Mises Daily Articles
Montesquieu on Commerce
Montesquieu's ideas were most famously spelled out in his The Spirit of Laws (1748). There he offered insights into governments, which he divided into tyrannies, monarchies, and republics. Of particular importance for America was his analysis of the relationship between law and liberty in republics.
With American politics full of protectionism (e.g., buy-American and union provisions in stimulus legislation), including a slowly escalating tit-for-tat trade confrontation with China and international trade policy that is, at best, foot-dragging on any moves to reduce trade barriers, one aspect of Montesquieu's work that has struck me recently is what he wrote about that very practical application of liberty — free trade.
Countries are well cultivated, not as they are fertile, but as they are free.
[T]he public good consists in every one's having his property … invariably preserved.
When the inhabitants of a state are all free subjects … each man enjoys his property with as much right as the prince…
[I]t is not for the advantage of the public to deprive an individual of his property, or even to retrench the least part of it by a law, or a political regulation.
The spirit of commerce … renders every man willing to live on his own property…
The spirit of trade produces in the mind of a man a certain sense of exact justice, opposite … to robbery…
Commerce is a profession of people who are upon an equality…
[T]he spirit of commerce is naturally attended with that of frugality, economy, moderation, labor, prudence, tranquility, order, and rule. So long as this spirit subsists, the riches it produces have no bad effect.
[W]hen a democracy is founded on commerce, private people may acquire vast riches without corruption of morals.
In republics, [commerce] is commonly founded on economy. Their merchants, having an eye to all the nations of the earth, bring from one what is wanted by another.
[I]t is much better to leave [trade] open than, by exclusive privileges, to restrain the liberty of commerce.
[O]ne nation should never exclude another from trading with it, except for very great reasons … for it is competition which sets a just value on merchandise, and establishes the relation between them.
Commerce has everywhere diffused a knowledge of the manners of all nations: these are compared one with another, and from this comparison arise the greatest advantages.
The history of commerce is that of the communication of people.
Commerce is a cure for the most destructive prejudices … wherever we find agreeable manners, there commerce flourishes; and that wherever there is commerce, there we meet with agreeable manners.
When two nations come into contact with one another they either fight or trade. If they fight, both lose; if they trade, both gain.
Peace is the natural effect of trade. Two nations who traffic with each other become reciprocally dependent … their union is founded on their mutual necessities.
The effect of commerce is riches…
[C]ommerce is of the greatest service to a state…
[I]t is for [countries'] their advantage to load this commerce with as few obstacles as politics will permit.
[With] exclusive privileges to particular persons … commerce declined … the profit centered in a few hands, and was not sufficiently extended.
[S]evere and tyrannical government was incompatible with commerce.
The real wants of the people ought never to give way to the imaginary wants of the state.
Commerce is sometimes destroyed by conquerors, sometimes cramped by monarchs; it traverses the earth, flies from the places where it is oppressed, and stays where it has liberty to breathe…
[Because of free trade] it became necessary that princes should govern with more prudence than they themselves could ever have imagined; for great exertions of authority were, in the event, found to be impolitic; and from experience it is manifest that nothing but the goodness and lenity of a government can make it flourish … More moderation has become necessary in the councils of princes. What would formerly have been called a master-stroke in politics would be now … the greatest imprudence. Happy is it for men that they are in a situation in which, though their passions prompt them to be wicked, it is, nevertheless, to their interest to be humane and virtuous.
Montesquieu recognized that liberty required government "so constituted as one man need not be afraid of another." And free trade was an essential part of such assurance. But trade restrictions provide a means for the politically connected and powerful to gain by imposing harm on the rest of society, which forces Americans constantly to fear that others will seize ever more of the power of government and use it against them. Such protectionism, behind its many disguises and misrepresentations, illustrates exactly what Montesquieu feared would undermine republics, such as ours started out to be:
In an extensive republic … there are trusts too considerable to be placed in any single subject; he has interests of his own; he soon begins to think that he may be happy and glorious, by oppressing his fellow-citizens; and that he may raise himself to grandeur on the ruins of his country. In an extensive republic the public good is sacrificed to a thousand private views…
Montesquieu was one of the most influential political thinkers behind America's founding in search of liberty. But the extent that our country has abandoned one of the most essential aspects of the liberty we sought in becoming independent — the freedom to trade as we see fit, based on our ownership of ourselves and the product of our efforts — shows how far we have moved away from a system that by its nature is peaceful, just, and mutually beneficial to a Hobbesian war of all against all for control of government's coercive power. As Henry George summarized it,
Trade does not require force. Free trade consists simply in letting people buy and sell as they want to buy and sell. It is protection that requires force, for it consists in preventing people from doing what they want to do … What protection teaches us is to do to ourselves in time of peace what enemies seek to do to us in time of war.
From before America's founding, careful thinkers have known of the blessings of liberty and the benefits of voluntary arrangements unhindered by political favoritism backed by government threats of force. Montesquieu was one part of that intellectual legacy, honored far more in the breach than reality today. We need to revive that legacy. Protectionism and all other forms of war by the state on its people are devastating, and need to be undone.