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Does The Flag Follow Trade?

April 29, 2004

In explaining his position on the Iraq War, John Derbyshire has this to say about the nature of trade: "The imperialist principle is 'trade follows the flag.' The case I am stating is more like: 'The flag will get pulled along in trade's wake, whether you like it or not.'" He then asserts that whether Americans are interested in the rest of the world, "The world, unfortunately, is very interested in America, as events occasionally remind us. (The name 'Pearl Harbor' mean anything?)"

Though Austrians know that nothing fundamental in the nature of a free exchange brings conflict, Derbyshire's case has a certain plausibility because trade and "the flag" have often gone together historically, (think of The East India Company). Furthermore, the U.S. has trade with many countries and also has conflict with many countries. I should also note that I have often heard variations on "America needs to be active in the world, merely in defense of her own interests" from laymen to justify foreign military interventions.

Derbyshire's argument is interesting. Some would use a link between trade and violence as a reason to put up protectionist barriers and stop trade, (and therefore, presumably, stop associated violence). Derbyshire, in contrast, does not want to shut international trade down but says, "If you are going to get rich by trading with the world, you are going to get stuck with a lot of the world's problems." If violence and conflict come with trade then, Derbyshire implies, 'bring it on'.

Here are some thoughts on Derbyshire's theory. The main trading partners with the U.S. are also nations that we are entirely at peace with: Canada, Mexico, Western Europe, etc. The U.S. buys little oil from the Middle East. Any interest in controlling what goes on with Middle East oil seems to have more to do with controlling the world price of oil or having control over other potential competitors. These are hegemonic concerns unrelated to free trade. The very example that Derbyshire mentions, Pearl Harbor, was triggered by the violent interruption of Japanese trade by the U.S. government with the intention of triggering conflict. This is hardly a good example of trade leading to violence. Derbyshire uses a lot of big terms to hide the real forces at work: "The world... is very interested", "America needs to be active in the world", "I do see this as a matter of civilization versus barbarism", etc. I think an analysis starting from methodological individualism is much more fruitful. Individuals and companies trade across borders. Representatives of governments intervene in others' affairs and trigger blowback, (sometimes, it is sadly true, at the behest of civilians and companies). The consequences of these two different activities can be separated out. The flag goes abroad because of wrong ideas in some peoples' minds, not because of peaceful trade.

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