On soft commerce

Montesquieu was right. That’s my reaction to Trump’s ban on people from some Muslim countries entering the US.

The thing is that, as the Washington Post has pointed out, the ban does not apply to nations where Trump has business interests, such as Saudi Arabia, Egypt and Turkey – despite the fact that these countries are no strangers to terrorists.

What we’re seeing here, then, is vindication of Montesquieu’s claim (pdf) – recently revived by Deirdre McCloskey – that commerce “polishes and softens barbaric ways”. Trump’s barbaric ban is tempered by his commercial interests.

You might say this is just fascism mitigated by greed. But I’d prefer this to unmitigated fascism.

This poses the question: how exactly does commerce soften barbarism? Roughly speaking, there are two mechanisms.

One – which we see in Trump’s decision – is pure self-interest. If we are trading with people, it’s in our interests that they are prosperous and that they regard us favourably. We therefore try not to hurt them.

In this sense, there’s an echo of Bretton Woods II (pdf) in Trump’s actions. In this system, westerners invested in Chinese factories and China invested in western bonds. This promoted a mutual self-interest in respecting others’ property rights: the risk of westerners being expropriated by the Chinese government is tempered by the fact that such an act would be met with sanctions against China’s western investments.

Another mechanism, though, is that commerce brings people together and so humanizes them and breaks down antipathy. One big way in which racism was diminished in the 70s and 80s, for example, was through the emergence of black footballers; increased commerce between white fans and black players broke down racism.

Thinkers such as Karl Polanyi have objected that market economies break down communities, replacing strong communal ties with the weaker ties of trade. There is, though, an upside to this. Strong homogenous communities can be insular and hostile to outsiders: the League of Gentlemen were right to see that there’s something sinister in the question “are you local?” It’s no accident that the vote to leave the EU tended to be strongest in areas where there were fewer migrants. And it might be no accident that, in a wider historical perspective, the growth of the market economy has coincided with a decline in violence.

It’s in this context that we should worry about Trump’s protectionism. I agree with Tyler Cowen that the macroeconomic damage of border taxes might be limited. Instead, their danger is cultural.

For one thing, protectionism rests upon the idea that trade is a zero-sum game – that “their” win is our loss – rather than an arrangement that benefits both parties*. This validates and encourages anti-foreigner sentiment. And for another, if there are fewer trade links between nations there’ll be fewer meetings between different nationalities and hence in the longer-run less tolerance and goodwill.

In this sense, what Trump is promoting is a form of feudalism. The idea that wealth creation is zero-sum is a feudal idea. And immigration controls are feudal, in the sense that they use force to ensure that those born into poverty stay poor.

Today, it’s not enough to be anti-capitalist. We must also be anti-feudalist.   

* You might object that there’s some truth in the zero-sum conception of trade as some people have indeed lost out through globalization. I’m not so sure. Capitalism is a mixture of soft commerce and hard exploitation and it is the latter that is most responsible for workers’ losses (pdf) – both in the sense that factors such as the decline of trades unions and power-biased technical change have harmed workers, and in the sense that we’ve not had the policy responses that would ensure that globalization did benefit everyone.

Comments

[Dave Timoney]

The idea that commerce brings people together is rather antique, conjuring up pictures of sailors dockside and merchants in market squares. The historic trend of trade has been towards segregation (e.g. docks moving out of cities and being increasingly automated) and evanescence (e.g. digital goods and services).

What brings people together is increasingly shared experiences, whether in the form of face-to-face work or tourism. For example, the mechanism by which racism declined in British football grounds after the 70s was not "increased commerce between white fans and black players" but that black players attracted and encouraged black fans. This led to the recognition of shared interests among spectators and made overt racism unfashionable.

We have probably already reached a point where trade tariffs are likely to have only a weak impact on international understanding, so Tyler Cowen's analysis could be extended from the economic realm to the cultural. Our problem may be that commerce, in the traditional sense, has already lost much of its power to "soften barbarism".

[Bob]

Just as the risk of socialism is totalitarian collectivism as manifested in Communism, so to the risk of capitalism as economic liberalism dominate over social and political liberalism is fascism based on corporate totalitarianism and plutocratic oligarchy as a form of feudalism.

From this perspective, the interaction that is manifesting is the logical progression of events.

This elicited a reaction from the have-nots in America, who had nowhere else to turn but to a billionaire that was willing to represent their interests vis-à-vis the establishments of both parties. Again, this was a logical iteration based on the social and political structure being based on wealth as power.

What appears to be fascism to liberals is the expression of the will of the people that delivered the election to Trump, based on his political advisers reading of the mood of the electorate, chiefly Steve Bannon.

Donald Trump's challenge is to deliver on his promises to the people that delivered power to him, while also using that power to further his own interests and those of his cohort.

Liberals need to stop obsessing on Donald Trump and the people that put him in power and setting their own house in order. They created Donald Trump and they can only remove him successfully if they get their own houses in order by consecutive self-criticism rather than blame, admitting their mistakes and failures, and formulating and executing a new plan that corrects the mistakes and advances their game.

[Aaron Headly]

A note on this: Trump's support wasn't just predominantly from white people, it was strongest in the areas where there is almost nothing but white people.

America's anti-moslem tendencies are strongest where there are no moslems around.

[David.]

Fear of the monkeys on the other side of the hill is prevalent everywhere that very few monkeys have ever ventured over the hill.... in either direction
The hills and plains of the USA, the UK and France etc.. are much the same.

[David]

And of course trade takes monkeys over the hill. When they venture thus they propose a benefit for the incumbent monkeys... goods and ideas that are different and often useful. And something else, that helps to de-escalate the intrinsic inbreeding on this side of the hill.
The incumbent males of course see this as a threat to their power of dominance, and will try to kill the "foreign" monkey before he presents his exotic self before "their" women.
It's only natural, and unfortunate.

[Kaleberg]

The excluded nations are one that Trump personally has done commerce with, not ones that the US has done commerce with. Hell, we're even selling aircraft to the Persians. Why are they on the list? The ban excludes Christians. Is their money different?

One gets the impression that if Kim Jong Un arranged for a Trump hotel in Pyongyang, we'd see the US suddenly no longer concerned about the North Korean nuclear threat.

[Gedney]

Think it's a mistake to link the ban to trade, or lack thereof. Trump's ban is an overblown, reactionary, irrational and disproportionate response to Islamist extremism. It is counterproductive, it will only add to the sense of grievance from the nutjobs, and foster further sympathy from reactionary elements among the non-extremist Islamic majority (think hysterical reaction to offensive but intrinsically harmless cartoons).

I suspect the countries selected are those deemed not to be making enough effort or incapable of containing their nutters. So whilst Turkey has a problem Erdogan is at least trying to suppress it in his own idiotic way. And it's not a commentary on repressive, medievalist Islamic theocracy else Saudi Arabia and similar would be included.

It's sending the loud and somewhat incoherent message you can have repressive nutjobbery just as long as you keep it to yourselves. Hmmm... perhaps there is a touch of protectionism there, I doubt the Bible Belt wants the competition?

[Smiths]

I think the countries excluded are simply too connected, important, and dangerous to just trash in the way the other 7 have been
The Trump team might be provocative and inflammatory but they are not suicidal morons