two boys swap tops for marbles, that is the marketplace. The simple
barter, in terms of human happiness, is no different from a trade
transaction involving banking operations, insurance, ships, railroads,
wholesale and retail establishments; for in any case the effect
and purpose of trade is to make up a lack of satisfactions. The
boy with a pocketful of marbles is handicapped in the enjoyment
of life by his lack of tops, while the other is similarly discomfited
by his need for marbles; both have a better time of it after the
In like manner,
the Detroit worker who has helped to pile up a heap of automobiles
in the warehouse is none the better off for his efforts until
the product has been shipped to Brazil in exchange for his morning
cup of coffee. Trade is nothing but the release of what one has
in abundance to obtain some other thing one wants. It is as pertinent
for the buyer to say "thank you" as for the seller.
is not necessarily a specific site, although every trade must
take place somewhere. It is more exactly a system of channeling
goods or services from one worker to another, from fabricator
to consumer, from where a superfluity exists to where there is
a need. It is a method devised by man in his pursuit of happiness
to diffuse satisfactions, and operating only by the human instinct
of value. Its function is not only to transfer ownership from
one person to another, but also to direct the current of human
exertion; for the price indicator on the chart of the marketplace
registers the desires of people, and the intensity of these desires,
so that other people (looking to their own profit) may know how
best to employ themselves.
trade may be possible, but it would hardly be living; at best
it would be mere existence. Until the marketplace appears, men
are reduced to getting by with what they can find in nature in
the way of food and raiment; nothing more. But the will to live
is not merely a craving for existence; it is rather an urge to
reach out in all directions for a fuller enjoyment of life, and
it is by trade that this inner drive achieves some measure of
fulfillment. The greater the volume and fluidity of marketplace
transactions the higher the wage level of Society; and, insofar
as things and services make for happiness, the higher the wage
level the greater the fund of happiness.
importance of the marketplace to the enjoyment of life is illustrated
by a custom recorded by Franz Oppenheimer in The
State. In ancient times, on days designated as holy,
the marketplace and its approaches were held inviolable even by
professional robbers; in fact, stepping out of character, these
robbers acted as policemen for the trade routes, seeing to it
that merchants and caravans were not molested. Why? Because they
had accumulated a superfluity of loot of one kind, more than they
could consume, and the easiest way of transmuting it into other
satisfactions was through trade. Too much of anything is too much.
serves not only to diffuse the abundances that human specialization
makes possible, but it is also a distributor of the munificences
of nature. For, in her inscrutable way, nature has spread the
raw materials by which humans live over the face of the globe;
unless some way were devised for distributing these raw materials,
they would serve no human purpose. Thus, through the conduit of
trade the fish of the sea reach the miner's table and fuel from
the inland mine or well reaches the boiler of the fishing boat;
tropical fruits are made available to northerners, whose iron
mines, translated into tools, make production easier in the tropics.
It is by trade that the far-flung warehouses of nature are made
accessible to all the peoples of the world and life on this planet
becomes that much more enjoyable.
of trade as the barter of tangible things simply because that
is obvious. But a correlative of the exchange of things is the
exchange of ideas, of the knowledge and cultural accumulations
of the parties to the transaction. In fact, embodied in the goods
is the intelligence of the producers; the excellent woolens imported
from England carry evidence of thought that has been given to
the art of weaving, and Japanese silks arouse curiosity as to
the ideas that went into their fabrication. We acquire knowledge
of people through the goods we get from them. Aside from that
correlative of trade, there is the fact that trading involves
human contacts; and when humans meet, either physically or by
means of communication, ideas are exchanged. "Visiting" is the
oil that lubricates every marketplace operation.
It was only
after Cuba and the Philippines were drawn into our trading orbit
that interest in the Spanish language and customs was enlivened,
and the interest increased in proportion to the volume of our
trade with South America. As a consequence, Americans of the present
generation are as familiar with Spanish dancing and music as their
forefathers, under the influence of commercial contacts with Europe,
were at home with the French minuet and the Viennese waltz. When
ships started coming from Japan, they brought with them stories
of an interesting people, stories that enriched our literature,
broadened our art concepts, and added to our operatic repertoire.
It is not
only that trading in itself necessitates some understanding of
the customs of the people one trades with, but that the cargoes
have a way of arousing curiosity as to their source, and ships
laden with goods are followed with others carrying explorers of
ideas; the open port is a magnet for the curious. So, the tendency
of trade is to break down the narrowness of provincialism, to
liquidate the mistrust of ignorance. Society, then, in its most
comprehensive sense, includes all who for the improvement of their
several circumstances engage in trade with one another; its ideational
character tends toward a blend of the heterogeneous cultures of
the traders. The marketplace unifies Society.
concentration of population determines the character of Society
only because contiguity facilitates exchange. But contiguity is
a relative matter, depending on the means for making contacts;
the neutralization of time and space by mechanical means makes
the whole world contiguous. The isolationism that breeds an ingrown
culture and a mistrust of outside cultures melts away as faster
ships, faster trains, and faster planes bring goods and ideas
from the great beyond.
of Society is not fixed by political frontiers but by the radius
of its commercial contacts. All people who trade with one another
are by that very act brought into community.
is emphasized by the strategy of war. The objective of a general
staff is to destroy the marketplace mechanisms of the enemy; the
destruction of his army is only incidental to that purpose. The
army could well enough be left intact if his internal means of
communication were destroyed, his ports of entry immobilized,
so that specialized production, which depends on trade, could
no longer be carried on; the people, reduced to primitive existence,
thus lose the will to war and sue for peace. That is the general
pattern of all wars. The more highly integrated the economy the
stronger will be the nation in war, simply because of its ability
to produce an abundance of both military implements and economic
goods; on the other hand, if its ability to produce is destroyed,
if the flow of goods is interrupted, the more susceptible to defeat
it is, because its people, unaccustomed as they are to primitive
conditions, are the more easily discouraged. There is no point
to the argument as to whether "guns" or "butter" is more important
in the prosecution of war.
that any interference with the operation of the marketplace, however
done, is analogous to an act of war. A tariff is such an act.
When we are "protected" against Argentine beef, the effect (as
intended) is to make beef harder to get, and that is exactly what
an invading army would do. Since the duty does not diminish our
desire for beef, we are compelled by the diminished supply to
put out more labor to satisfy that desire; our range of possibilities
is foreshortened, for we are faced with the choice of getting
along with less beef or abstaining from the enjoyment of some
other "good." The absence of a plenitude of meat from the marketplace
lowers the purchasing power of our labor. We are poorer, even
as is a nation whose ports have been blockaded.
since every buyer is a seller, and vice versa, the prohibition
against their beef makes it difficult for Argentineans to buy
our automobiles, and this expression of our skills is constricted.
The effect of a tariff is to drive a potential buyer out of the
marketplace. The argument that "protection" provides jobs is patently
fallacious. It is the consumer who gives the worker a job, and
the consumer who is prevented from consuming might as well be
dead, as far as providing productive employment is concerned.
is it jobs we want, or is it beef? Our instinct is to get the
most out of life with the least expenditure of labor. We labor
only because we want; the opportunity to produce is not a boon,
it is a necessity. Neither the domestic nor the foreign producer
"dumps" anything into our laps. There is a price on everything
we want and the price is always the weariness of toil. Whatever
causes us to put out more toil to acquire a given amount or kind
of satisfactions is undesirable, for it conflicts with our natural
urge for a more abundant life. Such is a tariff, an embargo, an
import quota or the modern device of raising the price of foreign
goods by arbitrarily lowering the value of our money. Any restriction
of trade, internal or external, does violence to a man's primordial
drive to improve his circumstances.
Just as trade
brings people together, tending to minimize cultural differences,
and makes for mutual understanding, so do impediments to trade
have the opposite effect. If the customer is always "right," it
is easy to assume that there is something wrong with the nonbuyer.
The faults of those who refuse to do business with us are accentuated
not only by our loss but also by the sting of personal affront.
boy with the tops refuse to trade with the boy who has marbles,
they can no longer play together; and this desocialization can
easily stir up an argument over the relative demerits of their
dogs or parents. Just so, for all our protestations of good neighborliness,
the Argentinean has his doubts about our intentions when we bolt
our commercial doors against him; compelled to look elsewhere
for more substantial friendship, he is inclined to think less
of our national character and culture.
of trade isolationism is the feeling that the "outsider" is a
"different kind" of person, and therefore inferior, with whom
social contact is at least undesirable if not dangerous. To what
extent this segregation of people by trade restrictions is the
cause of war is a moot question, but there can be no doubt that
such restrictions are irritants that can give other causes for
war more plausibility; it makes no sense to attack a good customer,
one who buys as much of our products as he can use and pays his
bills regularly. Perhaps the removal of trade restrictions throughout
the world would do more for the cause of universal peace than
can any political union of peoples separated by trade barriers;
indeed, can there be a viable political union while these barriers
exist? And, if freedom of trade were the universal practice, would
a political union be necessary?
Let us test
the claims of "protectionists" with an experiment in logic. If
a people prosper by the amount of foreign goods they are not permitted
to have, then a complete embargo, rather than a restriction, would
do them the most good. Continuing that line of reasoning, would
it not be better all around if each community were hermetically
sealed off from its neighbor, like Philadelphia from New York?
Better still, would not every household have more on its table
if it were compelled to live on its own production? Silly as this
reductio ad absurdum is, it is no sillier than the "protectionist"
argument that a nation is enriched by the amount of foreign goods
it keeps out of its market, or the "balance of trade" argument
that a nation prospers by the excess of its exports over imports.
Yet, if we
detach ourselves mentally from entrenched myths, we see that acts
of internal isolationism such as described in our syllogism are
not infrequent. A notorious instance of this is the French octroi,
a tax levied on products entering one district from another. Under
cover of "quarantine" regulations, Florida and California have
mutually excluded citrus fruits grown in the other state. Labor
unions are violent advocates of opulence-through-scarcity, as
when they restrict, by direct violence or by laws they have had
enacted, the importation of materials made outside their jurisdiction.
A tax on trucks entering one state from another is of a piece
with this line of reasoning. Thus, the "protectionist" theory
of fence building is internalized, and in the light of these facts
our reductio ad absurdum is not so farfetched. The marketplace,
of course, scoffs at such scarcity-making measures, for it yields
no more than it receives; if its offerings are made scarce by
trade restrictions, that which remains becomes harder to get,
calls for an expenditure of more labor to acquire. The wage level
of Society is lowered.
of "protectionism" rests on the notion that the be-all and end-all
of human life is laboring, not consumption and certainly not
leisure. If that were so, then the slaves who built pyramids were
most ideally situated; they worked much and received little. Likewise,
the Russians chained to "five-year plans" have achieved heaven
on earth, and so did the workers who, during the Depression, were
put to moving dirt from one side of the road to the other.
this notion that exertion for the sake of exertion is the way
to prosperity, then a people would be most prosperous if they
all labored on projects with no reference to their individual
sense of value. What is euphemistically called "war production"
is a case in point; there is in fact no such thing, since the
purpose of production is consumption; and it is not on record
that any worker built a battleship because he wanted it and proved
his craving by willingly giving up anything in exchange for it.
Keeping in mind the exaltation of laboring, would not a people
be most uplifted if they all were set to building battleships,
nothing else, in return for the necessaries that would enable
them to keep on building battleships? They certainly would not
Yet, if we
base our thinking on the natural urge of the individual to better
his circumstances and widen his horizon, operating always under
the natural law of parsimony (the most gain for the least effort),
we are compelled to the conclusion that effort which does not
add to the abundance of the marketplace is useless effort. Society
thrives on trade simply because trade makes specialization possible,
specialization increases output, and increased output reduces
the cost in toil for the satisfactions men live by. That being
so, the marketplace is a most humane institution.