Radical Trade Reform: From Industrial to Ecological Civilization

• Date: 01 January 2020
• Published date: 01 January 2020
• Author: Yi Huang,Shuying Tian
• DOI: http://doi.org/10.1111/ajes.12315

Radical Trade Reform: From Industrial to

Ecological Civilization

By Yi Huang* and SHuYing Tian†

abSTracT. All theories of international trade that are based on the

paradigm of industrial civilization are becoming obsolete. The

premises behind the principle of comparative advantage, which

developed in the historical context of the early 19th century, are

disappearing. Uncertainties about the future of fossil fuels, conflicts

between rich and poor, global ecological fragility, and many other

symptoms of system failure have revealed the flaws of industrial

civilization and international trade. We examine the history of trade

theory within the framework of industrial civilization. We then propose

the transition to an ecological civilization, which will restore the

diversity of cultures by moving away from the homogeneous world

culture that globalization has begun to create. Under the conditions of

ecological civilization, international trade will serve the human need

to exchange the surplus of each society and to communicate with

other cultures. It will cease to be a system of debt and dependence

that threatens the sovereignty of most nations today.

Introduction

International trade theory has been based on a set of principles that

are rooted in an industrial civilization. This is not surprising, since

modern ideas of trade arose in tandem with the Industrial Revolution.

Classical economics took productive efficiency as the central aim of

economic production and concluded that an open system of com-

petitive trade would increase the efficient allocation of resources and

enable economic growth to occur. In the following centuries, com-

petition brought about an increase in labor efficiency and acceler-

ated technological progress. However, because a competitive market

excludes those who are unable to achieve its exacting standards, a

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

DOI: 10.1111/ajes.12315

© 2020 American Journal of Economics and Sociology, Inc.

*School of Economics, Anhui University, Hefei, China. Email: yihuang718@sina.com

†School of Economics, Anhui University, Hefei, China. Email: shuyingtian@163.com

50 The American Journal of Economics and Sociology

global system based on competition has triggered frictions at the same

time that it has produced greater output. In particular, workers who

feel they have been betrayed by globalization have joined forces to

encourage trade wars. Free trade and globalization have opened the

door to excessive consumption in some places and poverty in others.

The 2008 financial crash became the most visible sign that capitalism

and free trade are deeply flawed. Thus, globalization has had the

ironic effect of turning the world away from free trade because it

embodies the drawbacks of capitalism and industrial civilization.

The recognition that civilization must operate within ecological

limits has also proved a turning point. It has become clear that a new

ecological civilization must replace the old industrial civilization if

any civilization is to continue. Ecological civilization requires us to

grasp the methods of coordinating the many dimensions of the social

and environmental crisis that represent the failure of industrial civili-

zation. As part of that transformation of thought, international trade

theory will need to be reformulated in light of perspectives that view

the world as an organic unity and not merely in terms of competing

interests. We do not claim to have found definitive methods of char-

acterizing how trade should take place in an ecological civilization.

This is primarily an exploratory effort to determine which questions

need to be answered.

Trade Theory in Industrial Civilization

In the past 200 years, trade has evolved from a system of international

(state-to-state) transactions to a global system that has largely made

states irrelevant. This evolutionary shift conforms to the logic of the

development of industrial civilization.

The development of international trade in the age of industrializa-

tion was a process of breaking down the barriers between countries.

From the beginning, trade increased specialization and a division

of labor. Through competition and integration within the system of

trade, different countries attained a particular position in the distribu-

tion of capabilities and interests in world production. Even now, each

country hopes to obtain the greatest gains from international trade,

to revitalize its economy, and to become invincible in international