Behind the movement towards free trade was the economic theory that there would be economic benefit if countries concentrated their economic activities in areas in which they had a comparative advantage and could produce more efficiently than others. The counter-argument to this is that free trade benefited, and continues to benefit, the most economically advanced countries. Thus, many countries which industrialized later than Europe and the US instituted import controls to protect their nascent manufacturing industries.
a trend in economic theory and politics of the industrial bourgeoisie that demanded no restrictions on trade and noninterference by the state in private enterprise.
The free-trade movement originated in Great Britain in the last third of the 18th century and was linked with the incipient industrial revolution. However, the demand for a free-trade system had been expressed even earlier by the French economist E. Crucé, the British economist N. Barbon, and the French Physiocrats F. Quesnay and P. Mercier de la Rivière. A comprehensive theoretical groundwork for free trade was provided by A. Smith and D. Ricardo, who presented the policy as an ideal, one that would always be advantageous to all countries and peoples. The British free traders directed their efforts against agricultural customs duties, which by resulting in high prices on farm produce served the interests of the large-scale landowners. The British industrial bourgeoisie sought low prices on farm produce, since this would assure less expensive raw materials and manpower. Moreover, a reciprocal lowering of customs duties would facilitate the increased sale of British commodities abroad. The free traders were also opposed to the vestiges of the medieval regulation of industrial production.
Under pressure from the free traders during the 1820’s, a reform of the customs system was carried out in Great Britain: customs duties on many commodities were abolished or significantly lowered; the high, protectionist customs duty on imported grain was replaced by a sliding scale of duties, in accordance with which the duty on imported grain rose with the decline in prices on domestic grain and, conversely, decreased when prices rose.
During the 1830’s the free-trade movement in Great Britain was intensified. It was led by the textile mill owners R. Cobden and J. Bright, who in 1838 organized the Anti-Corn Law League. The city of Manchester became the center for the advocates of free trade (hence the second name for the free traders, “Man-chestrians”). Subsequently the free traders formed the left wing of Great Britain’s Liberal Party. The free traders attempted to win the Chartists over to their side.
By the mid-19th century the free traders had won a complete victory in Great Britain; together with the elimination of legislative limitations on the import of grain, raw materials, and industrial goods, other protectionist limitations were also abolished. Only fiscal customs duties were retained. Free-trade tendencies were also manifested in the trade policy of France during the Second Empire (1852–70), Germany, Russia (the 1850’s and 1860’s), and other countries. However, in most capitalist countries protectionism was as predominant as ever. Protectionism was particularly intensified during the period of imperialism.
Efforts to revive free trade by concluding bilateral and multilateral agreements, such as those undertaken during the 1920’s and 1930’s under the aegis of the League of Nations, did not meet with success because of acute conflicts between imperialist nations. Moreover, J. M. Keynes attempted to prove theoretically that free trade was unacceptable under the conditions of state-monopoly capitalism. However, under present-day conditions certain free-trade principles are being implemented within the framework of closed, integrated groupings, such as the European Economic Community and the European Free Trade Association. Within these organizations the elimination of customs barriers between member countries serves as a weapon for subordinating small-scale, middle-scale, and occasionally even large-scale capital to giant monopolies. It also bolsters the giant monopolies in their struggle against competitors who are not members of the organizations.
During the 1960’s and 1970’s, the capitalist world observed an intensification of the advocacy of certain features of free trade. The governments of the large imperialist countries (the USA and the FRG, for example) have supported the idea of liberalized conditions for trade, under cover of which they are striving to create favorable conditions for the further economic expansion of their own monopolies.
G. G. ABRAMISHVILI