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Marx vs. Trump on Free Trade

On Facebook, I shared a thread by a buddy of mine, Doug Henwood, with whom I used to regularly correspond on the group marxism-thaxis (of which I was a co-founder). I reproduce here my comments on that thread:

Nice discussion thread that I've shared for my readers; Nick Manley linked to an essay at Reason magazine, and added: "the author of Marx, Hayek. and Utopia aka fellow free market libertarian Chris Matthew Sciabarra would prolly agree: it is insulting in my view that someone would even think Trump is remotely close to someone like Karl Marx in intelligence, so I rolled my eyes at the "even Karl Marx" part. I've never believed Marx and Marxists to be dummies!"

I wrote in reply:

I think the more compelling argument for Marx was simply this: He believed that capitalism was a revolutionary, progressive force in advancing the material conditions upon which, he argued, socialism would be able to emerge. Marx was so awestruck by capitalism's capacity to outproduce all other modes of production that he even projected its resolution of the very problem of scarcity; it was on the basis of having triumphed over scarcity that a society could *then* emerge "from each according to his ability to each according to his needs."
Now, I disagree with this fundamentally: I don't think relative scarcity is ever resolved, and even if a freer global "capitalist" system were to produce an abundance of goods, there will still be agent-relative-scarcity, if only because we are mortal beings, and time itself is scarce. [In Total Freedom, I present Rothbard's views on this issue: "The price system, reflecting relative scarcities, enables individuals to plan accordingly by relating the data to their own context of knowledge and their own purposes and goals. Even if it were possible to realize the Marxist dream of superabundance, 'scarcity' could never wither away, because, essentially, it is a function of time. Even in the Garden of Eden, time is scarce. For Rothbard, the notion of 'postscarcity' is illusory.] But that's another issue for another day.
Marx clearly understood how freer markets could destroy feudal and old mercantilist structures; Trump's neo-mercantilism and economic nationalism speak to certain segments of the current class society, but I think that, ironically, Marx would have viewed his policies as retrogressive.

I added:

I was speaking strictly in terms of capitalism's powers as a mode of production; clearly, Marx believed that the system caused all sorts of inequalities, which benefited the capitalist class, and systemic miseries for workers. And the internal contradictions of the system, which enriched one class at the expense of the other, would fuel the dynamics of its demise. You'll get no disagreement from me on this issue. Marx also argued, however, that the state, almost by definition, became an organ of class rule. In fact, one can find some rather remarkable parallels between Marx's views of the boom-bust cycle and those of the Austrian school of economics, who saw the state-banking nexus as the means of creating an inflationary boom that benefited debtors (usually capital-intensive industry) at the expense of creditors, but that such inflation of what Marx called "fictitious money-capital" would lead to the inevitable bust.
One other thing should be mentioned, of course: Neither Marx nor the Austrians---who are typically viewed as being on opposite ends of the spectrum---have ever believed that free markets have existed in their purest, unadulterated form. The state has always been involved in markets, and the whole birth of the regulatory apparatus was itself fueled by the demands of larger businesses to use the power of the state to destroy upstart competitors and to solidify their control over markets. Even the birth of central banking was fueled by those banks that believed they were "too big to fail"---but it is also no coincidence that central banking made it possible for the further growth of "crony" capitalism, the welfare state, and most importantly, the warfare state.
On this point, the views of New Left revisionist historians from William Appleman Williams, Gabriel Kolko, and James Weinstein are almost indistinguishable from the views put forth by the likes of Murray Rothbard, Leonard Liggio, Roy Childs, and other libertarians. It's no coincidence that Rothbard and my mentor, Bertell Ollman, were in the Peace and Freedom Party together, in their opposition to the corporatist state and the Vietnam war. In fact, in days of old, Rothbard edited a wonderful volume of essays by historical revisionists, Left and Right, in a book entitled A New History of Leviathan--co-edited by Rothbard and (then "democratic socialist") Ronald Radosh! Those were the days .... long gone...

Nick added a comment as well to Doug's thread, worth reproducing here:

Looks like this thread has died down or at least for now, but a quick follow up to Chris Matthew Sciabarra's book mention:
Not much of a fan of the Mises Institute gang with a few exceptions, but they are the only site I know of with a free pdf version of this history of the corporate state Chris mentions. It was indeed a cooperative effort between radical free market libertarians of that time and democratic socialist New Left types like now neocon but then radical leftist Ronald Radosh. If anyone is interested! [See A New History of Leviathan.]

I wanted to add one point of personal interest. Many years ago, I attended a talk by Radosh, and many talks by Rothbard, and I own a copy of the paperback inscribed by Radosh on one page and Rothbard on the next. I reproduce those inscriptions here for the sake of posterity; it's one of my cherished possessions:


For those unpersuaded by the arguments for free trade, even in the face of restrictive tariff policies from other governments abroad, I don't know of a better answer to those arguments than that provided by my friend and colleague, Richard Ebeling: The Best Answer to Trump’s Tariffs: Free Trade."

There are a few additional issues that need to be addressed (and I addressed them on various FB threads). I summarize them here:

1. There are many reasons why the U.S. lost its manufacturing jobs over the past two decades; a lot of it has to do with the freeing up of previously constrained markets overseas, now providing cheaper labor costs for the production of goods outside of the U.S., and the consequent downward pressure it put on the pay of U.S. workers. See here.

2. Trump ignores this monumental change at his peril; if he thinks he can get back all those manufacturing jobs by adopting the policies of "protecting" U.S. industries, he simply fails Economics 101. One does not move toward freer markets by adopting economic nationalism as a public policy. Furthermore, no government action is neutral. Tariffs penalize the American consumer, who has to pay higher prices for goods imported from overseas, and pay higher prices for goods produced in the U.S. by industries that are now "protected" by the tariffs. Increased costs have to be paid by somebody, and they are, by necessity, passed onto the consumer.

3. This isn't a case of turning the other cheek; it's a case of recognizing a changing global economy. If Trump is wedded to an "America First" ideology, then he needs to radically and fundamentally reform the U.S. economy. He could start by seriously reducing U.S. overseas commitments that have fueled the growth of a permanent war economy at home, along with a National Security State that has bolstered military expenditures to historically high levels while curtailing civil liberties. It's not as if candidate Trump was unaware of this; it was about the only thing that I liked about his campaign: for example, his calls on U.S. allies to pay more for their own "defense" needs, his calls to bring the troops home, etc. Instead, it now seems as if the drums of war are being beaten by the same Establishment that brought us the war in Iraq.

If in the coming 2020 election, the Democratic Party fully embraces "democratic socialism," the Left is in for a rude awakening, and Trump will be re-elected for another four years, especially if the economy doesn't experience another bubble-bust prior to the election. But I don't object to Trump's policies because I am afraid of the Left. I oppose any increase in government intervention, whether it comes from the left or the right, for reasons that should be obvious.

I added one additional point in the Facebook discussion:

Though it would be nice for China and Europe to move toward freer societies, I think we have enough trouble trying to convince Americans of the virtues of a free society. Tariffs will do nothing to move the domestic economy or other countries toward freer trade. It will invite further tariff restrictions from those it targets, and could very well have a deleterious effect on the global economy if it goes unabated. In fact, there is more than enough history to show that once you put certain government policies in place, the typical path is for it to lead to additional government policies to alleviate the problems caused by the initial intervention. That's what the "road to serfdom" is all about and it's why interventionism feeds upon itself, regardless of who is in control.
But I'll give Trump credit for one thing: He has brought the GOP back to its pre-Civil War nineteenth-century roots as the party of High Tariffs and Protectionism; gone forever is the soaring rhetoric of "free markets" that one found in the speeches of Goldwater and Reagan. Reagan, of course, may not have brought a freer market to the United States, but he at least made it respectable to talk about free markets, while asking U.S. adversaries to tear down their walls, rather than to build new ones.
I would like to add one point about post-War policies with regard to military defense; they may have been justified on egalitarian grounds, but they were the product of a very carefully laid out plan to create what President Eisenhower called "the military-industrial complex."
U.S. military assistance has always come with the proviso that funds would be funneled to U.S. allies as long as the funds were spent buying U.S.-manufactured munitions and arms. This has been the case with "foreign aid" practically since its inception, providing weapons to such "friends" as Saudi Arabia, who are engaged in the wholesale slaughter of people in Yemen. And the list goes on and on and on. At least candidate Trump was honest enough to reply to Bill O'Reilly's questions about Russian interference in Western countries when he said: "You think our country's so innocent?"
But the policies have continued---ostensibly because they help to provide U.S. jobs.

I went further:

Note that Trump himself knows the damage he is doing; his answer is to provide billions of dollars in subsidies to the industries that are being hurt by retaliatory tariffs. How can you not see through this as a scheme of redistribution that ultimately punishes U.S. consumers and U.S. taxpayers? It's not a zero-sum game. Somebody is paying for this. And it's not going to lead to a Kum Ba Yah moment where the guy who specializes in the "art of the deal" leads the world to completely free trade across all borders. It's not going to happen---not this way.

I agreed to disagree on this issue; time will tell. But thanks to Ryan Neugebauer for this FEE article, "Is Trump's China Bashing Vindicated If It Leads to Lower Chinese Tariffs? No." The key passage:

It’s risky because wars of any kind rarely go according to plan. Because they don’t, Trump’s jawboning risks something much worse as witless politicians in the U.S. and elsewhere start introducing all manner of tax barriers to exchange. Lest we forget, politicians are expert at making the 99.9% pay for the protection of the very few, but very well connected special interests. Washington is a favor factory, as are the capitals of other countries. Once politicians start handing out the false favors, it’s hard to take them back. And we all suffer.