While in a session on international trade theory at Harvard Kennedy School last summer, we had the assignment to go through the work of the most representative authors on this topic – Adam Smith, Alexander Hamilton, John Maynard Keynes and Karl Marx. As a preliminary remark, the professor made a very strong statement: “Did you know that Karl Marx was a free trader?” Then he complemented: “Karl Marx was indeed an advocate of free trade but for very particular reasons”.
Karl Marx’s major statement about free trade was a speech delivered to the Democratic Association of Brussels, on January 9, 1848, in light of the England’s Corn Laws that was recently repealed, around the same time as he wrote the Communist Manifesto. Filled with skepticism and sarcasm, Marx’s speech concluded:
“But, generally speaking, the Protective system in these days is conservative, while the Free Trade system works destructively. It breaks up old nationalities and carries antagonism of proletariat and bourgeoisie to the uttermost point. In a word, the Free Trade system hastens the Social Revolution. In this revolutionary sense alone, gentlemen, I am in favor of Free Trade”.
Marx focused on the discussion of Protection vs. Free Trade. His logic can be summarized in four main arguments: (a) Protection is nothing but a means of establishing large-scale industry in any given country with the only effect of strengthening the capital; (b) whereas Protection builds up the nation-state, Free Trade breaks it down; (c) Free Trade is about freedom of capital and not freedom of individuals; (d) under Free Trade, nations grow rich at the expense of another, and within one country one class enrich itself at the expense of another; (e) Free Trade exacerbates class warfare, and through this the capitalists will lose control of the world-state – they will be defeated by the impoverished classes, with the help of their backers in the higher classes.
Against the argument of Protection, Marx stresses the philanthropy of protectionists in the following words: “It is better to be exploited by one’s fellow-countrymen than by foreigners.” Further, Marx argues that “when you have overthrown the few national barriers which still restrict the progress of capital, you will merely have given it complete freedom of action. So long as you let the relation of wage labor to capital exist, it does not matter how favorable the conditions under which the exchange of commodities takes place, there will always be a class which will exploit and a class which will be exploited.”
Against arguments that Free Trade would provide cheap food and higher wages, Marx pointed that by unleashing competition, Free Trade was likely to drive down workers’ wages. Marx also disputed the argument that Free Trade facilitated a natural division of labor between countries. According to Marx, free traders failed to understand that “one country can grow rich at the expense of another”. For Marx, Free Trade under the present condition of society is the freedom where capital has to crush the worker.
Why did Marx come out in favor of Free Trade, even in that disqualified sense? Marx was being metaphorical, asserting that between the two bad Capitalist alternatives, Free Trade and Protection, Free Trade at least had the merit of pushing along the contradictions of Capitalism.