Protectionism

[ska invita]

Considering recent world political events Im curious if anyone has any thoughts about economic protectionism...as an economic policy and inevitably with its relation to nationalism.

Seems to me its a policy that divides both the left and the right:

On the one hand some parts of 'the right' see the free market as a leftist way of dissolving borders and national identity and gravitate towards protectionism as a result. And of course by contrast the consensus of the majority of the right has been the opposite over the last however many decades.

This Socialist Party link Trade wars and protectionism describes the split amongst Labour left in the 70s on the issue (supposedly Tribunite Left advanced by Tony Benn and most trade union leaders were for protectionism - Militant supporters argued against)

The 1970s
ONE OF the most prominent examples of workers' organisations advocating protectionist measures was in the 1970s when the idea of import controls gained widespread support. Import controls were seen as a way of protecting jobs and shielding Britain from the vagaries and turbulence of the world capitalist economy.

It was part of the official strategy of the Tribunite Left, then in the leadership of the Labour Party - advanced by people like Tony Benn and most trade union leaders. However, Militant supporters, the forerunner of the Socialist Party, argued against import controls for a number of reasons.

Although the idea of introducing a system of selective quotas for imports appeared superficially attractive as a means of safeguarding jobs, in fact their introduction would have had the exact opposite effect to that claimed by its advocates. Unwittingly, it was another variation on the theme of workers paying for the privilege of maintaining their employment.

Import controls are not the same as a monopoly of foreign trade or export controls and controls of movement of capital, which can form part of a socialist plan of production. Any idea today that there could be control on a capitalist basis of the flow of financial capital - amounting to trillions every day - from City of London and elsewhere is a non-starter.

One claimed economic advantage for import controls - over devaluation of the currency for example - was that it would not drive prices up.

However, Militant argued that workers in Britain or any country would face higher prices if import controls were introduced.There would have been little doubt that British capitalists would have increased their prices in a more sheltered market. And those foreign capitalists who were allowed to import would also push prices up with an easily guaranteed market.

There was no guarantee under private ownership that capitalists would take advantage of this so-called 'breathing space' to invest more and improve the productivity and competitiveness of the British economy.

We argued that British capitalism, after world war two, saw a Labour government effectively create a regulated economy in an attempt to protect itself from foreign competition. Yet, even though British firms were flush with cash and had a guaranteed market, the British capitalists in the late 1940s were only investing half to two-thirds that of their overseas rivals.

Another issue with import controls is that more jobs could be lost than saved as tariffs and quotas are put on British exported goods in retaliation. This would have had a much bigger impact in Britain in the 1960s and 1970s when a much larger section of manufacturing depended on exports.

The only real experience in this country of import controls being introduced was when the 1964 Labour government introduced a Temporary Import Surcharge (TIS) but was forced to scrap this mild measure within two years because of the threat of retaliation from other countries.

That SP article concludes

For socialists it does not matter so much where production is situated in a global economy but it is a question of which class in society controls production. The only way for workers to protect jobs and conditions is conducting successful, militant industrial struggle that forces the bosses to accept less in profits and make workers' jobs secure

..which i agree with, but considering the point "For socialists it does not matter so much" either way, which is preferable of the two? It seems to me that at least non-protectionism doesn't pander to and reinforce nationalism.

 

[yield]

Considering recent world political events Im curious if anyone has any thoughts about economic protectionism...as an economic policy and inevitably with its relation to nationalism.

Seems to me its a policy that divides both the left and the right:

On the one hand some parts of 'the right' see the free market as a leftist way of dissolving borders and national identity and gravitate towards protectionism as a result. And of course by contrast the consensus of the majority of the right has been the opposite over the last however many decades.

This Socialist Party link Trade wars and protectionism describes the split amongst Labour left in the 70s on the issue (supposedly Tribunite Left advanced by Tony Benn and most trade union leaders were for protectionism - Militant supporters argued against)

That SP article concludes

..which i agree with, but considering the point "For socialists it does not matter so much" either way, which is preferable of the two? It seems to me that at least non-protectionism doesn't pander to and reinforce nationalism.

What about West Germany and Japan after WW2 when economic protectionism was encouraged by the USA for them to act as a bulwark against the USSR?

Is import substitution industrialisation always nationalistic?

Isn't forcing "free market" policies onto the global south also in the "national interest"?

 

[ska invita]

What about West Germany and Japan after WW2 when economic protectionism was encouraged by the USA for them to act as a bulwark against the USSR?
Is import substitution industrialisation always nationalistic?
Isn't forcing "free market" policies onto the global south also in the "national interest"?

yeah true...its massively complicated i think.
What Brexit/Trump/Le Pen etc have in common is lip service to protectionism to different degrees...If Tony Benn was for protectionism is Corbyn? id like to understand it all better

 

[ska invita]

Is import substitution industrialisation always nationalistic?

what does import substitution industrialisation mean?

Isn't forcing "free market" policies onto the global south also in the "national interest"?

in the economic national-unit interest, but not Nationalistic and reinforcing of Nationhood

 

[yield]

what does import substitution industrialisation mean?

For a nation to buy, copy, sell, improve manufactured goods.

Sorry for wiki link Import substitution industrialization - Wikipedia

in the economic national-unit interest, but not Nationalistic and reinforcing of Nationhood

When's it one and not the other?

 

[ska invita]

When's it one and not the other?

The whole reason parts of the far right don't like globalised capitalism is that it is seen as undermining a localised national identity in place of some kind of globally-connected entity. And globalised capitalism does have that effect I think, from my own experience...I like that aspect of it...I like the world feeling smaller and more connected and national borders feeling that bit more meaningless. Nationalist reactionaries hate that part of it, a factor in current right wing trends to think of clash of civilisations, defending '(white) european culture' etc. (not new of course)

British economy (in the so called national interest) exploiting Asian workers doesn't necessarily have any impact on creating greater British nationalism

 

[ska invita]

Two good articles from Marxist economist Michael Roberts on this, basically exploring the lack of consensus on this issue.
Free trade or protectionism? – the Keynesian dilemma
Trump’s trade tantrums – free trade or protectionism?

Concluding remark seems to be neither has much better a record than the other, which leads me to think that on balance free trade is better in that it at least has an internationalist, less nation state competitive culture

"But is free trade or protectionism better for labour and the working class? It depends. Perhaps the answer is best summed up by Robert Tressell in famous book, The Ragged Trousered Philanthropist, written in 1910 in the UK: “We’ve had Free Trade for the last fifty years and today most people are living in a condition of more or less abject poverty, and thousands are literally starving. When we had Protection things were worse still. Other countries have Protection and yet many of their people are glad to come here and work for starvation wages. The only difference between Free Trade and Protection is that under certain circumstances one might be a little worse that the other, but as remedies for poverty, neither of them are of any real use whatever, for the simple reason that they do not deal with the real causes of poverty”.

American workers can expect nothing from Trump’s trade tantrums – indeed it can make things worse."

and

Engels re-considered the case for free trade in 1888 when writing a new preface on a pamphlet on free trade that Marx had wrote in 1847. Engels concluded that “the question of Free Trade or Protection moves entirely within the bounds of the present system of capitalist production, and has, therefore, no direct interest for us socialists who want to do away with that system. Whether you try the Protectionist or the Free Trade will make no difference in the end.”

But it is informative to see the Keynesians split over favouring free trade for global capital (Krugman) or protection for national capitals (Rodrik and Baker for the US and Wolf for the UK and Europe). Sign of the times.

 

[littlebabyjesus]

Missed this at the time. So bumping as per ska's request.

I agree completely with Tressell's point that questions over international trade agreements aren't where solutions to injustice are found generally, but I'd add that protectionism generally hurts the poorest the hardest. African countries have been pushing for actual free trade with the industrialised north for years.

Problem with import substitution industrialisation (ISI) as a strategy is that it has a pretty dismal record of success. It was tried with very limited success in a number of Latin American countries in the first half of the twentieth century. And it was probably easier to do then than it is now.

One of the main factors that caused those failures of ISI was surely the mechanics of dependency. Dependency theory seems to have gone out of fashion, but imo it highlights an important driver of (non)development, in which the periphery's development is shaped for and limited by the needs of the centre.

The basic arguments of dependency theory still seem very sound to me, but it isn't mentioned much nowadays.

 

[ska invita]

The basic arguments of dependency theory still seem very sound to me, but it isn't mentioned much nowadays.

By way of a response I watched this hour long lecture this weekend by Jason Hickel looking at "development" and globalisation - I really recommend it - he zooms through some figures as to where we are now, and how its gone for the global south after lets call it 40 years of neoliberalism. Super short answer is if you take out statistics for China, poverty and inequality have increased


He makes the case that in the immediate post-liberation struggle era (50s 60s) many countries successfully voted in socialist governments who put in place Keynesian economics, nationalised key state assets, and were successfully developing, and their general poverty lifting. Of course we all know this was overthrown at the barrel of a US gun (or proxy), and then further dismantled by order of World Bank/IMF following crippling loan-shark debts etc.

And from what I can see of Dependency Theory, that's exactly what is happening now according to stats from Hickel: he has figures for how much countries receive in aid (not insubstantial), but how much wealth is extracted (many many times more than is 'given').

As you say, this is not talked about in the UK much nowadays, especially when compared to the late 90s.

The opposite of the debt-slavery neoliberal sell-off isn't necessarily protectionism, though protecting local resources for the benefit of that nation could be considered a form of protectionism I guess.
As you say the key historical positive precedent was open trade, in fact often creating internationalist trade networks particularly with other post-colonial states.

The wiki you posted (clearly partisan) for ISI is a little confusing:

ISI policies have been enacted by countries in the Global South with the intention of producing development and self-sufficiency by the creation of an internal market. The state leads economic development by nationalization, subsidization of vital industries (agriculture, power generation, etc.), increased taxation, and highly-protectionist trade policies.[4] ISI was gradually abandoned by most developing countries in the 1980s and after the fall of the Soviet Union because its initial success was ultimately unsustainable[5] and, thereafter, the insistence of the IMF and World Bank on their structural adjustment programs aimed at the Global South.[6][7]

"nationalisation and subsidisation of vital industries (agriculture, power generation, etc.), increased taxation" aren't necessarily protectionist I dont think. P
Going back to a quote from the OP " for socialists it does not matter so much where production is situated in a global economy but it is a question of which class in society controls production."

im tired and a bit sickly, so i hope this post makes sense

 

[littlebabyjesus]

Yeah, most of what I know about ISI is from a bit earlier than the 1980s when it was attempted in Latin America. Problems cited as reasons for its failure include that it allows industry that isn't really very efficient to grow and as soon as you open up again, which you have to eventually, the industry fails. That said, South Korea is cited as a successful example of ISI, and this article claims to show that it's been key to growth in the BRICS countries. So yeah, there have been mixed results so the reasons for the historic failures could well be to do more with external spoiling than internal problems.

A conclusion can thus be drawn, both from literature account and econometric estimations, that the ISI macroeconomic policy defies the self-defeating prophesy levied against it by the institutions of Washington consensus and other adversaries. Essentially criticisms that the policy stimulates economic despondency, retards growth and kills competition in the domestic industrial sector – all that has been established in this study to be inadequate and somewhat inappropriate. It is thus suggested that developing economies, especially less industrialised economies should consider import substitution in the short run, and export promotion in the long run as the country develops sufficient manufacturing capacity that is capable of stimulating export.

Import substitution industrialisation and economic growth – Evidence from the group of BRICS countries

(I'm pretty out of date on this stuff)

Regarding dependency theory, the numbers for how much goes in as investment and how much is extracted as profit have a long history of being hugely skewed in one direction always. The numbers I've read about concerned US investment in Chile decades ago, and it was iirc roughly 5:1. And yeah this is still very much a live issue. It even relates to how investment takes place within the EU. Generalising, in any system where you can identify a centre and a periphery, this process of self-perpetuating exploitation is likely to be present.