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Are Libertarians Abandoning Free Trade?

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Tags LibertarianismProtectionism and Free Trade

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Murray N. Rothbard wrote in the February 1971 issue of the Libertarian Forum that “libertarians, if they have any personal philosophy beyond freedom from coercion, are supposed to be at the very least individualists.” Indeed, libertarianism holds high the rights and responsibilities of the sovereign individual: the right to self and to justly acquired property and thus the right not to be coerced or arbitrarily restricted and the responsibility for one’s own actions and the moral duty to respect and honor other individuals’ rights.

Yet libertarianism, or at least a relatively large subset of proponents of libertarianism, has taken a strange collectivist turn in recent years. This is evident in a number of issues, such as free trade, where libertarians used to be in agreement in principle, albeit not necessarily in all the details or the applications of those principles. In contrast, this new turn toward collectivism argues from a different starting point. Rather than the individual’s rights, the starting point for this group is instead a notion of the individual’s collective belonging and identity (such as one’s country or ethnicity).

There has, of course, never been a problem for libertarians to recognize individuals for who they are, or choose to be, and thus within their preferred social and cultural context. No man is an island. As social beings, we are embedded in a context of community, culture, and tradition. The distinction between individualist and collectivist is not either-or but which is primary: for collectivists, the individual is subject to the will of the collective (or, in reality, the will of its leadership); for individualists, the collective has no right of its own but is subject to the individual’s choice to associate. For obvious reasons, the analysis of any state of affairs from a collectivist point of view is different from that of an individualist point of view.

The issue of free trade illustrates this clearly. Libertarians used to be universally and uninhibitedly for free trade. Whether domestically or across borders, voluntary exchange serves individuals best—and any restriction thereof is a violation of their rights. Thus, any restrictions should always be abolished, the sooner the better.

Granted, reality is somewhat more complex. As I discuss in The Seen, the Unseen, and the Unrealized: How Regulations Affect Our Everyday Lives, whenever the state regulates economic action, there are severe and oftentimes far-reaching distortions of both the structure and outcome of market exchange. As libertarians have long recognized, regulations create winners and losers. Also, rolling back one or a few regulations, while it potentially causes a “freer” market, it will cause a situation with a different set of winners and losers. This is true as long as a regulation remains in effect. The only truly fair and just economy is one completely devoid of the state’s manipulations, whether those are actively pursued or passively effected.

These complex implications of trade policy were never seen as an argument against deregulation, however. Rather, they are an argument for letting people and businesses exchange without interventions. Less intervention means less distortion, and this is always preferable. This should be preferred even by interventionists, because, as Ludwig von Mises famously recognized: “Economic interventionism is a self-defeating policy. The individual measures that it applies do not achieve the results sought. They bring about a state of affairs, which—from the viewpoint of its advocates themselves—is much more undesirable than the previous state they intended to alter.”

In other words, libertarians were free traders and favored any step in the direction of free trade. However, this is no longer obvious. Donald Trump’s trade war with China when he was president appears to have caused a rift within libertarianism, or at least among those libertarians who eagerly discuss policy online, along the individualist-collectivist fault line.

Individualist libertarians are true to the “traditional” libertarian view that the state should get out of trade altogether and that a trade war is only harming consumers and the economy. The collectivists instead focus on international trade as a matter of collectivist justice and, as a result, raise other issues. Among those are the recognition that China (the “other” collective) is engaged in “unfair business practices” by subsidizing and in other ways supporting Chinese (their “own”) business and, as part of this, neglecting to enforce international treaties. (A similar argument can, of course, also be made for the United States and any other state.)

This is itself not news, as libertarians have always recognized the destructiveness of realpolitik, nation-statism, and the overall distortive nature of interventionism. The solution from an individualist-libertarian perspective has always been to call for deregulation and free markets—even unilaterally—with the obvious goal of getting the state out of trade. That China, for example, subsidizes production so that American and European consumers can buy goods and services at a very low, and possibly below-cost, price is not a problem for anyone but the Chinese. They are, after all, picking up the tab for the low prices we enjoy.

From the collectivist-libertarian perspective, however, the suggested solution is very different—and may even be contrary to traditional libertarian views. In their take, Chinese domestic and international trade policy is not an issue primarily for the Chinese but threatens “our” businesses and therefore “our” ability to produce goods and services, which can make “us” dependent on Chinese production.

In other words, the issue of trade is no longer a matter of the free exchange between private parties, whether individuals or businesses, but a matter of the collective to which these parties “belong.” International trade then becomes an issue of “national security” and, the argument goes, it is therefore justified to call on the state to act on “our” behalf. Consequently, a trade war is seen by this group as a means for “us” to pressure the Chinese to adopt “fair” business practices so that “our” (American and perhaps Western European) businesses can compete on the same terms as Chinese companies—or, as it is often called, a level playing field.

While there are certainly problems involved with an expansionary Chinese state—a Keynesian monster with grand international ambitions made clear in, among other things, the Belt and Road Initiative—it should be fundamentally problematic for libertarians to identify with, and even support, one state against another. It is even more problematic to support a state setting out to restrict and tax trade, whether or not it is intended as a means to pressure (or punish) “them”—the nation-state that is even more interventionist than “we” are.

The trade war issue is the latest among a number of collectivist-libertarian critiques of traditional libertarian positions (examples include migration and state building). Just like the other issues, it appears to cause severe confusion among the new collectivist breed of libertarians regarding the nonaggression principle. This core principle is what underlies the free trade issue: it is fundamentally a question of voluntary market exchange. Trade is a matter of the parties involved in each exchange, not a conflict between the parties as players for different “teams.” There is no larger “game” to be played that somehow trumps or nullifies the parties’ right to voluntarily exchange as they themselves see fit.

The state is of course antithetical to this freedom, as it is to any freedom, whether the freedom is exercised alone or in voluntary association with others. The state is at the core mere aggression, not a team coach. Thus, a libertarian cannot see the state as a mechanism for good, or as a means to an end, no matter how legitimate the end.


Contact Per Bylund

Per Bylund, PhD, is a Senior Fellow of the Mises Institute and Associate Professor of Entrepreneurship and Johnny D. Pope Chair in the School of Entrepreneurship in the Spears School of Business at Oklahoma State University, and an Associate Fellow of the Ratio Institute in Stockholm. He has previously held faculty positions at Baylor University and the University of Missouri. Dr. Bylund has published research in top journals in both entrepreneurship and management as well as in both the Quarterly Journal of Austrian Economics and the Review of Austrian Economics. He is the author of three full-length books: How to Think about the Economy: A Primer, The Seen, the Unseen, and the Unrealized: How Regulations Affect our Everyday Lives, and The Problem of Production: A New Theory of the Firm. He has edited The Modern Guide to Austrian Economics and The Next Generation of Austrian Economics: Essays In Honor of Joseph T. Salerno

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