Trade and Mutual Aid

There is no system that is incorruptible, but at its best, free trade orients us toward the good of others.

Appears in Spring 2013 Issue: Persuasion
March 1 st 2013

Bono, the U2 frontman and tireless activist for global development, emphasized the indispensible function of trade and entrepreneurship at a technology conference late last year. “Job creators and innovators are just the key, and aid is just a bridge,” he said. Bono admitted that these insights were something counter-cultural among global poverty activists: “A humbling thing was to learn the role of commerce.” Driven by his moral and specifically religious sensibilities, Bono’s mission is to find what actually works to address the problems of global poverty. This is an orientation that ought to be shared by all people of goodwill, but especially Christians. We must realize that our noble intentions are not a substitute for effective practice. In the extreme case, pious banalities can replace responsible action, as the epistle of James makes clear. If true religion consists in large part in concerning ourselves with the marginalized (James 1:27), then we need to constantly be aware of the temptation to merely be content with platitudes: “Go in peace; keep warm and well fed” (James 2:16). For this reason, the relationship between commerce and wealth-creation merits closer attention.

Aid, Trade, And War

The doctrine that has come lately to Bono has in fact been a staple of liberal (and neo-liberal) thinking about international trade and politics for more than a century. The slogan “When goods do not cross borders, armies will” is often attributed to the nineteenth-century French journalist, politician, and economist Frédéric Bastiat (1801-1850). It was actually Otto Tod Mallery, however, a rather less-famous advocate of free trade, who penned the closest analogue to that dictum a century after Bastiat. “If soldiers are not to cross international boundaries on missions of war,” wrote Mallery in 1943, then “goods must cross them on missions of peace.”

The apocryphal slogan does in fact capture the spirit of Bastiat’s vision, too. In a section in which he described the nation characterized by single-minded pursuit of universal justice, or the justice demanded “everywhere and for all,” Bastiat wrote, “If we glance at the relations of such a nation with other nations, we find that they are all favorable to peace. Protecting itself against any aggression is its only policy. It neither threatens nor is threatened. It has no diplomacy and still less a diplomacy based on positions of strength.” Where the interests and intrigue of diplomacy waned, however, the fires of invention and trade would burn brighter: “In virtue of the principle of universal justice, no citizen being able to prevent another citizen from buying or selling abroad, the commercial relations of this nation will be free and widespread.” The result, contended Bastiat, would be a set of relations between nations that would “contribute to the maintenance of peace.” These “commercial relations” would “themselves constitute a veritable and precious system of defense, which will render arsenals, fortified places, navies, and standing armies well-nigh useless.”

Bastiat’s view of the “nation that adopts universal justice as the basis of its legislation” may well strike us today as idealistic, even utopian. Writing as he was in the middle of the nineteenth century (1848), a progressive optimism was perhaps to be expected as a new world was surely about to dawn following the age of revolutions. Standing on the other side of two world wars, the Cold War, and nuclear proliferation, and in the midst of an ongoing “War on Terror,” though, Bastiat’s vision can appear naive, especially to policy hawks committed to realpolitik and what Eisenhower called the military-industrial complex.

Even so, one insight of ongoing relevance that Bastiat’s thought experiment helps to highlight is the key dynamic between voluntary exchange and coercive policy, between the realms of economics and politics. There is, in Bastiat’s view, a kind of zero-sum game between economics and politics, so that as free trade and commerce grow, the necessary role of political authority is diminished. In the nation of universal justice, “the government is reduced to very limited proportions, and the administrative apparatus to the utmost simplicity.” Bastiat is similarly sure “that civilization and progress will tend to make the government more and more simple and economical, for the more that justice becomes an outgrowth of good social customs, the more practicable it will be to reduce the force organized to impose it.” For Bastiat, there is a deep and intimate connection between commerce and the development of “good social customs,” or what the Victorians simply called “manners.” To understand this bond, we must examine the insights of a figure who has often been viewed as the “father of modern economics,” Adam Smith (1723-1790).

Trade And Persuasion

Adam Smith is perhaps most famous for his treatment of self-interest as a catalyst for economic activity and social development. In one of the few mentions of self-interest in his Wealth of Nations (1776), Smith strikingly observed, “It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest.” What is not often appreciated about this passage, however, is the way in which Smith’s observations about how markets work are framed by a hermeneutic of persuasion. Rhetoric, the art of persuasion, is absolutely critical for Smith’s understanding of free exchange. Smith had, in fact, lectured on rhetoric at the University of Glasgow in the decades before the publication of The Wealth of Nations, and the significance of persuasion becomes apparent in the broader context of the famous passage.

Smith’s point of departure is the unique human “propensity to truck, barter, and exchange one thing for another.” For Smith, this is a feature “common to all men, and to be found in no other race of animals.” Unlike other creatures fitted for relative independence in the wilderness, the human being’s social nature means that “man has almost constant occasion for the help of his brethren.” Smith’s view of the role of self-love enters at this point, as he argues that it is “vain” for us to expect help from others “from their benevolence only.” It is true that benevolence, a topic explored at length in Smith’s earlier Theory of Moral Sentiments (1759), is an important motivator for human action. But benevolence or altruism is generally less reliable and consistent than selfinterest. No doubt the truth of this observation is not lost on activists, like Bono, and nonprofit workers who have first-hand knowledge of the fickleness of so much philanthropic activity. The result, says Smith, is that the person in need of aid from a neighbour “will be more likely to prevail if he can interest their self-love in his favour, and show them that it is for their own advantage to do for him what he requires of them.”

In order for a commercial exchange to happen, then, in the absence of coercion, both parties must be convinced that it is better for each to give and to receive than otherwise. For the person initiating the transaction, it is necessary to show the other party, and in some cases convince them in the face of instinctual lethargy or suspicion, that an exchange is in their interests. “Whoever offers to another a bargain of any kind, proposes to do this,” writes Smith, “Give me that which I want, and you shall have this which you want, is the meaning of every such offer.”

An intriguing result of this dynamic of free exchange is that it behooves us to familiarize ourselves to a greater or lesser extent with the wants and needs of others. We can be more convincing that an exchange is likely to benefit another person if we have some sense of what that person considers to be beneficial. Indeed, in the setting of a market, we have the further incentive to produce some good or service that is likely to be in demand. Thus, in the sentence immediately following the famous reference to the butcher, the brewer, and the baker, Smith observes that “we address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages.” We do this in order to convince them, to persuade them, that trading with us is better for them to do so. Sometimes Smith’s claims in these passages are described as sharply contrasting with Christian morality. But in reality, however, these insights about the diversity of social relationships and mutual aid are deeply embedded in Christian social thought. The Protestant reformer John Calvin (1509- 1564) even compared the life of believers to the practice of barter and exchange, for “those who employ usefully whatever God has committed to them are said to be engaged in trading.” The goal of such activity is “to promote mutual intercourse among men.” The Reformed jurist Johannes Althusius (1557-1638) put it bluntly: “The body of the commonwealth cannot be healthy without commerce. The necessity and utility of this life have therefore contrived a plan and procedure for exchanging goods, so that you can give and communicate to another what he needs and of which he cannot be deprived, any more than can you, without discomfort, and on the other hand receive from him what is necessary and useful to yourself. Indeed, peace and concord are often acquired through commercial pursuits.”

The Division Of Labour And The Created Order

For Smith, this fundamental orientation to exchange that is present among human beings naturally manifests itself in specialization and the division of labour. Given his embrace of a basically Enlightenment anthropology, for Smith this diversification is more a product of nurture than of nature. But for many Christian theologians, the diversity of talents, gifts, and dispositions is rooted in pluriformity of the created order. Despite the different starting points for their anthropological views, however, there is a great deal of overlap regarding the implications of the diversity of human talents for social flourishing.

The divinely ordained diversity of the created world is a staple of Dutch neo-Calvinist thinkers like Abraham Kuyper (1837-1920) and Herman Bavinck (1854-1921), who followed the implication that God intended the diversity of gifts and talents. “Had it been intended otherwise, then every person, man or woman, would have to be in full possession of all genius and all talent. But this is not the case. Genius and talent appear only as distributed among a few individuals,” writes Kuyper. Neither is it the case that this uneven distribution of talents is a result of sin. Instead, the diversity and complementary of human social relationships is rooted in the relationship between man and woman, Adam and Eve. Thus, writes Kuyper, “The mere fact that God created a man and a woman proves indisputably that identical uniformity was not part of the plan of creation. So we may draw no other conclusion than that the rich variety among people, in terms of aptitude and talent, came forth from the creation itself and belongs to the essence of human nature.”

Likewise Herman Bavinck connects the diversity of human beings with the cultural mandate of Genesis 1: “By creating humanity as male and female God equipped them to fill the earth and subdue it. This duality of sex, this institution of marriage, contains in nuce all subsequent social relationships: husband and wife, parents and children, brothers and sisters, servants and freemen, civil rulers and subjects.”

The conclusion for Bavinck is stark. “Inequality is a given of creation,” he writes, “grounded in the very will of God himself, and not first of all a consequence of sin.” Inequality, or diversity, on this account is not primarily something to be mourned, but rather something to be celebrated. Human beings have been placed, even in the context of a sinless creation, in a relationship of mutual submission and social obligation. We are social creatures by nature, with needs that can only be met by other human beings. This is a fundamental truth about the human person, embraced by Adam Smith as well as Abraham Kuyper.

Trade And The Common Good

The dynamics of trade take these innate differences and orient them toward the common good. In discussing the benefits of navigation, for instance, Calvin observed that “by importing and exporting articles of merchandise, it is of great advantage to mankind.” Neither, he continued, “can any fault be found with this mode of intercourse between nations; for it is the will of God that the whole human race should be joined together by mutual acts of kindness.” It is true that in a fallen world these inequalities are often exaggerated and distorted. Likewise the blessings of material prosperity are all too often an occasion for sinful idolatry and oppression.

But the original divine will, manifest in the diversity of the creation order, is at its core a blessing and a means of preservation of human society. Society, says Bavinck, is expressed “in the combination and cooperation of the gifts and powers granted to humanity, and which has as its goal the preservation and generation, the distribution and enjoyment, of various spiritual and material goods.” Human diversity, the propensity to trade, and the resulting specialization and individualization of labour form the basis for human social life. “A society that is a genuine society, and as such is a complex organism of relationships and operations, cannot be anything but multiform,” writes Bavinck.

According to Smith, in such a genuine society, “the most dissimilar geniuses are of use to one another; the different produces of their respective talents, by the general disposition to truck, barter, and exchange, being brought, as it were, into a common stock, where every man may purchase whatever part of the produce of other men’s talents he has occasion for.” In this way, the commercial society facilitates mutual aid.

Bastiat’s claims about the socializing effects of trade based on persuasion rather than interactions based on coercive political action thus align with a central insight of the Christian tradition. Paul VI wrote in the 1967 encyclical Populorum Progressio that “development” was “the new name for peace.” Likewise, concluded Paul, “civil progress and economic development are the only road to peace.”

The End Of Trade

Despite these significant connections between classic economic thinking and Christian moral teaching on the nature of trade, we might contrast Bastiat’s idealistic vision with the reality of the present day. Where Bastiat hoped for a blossoming of commerce and a corresponding withering of government, Benedict XVI’s more recent encyclical Caritas in Veritate contends, “In terms of the resolution of the current crisis, the State’s role seems destined to grow, as it regains many of its competences.” Just as we are not to rest in pious platitudes (“Go in peace; keep warm and well fed”), neither are we to content ourselves with ideological sloganeering (“When goods do not cross borders, armies will”). Divorced from a more comprehensive conception of the human person and social flourishing, an uncritical reliance on free trade to solve the world’s problems can well become destructive.

Friedrich Hayek (1899-1992), often scorned today as a founding father of a corrosive neoliberal ideology, recognized the limits of market logic. “Probably nothing has done so much harm to the liberal cause as the wooden insistence of some liberals on certain rough rules of thumb, above all the principle of laissez-faire,” Hayek observed. Advocates of liberalized global trade harm, rather than help, their cause when they argue rigidly for the absolute ability of markets to solve the world’s problems. Something like Bastiat’s apocryphal slogan is on this account one of “the crude rules in which the principles of economic policy of the nineteenth century were expressed” and thus “only a beginning.”

The ideology of free trade is not a panacea. Even under the most optimistic of conditions, Bastiat’s vision remains a constrained ideal to measure societies against rather than a reality to be achieved. The society characterized by universal justice is, to use the words of Federalist 51, a society of angels, not of men. There is no system that is incorruptible, and that is as true for a system of free trade as it is for a system of representative democracy. Mallery includes a corollary to his thesis juxtaposing trade and war: “Unless shackles can be dropped from trade, bombs will be dropped from the sky.” Even if trade were truly free, bombs still would be dropped from the sky. Rationalistic models like that of homo economicus are as limited in the realm of international trade as in microeconomic analysis.

And yet even with these limitations in view, it is worthwhile to recall the purpose of trade: mutual benefit. Free trade is a system that imperfectly, and yet with some measure of success—as Bono and countless others are beginning to recognize anew—orients us toward the good of others. The complex pressures of the global financial crisis are leading many to turn inward. In many cases, such a reorientation can be healthy and helpful, a reminder of the concrete obligations attending to our situated selves in moral proximity to one another. But the devolution of globalization can also result in a sinful curving in upon oneself, one’s tribe, or one’s nation.

The principles of free trade aim at, and more remarkably often facilitate, the norm of justice which, in Bastiat’s words, was “uttered by the divine Founder of our religion: . . . Do unto others what you would have others do unto you.” There is a reciprocity, an alignment of our interests with those of others, to the ethics of free trade that is worth aspiring to, even if it is not a magic bullet for a fallen world.

 

Dr. Jordan J. Ballor is a research fellow at the Acton Institute for the Study of Religion & Liberty, where he also serves as executive editor of the Journal of Markets & Morality. He is a general editor of the Abraham Kuyper Collected Works in Public Theology (Lexham) and is the author and editor of numerous books.

Bio