Mises Wire

Home | Blog | Depends on What Free Trade Means

Depends on What Free Trade Means

January 12, 2004

Mr. Roberts offers a very interesting definition of a "free trade". In his opinion free trade rests on the condition of immobility of factors of production – if factors of production are free to move from one place to another, then this is no longer free trade. The argument is fallacious from the very beginning and is similar to economic concept of monopoly ("perfect competition", "monopolistic competition" and so on).

Free trade means simply: you are free to trade with anyone you want, using any resources that you have, and you're ready to sell in exchange for what you'd like to purchase. This includes every kind of good, not only consumption goods, commodities, but also production goods, labor and capital goods. To say that it is necessary for labor and capital goods to be "immobile" between countries, in order to achieve free trade, is to overlook the basics of free trade.

Since "free" means that decision is up to the owner of resource how to allocate one, "immobility" should be totally dependent on the will of the owner. It is my decision to choose when my body and my property should be "immobile", or "mobile". To maintain that when I transfer my property (make it "mobile"), I'm breaking the condition of "free trade" is a great perversion of language. Trade is "free" as long as every side of it is "free" to make any contract it wishes (without attacking every other person's property).


Follow Mises Institute

Add Comment