Global Trade

John J. Kirton, John J. Kirton

• Publisher: Routledge
• Year: 2017
• ISBN:
  9781351933223
• Edition: 1
• Topic: Politik & Internationale Beziehungen
• Subtopic: Politik

Trade has long been a core part of international relations. Bilateral, plurilateral and multilateral trade flows and agreements have arisen in many ways and in many areas over the centuries. From regional arrangements, such as the North American Free Trade Agreement, to the all-encompassing General Agreement on Tariffs and Trades and now the World Trade Organization, the system of global trade has seen struggles and successes alike. The traditional debate over liberalization and protectionism remains central today; and with ever-expanding globalization facing all states, the future of global trade seems to be no less controversial than it was centuries ago. By assembling the key scholarly works that have defined the field of global trade, this work addresses these debates and examines the past to see what the future of global trade might look like.

Part I
Foundations and Historical Overviews

[1]

Power Versus Plenty as Objectives of Foreign Policy in the Seventeenth and Eighteenth Centuries

By JACOB VINER

IN the seventeenth and eighteenth centuries economic thought and practice were predominantly carried on within the framework of that body of ideas which was later to be called “mercantilism.” Although there has been almost no systematic investigation of the relationship in mercantilist thought between economic and political objectives or ends in the field of foreign policy, certain stereotypes have become so prevalent that few scholars have seriously questioned or examined their validity. One of these stereotypes is that mercantilism was a “system of power,” that is, that “power” was for mercantilists the sole or overwhelmingly preponderant end of foreign policy, and that wealth, or “plenty,” was valued solely or mainly as a necessary means to attaining or retaining or exercising power. It is the purpose of this paper to examine in the light of the available evidence the validity of this interpretation of mercantilist thought and practice. Tracing the history of ideas, however, always runs to many words, and limitations of space force me to confine myself, even with respect to bibliographical references, to samples of the various types of relevant evidence. That the samples are fair ones I can only attest by my readiness in most cases to expand them indefinitely.

The pioneer historians of mercantilism were nineteenth-century German scholars, predominantly Prussians sympathetic to its economic and political philosophy, and especially to its emphasis on state interests as opposed to the private interests of citizens. The interpretation of mercantilism by Schmoller as primarily a system of state-building is familiar, and commonly accepted by economic historians.¹ A similar stress on the political aspects of mercantilist commercial policy is common in the German writings. The proposition that the mercantilists sought a favorable balance of trade, wealth, and the indefinite accumulation of the precious metals solely as means to power seems first to have been launched by Baron von Heyking, who indeed claims priority for his interpretation.² Schmoller similarly interpreted the uncorrupted mercantilism of Prussia and of the non-maritime countries in general, but he maintained that the “imperialism” of the maritime powers was a debased mercantilism, characterized by an unscrupulous use of military power to promote ultimate commercial ends, and half-condemned it on that ground.³

This distinction between “pure” mercantilism, a “Staatsmerkantilismus,” which can obtain its full development only in an absolute monarchy, and the mercantilism of countries where the commercial classes are influential and the state has to serve and to reconcile private economic interests, is also made much of by a later German writer, Georg Herzog zu Mecklenburg Graf von Carlow. For “pure” mercantilism, the ruling principle is not economic but the promotion of the power of the state.⁴ In general, however, the historians have not distinguished between the mercantilism of the absolute and the constitutional states, and where they have dealt at all with the questions of the ultimate aims of mercantilism they have almost invariably asserted that these were solely or preponderantly political, although only too often with ambiguity or even outright self-contradiction, and almost invariably without presentation of substantial evidence.

A case in point is William Cunningham, the English economic historian. His predominant interpretation of English mercantilism was that it sought power rather than or much more than plenty, and that it valued plenty solely or mainly as an instrument or support of power, although he easily slipped, in this as in other analytical issues, into ambiguity if not hopeless contradiction.⁵ An English economic historian sympathetic to mercantilism, W. A. S. Hewins, regarded this interpretation as unfair to the mercantilists, and offered the following rendition of Cunningham’s position to indicate its inacceptability :

. . . one might almost imagine him [i.e., Cunningham] saying: “The mercantile system is concerned with man solely as a being who pursues national power, and who is capable of judging the comparative efficacy of means to that end. It makes entire abstraction of every other human passion or motive, except those which may be regarded as perpetually antagonizing principles to the pursuit of national power—viz., neglect of shipping and aversion to a fish diet. The mercantile system considers mankind as occupied solely in pursuing and acquiring national power.”⁶

All the German and English economic historians who found in mercantilism the complete subordination of economic to political considerations seem to have been themselves sympathetic to the subordination of the individual to the state and to the exaltation of vigorous nationalism characteristic of mercantilism, and to have been hostile to nineteenth century liberalism and its revolt against the residues of mercantilist legislation. Where this was combined, as in Schmoller and Cunningham, with a dislike of the rise of the bourgeois and his values to dominance over politics, to attribute to the mercantilists the conception of power as the sole or preponderant end of national policy was to praise rather than to blame them.

Eli Heckscher, the great Swedish economic historian and the outstanding authority on mercantilism today, follows the standard interpretation of the mercantilist objectives, but clearly to add to their shame rather than to praise them. Heckscher is an outstanding liberal, an individualist, a free-trader, and clearly anti-chauvinist. When to the section of his great work dealing with the foreign policy of the mercantilists he gives the heading “Mercantilism as a System of Power,”⁷ and applies it to mercantilism in general and not only to the mercantilism of the absolute monarchies or of the non-maritime countries, he is rein-forcing the indictment of it which he makes on other grounds, for to him “power” is clearly an ugly name for an ugly fact. More systematically, more learnedly, and more competently than any-one else, he supports his thesis that the mercantilists subordinated plenty to power. His argument calls therefore for detailed examination if this proposition is to be questioned.

Heckscher really presents an assortment of theses, ranging from the proposition (1) that for mercantilists—whether for most, or many, or only some, not being made very clear—power was the sole ultimate end of state policy with wealth merely one of the means to the attainment of power through the “eclectic” thesis (2) that power and plenty were parallel ends for the mercantilists but with much greater emphasis placed on power than was common before or later, to the concession (3) that mercantilists occasionally reversed the usual position and regarded power as a means for securing plenty and treated purely commereial considerations as more important than considerations of power. His central position, however, and to this he returns again and again, is that the mercantilists expounded a doctrine under which all considerations were subordinated to considerations of power as an end in itself, and that in doing so they were logically and in their distribution of emphasis unlike their predecessors and unlike the economists of the nineteenth century.

It is difficult to support this account of Heckscher’s position by direct quotation from his text, since he presents it more by implication and inference from mercantilist statements than by clear-cut and explicit formulation in his own words. That mercantilists according to Heckscher tended to regard power as the sole end is to be inferred by the contrasts he draws between the position he attributes to Adam Smith—wrongly, I am sure— that “power was certainly only a means to the end ... of opulence,” and the “reverse” position of the mercantilists,⁸ the “reverse,” I take it, being the proposition that wealth was only a means to power. That there is something special and peculiar to mercantilism in conceiving power as an end in itself underlies all of Heckscher’s exposition, but the following passages come nearest to being explicit. “The most vital aspect of the problem is whether power is conceived as an end in itself, or only as a means for gaining something else, such as the well-being of the nation in this world or its everlasting salvation in the next.”⁹ This leaves out of account, as an alternative, Heckscher’s “eclectic” version, where both power and plenty are ends in themselves. On John Locke’s emphasis on the significance for power of monetary policy, Heckscher comments, with the clear implication that the injection into economic analysis of considerations of power is not “rational,” that it is “interesting as a proof of how important considerations of power in money policy appeared even to so advanced a rationalist as Locke.”¹⁰

Heckscher later restated his position in response to criticisms, but it seems to me that he made no important concession and indeed ended up with a more extreme position than at times he had taken in his original exposition.

The second of the aims of mercantilist policy . . . —that of power— has met with a great deal of criticism from reviewers of my book . . . I agree with my critics on that point to the extent of admitting that both “power” and “opulence” . . . have been, and must be, of importance to economic policy of every description. But I do not think there can be any doubt that these two aims changed places in the transition from mercantilism to laissez-faire. All countries in the nineteenth century made the creation of wealth their lodestar, with small regard to its effects upon the power of the State, while the opposite had been the case previously.¹¹

The evidence which Heckscher presents that the mercantilists considered power as an end in itself and as an important end, and that they considered wealth to be a means of power need not be examined here, since there is no ground for disputing these propositions and, as far as I know, no one has ever disputed them. That the mercantilists overemphasized these propositions I would also not question. Nor will I enter here into extended discussion of the rationality of these concepts beyond stating a few points. In the seventeenth and eighteenth centuries, colonial and other overseas markets, the fisheries, the carrying trade, the slave trade, and open trade routes over the high seas, were all regarded, and rightly, as important sources of national wealth, but were available, or at least assuredly available, only to countries with the ability to acquire or retain them by means of the possession and readiness to use military strength.

In the seventeenth and eighteenth centuries also, “power” meant not only power to conquer and attack, and the prestige and influence which its possession gav...