Libertarianism is generally seen as requiring free trade. Certainly, libertarian thinkers from Adam Smith to the present have strongly condemned protectionism. How then can a libertarian endorse trade restrictions such as the Jackson-Vanik Amendment, which denied free trade to totalitarian states that refused to allow their citizens to emigrate freely?
Perhaps I am blinded by my parochial interest in the Jackson-Vanik Amendment, but I think there is a compelling answer to this question. Libertarianism does indeed imply free trade between private individuals and firms. But trade with socialist governments is very different. When two private individuals trade with each other, it is reasonable to assume that both legitimately own the goods they exchange. Thus, at least as far as libertarians are concerned, the law should not restrict their transactions unless there is specific proof that one or both are trading in stolen or otherwise illicitly acquired goods. By contrast, a socialist state engaging in international trade is usually exchanging goods that it forcibly acquired from its citizens. The socialist state's goods are either confiscated from former private owners or produced by compelling workers to work for the state (which they generally must do whether they want to or not, because there is no competitive employment market). Socialist states also make extensive use of out and out forced labor. In a true socialist state - one where the government owns all the means of production and the state has a monopoly of foreign trade - trade in forcibly acquired goods is the only kind of international exchange that is possible at all. Just as in the domestic context libertarianism is perfectly consistent with forbidding trade in stolen goods, in the international context it is consistent with forbidding trade with socialist governments that, by definition (as libertarians see it), have acquired their wealth by plundering their citizens.
True socialist states must be distinguished from nominally socialist societies (such as China today) that nonetheless permit a large private sector to exist and engage in international trade. However, the USSR at the time of the Jackson-Vanik Amendment (like Cuba and North Korea today) was a fully socialist society with almost no private enterprise and a complete government monopoly of foreign trade.
Restrictions on trade with socialist states may or may not be good policy. Sometimes trade with such states can serve important strategic interests (as with US trade with the Soviet Union when the two nations were allied during World War II). Critics of trade sanctions claim that they fail to achieve their goals and may even be counterproductive. Be that as it may, restricting trade with socialist states does not violate any libertarian principles.
Related Posts (on one page):
- Libertarianism and Restrictions on Trade With Socialist States:
- Representative Charles Vanik, RIP:
I believe this is an issue small "l" libertarians are split on. Some support government bans on trade with such states, some support voluntary boycotts, and some support free trade because of the liberating influence on the totalitarian state's populace.
As far as trade in other goods goes it might be a question of game theory. What course of action is likely to increase the activity of black and gray market operators in socialist countries? Would refusing to trade with the government increase the black market price of your goods and therefore increase black market activity? Or would trading with the government increase the likelihood that your goods - once purchased - will be embezzled, stolen, etc. by black market operators and make it into the black market that way? Perhaps refusal to trade with the socialist regime but easing restrictions on its neighbors might stimulate black market activity through cross-border trading. On the other hand if trade is restricted this could cause competitors to form and survive within the community that does trade with these regimes helping them maintain the status quo within this community and making even inefficient state-owned producers economically feasible.
Trade with governments — or government-owned businesses — is always going to be problematic for libertarians, a necessary evil at best. This is true regardless of whether the government calls itself socialist or not (and if the government has anything to trade, it is to some extent a socialist government already). There is definitely room in libertarianism to contemplate trade restrictions against socialist governments, although it would naturally be better done through voluntary boycotts.
The problem with policies like Jackson-Vanik is that they step beyond "trade with socialist states/governments" and into trade with those governments subjects and victims. This is simply heaping one misfortune on top of another. It is also ridiculous — the black markets that exist under socialism are one of its most glaring vulnerabilities, and to deny trade the chance to undermine socialism through its black markets is to ignore one of the civilized world's best weapons against economic tyranny.
It would make more sense to just live with those states. After all, if they're producing something through state control that wouldn't be produced by private means, they're just taxing their citizens to subsidize us. Why embargo them for that?
You are a libertarian because you think it leads to the greatest economic efficiencies and benefits. Not because you think you have no moral right to infringe on your fellow citizens' economic liberties, correct?
Devil's Advocate
We libertarians nearly all agree that economic activity is beneficial to individuals, and is maximized by simply leaving it to occur, and with minimal tariff.
The more contentious axis is that of non-economic freedom. Do libertarian principles preclude a national ID card? No consensus exists, although those libertarians who would deny the government the power to keep track of individuals tend to be louder than those who see significant benefit to having better control of people who behave in anti-social ways.
A bit paradoxically, I predict that those who have no problem with a national ID card, those for whom libertarianism is mostly economic, would allow individuals to trade with socialistic governments, or not, as such individuals choose.
And vice versa.
Presumably one should also not trade with state-owned corporations of such states. But let's not confuse "trading with states" with "trading with private corporations in states".
I have a friend who is a socialist (a real one) but largely handles business and corporation law. When I asked about the apparent inconsistency, he replied that while he looked forward to a socialist state, in the meantime he had to pay the rent and feed the family. Made sense to me. : )
Nice theory, but of course it doesn't necessarily follow that personal freedom follows economic freedom. In fact there is nothing about economic freedom or capitalism in general that encourages personal freedom. In fact, China is a case in point. All the economic freedom of the last twenty years has led to almost no political reform and Hong Kong is going backwards.
Personal freedom following economic freedom? South Korea? Taiwan? Granted China started from a much worse situation than those two, and Hong Kong is a special case.
Though there may be little political reform, I can't imagine that you could seriously argue that there has not been improvement with regard to personal freedom.
And you can trace many personal liberties to the freeing of exchange: if you allow people to open businesses and pursue profits in an open market, you must allow them some room to advertise which requires some freedom of speech; to hire and fire freely, which means there must be freedom to work where you choose; to open a new business, again a freedom of choice.
Products on the market mean a freedom to purchase goods at your own choice of stores and choose between products, rather than only have a single choice of supplier and of product type... if other kinds of businesses are free and legal, there is soon pressure to allow people to open newspapers and other media outlets. As people freely advertise and debate about business in the public space, soon the right to engage in other kids of speech is demanded.
Seriously, how can you argue there has been. Of course things are better than during the Cultural Revolution, but do the Chinese have more personal freedoms or are they more free to criticize their government than they were twenty years ago--even with all the amazing economic progress they have made? I don't think so. Most of the personal freedoms have had nothing to do with the economic progress. The economic progress has really just exchanged one set of oppressors for another. The vast majority of Chinese are still abjectly poor and many (especially the rural poor) are worse off than they were when the communists actually were communists. Granted a large middle class has risen in China, but if you trade 300 million people who are a lot better off but leave 800 million the same or significantly worse off, have you really achieved much to be proud of?
Much the same can be said of Russia. Much of the progress in personal rights came before the collapse of the Soviet Union and was followed by a period of lawlessness and a brief period of stability. Now many of those gains are being lost.
Yeah. What's the problem?
Apparently, as far as Ilya is concerned, as long as they aren't "socialist", nothing. There is no evil worse than socialism.
The word "socialist," like "communist," "liberal," and "conservative" have been so abused to be totally devoid of meaning.
Instead, the liberterian reason for trade restrictions against nonliberterian states is based on the "debate" we had about the Iraq war and liberterian interests (except here on more legitimate grounds). That is, liberterian rules and principles break down when dealing with multiple state actors, and one has to compare liberterian values across several dimensions to determine which liberterian value takes precedent - the support of "freedom" for the second country's residents versus the support of "freedom" for your own country's residents.
Of course, the Jackson-Vanik Amendment substantially fails to track Ilya's reasoning, and its confusing why he would support the amendment instead of requiring a broader rule tied to socialism rather than emigration rights. But the emigration rights argument seems substantially better tailored to the liberterian justification that I put forth.
Note that under my theory, one could restrict trade with countries that "trample the rights of workers (at least to the degree a liberterian would consider them rights), ban unions" and "dispossess native peoples," since those may violate the second group's freedom, and bring the competing values question into play. To the degree that liberterians have problems with child labor (I can see this going both ways), the same theory would apply. This is another reason why I think my reasoning is superior to Ilya's.
(And hah, I'm not even a liberterian! Okay, off the high horse I go, as Ilya, I assume, will likely provide a humbling rejoinder)
Amendments like Jackson-Vanik by their definition seek to protect the rights of one group (the rights of people in socialist republics to own their own means of production) by infringing upon the rights of others (Americans, who can no longer trade freely with said republics). Prohibitions on purchasing stolen goods make sense within American borders, but I'm unconvinced that they make sense across borders: If you follow the social contract model of libertarianism, you might argue that a government's responsibility is to protect the rights of its own citizens without regard to the rights of citizens of other nations, with whom it has no social contract.
Under that standard, I think, such amendments seem strikingly less libertarian. Just food for thought.
The q isn't whether or not we should trade with the bad man, the q is who gets to decide that he's bad enough. The slippery slope of dictatorialism begins at the sign marked "good intentions."
This works both ways, of course. Those who get ripped off by the bad man - e.g. when a dictator nationalizes and expropriates a foreign-financed oil industry - have no one to blame but themselves and certainly do not deserve govt compensation; they ought to have known beforehand what would happen if they dealt with him. Thus are learning curves made to curve.
Even if we were to accept your premise, Ilya, it is a frustratingly impractical theory to implement, a vert=itable invitation to corruption. As Sam Clemens is purported to have said, when asked what to do about enemy submarines: Simple, just boil the ocean. I have given you the solution, sir, it is up to you to implement the details.
All the worst features of socialism, fascism and racism wrapped into one, and they decided to boycott the world, instead of the world's boycotting them.
How'd that work out?
All the worst features of socialism, fascism and racism wrapped into one, and they decided to boycott the world, instead of the world's boycotting them.
According to the CIA World Factbook they do trade with their neighbors. But this reaches toward what I mentioned in my post above, if the US embargoes a country it creates a market for others willing to trade with it. Look at the Soviet and Chinese arms industries - during the Cold War they profited by selling to everyone that Western arms dealers wouldn't.
His carping about Hong Kong is even more of a lark. He actually thinks that Hong Kong, a British colony and governorate, was for much of its colonial history more democratic than post-handover Hong Kong under Basic Law? You have to be joking or a complete ignoramus not to know that Patten and the British only belatedly tried to democratize some of the colony's institutions only as handover neared. For much of its history, Hong Kong never had as many elections and as vibrant a democratic culture as Patten would like to pretend.
In countries like South Korea and Taiwan, greater freedom has accompanied the march of economic progress. Capitalism accompanied the democratization of both countries' legislative institutions, the lifting of martial law, the dismantling of military government, and the onset of free elections. Singapore too is freer today than it was when Lee Kuan Yew was Prime Minister, and much freer than it was in its founding years, when communist subversives were routinely picked off by Special Branch or the Internal Security apparatus. Culturally and politically, the country is increasingly liberal, as is its government (before 1991, there wasn't even a legal possibility of viewing films with 'adult' themes in the country). Blogs are savagely critical of the state, and the government in turn has taken a hands off approach to criticism, when in years previous it would have responded robustly against dissent.
Of course, these developments, to the ignorant American in J.F. Thomas, are too low on the radar to merit consideration. For they blow his assumptions and conceits clear out of the water (including the asinine and stupidly cherished notion that there is no correlation between economic freedom and democratization).
So he embarrasses himself by manufacturing an opinion on China - a country he knows next to nothing about judging from his confidently held but laughable pronouncements - as a counterexample to the progressively democratizing capitalist Asian states. But even that is wrong. To any halfway competent observer of China who has even an inkling of her history, the idea that China is less democratic today than it was even a few years ago is risible nonsense.
Don't try to bull your way through this Thomas. Rectify your ignorance.
Libertarian ideas work because a properly functioning market system will always produce better results than any form of central planning, whether it's absolutist or communist or democratic socialism.
The problem is, there is a definable set of market failures - things that will prevent a market from functioning at 100% efficiency.
The reason a properly functioning market will always be more efficient than government control is because government control is essentially an artificially imposed market failure. But there are also market failures that are inherent.
In a developed market, the cost of these market failures for most (and possibly all) goods and services (and even intangibles like "family values") will be less than the cost of government control.
But in an undeveloped or developing market, that is not always the case. For example, in areas where there is little or no infrastructure to support the free exchange of goods, a large government infrastructure project can easily increase, rather than decrease, the overall market efficiency. In areas where incentives to steal exist and universal access to private security forces is not available, government intervention to prevent theft will increase the overall market efficiency.
The economy, broadly speaking, includes everyone with whom we might want to trade - these days, practically everybody. Due to the differences in geography, history, and politics, every nation has their own set of market failures. The question is, where foreign governments are acting to distort the market, what can our government do to minimize that distortion?
It wouldn't make sense for California to tax trade with Nevada, because although both state governments distort their respective economies to some degree, the difference between the two is minimal relative to the probable cost of the tariffs (which would include the cost of dealing with the existing legal barriers to the idea).
Imposing a tariff on goods imported from a particular country to counteract their subsidies of their exports, while not an ideal situation, can easily make sense. In cases (like Communist countries or many third world dictatorships) where a country's interference in the market is sufficiently extreme, a total ban may be justifiable, or it may not - it depends on whether trade would strengthen or weaken their internal markets, and on the extent to which their market failures would distort ours, and that question involves a lot of particulars.
On the whole, I think we're better off erring on the side of too much rather than too little free trade. But since market distortions are a fact of life, certain trade restrictions are compatible with the goal of increasing overall market efficiency, and therefore with libertarian principles (as well as plain old common sense).
But since market distortions are a fact of life, certain trade restrictions are compatible with the goal of increasing overall market efficiency, and therefore with libertarian principles (as well as plain old common sense).
And this all hinges on how you're defining "market distortions", "trade restrictions", "increased market efficiency", etc. I notice that people that are critical of free market capitalism, whether motivated by ideology or self-interest, tend to see market distortions or market failures everywhere.
And I notice that people who have blind faith in the market tend to blame all market distortions or failures on the interference of the government.
Boycotts, whether internally or externally generated, quickly come up against those sorts of problems.
Which doesn't mean I'm against 'em. We should, for reasons of decency, not trade with some regimes. Not that our standoffishness will do any good, but because there are some things decent people should not do.
War is Peace.
Freedom is Slavery.
Ignorance is Strength.
George Orwell