Tim Lee makes a couple of points about what he sees as the puzzling connections between free trade and protectionism, and he stumbles across the point I’d made earlier to one of Jerry Brito’s comments, (yes, the comment that Jerry can’t respond to, and therefore must censor) It’s a simple point that Karl Polanyi made in his excellent book The Great Transformation: that the self-regulating market requires state intervention, both for it’s creation and for its maintenance . So the creation of a self regulating market in copyrighted goods requires state intervention to create and maintain that market. But Tim, being a libertarian, can’t read or understand Polanyi, so he’s confused about why those who support free trade also support certain market interventions:

This is a fascinating question. One of the things I find really interesting about the 19th century political debate is that the opposing political coalitions were more sensibly aligned, perhaps because people had a slightly clearer sense of what was at stake. My impression (which may be wrong in its details) is that the free traders tended to be liberals and economic populists. They clearly understood that protectionism brought about a transfer of wealth from relatively poor consumers to relatively wealthy business interests. In the opposing coalition were a coalition of business interests and xenophobes making fundamentally mercantilist arguments about economic nationalism.

 

Karl Polanyi covers this period in his book The Great Transformation. His perspective is a little different.

First, Polanyi notes that those opposing the liberal agenda there were the defenders of the old order, ultimately derived from the feudal social structure, as well the working urban proletariat. Their interests never coincided and their visions of an alternative to the dominant liberal creed were so very different, it is not surprising that they never formed a united opposition. It is true that once the middle class realized that free trade meant cheaper food they were temporarily won over to its cause. But there were a few others who realized how disastrous free trade would be in the long run.

Second, Tim Lee, as all libertarians do, makes a whole series of informational exclusions about what comes along with liberalism. For example, it cannot be an accident that Great Britain, during the time of the ascendancy of liberal ideals, also maintained a very large colonial empire. Ultimately, adherence to the dogma of the self-regulating market requires state intervention to ensure that the prices of labor, land, and money are all controlled only by economic factors internal to that self-regulating market. When social, environmental, religious or national policies interfere with the operating of that self regulating market, state intervention is required. Case in point: US invasion of Iraq. When political ideals interfere with the functioning of the self-regulating market, state intervention is also called for by supporters of the market. Case in point: the DMCA. From this view, the fact that those who support the self-regulating market also support strong imposed patent, copyright and trademark laws is entirely consistent and unsurprising.

 

The bottom line is: you cannot separate the economic functioning of society from its broader social, political, environmental, national and social contexts, as liberals are wont to do. Human society just cannot be distilled into neatly separate fungible categories. They are all connected. Failure to come to grips with this reality is why libertarianism can only be maintained by making excluding whole categories of information.

Thus the following confusion on Tim’s part:

Today’s free trade debate is much weirder, because there are enough businesses who want to export things that significant parts of the business community are for freer trade. On the other hand, the liberals who fancy themselves defenders of relatively poor consumers find themselves in bed with predatory industries like sugar and stell that have been using trade barriers to gouge consumers. And the “trade” debate has increasingly come to be focused on issues that don’t actually have much to do with trade, whether it’s labor and environmental “standards,” copyright and patent requirements, working retraining programs, cross-border subsidies, etc.

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