximize the wealth of individuals. The central idea of Adam Smith’s book is this argument: the pursuit of individual self-interest, when pursued by all the residents of the nation, will result in an increase of the wealth of the nation. His link between the pursuit of individual self-interest and the maximization of the wealth of their nation is the essence of Smith’s logic, and it is also the essence of the argument of most free enterprisers.6
While the Bible does truly endorse private property and even the concept that individuals can work towards their own self-interest, the Bible does not endorse an absolutely free market without any moral or legal constraints on property ownership. In other words, it is biblically possible to use one’s property selfishly, in which case self-interest is not an absolute moral good of property ownership. The Law makes provision for the poor of one’s own community by allotting them a portion of crops that would be grown.7 The Jubilee land laws in the Bible exist to prevent wealth and property from becoming overly consolidated into the hands of a few, and laws providing for debt cancellation assure that people cannot go too far into debt, thus hampering their prospects for the future (Leviticus 25; 27:17-24). The Bible endorses a relatively free market based upon private property ownership, but limits economic activity to ensure that families are protected. It is far easier for a centralized state to confiscate the wealth of individuals than it is to expropriate the means of production from a family which they have owned for generations (see Naboth’s vineyard, 1 Kings 21). Furthermore, it is also easier to seize wealth when tribal identity is subverted, since a tribe naturally has a particular and unique interest in the welfare of its constituent families (see Numbers 36).
Free trade represents the pursuit of transitory efficiency and self-enrichment through cheaply manufactured foreign goods at the expense of the people who work in the communities in which we live and the welfare of our extended families and tribes. The result is that free trade has gained traction as people of white European descent have been trained to hate their own identity and taught that they have no interests in common with their fellow whites and tribal kinsmen. Since the transition from protectionism to free trade, the collective interests of the deracinated and uprooted proletariat have been substituted into the void once filled by clan and tribal loyalty. This is why the modern ascendancy of free trade and Marxist socialism has corresponded with the loss of the racial, ethnic, and tribal identity of the people of the West.
Adam Smith misunderstood what really produces the wealth of nations. To an extent, independent individuals acting in self-interest lead to national wealth; yet individualism is not the key to economic prosperity. The European nations with which Smith was familiar prospered as a result of generations of diligent work, pious devotion to folk and family, and the secure transmission of property from father to son. We read that “a good man leaveth an inheritance to his children’s children” (Proverbs 13:22), and so it was in the times of our ancestors. Smith made some correct observations regarding the legitimacy of individual interests as opposed to generic collectivism, but there is no question that Smith overemphasized the role of individualism in growing wealth. The libertarian worldview doesn’t account for the fact that wealth was grown and augmented across generations and passed on by inheritance. This could not have occurred without the acknowledgment of biblical rules governing the rights and responsibilities of the firstborn son, who was to become the head of the family after his father’s death.
While libertarians are ignorant of the corrosive effects that individualism has had on the strength of the family, Karl Marx, the intellectual godfather of communism, was very much aware of the path down which individualism would lead us. Marx knew very well that the family and tribe were insurmountable barriers to the success of the proletarian revolution he sought to effectuate. He knew that classical economics and private property were supported, not harmed, by protectionism, which is why he endorsed free trade for revolutionary purposes. Marx understood that free trade would undermine the jobs and income of the working class and temporarily enrich the merchant class, thereby widening the class divide and fueling the class hatred necessary for the communist revolution to take place.
The protectionist idea is rooted in traditional nationalism, which acknowledges that all classes have a legitimate stake in the success of the people as a whole. Once this nationalism is undermined by promoting the idea of propositional citizenship, we find ourselves only a few steps away from poverty and socialism. Libertarians may not understand the role that their ideology has played in the emergence of Marxist policy in the West, but the link is historically undeniable. It’s true what they say: politics does make for strange bedfellows.
Read Part 5
- Hans-Hermann Hoppe, Democracy: The God That Failed (Ninth Edition, Transaction Publishers, New Brunswick, New Jersey), p. 155 ↩
- John Jay, Federalist No. 2 ↩
- Information on modern British taxation history can be found here. ↩
- More information on income tax history can be found here. ↩
- Karl Marx, “Speech to the Democratic Association of Brussels at its Public Meeting of January 9, 1848” in Marx/Engels Collected Works, Volume 6 (London: International Publishers, 1975), p. 450 ↩
- Gary North, “The Statist Propositions of Protectionism,” http://lewrockwell.com/north/north1160.html ↩
- See Leviticus 19:9-10; 23:22; Deuteronomy 24:14; 26:12. Note that this is not the same as socialist wealth-redistribution schemes, since it would be presumed that the poor would have to work for the food that they received and would be limited to those within the gates, i.e. within local limits. Nowhere is any kind of socialist redistribution plan envisioned in the Bible. See David Chilton’s Productive Christians in an Age of Guilt Manipulators for more information on the biblical perspective on poverty. ↩