This talk was prepared for a Christian businessmen’s luncheon at the First National Bank in East Lansing, Michigan, on April 19, 2005.
Some of the most vociferous attacks on free trade in recent years have come from religious lobbies, and are led by people who believe that they have the best interests of the workers in mind. They call on us to buy products labeled fair trade, or to boycott growers who employ low-cost labor, or to refuse products made by international corporations operating in the third world, or to join protestors at any international conferences where it is believed that the conspirators inside are seeking to lower barriers to trade. They do all of these things under the conviction that to limit the right to buy and sell is part of the mission of spreading the social gospel.
Actually, what they are doing is raising the prices of consumer products, harming opportunity for workers to find good employment, hindering growth of economies in the developing world, and inadvertently serving as foot soldiers for the mercantile interest groups that seek to shield themselves from more efficient but foreign competitors. Their campaigns may be cast in a different light, but the substance of their program is no different from those who say that we should only buy American, which in turn makes no more logical sense than a campaign to buy only Michigan, or buy only Lansing, or, reductio ad absurdum, buy only from me.
The push to restrict people’s opportunities to buy and sell based on region is an attempt to bring about what economists call autarky, or economic self-sufficiency. It is the economic system that decries the expansion of the division of labor and urges all production to take place in the smallest possible geographical unit. In practice, the campaign for economic autarky takes place at the level of the nation state and thereby works as a handmaiden of those who see nationalism and even war as a better program than peace and mutual betterment through trade.
I know of only one setting in which autarky is economically viable. It is the Garden of Eden. Here the ground did not need to be prepared for growing. It produced on its own. Animals did not need to be hunted, slaughtered, and cooked. Economic scarcity did not exist. There was no scarcity of resources, no scarcity of time, and no economic problem to overcome at all. Mortality was unknown. Man and woman lived in perfect contentment in the presence of God. Economic autarky was viable here.
But with sin came death and banishment from this garden. Man and woman would have to work to produce. Pain and suffering entered into the world. Time and resources were scarce. But God did not leave the human population with no means to overcome the new limits on what could be consumed. God made it possible for the human population to use intelligence to exchange. People would divide their labor based on their own unique talents and capacities. This division took place between peoples and regions. Trade became a means to achieve a kind of cooperative unity even though the Garden of Eden was nowhere to be found.
Thus was born the concept of free trade.
The Christian tradition teaches that the sin of the Garden was finally destroyed at the Incarnation, when God became Man and walked among us. The Gospel of Matthew records for us that the first gifts given to him came from the Magi, wise men who traveled from foreign lands. And what did they bring? Gold, frankincense, and myrrh — products from the East. Jesus was thus presented products acquired from international lands, imports to Bethlehem.
One can only imagine the scene had the social gospel autarkists been present. They would have demanded to know whether the workers who mined the gold, made the incense, or produced the myrrh were paid a fair wage. They might have demanded, lacking proof of such, that the Wise Men should have refrained from buying. Certainly Jesus should not be given gifts acquired through fair trade, they might say. They might have demanded that instead of traveling from afar that the Wise Men might have been socially conscious enough to Buy Bethlehem.
In his ministry Jesus recruited from among the merchant class, most famously from among fishermen, whose produced commodity knows no nation or state. They were tent makers who traveled to provide people goods and services that they needed where they needed them. There is not a word in the whole of the Gospels that speaks of some alleged need to keep production local or to establish some arbitrary geographic limits on buying and selling. Such an attitude is completely alien to Biblical times, where the need to overcome poverty through trade was everywhere understood.
Jesus’s parables are filled with references to commerce and its ethical obligations. In the story of the Laborers in the Vineyard, we find a vineyard owner who hires based on contract and adheres to that contract even when it meant paying people who worked a full day the same as those who worked only a few hours. There was no talk of fair wages here. The lesson we are taught rests on the right of the owner to make contracts, the right of the laborer to accept or refuse work, and the failure of vision of those workers who complain about the terms after the fact.
Again, we can imagine what the social gospel autarkists would say about this situation. They would probably advocate nationalizing the vineyard and unionizing the workers, who would then promptly strike for shorter hours and higher wages and benefits all around.
Moving on to the parable of the talents from Saint Matthew, scripture notes that the master is preparing for another trip to a foreign land. We are told that he is the kind of person who reaps where he has not sown and gathers where he has not planted. In other words, he used the division of labor, the surest path to wealth. He was a trader and entrepreneur who saw his business as extended to all places, not just those of his residence. It is through foreign trade that the man most likely made his money, which was then given to the servants as a test of their prowess as investors. Some passed and others failed.
We as individuals and as a nation can choose to bury our talents or seek out the best and most profitable uses for them. That could mean that our capital should travel just as the master in the parable has traveled. To insist that we use our scarce resources wastefully means to behave as the man who was cast out of the kingdom on grounds that he hadn’t even deposited his money with the bankers to earn a market rate of return.
Today, we face relentless demands to establish a system of autarky, to buy local or national rather than divide up the labor, specialize, and trade to our mutual advantage. But this is not the path to prosperity. It is the path to conflict and war. Among the charges that the Declaration of Independence leveled against King George was that he was attempting to cut off colonial trade with all parts of the world but Britain. This the founders saw as a violation of human rights and a policy of impoverishment.
As F.A. Hayek wrote in the neglected conclusion to his 1944 book The Road to Serfdom, “If international economic relations, instead of being between individuals, become relations between whole nations organized as trading bodies, they will inevitably become the source of friction and envy.”
Ludwig von Mises concluded in his 1944 book Omnipotent Government: The Rise of the Total State and Total War with a similar warning. “The establishment,” he said, “of an international body for foreign trade planning will end in hyperprotectionism.” These two great free marketeers understood how government uses the period immediately following a war as it does the war itself for state power and special-interest rewards.
When we think of the conflicts of our own time, we can see how they stem from a failure to engage in exchange. Ten years of sanctions against Iraq cut off that country’s trade with its most profitable markets. This act of protectionism was a prelude to a ghastly war. In contrast, our relations with China have been of growing amounts of trade, and a potential setting of conflict has turned to one of mutual benefit.
After the fall of communism and the rise of economic liberalization around the world, it is no longer feasible to deny the reality of economic globalization. Rather than bemoan this, we need to see the benefits for all peoples. It means more good and services and lower prices. It means more opportunities for improving the standard of living. It means better relationships between all cultures and peoples. In free trade, I believe, we see the hand of the Creator. We are given the means to cooperate to overcome banishment from the Garden. We will also contend with scarcity. But that should never stop us from living out the Gospel command to go forth into all the world.
It is the earth and the fullness thereof, not the nation state, that is the Lord’s. Not just ministers but also merchants and consumers should be free to go forth into all the world.