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Strenghts and Weaknesses of the Liberal Case for Free Trade

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The liberal case for free trade—seen through the knowledge-representation-interest nexus—obfuscates the interests of (neo)imperial powers in maintaining their monopolies by controlling foreign markets, politics and common sense. In other words, the ongoing internalisation of a (neo)liberal economic culture that ties such ideas as the international division of labour, mutual gains and comparative advantage—in the context of minimal protectionism—to global prosperity, is a manifestation of cultural imperialism. By analysing the political arguments made by Adam Smith in favour of free trade, the differences between how liberals and realists view international relations (IR) are made insignificant. The lack of such differences suggests that the theoretical, moral, political and empirical cases for free trade mask an underlying commitment to upholding monopolies which function in opposition to free trade. Finally, by employing post-positivist analysis the implications of the liberal case for free trade being grounded in the preservation of imperial monopolies are illustrated using the case of corporate agriculture in India.

Smith’s political arguments in favour of free trade are brittle at best, and at worst imply the lack of substantial differences between how realists and liberals view IR. According to Wyatt-Walter, Smith’s major contribution to the liberal case for free trade was his analysis of the relationship between power and wealth. Frankly, what Smith shared with other liberal thinkers was the belief in how the ushering in of a free market can promote economic progress, how human reason can be employed in institutional reform at the domestic level, and how overly powerful governments and interest groups need to be constrained. Smith, however, did not agree with Rousseau’s belief in the reform of IR through international law due to the embedding of violence and injustice, nor did he agree with Kant’s idealism about the use of reason in international affairs—instead favoring the realist notion of balancing power through prudent statesmanship. Indeed, Smith was a realist when it came to politics in that he was also aware of the limitations of private interests in how they could influence the political process in order to favorably shape public interests. Similarly, Smith did not argue against national defense, spending as a primary condition of national wealth, and did not liken the idea of a minimal state as for him, justice required positive law. In fact, Smith had a realist view of natural liberty when he identified that the interests of individuals, irresistibly oppose it. Thus, Smith did not believe in the unconstrained accumulation of profit, neither in that war was bad for business, nor in a curtailed role of the state in domestic and international affairs, or in a benevolent human nature. Instead, war for Smith was necessary due to international anarchy whereby states had to prioritize security which required the accumulation of power as well as wealth. Although Smith rejected monopolies like those of the East India Company, he thought that the considerations of power and wealth should be balanced against issues of strategic dependence upon particular markets. At the time of Smith’s writing, Great Britain’s entry into new commercial relations outside the empire and deeper economic penetration in existing colonies was the product of Britain’s competition with other imperial states, meaning that Smith agreed that Britain could ameliorate its economic competitiveness by monopolizing supplies of products in states where it had not done so previously while also enhancing market control in existing colonies. After all, Smith believed that the mutual interests of states are limited and that war amused the modern citizen. Zero-sum national interests employed by a preponderant military and economic power with the goals of security and prosperity through exploitation of weaker states and economies; while the embedding of war in the complex passions of irrational human nature normalizes taxation during peace times and makes the nation-state unthinkable without perpetual conflict. Therefore, by identifying the similarities in the ends of the liberal and realist accounts of IR, the liberal case for free trade is seen as a manifestation of a cultural imperialism seeking to preserve monopolies which are oppositional to the principles of free trade.

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The theoretical, moral, political and empirical cases for free trade are the means by which economists, politicians and academics manipulate public interests in favor of the internalization of a liberal economic culture through direct and indirect imperial control. David Ricardo’s ideas of comparative advantage and positive-sum nature of trade underplay the international asymmetries of capabilities whereby trade openness limits underdeveloped states in static specialization thereby hampering development, and non-zero-sum game is prone to tariffs and market failures, as well as to political forces and interest groups. Britain’s increased embrace of free trade in the early 19th century, for instance, and precisely its greater exports of cotton goods to India reflect continuous faith in formal or informal imperialism. In turn, the moral case for free trade whereby individuals around the globe have an inherent liberty to trade with one another without government intervention is far-fetched in the light of the imperial roots of free trade internalization, and represents to a greater extent Europe’s white man’s burden - the responsibility of the West to moralize mankind and to spread Christianity civilization through commerce. Further, the political case for free trade exemplified in the idea that free trade helps improve relations among nations, suffers the fate of other liberal justifications—Montesquieu himself was well aware of how conquest and colonialism went hand in hand with the expansion of commerce, and how the accumulation of wealth made military conflict more likely by decreasing its cost. Both World Wars, in this way, come to be seen as inter-imperial conflicts waged for access to foreign markets and colonial resources even through in the years leading up to the First World War free trade was at its high point. Similarly, the consensus that exists among political scientists about how free trade promotes peace reflects Eurocentric bias among the elitist academics, who help shape a common sense which valorizes global liberal hegemony while obscuring the global patterns of inequalities, poverty and perpetual conflict. Finally, the empirical case rests, on the one hand, on quantitative data which represents cross-country data like the level of GDP growth which when applied to understand the problematic patterns of developing countries’ policies tends to incite trade openness as a solution. On the other hand, historical data or case studies in looking at patterns developing countries’ policies has the tendency to expose body politics or the on-the-ground reality. However, quantitative data tends to justify trade openness which in the case of the establishment of foreign monopolies hampers development, and while case studies can be more persuasive, when written from the perspective of an academic in the ivory tower they misrepresent the subject of study by silencing the voices of indigenous insiders. The case of India’s increasing integration in free trade between 1820 and 1855, and India’s conscious deployment of neoliberal rhetoric, ideals, and practices in the 21st century, are thus understood in terms of the deepening of India’s assimilation into dependency on imperial powers. Therefore, the four cases for free trade share in their commitments to: ignoring the unequal patterns of global development underpinned by imperial interests, the reproduction of European monopolies and common sense over colonial economies, and the silencing of subjects’ perspectives in developing states.

The efforts of the (neo)liberal case for free trade to preserve the global liberal hegemony has dire implications for economic development, lower income groups, as well as for females’ and children’s rights in developing states. Ever since India’s forced commercialization in the 18th and 19th centuries by the East India Company, foreign corporations have employed Eurocentric liberal knowledge in order to promote a style of development which prioritizes imperial interests. More recently, food chain clusters constituted by Western TNCs like Monsanto have—through vertical and horizontal integration—centralized authority over the agri-business sector. The deepening of the global monopolistic market structure has displaced India’s domestic food market, and integrated farmers into direct contracts with processing companies like Monsanto that then dictate the quality and quantity of produce. While farmers become dependent on the income provided by food chain clusters, the latter seeks to continuously maximize their profit margins by depressing market prices for small producers, keeping independent producers in check by amassing private stores so as not to rely on the open market, and leaving farmers no choice but to adopt foreign cost cutting technology and accepting fixed-price contracts. These developments render independent farmers subservient to the profit interests of foreign TNCs and vulnerable to constant cost-cutting initiatives and market imperatives which result in subsistence wages and greater exploitation of female and child labor. The extent to which India’s politics and common sense have become vassals of (neo)imperial interests is evident in the Punjab state government’s contract farming initiative supported by IFIs like the World Bank. Precisely, farmers grow desperate to cut their costs and are provided with credit to purchase cost-cutting technologies which they are not, however, taught how to use properly, meaning that once quality or quantity issues arise unit costs are slashed by foreign TNCs and the farmers are left in debt. The mechanization of farming also squeezes men out of the global food market—promoting economic migration and brain drain - while employing more women and children who earn substantially less than the men, and since the former tend to be easier to control, they are forced to work harder, under poor working conditions and for longer hours. Instead of offering services and agricultural credit – which would have ameliorated independent farmers’ positions within the global food market – Indian politicians and economists adopt an unfavorable liberal common sense which jeopardizes the long-term sustainability of cultivation in favor of short-term profits for foreign monopolies, thereby reproducing the ongoing agrarian crisis. The Indian case of corporate farming, furthermore, belongs to a whole series of similar policy adjustments which have come to symbolize the US hegemony in IFIs like the International Monetary Fund and the World Bank whereby perpetual debt in the global South is normalized by the North, and this is marked by continuity and incremental policy change. Therefore, the liberal case for free trade is responsible for obstructing the development of the global South, forcing lower incomes groups into perpetual debt, and exploiting the rights of females and children all in the interests of the (neo)imperialist global North.

To conclude, the liberal case for free trade obfuscates the interests of (neo)imperial powers in maintaining their monopolies by controlling foreign markets, politics and common sense. Firstly, Adam Smith’s political arguments in favor of free trade do not substantially differ from those of realist thinkers. Secondly, the similarity in the ends of liberal and realist thinkers suggest that the theoretical, moral, political and empirical cases for free trade share in their underlying commitment to upholding (neo)imperial monopolies. Finally, the case of India’s contract farming illustrates the dire implications unconstrained monopolization has for economic development, lower incomes groups and females’ and children’s rights in developing states.

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Strenghts and Weaknesses of the Liberal Case for Free Trade. (2022, December 15). Edubirdie. Retrieved March 2, 2024, from https://edubirdie.com/examples/strenghts-and-weaknesses-of-the-liberal-case-for-free-trade/
“Strenghts and Weaknesses of the Liberal Case for Free Trade.” Edubirdie, 15 Dec. 2022, edubirdie.com/examples/strenghts-and-weaknesses-of-the-liberal-case-for-free-trade/
Strenghts and Weaknesses of the Liberal Case for Free Trade. [online]. Available at: <https://edubirdie.com/examples/strenghts-and-weaknesses-of-the-liberal-case-for-free-trade/> [Accessed 2 Mar. 2024].
Strenghts and Weaknesses of the Liberal Case for Free Trade [Internet]. Edubirdie. 2022 Dec 15 [cited 2024 Mar 2]. Available from: https://edubirdie.com/examples/strenghts-and-weaknesses-of-the-liberal-case-for-free-trade/
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