February 09, 2010
The Debt We Owe to Trade
by Jeffrey Tucker   
10/11/08
 
William J. Bernstein, Atlantic Monthly Press, 494 pages, $30
 
It was the year 1600 and coffee had become wildly popular all over Europe, just as it had been popular all over the Muslim world since its discovery 900 years earlier. The sitting pope was Clement VIII. His advisers urged him to do something to stop the coffee mania then spreading across Christendom. He tasted the coffee, reflected on its properties, and then, to the astonishment of his advisors, blessed it as a Christian beverage.
 
Long live the pope!
 
Matters weren't so simple in the Protestant world. The beverage was still a raging controversy in parts of Germany in the 18th century, as J. S. Bach's hilarious "Coffee Cantata" demonstrates.
 
The story, which is apparently true from all the checking I've done, appears on page 247 of a marvelous book that covers not only the expansion of the coffee trade but all trade of all goods and services from the stone age to the present day, and does so in a marvelously intriguing way. The book is A Splendid Exchange: How Trade Shaped the World, by William J. Bernstein. The book is long -- 494 pages -- but engaging on every page.
 
After finishing the book, I found myself thinking about its contents constantly. Its subject is so ubiquitous that it is hardly ever closely analyzed. The time period stretches from age to age; the geography covers the planet; and the items covered include spices, coffee, silk, pigs and pork, precious metals, oil, and, really, just about everything else. Bernstein demonstrates thousands of times that the world as we know it would be unrecognizable without trade, and shows that trade has shaped who we are in ways that none of us fully recognizes. The historical detail is amazing. The writing is scholarly but clear and fascinating on every page.
 
 
Try to imagine Italian cuisine without the tomato, the highlands around Darjeeling without tea plants, an American table without wheat bread or beef, a café anywhere in the world beyond coffee's birthplace in Yemen, or German cooking without the potato.
 
Such was the world prior to 1492, before billions of acres of farmland were taken over with farming species from remote lands. It is not part of natural law. It was a result of deliberation and work. Fantastic economic and physical risks were involved. It is one of the ways in which the garden of this world has been tilled and kept by mankind, inch by inch.
 
The Bernstein book helps keep all the controversy about globalization in context. There is absolutely nothing new about globalization. Nothing. The progress of "globalization" has been on its current trajectory for the whole of recorded history. This trade has made the world ever more prosperous. And why? Because trade has permitted populations across the globe to cooperate to their mutual betterment. Without trade, the human population would shrink and most all of us would die. Even a slight curtailment of trade can bring on economic depression and dramatically shrink our standards of living.
 
It is one of the great failings of the human race that we tend to regard the wealth that surrounds us as a given, something that is just part of the world that will last forever and requires no work to acquire. Part of the reason we have this habit of mind is our general tendency to contemplate only what we experience in our lifetimes. But the wealth that surrounds us is the fruit of the whole of history, the accumulated capital of the human race from the whole of history. We are born into it, it grows while we live, and then we die. To help us appreciate the bigger picture requires careful education and study that broadens our mind.
 
This is precisely what Bernstein's book does. It takes us outside of the here and now and help us understand the big picture, and he does this by looking at the details of goods traded in lands far away in all times. The book is beautifully written and wonderfully interesting on every page. I can't recommend it enough.
 
 
My only complaints are minor ones: Bernstein doesn't seem to have a solid theory of trade that goes beyond neoclassical economic conventions. Had he put one up front, he would have been able to go beyond the very good chronicle here to actually forge a solid theory of the social order itself. It is another example of how Smith's "propensity to truck and barter" has misled: Instead of seeing trade as a mutually beneficial exchange that extends from the desire to better one's lot in life, and an extension of human rationality, he treats the entire subject as if it were an instinct of some sort. But that is a regrettable oversight that in no way diminishes the contribution here.
 
My second complaint concerns the final chapter, which conforms to a rule often cited by the late Murray Rothbard -- that all final chapters of books should just be removed. He spends the entire book showing how trade can take place without any government management, and then uses the last chapter to argue for government-managed trade in the form of the North American Free Trade Agreement and the World Trade Organization.
 
You just want to shout: Read your own book, Mr. Bernstein! In general I would have appreciated a less tentative conclusion, something along the lines of pointing out that trade is what makes it possible for all great and glorious things to take shape in this world, and without which only a few lucky people would be alive, living in caves and eating whatever we could hunt or gather. The book is even more important than the author knows.
 
Readers have left 12 comments.
   Quote(1) Just Five Words
October 11th, 2008 | 5:25pm
LONG LIVE FREE TRADE! DOWN WITH THE HAMILTONIANS! TO DUST "THE AMERICAN PROTECTIONIST SOCIETY"! And remember that the British restriction on the 13 colonies' free trade helped lead to The War for Independence, the Morill Tariff caused Lincoln's War, and Smoot-Hawley turned the Recession of 1929 into The Great Depression.

An' we don' need no NAFTA. It can be just 5 words: "There shall be free trade".

   Quote(2) Re: Just Five Words
October 11th, 2008 | 8:46pm
LONG LIVE FREE TRADE! DOWN WITH THE HAMILTONIANS! TO DUST "THE AMERICAN PROTECTIONIST SOCIETY"! And remember that the British restriction on the 13 colonies' free trade helped lead to The War for Independence, the Morill Tariff caused Lincoln's War, and Smoot-Hawley turned the Recession of 1929 into The Great Depression.

An' we don' need no NAFTA. It can be just 5 words: "There shall be free trade".

— Robert Y. Hayne

Amen. In the name of the FAther, and of the Son, and of the Holy Spirit.
 Written by Conservative Catholic
   Quote(3) A couple of points
October 13th, 2008 | 8:18am
A couple of points:-

- From the distribution of related wild plants and the variation in domesticated types, it is more likely that coffee originated in Ethiopia than in the Yemen.

- Not ALL trade worked for betterment, e.g. the slave trade, and not ALL the gains of new goods and techniques were spread by trade, e.g. the intellectual property of silk and rubber were stolen and New World crops were part of the loot of Spanish conquest.
 Written by P.M.Lawrence
   Quote(4) Trade's downside
October 13th, 2008 | 9:09am

There is a downside to trade, and it has to do with spreading things that you do not want to spread (think kudzu). Rare sicknesses that would remain isolated can spread all over (the moral from AIDS is not that you should not have gay sex, but that you can pick up very dangerous bugs the more people circulate - and that we were lucky that it was AIDS, which takes some time to transmit and not Ebola fever).

As for Hamilton, his purpose was to turn the US into an industrial nation. He succeeded. If American industry was a byword for quality until recently, it was thanks to him. Would you have preferred a country under the curse of easy riches, driven by cotton?
 Written by Adriana
   Quote(5) Some comments
October 13th, 2008 | 11:10am
Jeffrey,

While you do make some good points about the benefits of trade, my morning coffee from Colombia and linen jacket from Italy being among them, it's not without its downsides, as several posters have already mentioned.

During the sixteenth century, there were thriving trades in silks, spices, tea, and other commodities; there was also a thriving trade in human beings (although Holy Mother Church to her immense credit spoke out against the slave trade from the very beginning). Not to mention the various diseases that were "traded" between the Old and New Worlds. In defense of Hamilton, though not without his faults, he at least recognized that a functioning market economy needs a legal and financial system to ensure stable credit and sound money. I highly doubt he would have approved of the shoddy fiscal and monetary policy that have landed us in the current mess!

Ultimately, trade, like any human endeavor, is flawed and cannot replace the worship due to our Lord alone! So we can praise the benefits of commerce, but always with qualifications.
 Written by Sandia
   Quote(6) another downside
October 13th, 2008 | 1:38pm

On the wake of trade came the beliefs of the people we traded with (or traded the people themselves - slavery was also trade). Be in African animism that became translated into Voudun and Santeria, or be it Hindu and Buddhist beliefs, the result was a nice neo-gnostic mixture, AKA, New Age beliefs.
 Written by Adriana
   Quote(7) Adriana
October 13th, 2008 | 3:02pm
Hamilton's purpose was to turn the U.S. into the centrally-managed, mercantilist state he envisioned as a Federalist. Hamiltonian ideology certainly succeeded at that.

If he only innocently desired an industrial powerhouse as you say, he must never have considered that a state powerful enough to protect, subsidize, and conduct monetary policy for the benefit industry would also be the most obvious target for Marxist takeover -- the fruit of which has not only negated any supposed benefits of mercantilist policy, but also nearly destroyed productive industry altogether in the U.S.
 Written by Ryan
   Quote(8) Anachronism?
October 13th, 2008 | 8:10pm
Ryan: Since Marx was not even born them, how could Hamilton think of a Marxist takeover? Talk about an AH scenario... the kind that needs Alien Space Bats to work.

He might have worried about takeover by a monarchist potency - and he took the steps to make the US strong enough so that neither Spain, from Mexico, nor England, from Canada, nor the French, through the financial support might want to take posession of the country again...
 Written by Adriana
   Quote(9) Frailty, thy Name is Woman!
October 13th, 2008 | 8:11pm
"It is one of the great failings of the human race that we tend to regard the wealth that surrounds us as a given, something that is just part of the world that will last forever and requires no work to acquire."

Man, this describes my stay-at-home wife's mentality to a "T"! The modest wealth I've worked so hard to attain is like a puddle to her. There's always more where that came from! [smiley=laugh]
 Written by Anarcho-Papist
   Quote(10) The Slave Trade is NOT Free Trade!
October 13th, 2008 | 8:28pm
It is not only the slave trade and illnesses that can be spread by free trade. (I might interject here that slaves don't consent to be traded, so "slave trade" is a contradiction in terms.) Christian ideals upholding the dignity of the individual can be spread, as can medical advances and improved sanitation and nutrition.

The fact remains all government requires extortion (taxes) and, therefore, mayhem, violence, threats of violence, surveillance and involuntary servitude. Those who oppose slavery ought to support free trade and oppose government. Government is the ultimate slaveowner.
 Written by Tony Pivetta
   Quote(11) Re: Trade
October 14th, 2008 | 4:10pm

There is a downside to trade, and it has to do with spreading things that you do not want to spread (think kudzu). Rare sicknesses that would remain isolated can spread all over (the moral from AIDS is not that you should not have gay sex, but that you can pick up very dangerous bugs the more people circulate - and that we were lucky that it was AIDS, which takes some time to transmit and not Ebola fever).
— Adriana


Then again, the upside of trade is that medical advances can also be spread to areas of the world that might otherwise be doomed to needlessly suffer from totally preventable diseases (childhood immunizations, for example). Even for diseases that can't be prevented or cured, think of the improvements in quality of life that can be attained through better nutrition, medications, water purification and sanitation systems, etc. Free trade makes all of this possible by most efficiently allocating scarce resources.
 Written by Rob H
   Quote(12) Everything has a downside
October 15th, 2008 | 9:21am

What is wrong with admitting that trade has downside? do you know anything that does not have one?

Like water

People do not drown in water? Hurricanes and floods- that is water cause untold damage don't they? Are we supposed to deny it because water is essential to life?

Like fire

Will you allow your home to burn to a crisp because of the untold benefits that fire had brought to mankind? Will you get rid of the fire department?

Free traders who do refuse to see the destructive side of their god (for they worship it, against the First Commandment, to the point of believing that Adam Smith is more infalible than the Pope), fly against all common sense and all we know of the natural world.

Yes, there is a downside. Yes, we should be aware of it. Yes, we should be able to protect ourselves from it. And yes, we should not have to listen to tedious lectures as to all the good it obviously does.

 Written by Adriana

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