Yves here. This post is more open-minded than what you usually see from economists on the topics of nationalism and protectionism, yet it is still maddening. First, it fails to acknowledge flawed hidden assumptions about so-called free trade, which is actually “substantially liberalized but still managed trade.” True open borders with respect to goods is not attainable; at a minimum, there are frictions due to transit costs, even before the perceived need to protect citizens from uncontrolled entry of drugs, weapons, and defective products.
What economists pervasively refuse to recognize is a fallacy set forth mid-20th century, in the so-called Lipsey-Lancaster theorem, also known as The General Theory of the Second Best. It shows (with the required mathematics) that making incremental moves towards an supposedly ideal policy may not make things better. From ECONNED:
Recall that the situations that economists stipulate in theoretical models are idealized, usually highly so. Consumers are rational and have access to perfect information. There are no transaction costs. Goods of a particular type are identical. Capital moves freely across borders. Using these assumptions, or similar ones, the model is then shown to produce a global optimum.This highly abstract result is then used to argue for making the world correspond as closely to the model as possible, by lowering transaction costs (such as taxes and regulatory costs) and reducing barriers to movements of goods and capital.
But these changes will not produce the fantasy world of the model. Doing business always involves costs, such as negotiating, invoicing, and shipping. Capital never moves without restriction. Buyers and sellers are never all knowing, and products are differentiated….
The article shows, first in narrative form, then with the required formulas, that if all the conditions for the ideal state cannot be met, trying to meet anything less than all of them will not necessarily produce an optimum. Partial fulfillment of equilibrium conditions may be positively harmful, forcing the economy to a less desirable state than it was in before. Thus simple-minded attempts to make the world resemble hypothetical optimizing models could well make matters worse.
In general, outcomes at least as good as any “second-best” reality can result from a wide variety of different policy choices. So, while abusing rarified economic models to grope toward a unique hypothetical ideal can be harmful, many different messy policy choices can lead to improvements over any current, imperfect state. There is no one, true road to economic perfection. Trudging naively along the apparent path set forth by textbook utopians may lead followers badly astray, despite the compelling simplicity of the stories they tell.
A second tacit assumption in arguing for more liberalized trade is that the (presumed) welfare gains will be shared, that the winners can compensate the losers and still come out ahead. Tell me how often that happens in practice.
Third is that development economist like Dani Rodrik have shown that protectionism is important for developing economies, so they can develop infant industries that have the potential to be competitive internationally to mature to the point where they can do just that.
I imagine readers can add to this list.
By Marvin Suesse, Assistant Professor of Economics Trinity College Dublin. Originally published at VoxEU
Economists know that international integration creates winners and losers. But we do not fully understand why the ‘losers’ so often set the policy agenda. This column argues that economists are only now beginning to grasp the influence of nationalist ideas in shaping the policy narrative. The impact of nationalism rests on its ability to weld disparate special interests together into coherent coalitions and present a unifying story of progress and community amid adversity. In the 19th century, just as now, these stories found easy multiplication in popular media and on the marketplace of ideas.
When Robert J. Shiller coined the term ‘narrative economics’ during his presidential address to the American Economic Association in 2017, he was calling on economists to take stories seriously (Shiller 2017). The stories commonly told about economic events, he argued, shape the public’s understanding of past and present problems, thereby conditioning policy makers’ choices for the future. In my book The Nationalist Dilemma: A Global History of Economic Nationalism, I try to heed Shiller’s call (Suesse 2023). Based on historical case studies in 30 countries over the past 250 years, the book investigates nationalism as a powerful master-narrative that has often dominated public policy discussions, sometimes explicitly, and often unwittingly.
But what is it that makes businesspeople, consumers and policymakers listen to nationalist positions?
General and Special Interests
Protectionist groups often share a common legitimacy problem: by definition, they represent special interests seeking to prevent free-trade policies with potentially general welfare benefits. An explicitly nationalist frame of argumentation has several advantages for these groups.
First, nationalist narratives help to unite often disparate groups under one banner. A prominent example is provided by the politics of tariff setting in the antebellum United States. One of the most protectionist politicians of that era was Henry Clay, Senator and long-time speaker of the House. In the fractured political arena of his time, he knew that those states that had most to gain from tariffs, largely the mid-Atlantic states such as Pennsylvania, would not carry the vote alone. Hence, he combined protectionism with policies promoting a national bank and infrastructure investments into one package he called the ‘American System’. Banking policies satisfied New England states, whereas building roads and canals pandered to the interests of the sparsely populated mid-Western states. Together, this coalition had the votes Clay needed to outmanoeuvre the South and hike up tariff rates. While a number of issues bound this coalition together, including an opposition to slavery, the narrative of a unified ‘American System’ that Clay created effectively allowed him to paste over the coalition’s internal fractures. Narrative creation, of course, was not cheap. Political advocates of the ‘American System’ spent considerable sums bankrolling promising economists to their cause, including prominent authors such as Henry Carey and Friedrich List, who crafted elaborate theoretical systems to advocate for tariffs.
Such narratives have allowed protectionists to reach out to parts of the population that are not directly negatively affected by market integration. Another example is the passing of the 1879 German tariff law, which was the brainchild of large producers in heavy industry and grain agriculture (the so-called ‘Marriage of Iron and Rye’). This protectionist coalition framed their proposal in terms of the ‘Defence of National Labour’ and launched a coordinated publicity campaign on that basis. In doing so, they successfully encouraged participation by ordinary consumers and workers who sent letters agitating for tariffs to politicians. These outreach activities, riding on a wave of nationalist fervour, also allowed tariff advocates to denigrate free traders as “enemies of the people” and “unpatriotic elements”. This rhetoric finds echoes in the rallying cries of modern agitators tarnishing “globalists” as traitors to the national cause. Then as now, it effectively delegitimised liberal positions and put the arguments of free-traders beyond the pale of acceptable debate.
Public Relations, Then and Now
A well-oiled public relations machine has historically been crucial in aiding nationalist causes. Many Latin American countries have seen ‘populist’ politicians, such as the Argentinian Juan Perón or the Bolivian Evo Morales, craft their economic policies to correspond with symbolic events in national history. When Morales nationalised the country’s oil and gas fields in 2006, he explicitly did so in memory of the fallen heroes of the 1930s Chaco War, who had fought in part over this oil-rich ground. When Perón expropriated the British-owned railways in 1948, he similarly celebrated this with huge bombast in front of jubilant crowds as a symbol of recovered sovereignty. The pomp and ceremony conveniently concealed the financial realities of the situation, as his government paid foreign railway owners handsomely for parting with their outdated stock. Perón also declared the 9th of July, the day when Argentina’s hero San Martín had declared the country’s independence from Spain more than a century earlier, to be the ‘Day of National Economic Independence’. He thus linked political sovereignty (a concept no Argentine could possibly disagree with) to economic sovereignty (a much more contested subject). The same patterns of speech were repeated in 2016 by another American populist, Donald Trump, when he was “declaring America’s economic independence” in front of aluminium workers in Pennsylvania, America’s oldest industrial heartland. In this speech, Trump attempted to place his own policies in the tradition of acclaimed protectionist ‘Founding Fathers’, including Alexander Hamilton and Abraham Lincoln. And while professional economic historians will balk at the validity of Trump’s comparison, his rhetoric was evidently followed by electoral success.
While propaganda and managing the media message is important for success, economic nationalism is not all smoke and mirrors. Much nationalist messaging leverages notions of identity and community that appeal especially in times of radical change, be it political upheavals or financial crises. China in the early 20th century presents such a scenario, where the ruling Qing dynasty was disintegrating in a vortex of foreign aggression, economic stagnation, and civil wars. All this went hand in hand with an increasing penetration of domestic markets by foreign products. Chinese nationalist intellectuals countered these trends by propagating the concept of a Chinese national identity, one that was assumed to be perennial and hence resistant to change. At the same time, they exhorted their compatriots to purchase products corresponding to this new national identity – that is, to prioritise domestic products over British or Japanese ones. The resulting ‘National Products Movement’ became one of the big mass movements of early 20th-century China. Similar community-building attempts took place in colonial India, where charismatic leaders such as Gandhi advocated the exclusive consumption of products ‘made in India’ to strengthen the bonds among citizens of the emerging nation.
A Narrative of Progress
Selling stories has therefore always been part of economic nationalism. Friedrich List himself, possibly the most prominent theoretician in this genre, took great care to fashion his protectionist thinking into policy-relevant soundbites that could easily be absorbed by politicians. Yet List also realised that narratives of isolation, by themselves, were hardly a recipe for success. Pure autarky was, even in the early 19th century, viewed as outdated and regressive. List instead coupled protectionist appeals with a narrative of industrial growth. The latter, he proposed, would amplify national power and wealth (as well as providing plenty of employment opportunities). Industrial growth, in List’s view, required not only infant industry protection, but also an educated workforce, advanced technology, and a modernised banking system. Economic nationalism was therefore painted as an optimistic and progressive force. List’s posthumous defenders saw these ideas at the origin of the impressive growth of the German economy in the late 19th century, which they depicted as a showcase of fast-paced industrialisation and technological advancement. The resulting association between Listian policy recipes and German growth outcomes lend additional credence to his ideas (notwithstanding the dubious causality between the two). This narrative of being able to provide an ‘indefinite increase’ in production subsequently became one of the major selling points for List’s ideas abroad. Policymakers from Imperial Russia to the Ottoman Empire and Meiji Japan attempted to follow List’s recommendations, giving rise to a remarkable uniformity in nationalist ideas across the globe. Similarly, today’s nationalists, from Donald Trump to the Brexiteers in the UK or Hungary’s Viktor Orban, often echo each other in their pronouncements on the dangers of globalisation.
Conclusion: Taking nationalism seriously in economics
The tendency of nationalists to invoke similar arguments and rhetorical styles when speaking on the economy gives us a chance to study and explain the sources of this ideology. Taking economic nationalism seriously as a phenomenon with real economic impacts should not, of course, legitimise it. As much as it is a discourse designed to paper over fractured coalitions, it is subject to its own contradictions. The most severe of these is the tension between the desire for isolation from the world economy, on the one hand, and the admiration of fast-paced industrial growth, on the other. As many nationalist policymakers have found in the past, economic development is very hard to achieve in the absence of foreign trade and investment. These are real economic trade-offs that narratives cannot dispel.
Nonetheless, narratives are influential in helping economic nationalists gain and hold on to power. This is in accordance with a growing body of research investigating the degree to which ordinary consumers and voters are swayed by notions of national identity and their representation in the media (Della Vigna et al. 2014, Pandya and Venkatasan 2016, Atkin et al. 2019, Couttennier et al. 2019, Sequeira and Nardotto 2021). This complements more traditionally minded analyses that view economic nationalism mainly as a reaction by losers from trade (Colantone and Stanig 2017). What is still missing is a robust quantitative analysis on how these ideas filter through to policymakers (Everett and Fritz 2019). As the historical record and our current predicaments suggest, policymakers may be as susceptible to fall for slanted narratives as ordinary citizens.
See original post for references.
22 comments
Comments are closed.
If this is open-minded… then I suppose I haven’t been missing much by reading few economists. It really does just talk about “clout” rather than any substantial points on the nationalist side. I suppose the article is about the narrative. Even so, I would’ve expected “economic nationalism is not all smoke and mirrors” to be followed by something a trifle harder than “leveraging notions of identity and community” (which I’d argue isn’t that far from “smoke and mirrors” – “leveraging” is what you do in propaganda after all).
Also “interesting” is their invocation of “autarky”/”absence of foreign trade and investment”. Protectionism does not mean the absence of foreign trade, not by a long shot. It really is just the lack of dogmatic attachment to free trade. It may mean comparatively less foreign trade and investment, but this is indeed a matter of trade-offs… a phrasing that, to me, implies some economic advantages that the author does not see fit to actually mention. A trade-off with only downsides is not a trade-off.
For a specific example, Kitson and Solomou in “Protectionism and economic revival: the British interwar economy” show pretty clearly that the introduction of the general tariff in 1932 in the United Kingdom has improved the performance of newly-protected industries and thus the national economy as a whole:
They are careful to note that this was simply a good policy for the time. Introducing it back in the 1870s, when protectionism began to rise elsewhere, might not have helped. On the other hand, if the protectionists had won the day a decade earlier – when the interwar economic malaise had set in and protectionist policies were advancing elsewhere as well – Britain may have been much better off. The resulting economic structure also may have hindered later (postwar) growth. That is, at any rate, an actual and understandable trade-off. To the best of my knowledge, their research holds up and similar cases have been found in other countries. Admittedly, I only studied this topic years ago and my main focus was on the politics, so perhaps I missed something. If so I would welcome correction.
Yes, the post is not taking the usual contemptuous stance towards populists or opponents of “free trade”.
I am very wary, in the context of the UK, of anyone who puts numbers to growth trends in the UK before WW2. The UK government did not start to collect decent data on economic activity until the war started. What you normally find with writings which claim to know what the growth rates have been prior to 1940 is that the authors have used numbers which they or someone else has ‘estimated’ (i.e. largely made up) and then use these as the basis for making assertions which are frankly very questionable. The truth is we have only a limited idea of what, quantitatively, we know about the performance of the UK economy prior to 1940.
That’s fair enough. Still, there is some data that could be used. The authors take their growth data mainly from K. S. Lomax’s “Production and Productivity Movements”, which in turn is based on published reports from Census of Production and Import Duties Act Enquiry years (1907, 1912, 1924, 1930, 1933, 1934, 1935 and 1937). Lomax acknowledges considerable gaps and limitations (not least of all ones stemming from not all years being covered). This may be the best that could be done under the circumstances.
Its a reasonable article, but as so often with mainstream economists, they categorize things according to what they want to see.
As an obvious point, as development specialists such as Ha Joon Chang have pointed out, almost every country which has successfully transitioned to developed status has done so by using tarriffs and trade walls judiciously. The dirty little secret of international trade economics is that comparative advantage locks countries into economic sectors. If your comparative advantage is in raw minerals or agricultural products, its almost impossible to transition to higher value products unless you prevent imports from more developed countries. Trade between countries at different stages of development almost always benefits the ‘developed’ countries more, even if the less developed country gets a relative improvement. This is, incidentally, why infrastructural improvements aren’t always beneficial for poorer regions. Improved road and rail links can have the unintended outcome of disadvantaging local businesses in ‘weaker’ areas as cheaper outside goods flow in, while turning the newly connected region into a supplier of cheaper raw materials and workers for the better developed side of the node. This occurred in Ireland and Argentina in the 19th Century and is arguably the reason why France, a laggard when it came to railways, has a stronger network of regional towns and cities than Britain. They weren’t exposed to competition too early in their growth stage. Enthusiasts for the Belt and Road initiative need to look more closely at the details of the infrastructure before they should conclude its all a big win for smaller countries. When you look for example, at the proposed new railway networks in Africa they follow the classic colonialist pattern of resource extractionism rather than facilitating internal trade.
Just one comment on nationalism – it may once have been true that ‘nationalism’ was equated with protectionism, but this isn’t always the case, especially with smaller countries. The experience of many post colonial countries with protectionism was pretty disastrous (there are some exceptions) and few people think that a small country can be an autarky. Many nationalist groups in Europe have shifted from a protectionist to a more pro-EU stance in recognition of this – most obviously the SNP in Scotland, but also Sinn Fein in Ireland and Catalan/Basque etc., groups no longer associate themselves with overt protectionism. The most nationalist of groups in much of the former Eastern Bloc countries are generally pro-trade, often because they see big trade blocs such as the EU as a natural protection against large, overbearing neighbours (this is one reason why Catalan, Irish and Scottish nationalists are among the most enthusiastic pro-EU supporters). So it is really not particularly useful to equate all economic protectionists or populists as the same thing, especially when looking at countries at very different scales and different stages of development.
Good to see someone else is familiar with Ha Joon Chang’s excellent work — see my comment below that I was struggling to edit when you posted.
One of the challenges you mention here is the “internal colonialism” of the metropole and the periphery — one that a national government has an obligation to manage on behalf of ALL its citizens, not just its urban elites.
A great introduction to Ha Joon Chang’s work is his book, “Edible Economics.” Each chapter highlights a food (okra, anchovies, Coca Cola (I know, is it a food or a substance to remove rust from bicycles), rye, chocolate, etc.) and sneakily introduces an economic concept.
Those are all good points. I do think that a big trade bloc, while obviously at odds with national protectionism, isn’t exactly free trade. In fact it is arguably what the British protectionists urged back in the day of Joseph Chamberlain and his sons (their ideal was an “Imperial Zollverein”, which would encourage trade between Britain and its dominions while reducing trade with countries outside the Empire). The main difference between that and the EU trade bloc is that Britain had other ties with its colonies – but those ties were being progressively loosened at the time when this idea was being discussed.
I think a key point is that trade blocs can work in the way mainstream economists argue if they are between relatively equally developed nations – the EU has worked in its original design function, not just in terms of creating larger, more efficient markets, but also allowing weaker countries like Portugal and Ireland to catch up – more recently, Poland and some of the more competently run east European states. Arguably, Greece was always too structurally weak to be part of a trade bloc like the EU.
But of course the older trade blocs were based on an advanced industrial nation controlling ‘open’ trade with resource rich but technically backward nations. This can only end one way. So yes, you are right to say that a ‘trade bloc’ is not the same as ‘free trade’. The British Empire only allowed free movement of goods up until it hit the pockets of English industrialists or politicians.
The other unspoken (among economists) issue is that internal transfers within large blocs are essential to prevent massive inequalities, especially if they share a currency. The US does it indirectly through military and infrastructural spending, the EU does it through direct transfers and investment (albeit far too small). Pretty much every country larger than Luxembourg faces this problem and deals with it in its own way.
There was a very interesting article (will try to find it, suspect it was linked here as I mainly jump into the internet of the NC highboard) that looked at the maintenance o the sterling bloc post-WWI. The mechanisms used were fascinating. There were blocked accounts, limiting external sterling and UK foreign currency balances use to certain items. There were also funding relationships between BoE and the dominions, limiting their capital markets activity to London.
My point being that finance dominates trade. You cannot run a large trading block as you describe without the bankers wanting their piece of the action and than kaboom it is all over for the periphery because the profits will be extracted….
Free trade requires fettered capital.
Only an economist could write this article, let alone believe it. Trade is a creature of law, and the locus of the control of law (both its creation and enforcement) IS the nation — this is what it means to be sovereign.
As Yves puts it rather less crudely, “Free Trade ain’t free” and in any event in the purest form as promoted by its advocates is not an actually existing thing (anywhere, ever) — it’s a slogan.
I find Ha Joon Chang’s Bad Samaritans most helpful for outlining the historical record of bad faith promotion of “free trade” — invariably by imperialists to their own advantage (first the British, then the Americans) and at the expense of colonials or lesser nations upon whom they can impose unequal terms of trade. The hegemon ALWAYS promotes free trade — never mind that they rose to power (especially economically) behind tariff walls in the first place. I’m looking at you, England, with your Navigation Acts and wool tariffs; and then you, America, with the Jones Act and as even the author admits, a series of tariffs which bore the name “The American System.” It’s classic “pulling up the ladder behind you” dishonesty.
Disingenuously, the author implies that it’s the opponents of “free trade” who are the propagandists, when it’s his lot, the bought and paid for shills in the neoliberal orthodoxy who are absolutely the worst offenders in this regard.
Finally, it misses completely what an economy (and therefore the laws that govern it) are FOR — the wellbeing of the citizenry, stewardship of which in a democracy ought to be exercised by their elected representatives. That we currently endure a perverted version of this arrangement such that we are governed by and for propertarians and rentiers is, of course, a problem for another screed …
For a chaser, or just because, read John Perkins. That shows the practical end of the theoreticals.
Confessions of an Economic Hit Man. He also has a New edition.
“Protectionist groups often share a common legitimacy problem: by definition, they represent special interests seeking to prevent free-trade policies with potentially general welfare benefits.”
So if I do not want to see dolphins killed to provide the tuna I eat, or the Amazon cut down that drives global warming and leads to global megadeath (including economists), I obviously am stupidly turning down “potentially general welfare benefits?” How about un-free trade banning of thalidamide?
As Richard Wolf likes to say – universities have two economics departments and they are always in separate distant buildings – one is the school of business that lives in the real world…..
Such economists should focus their research on Borg worlds, IMO. At least there, economists could find their “economic man.”
Probably the most cited economist in connection with liberalized trade is Ricardo and his “comparative advantage.” What’s almost never mentioned is that Ricardo’s model assumes both capital and labor are relatively immobile.
Ha Joon Chong excels in reminding us how hypocritical are developed nations who almost always got so developed because they restricted trade. Oddly, his Economics: The User’s Guide omits any mention of MMT.
This post and Yves’ comments (plus commentariat additions) took me back to a video with Mearsheimer linked yesterday by Lambert Strether because it fits very well his thinking framework: liberal idealism vs. realism driven by the need to deal with nationalist plus other forces. Though Mearsheimer focuses on international relations his framework applies nicely to domestic policies such as industrial development and others that would require “nationalist” pragmatism as opposed to free market ideology. I strongly recommend that video.
I wonder if we are seeing a case of protectionism “by accident” in Russia? If we think of sanctions as a type of “tariff” it looks to me as if they work.
Agricultural sanctions on Russia after the Crimea accession (annexation?) seems to have sparked a massive increase in agricultural output. Russia now seems to have a thriving agricultural sector—world’s largest or second largest grain exporter over the last few years—expanded beef and pork production and so on.
Sanctions on Cuba seems to have lead to a rather vibrant pharmaceutical industry.
Tariffs, conceivably, could do something the same?
Different causes lead to the same effect: in this case, a reduction of foreign competition giving the locals an opportunity to step in and grow as they would not have been able to otherwise.
Actually, there is a direct historic link from Carey and List to Russia and Russian economic development: American civil engineer George Washington Whistler (father of the painter) who helped design and build the Saint Petersburg–Moscow Railway, Russia’s first major railroad. Carey and List’s ideas later influences Count Sergei Witte, first Prime Minister of Russia.
There was also a concerted effort in the mid-19th century by USA firearms manufacturers such as Colt, Smith, and Wesson to provide Russia with the machinery, tools, production techniques, and even workers to build an independent Russian arms industry.
Only an economist would write this with such a Brobdingnagian lack of self-awareness. It is very difficult to explain water to a fish, but at least this fish understands water as a historical concept.
It is good to have good narratives about protectionism against free trade narrative. Or more to the point, to have an industrial policy to ensure that the country continuously developed its productive capacity, including what American called in 19th century internal improvement (infrastructure), scientific research and technological improvement, because it is precisely those policies that factually and historically worked and allow the nation to develop, to get rich, whereas free trade policy kept and keep poor countries poor.
The make a long story short, England, which developed behind a wall of protection, as against cheaper Indian cotton they were selling in Europe but not in England, subventions and arbitrary used of violence, allowed it to pass from a poor raw resource’s exporter (such as wool to Italian cities) in the 15th century to an industrial powerhouse in 19th. But starting with the Tucker-Hume debate, they adopted free trade for export (indeed, it is only in the 1850s that they removed industrial protection, when they were ahead of everybody): they were saying to other countries: concentrate on raw resources export and we provide you with cheap manufacture (and credit by London, but of permanent balance deficit finance through debt, a permanent feature of poorer countries in the 19th century, is not supposed to exist in the liberal world… thus, don’t talk about it in your theory, everything will be brought to equilibrium…).
The choice was clear and Ricardo’s liberal, who said to the USA that their ‘natural’ advantage was on producing corn and wheat, shall not attempt to industrialize, whereas the ‘natural’ advantage of England was in manufactures, presumably, steam engines did grow in trees… just trade with free trade and everybody will be equally rich because of comparative advantage.
Now, anybody that knows a little bit of history knows that nation that did specialize in raw resources became the Third World countries in 20th century (from south American countries to Ireland, to India passing by Turkey, all in debt to Londe) whereas those who industrialize, not listening to the British theories of free trade, became wealthy one of the 20th century. Besides, as the USA and France shown, did not only industrialize, but their agriculture enjoyed from synergetic effect from industries and became much more productive than those who did specialize in agriculture.
Good that people mentioned Ha Ja Chang books, but Paul Bairoch had shown well too who developed with which policies and who didn’t in his Economics and world history : myths and paradoxes in 1995. And to add to these, Reinert, How Rich Countries Got Rich and Why Poor Countries Stay Poor (2007) is a must. Combine this one with Michael Hudson, Trade, Development and Foreign Debt 1&2, International Trade, London, Pluto Press, 1992 to add a financial aspect of the question and no free trader narrative could ever take hold of your mind.
By the way, for American readers, Michael Hudson wrote the best ever books on economic thought of the American protectionist against their free trade opponent based mainly out of Wall Street, NE England merchants (you know, some of them in the highly civilizing opium business..) and southern slaveholder. His book is called America’s Protectionist Takeoff,1815-1914 : the Neglected American School of Political Economy.
Never USA would have reached such a development had they listen to Ricardo rather than economic nationalism. It is just unfortunate that Wall Street elite took back and imposed the same policy as the British in the 19th century toward other countries with some modern variation: before it was free trade, gold standard and budget orthodoxy, whereas today it is free trade, floating exchange rates and austerity via IMF.
Hudson doesn’t dig much on Henry C.Carey though, the main proponent of ‘protectionist’, more to the point of industrial development, the most humanist economist I know in 19th century (he called for India and Africa industrialization, whereas even a Friedrich List thought India’s good for raw export and an Engel was praising colonial adventure such as those in Algeria by France) which fully integrated science, technology and energy in his economic contrary to liberal which makes those items exogenous to economic theory; he is not perfect, but he should be recovered by Americans if they want another outlook then the liberal one.
Almost none of his modern reviewer, often liberal and/or Malthusian economists with huge bias, confronts with historical fact or even talk about what he was already observing and explaining: that is British free-trade policy, by keeping other nations as raw resources providers, was keeping than poor and thus, was an economic policy of suppressing development. All the nations he listed, from Ireland to India, from the South American to Turkey, became indeed poor as modern economic historian had shown. He was right, liberal and… Marx were wrong as the case of India did show; one could read his The Slave Trade, Domestic and Foreign: Why it Exists and How It May Be Extinguished (1853).
Just read Mike Davis, Late Victorian Holocausts : El Niño Famines and the Making of the Third World and you would get what was British free trade – to borrow Carey’s word- made out of India; as Shashi Tharoor remember us, they succeed in making it passed from 24% of world GDP to 3%, with, as Davis showed, a ‘bonus’ of three massive famine as in Ireland in the end 19th, in the league, if not worst, of Stalin and Mao famine, thank to a blend of free , (selective) laissez-faire and Malthusian ideology.
Suesse’s summary of Henry Carey and the American School indicates to me that Suesse is relying on very faulty summaries of Carey and the American School and has never actually read Carey.
Anyone who actually reads Carey must be struck by his strong moralizing: he is not shy to denounce slavery as evil, as well as British economic policy in general. Especially memorable is Carey’s merciless and relentless condemnation of the opium trade and its effects on China (Commerce, Christianity, and Civilization, Versus British Free Trade. Letters in Reply to the London Times, Philadelphia, Collins, 1876.
Why is much of mainstream economics so often wrong? I argue a large reason is the amorality of mainstream economics, which allows them to entirely ignore the damages imposed on real people by the economists’ models, theories, and policy prescriptions.