Cultural Revolutions

American Economy

The WTO talks in Cancun, Mexico, and their ultimate collapse were similar to what happened in Seattle in 1999, when President Bill Clinton, an avowed “free trader,” walked out when faced with demands even he could not stomach.  Four years later, the United States again faced an intransigent coalition presenting unacceptable demands.

Liberal commentators have portrayed the breakdown as a clash between “rich” and “poor” nations, urging the United States to make more concessions to help the Third World.  Yet the smaller “poor” countries would have had little leverage without such major states as China, Brazil, and India leading them.  These rising continental powers are in the same position as the United States was a century and a half ago.  They want to control their own destinies, which means concentrating on national development and the deepening of their own economic bases.  Trade is useful only to the extent that it shifts the balance of power in their direction.  And, as Japanese Prime Minister Junichiro Koizumi told reporters, “There are divisions even among developed nations.”

What is lacking among neoclassical trade theorists is the realization that commerce runs on the basis of competition, not harmony.  The great error that has dogged classical liberalism is that peaceful trade can replace international strife.  The...

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