wingolog

I came of age an age ago, in the end of history: the decade of NAFTA, the WTO, the battle of Seattle. My people hated it all, interpreting the global distribution of production as a race to the bottom leaving post-industrial craters in its wake. Our slogans were to buy local, to the extent that participation in capitalism was necessary; to support local businesses, local products, local communities. What were trade barriers to us? One should not need goods from far away in the first place; autarky is the bestarky.

Now, though, the vibe has shifted. If you told me then that most leftists would be aghast at the cancelling of NAFTA and subsequently relieved when it was re-instated as the USMCA, I think I would have used that most 90s of insults: sellouts. It has been a perplexing decade in many ways.

The last shoe to drop for me was when I realized that, given the seriousness of the climate crisis, it is now a moral imperative everywhere to import as many solar panels as cheaply as possible, from wherever they might be made. Solar panels will liberate us from fossil fuel consumption. China makes them cheapest. Neither geopolitical (“please believe China is our enemy”) nor antiglobalist (“home-grown inverters have better vibes”) arguments have any purchase on this reality. In this context, any trade barrier on Chinese solar panels means more misery for our grandchildren, as they suffer under global warming that we caused. Every additional half-kilowatt panel we install is that much less dinosaur that other people will choose to burn.

But if trade can be progressive, then when is it so, and when not? I know that the market faithful among my readers will see the question as nonsense, but that is not my home church. We on the left pride ourselves in our critical capacities, in our ability to challenge common understandings. However, I wonder about the extent to which my part of the left has calcified and become brittle, recycling old thoughts that we thunk about new situations that rhyme with things we remember, in which we spare ourselves the effort of engagement out of confidence in our past conclusions, but in doing so miss the mark. What is the real leftist take on the EU-Mercosur agreement, anyway?

This question has consumed me for some weeks. To help me think through it, I have enlisted four sources: Quinn Slobodian’s Globalists (2018), an intellectual history of neoliberalism, from the first world war to the 1990s; Marc-William Palen’s Pax Economica (2024), a history of arguments for free trade “from the left”, from the 1840s to the beginnings of Slobodian’s book; Starhawk’s Webs of power (2002), a moment-in-time, first-person-plural account of the antiglobalization movement between Seattle and 9/11; and finally Florence Reese’s Which side are you on? (1931), as recorded by the Weavers, a haunting refrain that dogs me all through this investigation, reminding me that the question is visceral and not abstract.

stave 1: mechanism

Before diving in though, I should admit that I don’t actually understand the basics, and it is not for a lack of trying.

Let’s work through some thought experiments together. Let’s imagine you are in France and want to buy nails. To produce nails, a capitalist has to purchase machines and buildings and steel, has to pay the workers to operate the machines, then finally the nails have to get boxed and shipped to, you know, me. I could buy French-made nails, apparently there is one clouterie left. Even assuming that Creil is a hotbed of industrial development and that its network of suppliers and machine operators is such that they can produce nails very efficiently, the wage in France is higher than the wage in, say, China, or Vietnam, or Turkey. The cost of the labor that goes into each nail is more.

So if I have 1000€ that I would like to devote to making a thing in France, I might prefer to obtain my nails from Turkey for 50€ rather than from France for 100€, because it leaves me more left over in which I can do my thing.

Perhaps France sees this as a travesty; in response, France imposes a tariff of 100% on imported nails. In that way, it might be the same to me as a consumer whether the nails were from Turkey or France. But this imposes a cost on me; I have less left over with which to do my thing. In exchange, the French clouterie gets to keep on going, along with the workers that work there, their families and the community around the factory, the suppliers of the factory, and so on.

But do I actually care that my nails are made in France? Should the country care that it has a capacity to make nails? When I was 25, I thought so, that it would be better if everything were made locally. Perhaps that was a distortion from having grown up in the US, in which we consider goods originating between either ocean as “ours”; smaller polities cannot afford that conceit. There may or may not be a reason that France might want nails to be made locally; it is a political question, but one that is not without tradeoffs. If we always choose the local option, we will ultimately do worse overall than a country that is happy to import; in the limit case, some goods like coffee would be unobtainable, with a price floor established by the cost to artificially re-create in France the mountain climate of Perú.

Let us accept, however, the argument that free trade improves overall efficiency, yielding productivity gains that ultimately get spread around society, making everyone’s lives better. We on the left are used to being more critical than constructive, but we do ourselves a disservice if we let our distaste of capitalism prevent us from appreciating how it works. Reading Marx’s Capital, for example, one can’t help but appreciate the awe which he has towards the dynamism of capitalism, apart from analysis and critique. In that spirit of dynamic awe, therefore, let us assume that free trade leads to higher productivity. How does it do this?

Here, I think, we must recognize a kind of ruthless cruelty. The one clouterie survives because of local demand; it can’t compete on the global market. It will fold eventually. Its workers will be laid off, its factories vacated, its town... well Creil is on the outskirts of Paris, it will live on, but less as a center in and of itself.

The nail factory will try to hang on for a while, though. It will start by putting downward pressure on wages, and extract other concessions from workers, in the name of economic necessity. Otherwise, the boss says, we move the factory to Tunisia. This operates also on larger levels, with the chamber of commerce (MEDEF) arguing for regulatory “simplifications”, new kinds of contracts with fewer protections, and so on. To the extent that a factory’s product is a commodity – whether the nails are Malaysian or French doesn’t matter – to that extent, free trade is indeed a race to the bottom, allowing mobile capital to play different jurisdictions off each other. The same goes for quality standards, environmental standards, and similar ways in which countries might choose to internalize what are elsewhere externalities.

I am a sentimental dude and have always found this sort of situation to be quite sad. Places that are on the up and up have a yuppie, rootless vibe, while those that are in decline have roots but no branches. Economics washes its hands of vibes, though; if it’s not measurable in euros, it doesn’t exist. What is the value of 19th-century India’s textile industry against the low price of Manchester-milled cloth? Can we put a number on it? We did, of course; zero is a number after all.

Finally, before I close today’s missive, a note on distribution. Most macro-economics is indifferent as regards distribution; gross domestic product is assessed relative to a country, not its parts. But if nails are producible for 50€ in Turkey, shipping included, that doesn’t mean they get sold at that price in France; if they sell for 70€, the capitalist pockets the change. That’s the base of surplus value: the owner pays the input costs, and the input cost of a worker is what the worker needs to make a living (rent, food, etc), but the that cost is less than the value of what the worker produces. That productivity goes up doesn’t necessarily mean that it makes it to the producers; that requires a finer analysis.

to be continued

For me, the fundamental economic argument for free trade is not unambiguously positive. Yes, lower trade barriers should leave us all with more left over with which we can do cool things. But the mechanism is cruel, the benefits accrue unequally, and there is value in producing communities that is not captured in prices.

In my next missive, we go back to the 19th century to see what Marx and Cobden had to say about the topic. Until then, happy trading!