Competing intellectual views on Liberalism and Protectionism from 1900-1940
Introduction
While there have many fluctuations in the level of openness in the international economy, one time frame that stands out for particularly rapid development is the period between approximately 1900 and 1940. In this time, there was a gradual worldwide shift to a more protectionist and isolationist international economy. While the debate about liberalism v. protectionism is one that has been present throughout history, this particular period was rather heated. As Johannes Overbeck writes, "Intellectuals often wield power through the spoken and written word. Experience suggests that when intellectuals have been converted to a set of belief, it is often merely a question of time for their views to become the driving force of politics" (1999). Economists and public intellectuals participating in this debate during the early 20th century include Frank Taussig, Arthur Pigou, Ludwig von Mises, Lionel Robbins, Benito Mussolini, John Maynard Keynes, and Reed Smoot and Willis C. Hawley. The policies being implemented during this time period by politicians on both sides of the Atlantic Ocean generally moved to a more protectionist stance. Although it is difficult to prove a direct, causal relationship between the writings of economists and intellectuals at the time and the evolving policies of different nations, it is nevertheless important to examine and understand what was happening in both the academic and political worlds.
Section Two: Historical Views of Free Trade
Economists in support of free trade: Adam Smith, David Ricardo, Jean Baptiste Say, Frederic Bastiat, John Stuart Mill, Nicolaas Pierson, William Sumner
Economists in favor of protectionism: Alexander Hamilton, Daniel Raymond, Henry Carey, Adam Muller
Section Three: Economists advocating Liberalism from 1900-1940
Frank William Taussing: Protection and Free Trade. The Case for Free Trade. Thesis of argument:
Joseph Chamberlain: The Riddle of the Tariff Thesis of argument:
Ludwig von Mises, Money, Method and the Market Process Thesis of argument:
Lionel Robbins, The Economic Basis of Class Conflict Thesis of argument:
1. Frank Taussig:
a. Brief background: Graduated from Harvard, published The Tariff History of the United States in 1888 which established his reputation. Worked as the chair of the US Tariff Commission at request of President Woodrow Wilson and then joined the “Advisory Committee on Peace” after World War I was over.
b. Work for the purpose of the wiki: Principles of Economics
c. Thesis/main points:
i. People misunderstand implications of free trade because they see the first and most obvious effects of a given policy while neglecting to inquire about the long-term effects about
ii. Most people’s ideas about free trade are only concerned with prices and sales
iii. Interest groups play a special role
2. Arthur Pigou: a. Brief background: Professor of Political Economy and Cambridge University; responsible for passing down the Marshallian tradition which became the focus of th Cambridge School of Economics b. Work for the purpose of the wiki: The Riddle of the Tariff, Chapters 2 and 5 c. Thesis/main points: i. Opposing Joseph Chamberlain’s ideas on raising tariffs to protect against German competition ii. Elaborated on distinctions within tariff systems
3. Ludwig von Mises: a. Brief background: Austrian-Hungarian; worked as Economic Advisor to Austrian Chamber of Commerce; lecturer at University of Vienna b. Work for the purpose of the wiki: Money, Method and the Market Process c. Thesis/main points: i. Rejected notion that there are irreconcilable conflict between group interests ii. People can only improve their own position by serving others better and more efficiently iii. Social cohesiveness is brought about by mutual interdependence generated by the market economy iv. Tariffs, quotas, and other instruments of economic nationalism created privileged castes – which industries get protection? Which group gets to benefit from tariffs?
4. Lionel Robbins a. Brief background: Grew up in England, taught at London School of Economics b. Work for the purpose of the wiki: Economic Basis of Class Conflict, 1939 and Economic Planning and International Order, 1937 c. Thesis/main points: i. Writes about ideal of self-sufficiency ii. Argues against protectionism on basis that some industries are vital to national security iii. Like Taussig, identifies how the public is short-sighted when it comes to benefits of free trade iv. Policies of interventionism made the movement of resources from one industry to another difficult
Section Four: Economists advocating Protectionism from 1900-1940
Section Five: Tariff Policy During 1900-1940
--Brief outline of years leading up to Smoot-Hawley and other important (and increasinly restrictive) tariffs: McKinley Tariff of 1890, Fordney-McCumber Act in 1922
Section Six: Conclusion
