Debating Free International Trade

• DOI: http://doi.org/10.1111/ajes.12310
• Published date: 01 January 2020
• Author: Gerard Strange
• Date: 01 January 2020

Debating Free International Trade

By Gerard StranGe*

abStract. This article begins with a definition of free international

trade and a brief history of the evolution of free trade as an ideology

and economic policy. It next considers the case for free trade as first

articulated by classical economists Adam Smith and David Ricardo

and then examines free trade critiques proffered by Friedrich List and

Marxist scholars who claim that free trade can never be just nor fair so

long as relational and structural power inequalities exist between

corporations and workers. This article concludes with a summary of

the current free trade debate, highlighting, in particular, how radical

critics of free trade have begun to embrace a more distinctly Marxian

view of the dynamics of globalized capital accumulation. This new

perspective acknowledges the progressive transformations that

globalized trade has brought to developing countries while also

highlighting the ways global free trade relies upon and sustains an

exploitative class dynamic.

Introduction

Although precise definitions remain elusive, few ideas in economics

and mainstream international political economy (IPE) have gained

more broadly uncontested intellectual acceptance or secured more

widespread and bipartisan support within policy communities than

the idea of free trade. In liberal political economy, free trade refers

to voluntary or uncoerced exchange relations between self-motivated

economic agents in a market environment. In practice, free trade nor-

mally means trade in a market environment where monopolistically

imposed and discriminatorily applied laws, tariffs, taxes, duties, and

quotas designed to control and limit imports are absent. More gen-

erally, a free trade policy is one that removes restrictions from trade

and seeks to promote a competitive allocation of scarce resources in

American Journal of Economics and Sociology, Vol. 79, No. 1 (January, 2020).

DOI: 10.1111/ajes.12310

© 2020 American Journal of Economics and Sociology, Inc.

*Adjunct professor of political science and international relations at the University of

Western Australia. Email: gerry.strange@uwa.edu.au

26 The American Journal of Economics and Sociology

a market context. Although, in principle, any resource that appears in

the form of a commodity is, by definition, tradable in a free market,

the definition of trade in orthodox economics is often analytically

restricted to mean trade in goods and services, excluding international

trade in productive capital, financial assets, land, and labor from the

definition of free trade (Bhagwati 2007). With the rise and consolida-

tion of globalization in production and finance over the past 50 years,

as well as the emergence of greater transnational labor mobility in

some regions, notably the European Union, the restricted definition

of trade traditionally used in economic analysis is arguably becoming

superfluous.

As a systematic doctrine in political economy, free trade first began

to emerge in the late 18th century. In particular, the doctrine can be

traced to Adam Smith’s classic arguments in favor of free trade (and

against monopoly) based on his inquiry into the principles of division

of labor, specialization, and trade in a competitive market economy

that underpinned economic growth—the “wealth of nations” (Smith

[1776] 2007). In the early 19th century, David Ricardo, partly building

on and formalizing Smith’s work, first formulated his celebrated the-

ory of comparative advantage—a theory that remains the touchstone

justification for free international trade to this day (Ricardo [1817]

1821). By the mid-19th century, following successful political agitation

in Parliament by Richard Cobden in support of the Anti-Corn Law

League, the idea of free international trade gained increasing accep-

tance in Britain. After the repeal of the Corn Laws in 1846,1

free trade

became one of the leading tenets of British foreign economic policy

(Gamble 1983: 68).

Free trade lost credibility both as a theoretical doctrine and as a

platform of state policy in the decades between World Wars I and II,

and, to a much lesser degree, through the Keynesian and Soviet eras

of the 1940–1980s. In more recent times, the doctrine has returned

spectacularly, with the near universal rise to policy dominance of mar-

ket-favoring neoliberalism. Reflecting this virtual consensus, states,

alongside global and regional economic governance institutions and

organizations, have strongly promoted and institutionalized free trade

over the past five decades through the liberalization and deregulation

of economic relations worldwide. This is perhaps most evident in the