Free trade versus destructive statist ideology
Published on January 21, 2023
By Connor O’Keeffe.
In the wake of the 2008 financial crisis, institutional publications and Wall Street executives have been calling for the death of globalization. These calls intensified and multiplied after Brexit, the election of Donald Trump, the pandemic and Russia’s aggression against Ukraine. However, the data challenge this narrative. Last year, world trade reached a record high of $28.5 trillion, and forecasts are for growth in 2023. However, the pace is expected to slow down. This situation can be explained not by the historical failures faced by globalization, but by an inherent problem.
Before proceeding, it is important to define some terms.
Globalization occurs when societies around the world begin to interact and integrate economically and politically. Intercontinental trade during the age of sailing and the Silk Road are the first examples of globalization. Globalization really started after World War II and got a new boost with the widespread use of the Internet. It is important to note that globalization includes both voluntary economic activities among the peoples of different nations and involuntary geopolitical activities of states in mainstream discussions.
In contrast, Ian Bremmer defines globalism as an ideology that calls for top-down trade liberalization and global integration supported by a unipolar power. Statists believe that trade between people is literally impossible without states; a market can exist only when one group claims a legal monopoly on violence, then builds infrastructure, provides security, documents property rights, and acts as the final arbiter of disputes. Globalism is the application of this perspective to international trade. Globalists believe that top-down global governance enforced and enforced by a unipolar superpower enables globalization.
But, like more local statists, the globalist view is logically and historically flawed. World trade was well advanced before the first major attempt at global governance, the League of Nations in 1919. The stated purpose of the League was to secure peace and justice for all the peoples of the world through collective security. It broke up and failed at the beginning of World War II. But globalism as an ideology found its place after the war. Europe fell apart. The USA and the USSR were the only two countries that could exercise power on a global scale at that time.
Thus began the era of the fastest globalization in history. Trade boomed as people recovered from the war. The globalist project also began with the creation of the United Nations and the World Bank. Globalism is limited only by ideological differences between two superpowers. While the US aimed for top-down trade liberalization, the USSR wanted to support revolutions – which alienated its last allies and plunged the world into the Cold War.
In the United States, “neoliberals” and neoconservatives have dominated the political mainstream through the power of arms and their shared mission to bring about markets and democracy funded by the American taxpayer. Fortunately, the rate at which their interventions at home and abroad destroyed American society was slower than that of the Soviets. The abolition of prices and private property ultimately led to the collapse of the USSR in the early 1990s. With the defeat of its main rival, the United States realized its unipolarity, one of the main principles of globalism.
From the beginning, the American establishment aspired to its newfound global influence. “Free trade” agreements were introduced through new international organizations such as the World Trade Organization. Some are hundreds of pages long, arguing that all free trade really requires is the absence of politics. The United States has floated its fleet in the world’s oceans, promising to provide shipping lanes as patrol boats on global highways. American taxpayers have been forced to subsidize global trade with the promise of American military security and funding of international governing organizations.
As Murray Rothbard points out Man, Economy and State with Power and Market, international trade does not exist in a truly free market. Nations will still exist, but they will be pockets of culture, not economic units. Any government restriction on trade between people based on their location is a violation of their freedom and costly to society. Most free market economists understand this and oppose government restrictions accordingly. But subsidies to international trade are also against the free market. The correct position of the free market is the complete absence of politics on either side. There are no restrictions or subsidies. Let people freely choose who they do business with. There should be no choke at either end of the scale.
Economic integration was far from the only goal of the unipolar American regime. During the Cold War, many people gained wealth, power, and status by being part of America’s warrior class. Despite the total collapse of the USSR, the last thing the US wanted to do was to declare victory and give up its privileged position. Instead, the United States sought to find a new enemy to justify maintaining these privileges. Their eyes fell on the Middle East, where they started eight unnecessary wars that destroyed the concept of a “rules-based international order.” America’s unipolarity proved Albert Jay Nock right: governments are only as peaceful as they are weak.
This institutional desire for war was to sow the seeds of US unipolar destruction for the time being. While the United States has dispelled any notion of upholding a rules-based order with its adventurism in the Middle East, tensions have flared in Eastern Europe and East Asia. The governments of Russia and China have again become enemies of the United States.
Russia’s invasion of Ukraine in February was a major victory for the American war machine, but also a major step backwards for globalism. The Russians broke away from the world order that the United States had ruled for thirty years. The Western response, based on harsh sanctions and forced economic disinvestment, deepened the cracks in the global system.
No one knows what the future holds, but it is certain that the globalist dream of a single system of global governance will be shattered in the near future by the collapse of the Russia-China bloc. There will be pain because many relationships between nations are governed by governments; however, a significant degree of globalization is still highly valued by consumers around the world. The data contradicts the idea that globalization is going backwards. It’s only slowing down as governments try to drag consumers down the other side in search of distraction.
Despite claims that globalization is dead, international trade is alive and well. But the movement toward an interconnected world is slowing as the ideology of globalism suffers its biggest setback in decades. A statistician linking unipolar global governance and international trade explains where these claims come from and why they are wrong.
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