by Nathan Smith

With all the talk about the benefits of free trade, would you like to know what your enemies think of the idea?

Wellington is in the middle of signing a free trade deal with India while also “accelerating” towards a deeper Single Economic Market with Australia. These will add to the dozens of free trade agreements already signed. For a tiny island at the bottom of the planet, trade relationships are critical. But why does it have to be “free” trade?

It’s essentially gospel in the modern era to aim for free trade, and public servants worship figures like David Ricardo and Adam Smith. No one ever questions the idea. They throw around terms like “competitive advantage” and “comparative advantage” (often confused) as if there’s nothing we can do to stop them. Free trade is sold as a fait accompli, and only the crazy loons reject it, right?

Well, I don’t entirely reject free trade. If another manufacturer can create a product at a lower cost but is based overseas, it makes sense to import it. That’s a win-win. Of course, it’s also a lose-win for the local manufacturers of the same product who might go out of business if they can’t compete with the imported product. But that’s where Schumpeter’s “creative destruction” comes in, and they can pivot to build other products instead.

“Free trade” is obsessed with this kind of specialisation. New Zealanders may not wish to devote themselves to coal mining. They may wish to grow some wheat or research new medications, even if others in different countries can do so more cheaply. Should the market be organised so that New Zealanders cannot grow and sell wheat or find a cure to disease? Free trade theory says yes, because everyone must do only what they can do most cheaply.

So, while I can see the benefits, it is also true that “free trade” isn’t free, since it focuses on the cost of goods, not the good of costs. When you say it like that, you can smell the presence of something more sinister in this theory. The odour of evil.

In fact, in 1848, Karl Marx advocated for free trade because he said it “breaks up old nationalities and carries antagonisms of proletariat workers and bourgeois small businessmen to the uttermost point. The free trade system hastens the social revolution.” For Marx, “free trade” was a weapon because it created an eternal urban proletariat everywhere, with no country and no loyalty to anything. This is why capitalism must come before the communist revolution. How else can the claim be made “workers of the world unite” if those workers still have nationalities?

Now, of course we all know that Karl Marx is just Santa for dumb adults. But what should be immediately suspicious about “free trade” is that Marxists think freedom is evil. The Marxist ideology is predicated on the oxymoron of “equal individuals,” even though individuality and equality are mutually exclusive states of being. Marxists are perfectly aware that people don’t want to be equal to their neighbours and that freedom is antagonistic to equality. It is Santa-believing idiocy to think that Marxists support “free trade” to help you. They don’t like you. They hate you. They are your enemies.

But Marx isn’t the enemy I want to talk about. Today’s enemy is much more dangerous, precisely because it wants you to believe it is your friend.

That enemy is the United States of America.

I’ve already written about what the US is, what it isn’t and why it is at the root of all the problems most of us care about today. But I am not the only one to notice how much negative influence the American idea has on our minds. Many people over the past 200 years have made the same connection, particularly on “free trade.” One of the more interesting voices was former British politician John Biggs-Davison.

In his book Uncertain Ally, Biggs-Davison did not simply complain that Washington occasionally treated London badly. Instead, he argued that from 1917 through to Suez in 1956, US policy repeatedly and deliberately weakened the economic and strategic foundations of British power while presenting itself as Britain’s closest ally. His conclusion was that beneath the language of friendship lay a structural rivalry in which “free trade” was used as a weapon.

The Americans did not appreciate the British Empire’s system of trade known as imperial preference, under which goods had to be sourced from specific locations. British purchasers would have first dibs on raw materials, and many goods had to be bought under monopoly contracts. The Ottawa Agreements of 1932 stipulated that Britain would supply manufactured goods, while the Commonwealth and its colonial territories would supply food and raw materials.

After 1945, the British Empire desperately needed to recover from the effects of the war (and Churchill’s various blunders in that war) by leveraging these relationships with the colonies. London wanted to protect its strategic industries, direct investment towards imperial development and organise trade around the imperial preference system. If it had done this, Britain and its dependencies could have re-industrialised quickly by developing within a relatively sheltered economic bloc.

But Washington had other plans. The US had plenty of money, industrial output and the technology to dominate an open international economy. Britain did not. So, the US began to push the idea of “free trade.” Far from being beneficial, Biggs-Davison argued that the US insistence on “non-discrimination” and “multilateral free trade” was really a targeted campaign to sever the bonds linking Britain to its colonies.

Free trade was used as a solvent of power, breaking down the economic relationships based on political allegiance, reciprocal obligation and imperial membership, replacing them with relationships governed by price, currency and competitiveness. The result was that once everyone could buy and sell wherever they liked, their dependence on Britain declined, and the Empire disappeared. And that was the goal all along. In Biggs-Davison’s view, “free trade” was just a way of saying, “Now we surrender to the US Empire.”

Even to this day, the US tries to pretend it did the world a favour by imposing the free-trade paradigm. After all, the Commonwealth countries had their own industries, policies and national interests. India had become independent in 1947. Canada was already oriented towards the US. Australia and New Zealand both wanted access to British markets but did not want London directing their development. The age of imperialism was over, Americans will say, and a New World Order is on the horizon.

Biggs-Davison utterly rejected this slimy, weasel-worded backstabbing by the Americans. Beyond the talk of shared values, common heritage and wartime camaraderie, this rhetoric obscured a key divergence of interest between the US and Britain. Washington had long dreamed of dominating the world since at least Woodrow Wilson, but doing so would require dismantling all the preferential trade blocs that excluded US goods. The weapon they chose was the same one identified by Karl Marx in the previous century: “free trade.”

Washington’s goal also explains many of the CIA coups in the 20^th century, such as the removal of Mossadegh from Iran in 1953. British imperial preference at that time through the Anglo-Persian Oil Company was replaced by the Seven Sisters oil companies. The message from Washington was that Iran’s oil market must be opened to different companies, not just one with a monopoly contract. The world was forced again and again to open its markets to allow the Americans in, right down to every area of British commercial life, retail and manufacturing. That’s why there are McDonald’s in all cities and Levi jeans are still popular today.

The lesson of “free trade” is that low-cost goods always end up being the most expensive because economic foundations, productive capacity and secure markets are the irreducible basis of national power and strategic autonomy. Any policy which sacrifices these foundations in pursuit of friendly words from America will only accelerate the liquidation of its sovereignty. Free trade is never free. Marx knew that, and so does Washington.

What did successive British governments do after Biggs-Davison wrote his book? Margaret Thatcher, Tony Blair, David Cameron and Boris Johnson all continued selling off every asset owned by the UK, privatising everything, importing large foreign populations and basically surrendering any notion of British greatness to US-led international finance, “free trade” and open markets.

The Americans are not our friends. They are the undisputed, ruthless rulers of the world and all their ideas, like “free trade,” benefit only themselves. If everyone in Wellington stopped worshipping Ricardo and Smith for a few seconds, maybe they would think from first principles about what New Zealand really needs.

Originally published on The Good Oil.