A Realistic International Economics

Abstract

To formulate valid and useful ideas for young students of economics presents a challenge in the area of international trade that differs from those presented in other areas of economics. The problem is not so much dealing with the shifting, fashion-ridden, and factional economic doctrines of recent decades as it is correcting errors and confusion that go back to Adam Smith. Curiously enough, Adam Smith's free-trade doctrine seems to be one of the matters on which economists now are most in agreement. Yet, on considering afresh basic economic current doctrines on international trade as presented in college textbooks in the United States, one must be struck that this subject is handled in an unusual way. How is it that U.S. economists have so committed themselves to a party line of laissez-faire economic doctrine, asserting that so-called free trade is automatically beneficial, and the only other course, a negatively stereotyped protectionism, is unquestionably harmful? How can economists thus unreservedly propose unregulated international trade with virtually no reference to actual experience with different arrangements for international trade-relying on inferences from a hypothetical example that, on the face of things, is not at all realistic? Other questions arise. How can a policy of laissez faire that has, at best, a mixed performance within the national economy work so perfectly in the unpromising context of trade across national boundaries? How can economists assert the desirability of free trade, with no reference to its revolutionary political implications, that is, in undermining the independence and capabilities of the nation as man's major political organization and providing nothing to put in its place? How can economics continue to deny that differences in national wage levels cause one-sided trade that shifts industries and jobs to low-wage nations, when anyone who reads the newspapers encounters a flood of evidence to the contrary? In the face of such anomalies, it seems that the subject is in need of independent and realistic reconsideration. In this paper, I propose an interpretation of international trade that I believe is valid and useful for the beginner in economics. This view provides a basis for understanding the great changes in patterns of international trade that are occurring, their implications, and the kind of policies required to guide international trade in a constructive direction. My goal, thus, is to explain what the world and events are doing, not what economists are doing. Coverage of the conventional descriptive material on the nation's