Free Trade vs Protectionism Research Paper

Free Trade vs Protectionism Research Paper:

The purpose of this research paper is to assess reasonability of free trade and protectionism concepts based on the empirical test of two opposing theories that are associated with free trade and protectionism respectively. The two theories that will be analyzed within the conceptual framework of this research are liberalism and mercantilism. We will first briefly outline the concepts of free trade and protectionism and their contradictory postulates, to be followed by elaboration on their effective implementation in the empirical setting.

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The dichotomy of free trade versus protection has been an important building block for contemporary economics. During the nineteenth century a highly influential and long-standing proposition was fabricated in which free trade as an overreaching political goal-and as a slogan-was said to have originated with Adam Smith. (Goldman, 1989) Moreover, this proposition stated that free international trade, including radical tariff reforms, and so on, was something that inevitably and naturally followed from Adam Smith’s famous theory of the market process. In contrast, protectionism was connected with the mercantile system and with such ‘mercantilist’ writers as Thomas Mun and James Steuart. (Irwin, 1996)

Free trade became a standard illustration of the basic free market principle of classical as well as modern micro-economics: by trusting the free interplay of market forces-the invisible hand-a maximisation of wealth would occur. (Maneschi, 1998) Before the Keynesian revolution and the controversies over full employment in the 1920s and 1930s, the debate over free trade and protection during the nineteenth century was certainly the most important popular debate in which economists had been involved, hence, the discussion of the pros and cons of free trade-in which the free-traders, at least in principle, won the day due to what seemed to be a superior logical argument-offered an identity for economics and professional economists. (Maneschi, 1998)

The rise of liberalism in Europe at the end of the nineteenth century makes it clear that liberalism is but one vision among others. However, the success of the West after 1945 allowed this realization to be down-played, even forgotten. But the realization was true, as more serious attention to Marxism would have made clear; thankfully the recent revival of Islam is again making people in the West aware that their world faces competitors.

In consequence, it becomes necessary to spell out what it is about liberalism — defined in terms of the moral worth of every individual and of the attractiveness of negative liberty as a consequent social practice — as an ideology that makes it preferable to other alternatives. This version is, in some ways, ‘mundane’, and this will not please everyone; however, good reasons for excluding more ‘generous’ views are available and will be noted.

When reasons for liberalism as an ideology are offered, what precisely is happening? Are we simply trying to give members of liberal societies a better conscience about themselves? This is not an ignoble aim, and there is no reason to repudiate it. However, to stick at that position is to endorse relativism, to accept that liberals are trapped inside a particular world just as others are trapped in theirs. That is not an acceptable resting place; the discussion of rationality and relativism that this entails shows, moreover, that it is not a necessary resting place. The arguments in favour of liberalism are made in the belief that they have the power to sway judgement. It is as well to be absolutely clear that, in a sense, a sleight-of-hand is being performed here.

A move is being made from a recognition of the relativity of beliefs to an insistence that liberalism is more universalizable than others; liberalism may recognize itself as one ideology among others, but it treats this simply as a problem to be overcome. This seems, but is not, contradictory. This is not to say that escaping relativism is in any way easy. A safe and secure validation for liberalism cannot be created at a stroke; rather too much for comfort will in consequence rest on the sociological underpinnings to liberalism examined later.

As each of the three pillars of liberalism have some relationship to modern science, it is useful at this point to recall an important analytic issue already encountered. This can best be done by considering Popper’s philosophy of science. The most obvious merit of Popper’s work is that it does not try to refute Hume; on the contrary, it takes Hume’s most sceptical thoughts and builds a philosophy on their basis. Popper’s key idea is simple, far-reaching and profound. Since knowledge can never, given the possibility of new. evidence, be absolutely firm, a scientific attitude is one which allows for theories to be falsified; this attitude will encourage investigation and the growth of knowledge.

In contrast, pseudo-scientific theories, notably psychoanalysis, are circular and irrefutable, and therefore block and frustrate empirical research. For the most part Popper sees himself as describing the practice of scientists. However, when confronted with evidence of craven ‘scientists’ who protect their theories, and probably their tenure at universities, by adding escape clauses to avoid refutation, Popper moves to a prescriptive plain: really good science has been revolutionary, and the protection of tenure will not gain Nobel prizes.

All this is to raise uncertainty to even greater limits than was the case with John Stuart Mill, and it is no surprise to discover that Popper has increasingly defined science simply as the possibility of criticizing. He has himself noted an asymmetry to his thought as a whole: he admires fireworks in science, but advocates piecemeal social engineering in society. 4 There are good reasons, however, for not allowing Popper’s acceptance of this disjunction to stand.

Modern science is not really revolutionary; on the contrary, the change from Newton to Einstein, of which Popper makes much, is really an example of piecemeal and cumulative change inside modern science, as is suggested by the fact that the conceptual change was not so great as to necessitate destruction and rebuilding of all bridges. Criticism by itself is not enough; what does matter is the acceptance of modern cognitive practices in order that the asking of questions can prove effective. How can you falsify a theory without a background assumption of empiricism? Mechanism and empiricism are necessary to prevent ideologies being judges in their own case and to encourage the search for explanatory structures: the acceptance of such norms does deserve the label revolution.

However, the fundamental reason for placing science at the heart of liberalism is much simpler. What matters more to the majority of human beings than the pleasure of research is something more straightforward. High-powered modern science plays a vital role in producing the technology necessary for modern, post-scarcity social life. Spencer and Comte were right to insist that war, nastiness and brutishness were generally characteristic of pre-industrial militarist societies; such practices were rational in conditions of scarcity.

The scientific/industrial complex at least gives us the possibility of decent behaviour. None of this is to say that modern societies are havens of social justice; but such societies have raised living standards, and they do at least allow for the possibility of non-zero sum political life. This general consideration amounts to an injunction of negative utilitarianism: certain horrors, foremost among them plague, war and famine, from which men and women have suffered can be alleviated, and it behoves us to accept a way of life that allows this.

But matters can be put in a more positive light: industrial societies are based upon historically high levels of geographical and social mobility, and these increase the ‘life chances’ of individuals, allowing for identities to become achieved rather than socially ascribed. Societies which do not have this productive system are now illegitimate in the eyes of their citizens. Equally importantly, such societies find it hard to defend themselves against intervention, and elites of old regimes are clearly aware of this. Bluntly, developing societies are seeking to modernize as fast as possible, and this determination remains crucial to the modern world polity. Even were there not good reasons for adopting the scientific/ industrial complex, liberalism would still need to base its thought upon the emergence of industrial society.

The second reason for endorsing this moral feel of a scientific world view is, in contrast, purely negative. Liberalism is the least bad social recipe available. A central tenet of Goffman’s work was that it is very hard to have largescale Durkheimian festivals at which social mores could be underwritten, and Goffman therefore spoke, with characteristic ambiguity, about the convenience of having the value of the individual stressed in those interpersonal acts of deference and demeanour that he analysed so well.

The only occasion on which positive re-enchantment (as compared to cultural hangovers/entertainments -the British Coronation, Wembley Stadium, tea at Lord’s -which are without much social significance) was tried on a collective basis by a modern industrial society was at the Nuremburg rallies. Uncertainty seems massively attractive in the face of ideocratic dogmatism, just as ‘coldness’ does when confronted with rabid enthusiastic communalism. It would, of course, be a great mistake to blame thought as being responsible for large-scale social movements of this type; clearly structural problems existed which encouraged large numbers to take the messages of intellectuals seriously.

Structural problems even more massive in size exist today for those Third World societies which are seeking to make a speedy transition to the modern world, and it is this which explains the power of ideology in the contemporary Third World. However, it remains true that modern intellectuals have, as a whole, a poor record in relation to such appalling collective fantasies. Liberalism’s attractions are vastly enhanced by comparisons with romanticisms which so clearly encourage adoption of dubious utopias.

It is desirable to go some way beyond these bald statements by commenting upon the rather unhappy manner in which they have been expressed. Perhaps the best-known part of Weber’s sociology is his concern with bureaucracy since it was this that led him to speak about modern man being forced to live in an ‘iron cage’. It is appropriate that his work is compared with that of Franz Kafka. Should we accept this characterization as an accurate view of our situation as a whole?

There is a good reason for being somewhat suspicious of the air of cultural pessimism that surrounds the disenchantment thesis. Most people were never that ‘enchanted’ by a world of poverty and disease, and it is entirely proper to say that for them the disenchanting effects of modern science are outweighed by the affluence it provides. Sociological studies of the British working class certainly give the impression of a hive of activity on the part of those in work, and this seems far removed from any sort of Kafkaesque scenario. 12 This is not to deny that certain societal spiritual support may be lacking, but it is to suggest that the most appropriate place for seeking solace is private life.

Generous liberalisms call for a warmer and more complete moral universe. They berate the end of ideology school for not realizing that what we need is more ideology. 18 It is important, however, to note that these thinkers are not modern equivalents of the reactionary modernists. If they want more, they also want a better class of ideology, a little warmth without the nastiness.

Interestingly, one best-selling version of generous liberalism, an analysis of the modern American character entitled Habits of the Heart, seems to suggest that the best ideology available is that provided by the church, and a rather high church at that! 19 Two rather different points must be made against such thinkers. The first is simply to note that such theories are rendered innocuous by having sociologically implausible foundations. How can a complex modern economy be organized on a friendly basis?

Should we hug the sellers of socks and software? More importantly, why should we believe that it will be possible to get on with living if everything is negotiable at every instant, as Habermas desires? Furthermore, it is surely relevant to note that Sandel and MacIntyre do not really tell us what makes up the fuller ideology they have in mind — although MacIntyre hints that he may do so later. Why should we believe Habermas that a rational social identity will be achieved once various obstacles have been removed?

It is this that suggests criticism from the opposite angle. Generous liberalisms are not completely innocuous. I do not have in mind here the fact that the proliferation of such views means that other, more urgent problems are ignored; nor is the capacity of these views to raise expectations that cannot be fulfilled what is at issue. It is simply that intellectual disciples are often without much discrimination, as was demonstrated by those who acted in Nietzsche’s name. Perhaps this could happen again.

It is surely worthwhile exercising self-restraint, and in particular asking carefully about the sociological plausibility of social and political theories, to make sure that it does not happen again. It is useful in this context to recall John Dunn’s call for a liberal theory that would be ‘generous’ enough to be the moral equivalent of a religion. 20 One reason for rejecting this is simply that no such moral equivalent is, or can be made, available; modern cognition rules out all totalizing systems of belief. If any such could, however, be constructed, it is very much an open question whether liberalism’s very heart — the sense of openness, contingency and choice — would remain in being. However, an equally important objection is simply that the call for such a belief system may be taken all too seriously, and aid in the creation of another ‘secular religion’.

There are three components to liberty. The first component is that of the secure provision of the basic necessities of food and health, the absence of which makes life miserable. To fulfil this element is to satisfy the requirements of negative utilitarianism. Furthermore, liberalism has a positive appreciation for more than a mere sufficiency: a measure of luxury lies behind that spread of fashion which allows a degree of role-playing helpful in the creation of a sense of personal autonomy. In more political terms the desire for autonomy is the second component of liberty, namely that of negative liberty.

A desirable society is one in which every person has space in which to develop. There are several interrelated elements at work here. Central to this notion is respect for the absence of arbitrariness/presence of the rule of law. There is a long tradition in European thought, to which Montesquieu, Hume and Smith all belonged, which stresses that it is arbitrariness that makes government insupportable. Tocqueville’s insistence that democracy could, in principle, arbitrarily rule some out of society is a part of the same tradition.

Its ultimate base is that of a generalized Kantian respect for all persons. But laws may be vicious, and something more is involved in this notion. It implies equality before the law and the right to freedom of opinion. The final component of liberty is, however, that of the right of the people to control political power by democratic means. The attractiveness of this component has grown as the result of the historical disasters of the last hundred years. It is worth noting, however, that in modern circumstances it is only a ‘realistic’ version of democracy that makes much sense.

The complexity of modern society makes it impossible to imagine democracy being of the face-to-face participatory kind favoured by the Greeks, and recommended by Rousseau for small communities. The realistic theory of democracy, in contrast, stresses the benefits of a divided and competing political elite. 26 This view recognizes that modern politics is necessarily oligarchical, but emphasizes none the less that the circulation of elites allows the replacement of incompetent governments as a matter of course.

A coherent liberal view of liberty demands that all three elements be present. What is at issue here is the problem raised by Tocqueville, namely that democracy in and of itself does not guarantee a desirable society. This may seem an abstract point, but it is one of great relevance for the debate concerning the relationship between science and society. Habermas’s response to the attempt to keep science as a specialized preserve of scientists has been to demand the democratization of science. In its most sophisticated version, this demand has led to the suggestion that the science/liberalism nexus would be best cemented on the basis of a consensus rather than a correspondence theory of truth.

Although this is suggestive and important, it must, in the last analysis, be rejected. Asking for consensus can be illiberal, in the manner of Rousseau’s General Will, although Habermas most certainly is not; what matters in epistemology is the second element of liberty, that is, the right to raise questions. Liberalism has consistently been seen here as one ideology among others; nevertheless, a series of related reasons has been offered to suggest that it is the best — or, anyway, the least repulsive — ideology on offer.

Now any rigorously sustained relativism would mock such an argumentative strategy as self-contradictory. The point about relativism, it would be maintained, is that concepts and perceptions vary completely by society; truth really is different, as Pascal had it, on the other side of the Pyrenees. The crucial component of this claim is the belief that it is possible to think only through the terms that a particular culture provides. This doctrine has been hugely influential in social science, and indeed in the larger world of political and social theory.

The thesis was most eloquently expressed, however, by George Orwell in Nineteen Eighty-Four: the power to control the commanding conceptual heights of society are held to be so great that it will become impossible even to conceptualize any alternative. If any strong version of relativism of this sort is correct, it becomes, of course, stupid and naïve for liberals to offer reasons in favour of their beliefs. Who do liberals hope to convince?

Relativism has its attraction. It can be an antidote to the soft spinelessness to which liberalism has on occasion been prone; a ‘relativistic liberal’ would not be bothered trying to convince someone from a different civilization, and might more easily recognize them as an enemy to be fought. Furthermore, relativism seems to be liberal; it is against ‘missionary activity’, that is, it dislikes interference, especially with other cultures, as classically was the case with imperialism. 30 There is something to be said in favour of giving reasons for liberalism in order that members of the advanced democracies inside the capitalist arena may better understand themselves.

Beyond this, however, much of relativism’s claim to be liberal is phony. Its ethic suggests that local standards should be accepted. What if such standards are repulsive? No liberal can rest content with a non-universalistic position in the light of the attendant danger. Nevertheless, the question as to how universal standards should be ‘applied’ in world politics is extremely complex, and it will prove possible to share relativism’s distaste for naïve moral crusades, although for sociological rather than philosophical reasons.

The key part of an assault on relativism must lie in the demonstration that people are not so conceptually imprisoned that they cannot ‘see’ anything of what is happening in neutral terms. There are two reasons for believing such an attack to be justified. First, philosophers who write about ideologies — and sociologists (who should know better) who follow them — exaggerate their coherence, elegance and internal economy. It is doubtful whether an ideology could be perfected, as is the intention of the rulers of the society depicted in Nineteen Eighty-Four, so that it would genuinely become possible to think only in one way; certainly no ideology that is known to me works so smoothly. On the contrary, belief systems are messy affairs, rag-bags full of ideological options that can be pulled out by interested parties as occasion demands. To say this is not to deny that an ideology can have some constraining force, especially when a particular option is missing, and that it can affect the way in which ‘interest’ is defined; but it does deny that ideology controls.

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