"Free" markets + "free trade" = elite propaganda

Robert Henderson

1. Unquestioned ideas
2. The "Free Market" is a state regulated market
3. The "free market" as its proponents conceive it
4. How effective is anti-monopoly legislation?
5. Microsoft and Windows - a natural monopoly
6. The historical trend towards contraction of competition
7. "Free trade"
8. Has "free trade" ever been practised?
9. "Free trade" today
10. Does "free trade" deliver? The lessons of economic history
11. Is society materially enriched by "free markets" and "free trade?
12. What is meant by material enrichment?
13. How the market fails to provide what the customer wants
14. Relative poverty and wealth and happiness
15. Man does not live by bread alone
16. Geopolitics
17. The democratic deficit
18. The reality of our economic circumstances
19. Why elites are so keen on "free markets" and "free trade"
20. A sane alternative to globalism
21. Free trade as a religion
22. An elite ideology

1. Unquestioned ideas

Because they have the word free in them, the terms "Free markets" and
"free trade" have seduced those of all political colours to treat
them uncritically as ideas. They are considered good or bad but their
intellectual coherence is rarely questioned.

Neo-liberals believe in a childlike quasi-religious fashion in the
workings of Adam Smith's "invisible hand", which, moved by
enlightened self-interest, supposedly creates the best of all possible
material worlds through the operation of the market. Socialists see
"free markets" and "free trade" as economic "state of natures" which
must be ameliorated by the state before a civilised society can be
realised. Conservatives in the traditional sense no longer exist as a
recognisable political force in the West, but when they did exist
they opposed "free markets" and "free trade" primarily on the grounds
of national security and the general disruption to society that they
caused. Nationalists of the fascistic kind have traditionally opposed
the ideas because they see the nation as a single organism which can
only be strong if it is master of its own destiny, something which
an only be achieved (they believe) through state direction of both
the internal market and of external trade.

There are varying quantities of truth in all these ideological
responses, but their utility is seriously tainted by the lack of
any objective or even properly defined and permanent prescriptive
truth in the concepts of "free markets" or "free trade". The reality
of these ideas is that they are arbitrary chosen bundles of
behaviours which are excluded or included at the will of their
proponents. Moreover, the bundles of behaviours are not static.

The widespread negligence in examining the coherence of these ideas is
all the more remarkable because their incoherence as theories and the
arbitrary and dishonest nature of their practical realisation is not
only readily apparent but fundamentally undermining of the claims made
for them by their champions.

2. The "Free Market" is a state regulated market

There is a splendid irony in the objection of the self-defined "free
marketeers'" and "free traders" to state intervention for the natural
end of a truly free market is monopoly - or at least greatly reduced
competition resulting in oligopoly and the rule of cartels. All
so-called "free market" societies recognise this by passing
anti-monopoly laws. The "free market" is in fact a market controlled by
the state in the most fundamental way, that is, to prevent its natural
workings. It is one of the great propaganda triumphs of history that
"free markets" have been successfully sold as being what happens
naturally without state intervention. Call a spade a spade and
substitute the truthful "state regulated non-monopolistic market" for
"free market" and the psychological shape of the idea changes
dramatically.

(Some casuistical "free marketeers"might argue that the "free" in free
market applies to the workings of the market rather than the market as
a natural phenomenon. That explanation falls because "free marketeers"
invariably make the blanket claim that markets only work efficiently
without government interference. Their honest position would be to
state that they want state regulated markets to prevent monopoly. They
will not do that because it would be an acknowledgement that state
regulation of the market is legitimate and hence remove any general
argument against regulation. That in turn would mean any form of
state regulation would be potentially reasonable and consequently each
form of regulation would have to be argued down individually on the
merits of the case, rather than simply empty-headedly dismissed on the
grounds of no regulation = good; regulation = bad.

The state regulated "Free Market" is not even a natural phenomenon
made somewhat artificial by rules to exaggerate the natural phenomenon
in the same way that we breed animals to exaggerate nature. Rather it
is just about as far from being a natural phenomenon as anything can
be for it goes against all Man's inclinations, both individual and
social.

Economic history is overwhelmingly a catalogue of market regulation,
local and national, from guilds to governments. It would be
surprising if it were not because human beings, like all other
organisms, naturally behave to secure their own advantage or that of
their group. Extended to the nation state, this natural behaviour
has commonly resulted in domestic markets being protected against
foreign competition. Whether this is a good or a bad thing is another
matter - a question I shall deal with later - all I am concerned to do
at this point is to nail down that the fact that protectionist
behaviour is what is natural.

Historically, whether you were anything from a rich merchant to a
poor day labourer it was obviously not in your personal interest to
allow others free access to your markets to offer the goods or services
at a lower price or to work for lower wages. The merchant might be
driven to bankruptcy by competition, the labourer from his job.
History also tells us that whatever their previous economic station,
such people will probably not be able to find equivalent or better
paid employment and often may not be able to find any employment at
all where structural unemployment arises. What was historically true
not only remains true today, but its effect is much magnified
because the opportunities for competition are greatly increased by
modern communications and the ease of travel and cargo transportation.

Of course, any individual or sectional advantage causes strains in a
society and if the material privilege of any person or group becomes
excessive, sooner or later there will be a successful revolt and the
wealth in a society will either be shared more fairly through a change
in the way the society is structured, for example, through the
abolition of tolls, the ending of state monopolies or even through a
removal of the rich as a class without any increase in the wealth of
the majority.

But wherever wealth distribution through social change has occurred it
has normally been done with the express intention of benefiting a
particular group or even an individual in the case of monarchs. The odd
thing about "free marketeers" is that what they ostensibly advocate is
not to privilege any particular individual or group but to benefit
society as a whole. Whether free markets do so is another matter, but
that is their claim.

The "free marketeer" says to a population, do what I say and in time
society will become richer. He does not say this person or that group
will become richer or even all will become richer, but merely that the
society as a whole will become richer. This is an extraordinary thing
to ask people to trust in. It is also the most wonderful blank cheque
ever written to a politician because not only does it absolve him or
her of any need to take the responsibility for regulating the economy,
it also means that he or she can never be held to account for
dishonesty by any individual if that individual is personally worse
off. All a "free marketeer" politician has ever claimed is that his
economic way will make society richer. Provided society overall is
richer, he has met his met his promise.

It is also telling for their intellectual credibility and honesty that
"free marketeers" will oppose government interference in such matters
as subsidies, quotas, embargoes, wage rates and working hours and
grumble about tax rates and public expenditure, but are generally
quite happy to see other gross distortions of the market deriving from
government action. They not only tolerate patents, copyright and
trademarks, but often defend them as property in themselves and as
devices which actually improve economic performance because they
encourage invention, investment and expansion. In addition, those who
constantly bleat about Adam Smith's "invisible hand" sorting out the
business wheat from the chaff insist that limited liability is
necessary. This of course is also a violent interference with the
market because it means that the individual shareholder never takes
full responsibility for their investment. (It is worth noting that the
British industrial revolution - the one and only bootstrapped
industrial revolution - took place before limited liability became
legally possible (Limited Companies Act 1862) and at a time when patent
rights were insecure and in practice limited to the domestic British
market.)

It is true that none of these things are actually part of what the
concept of a "free market" is and that they are inimical to such a
market, but the fact that almost all modern "free marketeers" have
tacitly incorporated them into their vision of what a "free market" is
demonstrates their intellectual confusion (or dishonesty if you
prefer).

3. The "free market" as its proponents conceive it

Let us put aside for the moment the fact that "free markets" are state
regulated markets and ask the question what is a "free market" as it
is conceived by "free marketeers"? A jolly good question. Even if
market distortions which appear acceptable to "free marketeers" such
as patents and limited liability did not exist, that would leave many
other things which prevent unfettered domestic competition. In an
advanced modern economy these include:

Taxes
Non tax fiscal measures, eg control of interest rates
The state of the currency
Exchange controls
Overall Government expenditure
State Subsidies
Industry and trading standards, official and otherwise
Public sector employment
Transport costs
Public ownership
Defence
Direct and indirect Government intervention
Copyright, trademarks and patents
The moral and social climate, eg, a tradition of Welfare
The feeling of the people, eg, the national feeling of Japanese
Practical cultural barriers such as the difficulty of a language
Dumping
Transport costs
Working hours
Trading laws
Labour laws
Wage rates
Bureaucratic differences
Company laws - particularly the attitude towards foreign ownership
Banking laws
Banking system
Social policy - welfare, health etc
Physical infrastructure
Honesty of public servants
Foreign policy
National strategic considerations
Education - The amount spent, school leaving age, curriculum,
Limited Liability
Environmental laws

Some of these things such as subsidies, patents, quotas and limited
liability could be obviously and legitimately ruled out of order by
a "free marketeer" because they are deliberate state interferences with
competition, but what of items such as the provision by the state of
education or the physical infrastructure of a country? They are
undeniably distortions of competition at some level, but they are not
deliberate attempts by the state to distort competition. A purist "free
marketeer" could just about say such things were no business of the
state and still be intellectually coherent because it is possible to
conceive of a society without such state provision. But however
purist they might be, sooner or later the "free marketeer" will run
into features which undeniably restrict competition but which must
exist simply because they are an inescapable part of society. The most
obvious is tax.

Any modern state needs a large tax revenue to sustain itself, the only
questions to determine being how large should be the revenue and what
it should be spent on? Some things such as defence and policing are
inescapable expenditures for any state, although even there the
amounts to be spent are debatable and elastic. Items such as education
and welfare are more subject to variable expenditure. Nonetheless,
substantial amounts are as a matter of contingent fact invariably spent
on such items by all advanced states. Such countries also engage to a
lesser or greater degree in all the forms of regulation listed above.

In theory, and even more in practice, the notion of a "free market"
seems to rest on little more than anti-monopoly laws, wages and prices
set by the market (although in practice this does not happen purely
through the market because of welfare provision, tax regimes etc) and a
lack (or at least a minimum) of state interference in such areas as
health and safety, employment law and company law.

The inclusion of these narrow criteria are merely a subjective choice
made from a much larger menu of man-made distortions of the market.
Consequently, there is no objective coherence to the concept of the
"free market" as it is conceived by the "free marketeers". It is an
arbitrary ideology based on subjective choice.

4. How effective is anti-monopoly legislation?

Anti-monopoly laws operate within the constraints of the type of social
and economic circumstances described above. That alone means they are
severely limited in what they can do. They must, for example, tolerate
state granted monopolies in the form of patents and copyright.

Anti-monopoly legislation generally only effectively attacks the
problem from one end. A company can be prevented from growing its
market share by taking over other companies but there is normally no
meaningful restriction on a company growing its market share simply by
expanding the existing company. Microsoft and the domination of
Windows is a classic example.

Where companies try to expand by takeover, experience shows that
those charged with applying the legislation allow very large parts of a
market - 25% or more - to be held by a single company. The consequence
is that a market which would seem to be an obvious candidate for
competition, for example, food and domestic supplies retailing, can
easily come to be dominated by three or four major players (as is
the case in Britain).

There are also those products which are either natural monopolies
because of the physical location of their infrastructure - railways,
roads, the utilities such as gas - or which are inevitably going to
have few entrants in the field because of reasons of cost, for example,
aerospace, motor cars, ship building.

Finally, there are those rare markets which are dominated by one
company simply because of the nature of their business. The classic
example of this is Microsoft and their Windows operating system.

5. Microsoft and Windows - a natural monopoly

In South Park: The Movie, there is a glorious scene where, under
martial law, Bill Gates is executed for falsely promising that Windows
98 would be "faster, easier to use and more reliable". Many
long-suffering Windows users doubtless wish that life had imitated art
in that instance. Yet despite widespread dissatisfaction Windows
remains the overwhelming dominant operating system.

At first glance it might seem that operating systems should be just
the type of product which is open to fierce competition because
software is a market which potentially has low entry costs. It is
true that most areas of programming are competitive - within the
constraint of the dominant operating system (OS) - but operating
systems are the odd man out. The reason is simple. Once a single OS
gained dominance, the chances of any other system effectively
competing were very small. This is because the weight of programs
available to run under the dominant OS soon became much greater than
those which could be run under any other OS. Thus, it becomes
inefficient to choose any other OS. That in turn means most of the
software is written in a way to make in "friendly" to the dominant OS
systems' users. This further excludes OS competitors and the software
to run under them because users, especially employers, do not want to
spend the time training their employees on completely new systems,
converting data etc.

The consequence is that Microsoft still has a stranglehold on the pc
market. Moreover, if anyone wants to write any other software, they
are constrained by the practical need for it to run under the Microsoft
OS if they wish to reach the mass computer user market.

The near monopoly has lasted a long time. It has done this despite
considerable attempts by both rivals and the US government to diminish
their market position. Windows' dominance looks secure for the
foreseeable future.

6. The historical trend towards contraction of competition

As remarked previously, the logical end of a free market is monopoly.
The reason is obvious: competition tends to reduce the number of
competitors through the natural process of success and failure and the
takeover of one firm by another. In some trades this does not create
an obvious serious anti-competitive difficulty because the initial
capital investment is small and entry to the trade within the reach of
many. But entry to a considerable and growing number of areas of
manufacturing and service provision is too expensive for all but a
few.

In a significant minority of trades starting a business from scratch is
practically impossible for any one individual or even a group of
private investors. The car industry is a first rate example, the
number of companies now being small (and becoming smaller) compared
with the number of even 40 years ago. Moreover, many of the car
companies which do still exist do so only because of state subsidy and
protection.

7. "Free trade"

"Free trade" is frequently treated as synonymous with international
trade. In principle it does not have to be restricted to international
dealings because the concept may be applied to any market, whether
that be within a global, regional, national or even a local
context. The United States for example displays considerable
differences in local tax rates between not only states but within
localities within a state, and, indeed, the ultimate aim of the "free
trader" is to create a single world market. However, there are
considerable differences in practice between domestic markets and
international markets, not least because the criteria which are deemed
to fall within the concept of "free trade" are not identical with those
which are said to be a necessary part of the concept of a "free
market", for example, laws to prevent monopoly are redundant when it
comes to international trade because one country will either supply or
not supply goods and services to other countries and a country with a
monopoly of an important good or service can as a matter of fact only
be persuaded to supply the good or service against its will by
extra-legal action, ultimately force or the threat of force.
Consequently, it is convenient to treat "free trade" as being economic
intercourse between nation states and that is what I shall do.

What does and does not constitute "free" international trading? In
times gone by, people would have pointed to those honest workhorses of
restriction: embargoes, quotas and tariffs and navigation laws and
not much else. But in the modern world things are much more
complicated as we discover almost daily during the seemingly
interminable EU squabbling and the GATT rounds.

Some things are obviously incompatible with "free trade" such as
embargoes or state subsidies, but what of different tax regimes,
welfare provision or labour regulations? Why should they be excluded
from the things which should not be tolerated in a "free trade"
regime? After all, a low company tax regime could be regarded as a
form of state subsidy to business and all welfare provision could be
regarded as a subsidy to wages.

But even such items are straightforward compared to others. What of
national sentiment which gives a preference to home produced goods
regardless of whether they represent the best value when judged purely
by price and quality? Should a country be forced to take the cheapest
of any particular equivalent good or service, regardless of the wishes
of the people of that country, on the grounds that not to purchase that
which gave "best value" constituted "unfair competition"? A reductio
ad absurdum? Well, consider the fact that public bodies within the EU
(which for these purposes includes any organisation drawing part of
their income from public funds) must allow any company within the EU to
bid for any work put out to contract, and if the lowest bid is not
accepted, the public body risks being fined for a breach of the Single
Market rules.

Even more problematic are things which are simply effects of economic
activity. Take true dumping, not the state subsidized export regimes
which often pass for such, but a simple economic practice to maximise
profit.

True dumping works like this. Imagine that a company can make 2,000
units a week. It covers its costs for all 2,000 units if each week it
produces and sells 1,000 units at Å“1 each. The company finds it
can
sell a maximum of 1,500 units in the home market at Å“1. If it
reduces
the unit price to 75 pence it could sell all 2,000 but that would only
produce the same amount of revenue as selling 1,500 at Å“1
each.
Consequently, it sells 1500 in the domestic market at Å“1 each and
the
other 500 at 50 pence each (carriage paid by buyer) in foreign markets.
Total sales are Å“1750 instead of Å“1500.

That is a very simple model of dumping but something akin to it happens
regularly with differential pricing from country to country (the
European car market is a prime example of this). No state subsidy has
been given, no state intervention of any sort has occurred. Why should
it not be considered as reasonable a practice as the toleration of
different national wage rates? In fact, why should it not be considered
more reasonable because wage rates are directly linked to such hidden
subsidies as those of welfare and low company taxation? (in fairness,
the economic activity of the dumper would also be linked to wage and
tax subsidies, but the connection would be more remote.)

Most contentious perhaps is the question of immigration. Does "free
trade" require the movement of people as freely as goods and services?
This is generally accepted as self-evident by purist "free traders".
Yet there is no logic to the claim. Economic forms are made for men
not men for economic forms. We know as a matter of practical
experience it is possible to have the exchange of goods and services
without the mass movement of people. If a society decides that the
benefit gained from the free movement of people is outweighed by the
social disruption caused by such migration, it is a perfectly rational
decision. A people may decide that they will have or not have free
exchange or movement just as they may decide to have this or that level
of taxation or welfare provision. It makes no more sense to say a
society which restricts immigration - which all advanced states in
practice do - is not a "free trader" than to say they are not a "free
trader" because their income tax rate is higher or lower than that of
their competitors.

The treatment of human labour as merely a factor of production (along
with land and capital) is also incompatible with the liberal
democratic tenets of the equal worth of each person and the rights
and obligations of citizens. Allowing mass immigration to reduce
wages or the exporting of jobs to cheaper labour overseas is treating
human beings as being of no more account than inanimate objects. It is
inhuman.

So what does "free trade" actually mean? Does it require merely that
countries may trade with one another without any formal barriers such
as tariffs and quotas? Or should it take into account all those items
such as national tax regimes, non-tax fiscal measures, wage rates
(where these are set by the state), standards of practice and
manufacture (official and otherwise), and the size of the public
sector. All of these are controllable either entirely or to some degree
by men. In other words, they could be removed or altered.

If a definition of "free trade" is accepted which includes these and
other non-traditional elements of market distortion, the ultimate logic
of the definition is that "free trade" as a global concept cannot
exist until all peoples and countries are reduced or elevated to the
same general economic condition.

Those who run the European Union would say that is precisely what is
required, at least within the EU. But the experience of trying to
create unified trading conditions at a supranational level in the most
advanced of supranational political and economic entities,
demonstrates just how difficult it is to create a supranational market
in which there is a broad uniformity in the trading conditions within
its constituent national parts. Despite nearly half a century of trying
through treaty after treaty and the covering of the EU members with an
avalanche of EU directives, there is no meaningful economic
uniformity within the EU, either in the circumstances of private
enterprise competition or in the function of the state. The
introduction of the Euro has painfully revealed exactly how disparate
the economies of even the richer EU states still are with Germany
needing low interest rates to re-inflate and Italy requiring high
rates to control public spending and the European Central Bank
paralysed by their inability to square such an economic circle.

The Holy Grail of "free traders" is comparative advantage. This is a
first rate example of a neat and emotionally satisfying (to a certain
type of mind) intellectual idea which bears little relation to reality.
The idea is that every country concentrates on making what it is best
at and the overall global product rises because of increased
efficiency. Even in theory this is rather dubious because it ignores
every other aspect of society than a narrow view of economic
relationships and assumes tacitly that a comparative advantage will
last. David Landes in his The Wealth and Poverty of Nations (Little,
Brown and Co 1998) cites the instance of the Englishman John Borrow,
who in 1840 urged the states of the German Zollverin to concentrate on
growing wheat, and sell it to buy British manufactures and comments:
"This was a sublime example of economic good sense: but Germany would
have been the poorer for it. Today's comparative advantage...may not be
tomorrow's."

The truth is that any definition of "free trade" is as subjective as
that of a "free market". It has no natural boundaries because the
implications of both ultimately embrace the whole of human material
endeavour and there are no true natural variables on which to base a
definition - even those which might at first glance appear to be
objectively and naturally set, such as wages and prices, are determined
by matters other than the market, for example tax regimes and welfare
provision.

8. Has "free trade" ever been practised?

Between 1860 and 1914 Britain operated the best approximation to
"free-trade" the world has seen. In the period 1840-1870 not only did
she by degrees open her markets to all regardless of whether other
countries reciprocated, but the size of the British state was so tiny
that the distortions of government expenditure and taxation were
minuscule compared with the present day. But achieving the best
approximation to "free trade" was not difficult to achieve because no
other country of any size has ever seriously attempted it for any
length of time.

For a quarter or a century or so, Britain got away with the ill-effects
of being a reckless "free trader" whilst other major countries
remained protectionist to varying degrees. She escaped the consequences
for three prime reasons: Britain's industrial dominance, long distance
transport of bulk goods remained cumbersome and expensive and the
fact that America and Europe were strangely slow to follow Britain's
example and industrialise.

That all changed in the 1870s. Bulk transport was becoming much
easier and cheaper. Railways - ironically more often than not built
with British capital and technical expertise - had begun to have a
considerable influence on the continent and in America and were
beginning to snake across Australia and South America. Perhaps most
importantly the age of the practical steamship and refrigeration
arrived. Manufactured goods, food and raw materials could now move
around the world in volumes which dwarfed anything which had gone
before. British farmers were especially badly hit when the Americas
and Australasia flooded the British market with food and wool.

To these developments, and arguably in part as a consequence of them,
there was a widespread retreat into a deep protectionism in the 1870s,
most notably by the USA and Germany. Britain failed to respond to these
developments by guarding her own markets.

The period of 1870-1914 saw the predictable results of Britain's
quixotic refusal to guard her markets when all about her were
assiduously doing so: she lost her general industrial predominance,
well nigh destroyed her farmers and failed to dominate vital new
industries, such as the chemical, which at one time she had led -
Britain produced the first synthetic dye (Perkin 1856) and the first
synthetic plastic (Parkes 1855). Two of the most enthusiastic
protectionists, the USA and Germany, became the first to exceed
Britain's GDP.

Bismarck summed up what had happened in a speech in 1882 when he
said:"I believe the whole theory of free trade to be wrong...England
abolished protection after she had benefited from it to the fullest
extent. That country used to have the strongest protective tariffs
until it became so powerful under their protection that it could step
out of those barriers like a gigantic athlete and challenge the world.
Free trade is the weapon of the strongest nation, and England has
become the strongest nation in the world owing to her capital, her
iron, her coal, and her harbours and owing to her favourable
geographically position. Nevertheless, she protected herself against
foreign competition with her exorbitant protective tariffs until her
industries became so powerful."

But even the "free-trade" Britain practised was far from complete.
Government contracts were generally given to British companies. Ditto
municipal contracts. Moreover, there was a strong sense of patriotism
in the country which, as with the present day Japanese, mitigated the
effects of free-trade. Nor, of course, was there a WTO, EU or any
other body to question and interfere with the internal economic
workings of Britain such as taxation, interest rates or working
conditions.

British "free trade" was further complicated by the existence of the
Empire and a widespread imperial sentiment which created the
opportunity and the desire to trade with members of the Empire rather
than the rest of the world. It does not do to over-egg the effects of
this because British trade with the world outside the Empire,
especially the USA, always remained strong, but it undoubtedly
significantly distorted British trade.

9. "Free trade" today

If "free trade" was a gigantic gamble for an industrially, commercially
and politically dominant Britain in 1850, it is vastly riskier for
any country now. Transport even after the arrival of railways and the
steamship was still expensive, slow and cumbersome compared with now.
The electric telegraph was the height of sophistication. Most parts of
the world could not engage in international trade on their own terms
because they were colonies, under the practical control of foreign
powers or unindustrialised.

Today physical transport is fast and cheap. In place of the telegraph,
we have the internet. Many countries have industrialised. The age of
formal empires is over.

But there is more than political and technological change which makes a
difference between our own time and the last outbreak of "free trade"
mania. The "free trade" being advocated now is doctrinaire to the
point of idiocy, namely the god of comparative advantage (the idea that
each nation should concentrate on those products which are most
profitable and forget the rest) is to be applied to everything, even
(in the EU) to all public contracts, including those for weaponry.
Childishly doctrinaire as they were as they played with their untried
intellectual toy, even the most extreme "free traders" in the 1830s and
1840s saw that some parts of the economy could not be reasonably opened
to competition for strategic reasons, military supplies being the
prime case.

Let us suppose that we had a perfect "free trade" world now, a world
in which there were no tariffs or quotas or embargoes or "standards"
to meet; that all the artificial restraints on trade were removed; that
no government subsidized productive employment in any way and all that
remained to differentiate countries were market decided labour rates,
carriage costs and the cost of nonproductive public works such as
justice and the army. What then?

The consequences would be extremely dangerous for the West. Farmers in
the First World would be on their knees and mass production of
virtually anything in general demand would quickly become impossible
because whatever a company's efficiency, it simply would not be able
to compete with labour which was a tenth or less of the cost of its
own native workforce. All such countries could do is try to make
high-value goods,

Even if the redundant working populations of the First World could find
alternative employment, which is dubious, their countries would be left
utterly at the mercy of those who now produced their food and most of
the manufactured goods they consumed.

10. Does "free trade" deliver? The lessons of economic history

Free traders base their case primarily on the increase in prosperity
which they believe will only come through increased global trade. The
general answer to that claim is that Man does not live by bread alone.
Moreover, even if there is a general rise in the global product at
present, it does not necessarily follow that the same or better result
could not be achieved by other means. The experience of all
industrialised countries to date is that industrialisation is best
achieved - perhaps can only be achieved by protecting the national
economy. Indeed, there is a powerful logic in the idea that developing
nations today require protection more than the early industrialising
states because the early industrialising nations had little
competition.

But even if it could be shown indubitably that the global product is
increased more by "free trade" than by protection, it does not follow
that it is in a particular country's interest to adopt free trade.
Consider the position in a national market which operates "free trade"
within that market, but protects its trade and industry from foreign
competition. Companies go bust if they do not compete. But successful
companies take their place and continue to provide employment at
broadly similar rates of pay. The logic of global "free trade" is that
countries which cannot compete will go bust and not be replaced by
others in the domestic market. There will be no replacement jobs within
the bankrupt country because the successful competitor is abroad.

The most lethal ammunition to discharge at "free traders" is the
fact that no country in the history of the world has industrialised
successfully without very strong protectionist measures being in place.
That includes the first industrial nation, Britain, which spent a
couple of cosy centuries behind the Navigation Acts, the first of which
was passed in 1651, before becoming a free trader. Not only that, but
Britain only adopted "free trade" principles after she had become
heavily industrialised and did so at a time when the country was still
the dominant industrial power in the world by a long chalk and her
exports were more or less guaranteed to sell in foreign markets.

Before Britain dropped her old colonial protectionist system in the mid
19th Century, she had industrialised in the modern sense from scratch
and expanded her GDP massively. Perhaps most impressively she had
managed to continue to largely feed herself without the price of corn
going sky high, despite the fact that the UK population almost doubled
between 1801 (the first Census) and the repeal of the Corn Laws in
1846.

As described above, Britain's experience during her most committed
"free trading" period was one of declining market share and commercial
and industrial dominance while rigid protectionists such as Germany and
the USA experienced massive growth. Of course, Britain could not hope
to remain so dominant but her decline was remarkably rapid. In 1870
Britain was the richest country by GDP in the world: by 1914 both
Germany and the USA had larger GDPs. Moreover, by religiously
adopting open markets, for capital as well as goods and services,
Britain seriously distorted her economy. Vast capital exports resulted
in underinvestment in Britain and foreigners manufacturers and traders
took full advantage of Britain's open doors. The result was that by
the Great War in 1914 her farmers were on their knees and modern
industries such as the chemical and pharmaceutical were sadly
undeveloped because of foreign competition (this distortion of the
economy was soon to be a great national embarrassment during wartime
when many industries were found to be inadequate to replace imported
goods).

Here is a German voice from 1913: "By its free trade policy England
has been more useful to us than its numerous political machinations
have been harmful to us. Where would our sugar industry - one of the
first items to help us in our economical rise - have been today, or
our textile and iron industries, had it not been for the free markets
of England? Nowhere: we should have been entirely without our new
German capital, our financial resources. On the back of free trade
England we grasped at and secured our economical
world-power....Industrial and political supremacy go together. Warships
are machines, and the nation which succeeds in attracting the centre
of capital is the nation that can afford to build most. The present
rulers of England represent the fourth generation of dictators to the
world. It will not be easy for them to give up the role of 'primus
inter pares'". (Prof von Schulze-Gaevernitz quoted - p347 -in The fall
of protection 1840-50 by Bernard Holland)

Britain limped on with "free trade" after the Great War until 1931
when the secular religion was abjured, at least temporarily, during the
Great Depression. Although unemployment remained high by historical
British standards until WW2, the British economy behind protectionist
barriers recovered quickly compared with most of the rest of the world.
Most interestingly, the newer high-tec industries such as the motor,
chemical and electrical recovered and grew fastest following their
protection.

From 1945 to the mid eighties of the last century at least,
Britain
continued in an essentially protectionist system, as did the rest of
the world. The world economy grew strongly during the period despite
the protection. Even within the EU the "free market" mania did not
really get under way until the Single European Act of 1985.

It is true that since protectionist barriers have come down over the
past 20 years economic growth has been strong in the First World, but
then it has been strong behind protectionist barriers and, indeed,
with state direction of the domestic market. Germany under Hitler in
the 1930s recovered amazingly quickly, despite the fact that the Nazis
pursued an economic course which was probably as close to autarky as
it is possible for a major modern state to bear. Imports and exports
were regulated according to what was perceived to be necessary to make
Germany strong through self-sufficiency. What Hitler did not do was
attempt to run industry directly. Instead, the Nazis allowed private
enterprise to run commerce and industry whilst directing what was
produced and supplied.

All that tells us three things: that "free trade" is not necessary
for rapid economic growth, that state regulation of the domestic market
and international trade is not a recipe for disaster and that being a
"free trader" when the rest of the world is not reciprocating is a
mug's game.

11. Is society materially enriched by "free markets" and "free trade?

This is an impossible question to answer categorically because there is
no way knowing what would have happened if protectionism had remained
full blooded throughout the last century and a half. One can compare
growth rates under stronger or looser protection regimes, but they
really say little because the other determining factors such as
public expenditure have varied so greatly. These variables also blur
judgement about the comparative merits of controlled and "free"
domestic markets.

The most certain thing one can say from the economic experience of the
developed world is that governments running commercial industries such
as coal and steel directly is generally a mistake. (Governments are
the natural suppliers of universal services such as healthcare only
because private provision of such things is never adequate.)

What is certain is the fact that the material effects of "free trade"
are far from uniform. It is no consolation to those who suffer along
the way that others may benefit from their disadvantage. The next
generation or the generation after that may be richer but why should
their benefit be brought at the cost of disadvantaging a prior
generation? Certainly no politician or political party standing at an
election would dare to do so on a platform of "we shall make many of
you poorer to make future generations richer." Those living at any
point in time have their own moral context and needs.

The constant economic turmoil caused by "free trade" and its inevitable
concomitant, the supranational corporation, undeniably leads to
circumstances which greatly disadvantage large swathes of the
population in the First World through the removal of First World jobs
to the rest of the world. At worst, these people become the perpetual
victims of structural unemployment (try getting a job in an area where
the main employer closes and you have no scarce or easily transferable
skills or you are middle-aged or, indeed, try opening a new business or
becoming self-employed in a depressed economy): at best they are driven
into ill-paid and uncertain employment.

12. What is meant by material enrichment? Britain as a case study

The assumption is that the material conditions for most have improved
considerably over the past two hundred years. Any economics textbook
will plot economic improvement in terms of rising real wages. But
those supposedly rising real wages are based on measures which are
often questionable, incomplete or derived from very narrow data
such as corn prices. Even modern measures such as the Retail Price
Index (RPI) are not static, their content and weighting being
regularly revised. Nor do such measures fully represent the true costs
of necessities, the most notable distortion in Britain being the
failure of the Retail Price Index (and its successor index the
Consumer Price Index) to reflect housing costs fully. Any comparison
between different times based on such measures needs to be treated
with caution.

Of course no one in their right sense would question whether there has
been massive material advance in the past two centuries. A more
interesting question in our context is whether most people are
materially better off now than they were in 1960s, by which time a
fully fledged welfare state was bedded in, housing, both owned and
rented, was reasonably priced, social housing was being built in
massive quantities, university education was not merely free but
students subsidized with grants, unemployment was tiny and inflation
low.

Today the welfare state is constantly under attack by the British
political elite and in some areas such as NHS dentistry already
seriously inadequate, while the state pension is much reduced as a
fraction of the average wage following two decades of increases linked
to the cost-of-living pegging rather than increases linked to the
average national wage.

Housing of all sorts in most parts of the country is presently
absurdly costly and social housing is greatly reduced through
Right-To-Buy and minimal new building since the 1980s.

The cost of university education is rocketing and grants are a
distant memory.

Unemployment remains high today (2005) even by the official figures -
approximately 950,000 by the claimant count and around 1.5 million by
the most widely used international measure - figures which most
probably severely understate the real unemployment level because it
ignores the considerable disguised unemployment within the 2 to 3
million people currently on long term sick benefit payments (the 1980
figure for such people was 600,000). The increase in those staying on
at school after the age of 16 and going on to university has also
reduced the present figures by taking hundreds of thousands out of the
jobs market for years. From 1945 to the late seventies unemployment
never rose above a million on the official claimant count and for most
of the time was considerably lower even with little disguised
unemployment and far fewer people staying in education after the
school-leaving age (which was only 15 until the mid sixties).

There are other fundamental social changes which bear upon the
material state of the nation. Many more people today have to travel
long distances to work than they did forty or fifty years ago. That
is costly both in terms of fares and time. More generally, it is
increasingly difficult for someone on the average wage to support a
family on that wage. That often means both parents have to work not
from choice but necessity.

Taxation bears much more heavily on the poorer part of the population
now than it did in the past. Direct taxation - income tax, national
insurance, inheritance duty - applies to many more people now than it
did in 1960, primarily because a failure to maintain personal
allowances and tax bands at a reasonable level. Direct taxation is also
broader in scope, for example VAT compared to purchase tax. Such
taxation takes proportionately more of the income of the poor than the
rich.

It is a moot point whether overall people are generally materially
better off than they in 1960. They may own more trinkets such as TVs
and computers and some imported goods such as clothes may be at least
much cheaper, but those are small advantages to set against the great
increase in housing costs and commuting fares and the diminishment in
social provision. Doubtless a section of society has benefited, but it
would be a brave man who wanted to argue that the condition of the vats
majority has improved, especially the poorest third of the population.

Many will read this with astonishment, saying but we have so much
more today, dazzled as they are by the many new products. It is
important not to confuse technological advance with "free markets" and
"free trade" or general material wellbeing. People are undoubtedly
better off in 2005 in terms of being able to purchase such things as
cars or electronic goods then they were in 1960. But people in 1975
were also better off in those respects than those who had lived
fifteen years before. That improvement was long before "free markets"
and "free trade" had become the elite ideology. It is worth adding
that new products often result in additional expenditure regardless
of whether the individual really wants the product - any product which
becomes widely used is difficult to resist. Technological innovations
are particularly prone to induce reluctant purchases.

13. How the market fails to provide what the customer wants

There is no better modern example of the market failing to provide
what the customer both needs and wants than the computer industry.
If it was driven by the customer, the computer industry would produce
hardware and software which was easy to install, had continuity of
use, was simple to use and was supported by adequate help lines and
manuals. The industry signally fails to do any of these things.

Hardware and software are of course purchased in ever greater volume
and computer services, including maintenance, continue to swell. But
that is not an indication of customer satisfaction. Rather, it is
simply a reflection of how computers have become an inescapable part
of our lives, not only as obvious computers but also in the guise of
so many of the other machines we use - everything from phones to
intelligent clothes. Business and public administration have become so
dependent on their use that they cannot do without them. That being so,
whatever is on offer, however unsatisfactory, is bought out of sheer
necessity. The computer companies have the modern world over a
barrel.

It might be objected that although most people cannot completely escape
computers at their work, they do not have to bring them into their
private lives. Yet increasing numbers buy computers for private use.
Why do they do that if the machines are so unreliable and demanding?
Simple: once a significant minority have private computers and business
uses them very widely, it becomes very difficult for the rest to
resist, not least because businesses and government increasingly
require those dealing with them to do so by computer. But there are
other pressures as well.

We have long passed the point where a handwritten document is likely
to be read by most people in business unless it is an order or payment.
Now, except between social contacts, everything must be wordprocessed
to be acceptable. A word processor or access to one has become a sine
qua non for anyone who wishes to be taken seriously. Even amongst
private individuals a letter is increasingly seen as unusual or even
quaint.

With emails, we have not come to the stage that telephone ownership
reached a quarter of a century ago when not to have a phone became
considered eccentric, but we are rapidly moving towards it.

Employers increasingly wish to contact employees by email wherever they
are and this means the choice is often between having a computer and
email at home or not having a job.

Those with school age children, whatever they think of computers, find
it next to impossible to deny their children not only a computer but
access to the internet, both because the children want it to match
their peers and because they have been brainwashed into believing that
a computer is a necessary educational tool.

In short, people are increasingly being driven to become computer
owners and users not because they actively want to, but because
they feel isolated and excluded if they remain computerless. Again, as
with the analogy between telephones and emails, within the foreseeable
future, someone without a computer is in danger of becoming in the
eyes of the majority as much as an oddity as someone without a TV is
now considered.

14. Relative poverty, wealth and power

Even if most people or even all people were in absolute terms better
off as a consequence "free trade", that does not mean that their
general situation has improved in power terms.

Wealth is not merely an advantage for what it can directly buy but also
for the power it brings. The poor are doubly disadvantaged by their
poverty by their restricted ability to purchase what they want and
their subordination to those who can purchase anything they desire.
Consequently, the ordinary man or woman may well be happier and freer
in a society which is materially poorer overall but which is less
oppressive through the absence of great differences in wealth. Charles
Darwin in the Voyage of the Beagle describes a port in South America
which suffered an earthquake while the Beagle was there in harbour.
The town attached to the port was virtually destroyed and its
inhabitants were reduced at least temporarily to the same material
level. Darwin noted the happiness, almost gaiety, of the population
after this happened.

The example of Britain is instructive when it comes to relative wealth.
Until the 1970s inequalities in wealth were narrowing. Despite all the
puffing of the "trickle down" of wealth which supposedly results from
Thatcherite "free market" practices, wealth distribution has not
changed dramatically over the past quarter century of "free market"
policies by successive British governments.

A Royal Commission (1976-79) on the distribution of income and wealth
found that in 1976 the top 1 per cent of the population owned 25% of
all personal wealth, the top ten percent raked in 60% and the bottom
eighty per cent had a measly 23% (Penguin Dictionary of Sociology
p72). The Inland Revenue figures for wealth distribution in 2002
are show the top 1 per cent own 23% of national wealth and the
bottom fifty per cent of the population have a staggeringly small 6%
(Office of National Statistics (ONS) website - published 2004).
Those figures, eye-opening as they are, conceal the fact that wealth
inequality in 2002 would be much greater than 1976 were it not for the
increase in home ownership and the rise in house prices.

Another ONS report (2005) entitled "The long shadow of childhood"
(TLSOC) based on research by the London School of Economics concludes
that there has been remarkably little change in social mobility in
Britain over the past 30 years. The study was based on census records
between 1971 and 2001.

TLSOC also demonstrated how the social and economic status of children
is very much tied to that of the parents. For example, more than two
thirds of those with parents in professional or managerial jobs
managed to take a degree: of those with semi-skilled/unskilled
parents, 14 per cent had a degree.

Another study

15. Man does not live by bread alone

Even if the "free traders'" claims of an overall increase in the
wealth of a society were true, there would still be strong arguments
against the policy because a society is more than its crude economic
relationships.

Human beings do not like too much uncertainty. A certain amount of
stress is good for them, but only so much. Like masochists and physical
pain, human beings are comfortable with stress only in so far as they
feel it is within their control. Manifestly, for many people the
uncertainty they experience is utterly outside their control. This
widespread insecurity leads not merely to individual suffering but
damages the social fabric by generally diminishing confidence in the
future and the ability to cope in the here and now.

A 2005 study (Molly Watson Western Mail 31 9 2005) by a Cardiff
University Department of Psychology team led by Prof Aylward Mansel
suggests that the general level of happiness in the Depression was
greater than it is now (the team analysed data from surveys of
assessing happiness and contentment from the past 70 years.) This
conclusion might seem absurd to most people living today who, if they
have any conception of the Depression, it is one of a dire time packed
with the most horrendous stress. Yet the findings of the report have a
certain plausibility because in the 1930s there was undoubtedly a
greater sense of social solidarity, especially amongst the working
class, than there is now and civil society was far stronger then - the
working class not only lived in close-knit communities which offered
support to those who fell on hard times, but they were woven into
supportive institutions such as the co-operative movement and unions.
They were anything but socially isolated whereas today people are
often isolated. Social involvement, the Cardiff University study found,
was the single most important cause of happiness or unhappiness.

One must be cautious with such studies because however scrupulous
the researchers a degree of subjectivity is inevitable. Nonetheless the
equation of isolation with unhappiness will, I think, strike a strong
chord with most.

There is also the question of a people's self-confidence. If a nation's
visible and everyday manufactures are predominantly foreign, it tends
to produce a sense of dependence in the individual. A man looks around
and can find next to nothing he can identify as produced either in his
own country or made by companies owned by his countrymen. Not
unnaturally he begins to lose confidence in the ability of his own
country to stand alone. Peoples throughout history have allowed
themselves to be conquered simply because they believed themselves to
be generally inferior to those who confronted them and slaves have
been routinely controlled by owners who deliberately attempted to
reinforce their sense of inferiority.

16. Geopolitics

Free trade is postulated on an absurdity, namely that the world will no
longer see wars which will significantly disrupt trade, or at least the
trade of the First World. It is a fool's paradise.

Those with memories greater than that of a goldfish may recall the help
and support Britain received from her supposed EU "partners" in the
Falklands. Remember how France supplied military equipment in the
form of missiles to the Argentine during that war. Imagine what would
have happened if Britain at the time had relied largely on equipment
which was either wholly or partly produced abroad. Suppose, for
example, her main fighter aircraft had been produced by an EU
consortium (as it soon will be), what guarantee could Britain have had
of fresh supplies of spare parts and weapons during the Falklands war?.

The dependence on foreign suppliers affects even the greatest states.
The New York Times (29 Sept 2005 - "More US weapons have foreign
roots") documents the reliance of the US military on foreign suppliers.
This is still small as a percentage of the whole defence budget but it
is growing and already encompasses important areas such as bio-chemical
warfare protective suits.

17. The democratic deficit

"Free trade" emasculates democracy. It does this by confining politics
within narrow limits. The present "free trade" agreements mean that no
political party can easily stand on a platform of extending state
intervention, whether by nationalisation, trade restrictions such as
embargoes or the subsidy of its own industries. A party which wished
to do any of these things could of course propose to withdraw from the
treaties, but that would be in practice a very difficult course to
follow, especially where the treaty obligations go beyond mere trade
such as those involved in membership of the European Union.

Loss of democratic control is obviously to the disadvantage of the
masses. However, it also has implications for competition. The
prevention of the formation of monopolies and cartels can be done at
the national level, but it is impossible when companies become
supranational. You offend against America's anti-trust laws? No
problem, you remove your manufacturing abroad to countries which are
happy to have you (or at least their clients are) regardless of what
arrangements you may have made with competitors or the any monopoly
position.

Does "free trade" increase competition and choice in the long run?

In the industrialised world at least, the experience of less restricted
trade since 1945 is that competition has reduced not merely in the
capital intensive industries and occupations but in those which are not
obvious. The numbers of farmers has greatly contracted, but so have
the number of storekeepers as chain stores and supermarkets have
overwhelmed the individual proprietor. In fact, it is difficult,
perhaps impossible, to find a mature field of economic activity, ie
one which has not sprung up since 1945, which has not displayed
reduced competition within the post-war period.

Some of this reduction in competition is simply due to the working of
the domestic market towards monopoly, for example, the growth of chain
stores, but much of it is directly related to the removal of
protection for First World economies.

It is true that large parts of the world have industrialised and
increased the number of international competitors, but the overall
number of businesses in the developed world has been reduced.
Multinationals control much of the economic activity of the Third World
and, in some industries, dominate the national markets of the First
World.

The car industry is a wonderful example of the squeezing of
competition. All over the world car companies are being taken over by
the giants and many car companies which do exist rely on state aid and
favours. The number of companies now being small (and becoming smaller)
compared with the number even 40 years ago. Moreover, many of the car
companies which do still exist do so only because of state subsidy and
protection.

Other traditionally important industries where competition is greatly
reduced are aerospace, aviation, shipbuilding, oil, chemicals, steel
and farming.

18. The reality of our economic circumstances

What we have does not even fall within the arbitrary and narrow
definitions of "free markets" and "free trade" which most of their
adherents espouse. States still protect their economies with state
subsidies, favourable tax regimes, quotas and tariffs. Nonetheless,
protectionist barriers have been reduced sufficiently to severely
damage first world industries through products from the developing
world with their absence of labour laws and wages many times less than
those of developed economies.

First World economies have also exported vast numbers of jobs to the
developing world. These range from manufacturing to skilled white
collar work such many IT functions. The old middle-class belief that
they were immune from the effects of globalisation has received a rude
buffeting.

At the same time as jobs and industries have been exported, the
industrialised world has increasingly allowed the purchase of native
companies by foreigners. Perhaps the most dramatic example of this has
been the complete transfer of London merchant banks to foreign
ownership.

The fourth strand in the modern "free trade" web is immigration. Since
1945, with the exception of Japan, the First World has allowed
through a mixture of design and neglect of border controls, vast
numbers of immigrants into their territories, most of whom have been
unskilled or low-skilled.

The primary consequences of the slowly evolving post war international
economic regime have been two. The first has been the gradual growth
of dependence on the imports of vital goods and services by the
developed world and a loss of governmental control of companies within
their borders, not least because any large multi-national can hold the
threat of upping sticks to another country if a government does not
play ball.

The second consequence has been the degradation of the economic
circumstances of those whose jobs were most at threat from the
internationalisation of trade. Those effected are mainly the poorer
and less qualified workers and their dependents. They have found their
opportunities for work much reduced and the pay and conditions for the
suitable work which remains eroded by extra competition from both
native workers chasing fewer jobs and immigrants competing for the
same jobs.

Those whose jobs opportunities have been degraded have suffered a form
of theft. Had mass immigration and the export of jobs been prevented,
the wages for the jobs taken by immigrants would have been higher
than they are when subjected to the additional competition of immigrant
labour and the exported jobs would not have been exported, which in
itself would have tightened the labour market. In societies of rising
aspiration, this could result in jobs considered menial being better
rewarded than those which enjoy high status under "free trade"
circumstances. It might be necessary to pay a sewage worker as much as
a doctor. Doubtless many would throw their hands up at this. But there
is no logic to such a response, because in a society with a large
private enterprise component a wage is simply a response to the value
the market puts on a job. Unskilled workers may not earn as much as the
average doctor or lawyer at present, but skilled tradesmen such as
plumbers and builders often do.

19. Why elites are so keen on "free markets" and "free trade"

"I just think that a lot of modern corporate capitalists -- the
managerial class basically -- has no loyalty to any country anymore, or
any particular values other than the bottom line." (Pat Buchanan quoted
by Danliel Brandt in his article "Class Warfare" in issue 13 of
Namebase Newsline -http//www.namebase.org/news13.html).

Buchanan is grasping a demon which he only dimly apprehends. What is
happening is vastly more significant. We are presently witnessing the
creation of an international class of plutocrats who care for nothing
but their own class. They have the potential to form a true
international aristocracy. If that happens, the imperfect democratic
control the masses have been able to exert over their elites in the
past century will end. The prime tool for the creation of such an
international aristocracy is "free trade".

There are parts of Western elites which are more or less reluctant to
embrace "free markets" and "free trade", but the general economic
trend is clear: the internationalist, globalist creed is the dominant
philosophy when it comes to trade and increasingly the idea of "free
markets" in the domestic sphere is being accepted in practice if not in
overt political policy.

Why have these elites moved from their previous socially oriented
nationalism to internationalism? The answer to this question reveals
the nature both of elites generally and the particular philosophy
they currently support.

In most circumstances throughout history the wishes of the mass of a
population have been of little or no account in any formal sense.
The masses made their presence felt through rioting and social
disturbance or as pawns in the service of elite members who wished to
rebel. An elite took note only when they were frightened enough - the
creation of a form of national public assistance by the Poor Law of
1601 is a classic example of such behaviour.

Eventually, representative government evolved to the point where the
masses began to have a direct say in the political process through the
vote. The elite as a group did not welcome this but felt it could not
be resisted. It was not democracy to be sure but elective oligarchy,
which was buttressed by elite constructed devices to exclude new
entrants into the political process such as first past the post
voting, election deposits and a very strong party system. Nonetheless,
once the franchise was broadened the masses were able to exercise a
large degree of democratic control because politics was still national
and a political party had to respond to the electors' wishes. The elite
resented this control over their behaviour as all elites do and looked
around for a way to diminish democratic influence. They found the means
to do it through internationalism.

In a sovereign country elected politicians cannot readily say this
or that cannot be done if it is practical to do whatever it is. That
is a considerable block on elite misbehaviour. So elites decided that
the way round this unfortunate fact was to commit to treaties which
would remove the opportunity for the electorate to exercise control.
The most notable example is the Treaty of Rome and the subsequent
treaties which have tied Britain into the EU.

Vast swathes of policy are no longer within the control of the British
Parliament because of these treaties. Add in the treaties tying Britain
to the UN and the WTO and the commitment of every mainstream British
party to them, and democratic control has essentially gone.

But internationalism is not simply a bureaucratic elite device to
weaken democratic control, it is a sociological event in itself. An
elite thinks of itself as a separate group, a group which may in some
circumstances extend beyond national boundaries and jurisdictions.
The medieval aristocracies of Western Europe thought themselves part of
a chivalric whole. When Charles I of England was executed in 1649
the monarchs of Europe were horrified because they thought it would
set an example for other royal killings.

The ruling elites in the First World today have a class interest which
binds them more closely to one another than to the people they rule.
Indeed, there is arguably a greater sense of international elite
solidarity than ever before. This is because modern communications
allow people, goods and ideas to move with an unmatched ease. Because
of this the international class can constantly revitalise and extend
their group solidarity.

The advantage to the elites of this culturally based international
solidarity underwritten by many personal elite relationships across
national boundaries, is that it allows them to weaken even further
their dependence upon their immediate (native) populations, because
not only does a particular national elite have a ready made excuse for
not doing something - our treaty obligations will not permit it - but
the personal relationships and the growing sense of class solidarity
increases the confidence and hence the willingness of the various
national elites to act ever more in the international elite class
interest. Indeed, the more they are together and the more they act
together, the more natural it will seem.

It is important to understand that elites are not engaged as a group
in a conscious conspiracy against the masses. What happens is that the
psychological and sociological forces which press upon us all lead the
elite to adopt policies which always lead to their retention of power.
It is not difficult to see how this happens.

All human beings have a powerful ability to write a narrative in their
heads which will persuade them that they act not from self-serving or
disreputable reasons but honourable and socially useful ones. The
consequence of this is that while individual members of an elite will
consciously comprehend the likely effect of their ideology, the
majority will simply accept their ideology at face value. This helps to
bolster and stabilise the elite's position because no elite ideology
ever overtly states that the masses will be disadvantaged if the
ideology is followed, and in the case of formal democracies, the
ideology positively claims to materially better society as a whole.
This will emotionally reassure most elite members, who will bolster
their acceptance of the ideology through inter-elite conversations - if
most or all those in a group are positive about something, that is
most powerful social reinforcer.

20. A sane alternative to globalism

Economic history suggests that the most effective general strategy to
promote economic development in a country is to allow competition
within the domestic market (where it does not create serious social
discord) whilst regulating international trade through protectionist
measures sufficient to maintain the general capacity of a country to
point where it can maintain itself in an emergency such as war or
blockade and be sovereign in most circumstances.

This would require the judicious use of embargoes, tariffs and quotas
to ensure that all the vital industries remain as a presence in
Britain.

A few industries should be in principle wholly supplied from the
British market. These are defence equipment and the various energy
sources. The reasons for defence equipment provision being domestic are
simple: any foreign supplier can cease to supply goods for political
reasons or simply be unable to produce the goods when wanted at all
or in sufficient quantities.

Energy supplies should be domestic because if they fail the whole of
society is brought to a halt. Self-sufficiency in energy in any
advanced country could be achieved in the medium term by nuclear power
supplemented perhaps by new sources of energy such as wave and current
power and bio-fuels.

A country should also build up a stockpile of essential materials such
as metals and the minerals used in the chemical industry. Five years
national supply should be a minimum.

A country should be able to feed its population from its own
production at a pinch. In Britain this is possible with modern crop
yields and animal husbandry. Crop yields are considerably greater
than they were even in WW2 and the opportunities for increasing the
volume of animal products have multiplied greatly over the past 60
years, for example, in the massive development of poultry farming
since 1945.

75% of the market in every other vital industry should be reserved for
the domestic market. What is a "vital industry"? Try these for
starters: metal (especially steel), chemical, biotech, computers,
robotics, motor vehicles, shipping, aerospace, clothing, building,
machine tools.

I would also reserve to domestic production at least 25% of the market
for goods that are useful but not vital to provide a base for an
expanded home production in times of emergency. Trade in
wholeheartedly nonessential goods - Christmas trees, pogo sticks and
suchlike - could be "free".

I am not arguing for autarky. What I am advocating are trading
circumstances which allow a nation to defend its national interests,
particularly in time of war or international crisis. The measures I
propose would produce self-sufficiency in food where necessary, the
maintenance of the ability to manufacture a complete range industrial
goods and most importantly the maintenance of an arms industry which
can produce a full range of weapons necessary for the defence of the
country.

Such a system would provide the security the state requires and permit
very substantial international trade even in essential goods.

Obviously such a regime could not be followed in its entirety by most
states. However, all could exist within those parts of it suited to
their circumstances, for example, Britain could manage the entire
regime, many third world countries could be self-sufficient in food.

21. "Free markets" and "free trade" as a religion

Free marketeers fancy themselves to be rational, calculating beasts.
In reality, their adoration of the market is essentially religious.
They believe that it will solve all economic ills, if not
immediately, then in the medium to long term. Armed with this supposed
objective truth, they proselytize about the moral evils and
inefficiencies of public service and the wondrous efficiency and
ethical outcomes of private enterprise regardless of the practical
effects of their policies or the frequent misbehaviour of those in
command of large private companies. Their approach is essentially that
of the religious believer.

Like the majority of religious believers, "free marketeers and traders"
are none too certain of the theology of their religion. (I am always
struck by how many of them lack a grasp of even basic economic theory
and are almost invariably wholly ignorant of economic history). They
recite their economic catechism sublime in the concrete of their
ignorance.

The religion has its roots in the first half of the 18th century when
there were occasional attempts to suggest tariff reform, but the idea
only became a serious political policy in the 1780s with the advent of
Pitt the Younger as Prime Minister in 1784 who long toyed with
"economical reform".

The 18th century also provided the religion with its holy book, The
Wealth of Nations by the Scottish philosopher and economist Adam Smith.
This strongly argued for "free markets" and "free trade", but Smith
also recognised the demands of national security, the need for
government to engage in social provision such as road building and
maintenance which would not otherwise be done and, must importantly,
the nature of a society and its economy. Here is Smith on the
Navigation Acts: "...the Act of Navigation by diminishing the number of
buyers; and we are thus likely not only to buy foreign goods dearer,
but to sell our own cheaper, than if there were a more perfect
freedom of trade. As defence, however, is of much more importance than
opulence, the Act of Navigation is, perhaps, the wisest of all the
commercial regulations of England." (Wealth of Nations Bk IV. ch ii)

But Smith and his book suffered the fate of all those who found
religions, secular or otherwise. As the decades passed Smith's cautious
approach was redrawn in the minds of his disciples to become a
surgically "clean" mechanical ideology in which all that mattered was
the pursuit of profit and the growth of trade and industry through the
application of the "holy edicts" of open markets and comparative
advantage. The disciples, like other religious believers, avidly
quoted the passages from their holy book which suited their purposes
and ignored those which did not. They also found a further holy text in
Thomas Malthus' Essay on Population of 1802, whose predictions,
although unproven by events, could be used to demonstrate that
economic expansion was vital if widespread starvation was not to occur.

The clinical, soulless and inhuman nature of the laissez faire idea
as it evolved is exemplified by the English economist David Ricardo.
Here is a flavour of his mindset:"Under a system of perfectly free
commerce each country naturally devotes its capital and labour to such
employments as are most beneficial to both. The pursuit of individual
advantage is admirably connected with the universal good of the whole.
By stimulating industry, and by using most efficaciously the peculiar
powers bestowed by nature, it distributes labour most economically,
while increasing the general mass of the production it diffuses general
benefits, and binds together by one common tie of interest and
intercourse the universal society of nations". (David Ricardo in The
fall of protection p 174).

The Napoleonic wars largely foiled Pitt's wish for broad reform and
placed "free trade" in suspended animation as a serious political idea
until the 1820s, when cautious attempts at tariff reform again were
made. But underneath the political elite was a radical class who were
very much enamoured of wholesale economical reform. With the Great
Reform Act of 1832 they were given their opportunity to become part of
the political elite. They took it with both hands, their most notable
and extreme proponents being John Bright and Richard Cobden backed by
the intellectual power of David Ricardo - all three became MPs.

Within a dozen years of the first election under the Great Reform
Act's passing, Parliament had been captured by the disciples of Adam
Smith and the pass on protection had been sold by of all people a Tory
prime minister, Sir Robert Peel, an action which kept the Tories from
power for most of the next 40 years.

Such was their religious credulity that the "free traders" advocated
not merely opening up Britain's markets, both at home and in the
colonies, to nations who would allow Britain equivalent access to
their markets, they advocated opening up Britain's markets regardless
of how other nations acted. The consequence was, as we have seen,
disastrous for Britain.

Disraeli in a speech on 1st February 1849 cruelly dissected this
insanity:" There are some who say that foreigners will not give us
their production for nothing, and that therefore we have no occasion to
concern ourselves as to the means and modes of repayment. There is no
doubt that foreigners will not give us their goods without exchange for
them; but the question is what are the terms of exchange most
beneficial for us to adopt. You may glut markets, but the only effect
of your attempt to struggle against the hostile tariffs by opening
your ports is that you exchange more of your own labour each year for
a less quantity of foreign labour, that you render British labour less
efficient, that you degrade British labour, diminish profits, and,
therefor, must lower wages; while philosophical enquirers have shown
that you will finally effect a change in the distribution of the
precious metals that must be pernicious and may be fatal to this
country. It is for these reasons that all practical men are impressed
with a conviction that you should adopt reciprocity as the principle
of your tariff - not merely from practical experience, but as an
abstract truth. This was the principle of the commercial negations at
Utrecht - which were followed by Mr Pitt in his commercial
negotiations at Paris - and which were wisely adopted and applied by
the Cabinet of Lord Liverpool, but which were deserted flagrantly and
unwisely in 1846". (The fall of Protection pp 337/8").

Ironically, the "free traders" make the same general errors as
Marxists. They believe that everything stems from economics. For the
neo-liberal the market has the same pseudo-mystical significance that
the dialectic has for the Marxist. Just as the Marxist sees the
dialectic working inexorably through history to an eventual state of
communism (or a reversion to barbarism to be exact), so the neo-liberal
believes that the market will solve any economic problem and most
social ills. Neither ideology works because it ignores the reality
of human nature and its sociological realisation.

The one track economic mentality of the early "free traders" is well
represented by the father of J S Mill, James Mill:"The benefit which is
derived from exchanging one commodity for another arises from the
commodity received rather than the from the commodity given. When one
country exchanges, or in other words, traffics with another, the
whole of its advantage consists of the in the commodities imported. It
benefits by the importation and by nothing else. A protecting duty
which, if it acts at all, limits imports, must limit exports likewise,
checking and restraining national industry, thus diminishing national
wealth." (The fall of protection p 174). And to Hell with any social or
strategic consideration or changing economic circumstances.

After the Great War and the fall of "free trade" as public policy in
1931, the religion went underground for nearly fifty years. When it
re-emerged as a political idea in the 1970s the politicians who fell
under its spell were every bit as unquestioning and credulous as those
of the 1840s. Tony Blair' statement on Globalisation, ie, free trade,
at the 2005 Labour Party Conference shows that it is alive and
kicking today. Scorning any attempt to discuss Globalisation, Blair
said of those who wished to oppose it "You might as well debate whether
autumn should follow summer". (Daily Telegraph 1 10 2005.)

None of this would matter very much now if those who believe in "free
markets" and "free trade" were without political power.
Unfortunately, theirs is the elite ideology of the moment and the past
25 years. In Britain, the Tories may be more fanatical in their
devotion to the market as panacea, but Blairite Labour have caught
more than a mild dose of the disease. A good example of this is their
response to house price hyperinflation where they desperately and
futilely attempt remedies within the constraints of what they perceive
to be "free market" disciplines rather than opting for the obvious
state generated remedies such as restricting immigration, building a
great deal of social housing and forcing developers to release land for
building.

Both the traditional Left and Right have been duped by globalisation.
The Left initially welcomed globalisation as a dissolver of national
sovereignty, but they are discovering by the day just how restrictive
international treaties and membership of supra national groups can be.
As things stand, through our membership of the EU and the World Trade
Organisation treaties, no British government could introduce new
socialist measures because they cannot nationalise companies, protect
their own commerce and industry or even ensure that taxpayers' money
is spent in Britain with British firms. A British government can have
any economic system they like provided it is largely free trade, free
enterprise.

The Right are suffering the same sickness with different symptoms. They
find that they are no longer masters in their own house and cannot
meaningfully appeal to traditional national interests because treaties
make that impossible.

But there is a significant difference between the position of the two
sides. The traditional Right have simply been usurped by neo-Liberals
in blue clothes: the traditional Left have been betrayed by a
confusion in their ideology which has allowed their main political
vehicles to be surreptitiously by the likes of Blair.

The left have historically objected to "free-trade" on the grounds
that it destroys jobs and reduces wages. But what they (and especially
the British Left) have rarely if ever done is walk upon the other two
necessary planks in the anti-"free trade" platform: the maintenance
of (1) national sovereignty and (2) a sense of national cohesion. The
consequence is that the Left has been and are still struggling with
two competing and mutually exclusive ends: internationalism and the
material improvement of the mass of the people.

22. An elite ideology

The best way of judging any political ideology is to ask cui bono? (who
benefits?) The obvious answer in the case of "free markets" and "free
trade" are those who believe (with good reason) that they nor their
dependants will never be amongst those who will suffer the ill-effects
of free trade. These people are and will continue to be overwhelmingly
drawn from the middle and upper classes for the same reasons that such
classes have always maintained their superiority, namely that such
people will have inherited wealth, social connections and superior
opportunities for education which are denied to the majority.

The new international elite is neither left nor right. Its ideology
is simply designed to promote the interests of the elite. It has
aspects of right and left, but they are merely the policies which
allow the elite to both disguise their true intention and to give a
pseudo-moral camouflage to their ends. They speak of the
internationalist equivalent of "motherhood and apple pie" with
exhortations to "end world poverty" and fund a "war on disease
worldwide". If I had to find a term to describe this elite I think I
would settle for neo-Fascist because so much of what is proposed is
reminiscent of fascism.

It is also telling that Western businessmen who ostensibly support the
idea of the positive effects of competition arising from "free markets"
and "free trade" never want it for themselves. They always happily
grab a state subsidy or an embargo if it is to their advantage. None
of the US airlines had any hesitation in grabbing billions of dollars
from the Federal government after 911. Large companies publicly
complain of government regulation while secretly welcoming it because
they can bear the cost of it more easily than their smaller
competitors. Multinationals shamelessly play one country off against
another in their search for massive subsidies and other favours before
they deign to operate in a country.

Countries play the same game, cheating wherever they can. And the more
powerful the state the greater the cheating, both in terms of helping
particular industries with direct state aid and in the formulation of
the treaties governing world trade. Hence, the USA presents itself as
the ultimate champion of free enterprise whilst being both now and
throughout its history one of the greatest of protectionists and state
subsidisers of its industries - that it is seen widely as an
enterprise society is one of the great propaganda triumphs of history.
Its behaviour after 911 is symptomatic of the unequal nature of modern
"free trade". The US not only handed, as mentioned above, billions to
its ailing private airlines, but put up protective tariffs to protect
its steel produces.

It has been ever thus. The two greatest names of the early Industrial
Revolution, Josiah Wedgewood and Matthew Boulton, were happy to climb
on the Enlightenment bandwagon with its beliefs in the universality
of Mankind and advocate lesser tariffs and freer trade - until the
proposed freeing threatened their own businesses.

What goes for businessmen goes for the individual worker. Who has ever
met someone whose job was threatened by "free trade" speaking in favour
of it?

Abe Lincoln's used to put this question to pro-slavers who said
slavery was a boon for the slave because they were provided for and
were free of normal responsibilities: "What is this good thing that no
one wants for himself?" An equivalent question should be put to the
"free traders".

The truth is simple: "free markets" and "free trade" are simply part
of an elite ideology and like all elite ideologies they serve the
purposes of the elite first, second and last. Those not of the elite
who espouse it act merely as useful idiots to promote the interests of
the elite.

Opposition to globalisation should not be a Left or Right issue. The
socialist and the Conservative should both resist it because it removes
the ability of the electorate to control those with power and the
power of their political movements to realise their ends.