2 February 2018

Free trade - Left behind?

by Christopher Rowe

“Tariffs are not a remedy for unemployment. They are an impediment to the free interchange of goods and services upon which civilised society rests… They perpetuate inequalities in the distribution of the world’s wealth won by the labour of hands and brain.”

Fine words on the merits of free trade. You would be forgiven for thinking they were drawn from the pages of Adam Smith’s Wealth of Nations. Yet this statement of intent postdates the publication of that seminal work by more than a century. The words of some twentieth-century, self-seeking capitalist? Not how one would normally describe the Labour Party of 1923, which stood unapologetically in favour of free trade in the face of Conservative efforts to maintain and impose further tariffs.

As the Labour manifesto of 1923 (the above quotation represents its first few lines) so aptly demonstrates, free trade, neither an inherently capitalist nor socialist doctrine, has throughout the ages found favour with those across the political spectrum, including the Left.

The 1923 general election was a contest between free trade and protectionism. Conservative Prime Minister Stanley Baldwin staked his fortunes on the divisive issue of tariff reform as the panacea for high unemployment and the struggling economy.

In response, the Labour Party managed to unite two unlikely ideas in its offering to the people: a programme of nationalisation and free trade. Labour pamphlets from the end of the war onwards portrayed protectionism as an imperialist doctrine, which resulted in increased risk of international conflict and lower real wages. Chief amongst these were Brougham Villiers’ Tariffs and the Worker and a pamphlet by Leonard Woolf, endorsed by prominent Labour figures including C.R. Buxton and J.R. MacDonald, which rejected tariffs for domestic industries.

During the 1923 election through to 1931 and beyond, Labour politicians and trade unionists lambasted protectionism as the politics of high food prices. In the 1931 election, 93 percent of Labour candidates defended free trade against renewed calls for protection.

William Wedgwood Benn, the Viscount Stansgate and father of Tony Benn, and until 1928 a member of the Liberal Party before jumping ship to Labour, proclaimed in 1923 that “we believe in free trade and believe that this is a free trade country, and that our constituents intend that free trade shall be the policy of the government.”

Benn, in his support for unilateral tariff reduction, was typical of the Left at this juncture. Thomas Shaw, a Labour MP from 1918 onwards, backed free trade in the 1923 election as a doctrine which guarantees the “efficiency” of industry and which was “the only thing in the world that can make… industry prosperous”. Ensuring that this would not be seen as unpatriotic, he stated that “we have the finest type of working man in the world” and the country would thrive “if the same skill and industry and organising capacity were shown on the part of the employers as we see on the part of the workmen.” Shaw realised that tariffs breed inefficiency on the part of industry, as well as raising prices for consumers and hitting the poor the hardest.

John Maynard Keynes, then a Liberal supporter, also railed against protectionism:

“By cutting off imports we might increase the aggregate of work; but we should be diminishing the aggregate of wages… Is there anything that a tariff could do, which an earthquake could not do better?”

This advocacy of free trade by Labour representatives and sympathisers was hardly some aberration. The genesis of the free trade movement in the nineteenth century was firmly linked to what one might anachronistically term “the Left”. It was the industrialists, the entrepreneurs, “the nation of shopkeepers” who, experiencing stagnating demand, were champing at the bit for a reduction in tariffs. And this was because their livelihood increasingly depended on their ability to sell their wares abroad without encountering the encumbrance of reciprocal trade barriers.

It was radical MPs from the newly enfranchised (post-1832) northern boroughs who led the way, bringing an end to the Corn Laws in 1846 and mitigating the worst effects of imperial preference. Villiers, Cobden, Thornely, Gibson, and others, all representatives of towns, called for industry to be “unchained” in the 1840s in order to bring much needed relief to the working classes in the form of lower food prices - thereby securing an end to the “hungry forties”.

Decades later, fears over whether Britain would be able to feed herself if she were to embrace free trade proved to be unfounded. Joseph Arch, the leader of the National Agricultural Labourers’ Union, did not lament the cessation of agricultural protection. Rather, he emphasised in 1884 that ‘[t]he natural effect of Protection is to restrict trade, and restriction means less of everything for the working classes. This is proved by actual experience. The darkest days in our history were those [of] Protection’.

Is the relationship between the Left and free trade history (and hardly recent history at that)? What about these words of sense uttered at the turn of the twenty-first century:

“We have a vision of Europe. We want a people’s Europe: free trade, industrial strength, high levels of employment and social justice, democratic. Against that vision is the bureaucrat’s Europe: the Europe of thwarting open trade, unnecessary rules and regulations, the Europe of the CAP and the endless committees leading nowhere.”

Those words could have fallen from the lips of Nigel Farage, but instead represent the utterings of a leader who later became happily ensconced within the bureaucratic labyrinth of the EU.

But Tony Blair, in his speech to the Labour Conference in 1997, believed in free trade. He wanted Europe to embrace the world, eschew unnecessary rules, and scrap the modern-day Corn Laws embodied in the CAP. The 1997 manifesto decried tariffs erected by the EU, calling for “urgent reform of the Common Agricultural Policy” which it described as “costly, vulnerable to fraud and not geared to environmental protection.”

Free trade was, at the inception of the New Labour project, key – it was only in subsequent years, when commitment to the EU trumped all else, that Blair sidelined this message.

What can be drawn from this historical overview? That there is a justification for free trade rooted in the concerns which drive socialist politics: free trade is a consumer-first, pro-employment, anti-poverty doctrine, from which the working class stands to benefit most. And how better to persuade sceptics on the Left of this than to remind them of the words of their ideological forebears?

Christopher Rowe

Christopher Rowe is a historian of free trade, with particular expertise in nineteenth-century British and European history.