Protectionism
Krugman emphasized that prioritizing economies of scale meant that average costs of production fell, making trade on a great scale more enticing.
While theory often doesn’t mirror the real world, in this case the benefits appear equally strong on both sides. The encouragement of open markets and free trade by the Liberal Trade Order has meant that extraordinary economic growth has been observed since the 1940s. 7 Great supply chains which span continents and move trillions of dollars in goods every year mean that consumer choice is expansive. It was the work of the World Trade Organization 8 which was praised for providing a multilateral legal framework for resolving tensions. The rise of the internet has also played a decisive role. Improving communication and connection between nations, it has paved a way for globalization to drive rapid economic development in many emerging economies. 9 Given this, therefore, a protectionist approach to political economics appears to be a merely outdated barrier. Raising prices, reducing efficiency and worsening welfare make no sense in today’s world. History is full of economists warning of its dangers, from Adam Smith 10 in the 1770s and Milton Friedman 11 in the 20th century to Paul Krugman 12 in contemporary times – all fearing the inevitable: foreign retaliation and the stagnation of industry. This reflects the conventional argument: that free trade is universally beneficial while protectionism is widely detrimental. The strength of this argument rests on the assumption of global symmetry and predictability: that nations, left to their own devices, will cooperate because mutual benefit is ultimately guaranteed. Critically, this system only works if states share the same priorities – an assumption that rarely holds in practice throughout history. Importantly, policy makers must balance political, social and strategic goals with those of economic efficiency. It is this fundamental tension that explains why protectionism is not the anomaly which it seems to be; it instead reflects the vulnerabilities of global interdependence. Despite its recent media attraction, it is not a new concept. One of the earliest mass political debates over trade was sparked following the 19 th -century laws imposed on the importation of corn in Britain. The Corn Laws 13 were an attempt to shield domestic farmers from foreign competition and maintain high prices. The landed aristocracy, who enjoyed lucrative grain profits, were aligned against industrialists and workers, who had to face the inflated cost of food. Although the eventual repeal is celebrated as a triumph of liberal economics, the controversy also demonstrated a deeper idea: that 7 Wikipedia Contributors. Liberal international order. https://en.wikipedia.org/wiki/Liberal_international_order . Consulted : 25/08/25. 8 WTO. History of the multilateral trading system. https://www.wto.org/english/thewto_e/history_e/history_e.htm . Consulted: 25/08/25. 9 IMF Staff. Globalization: A Brief Overview. https://www.imf.org/external/np/exr/ib/2008/053008.htm. Consulted : 25/08/25. 10 Perry, M. Adam Smith Makes the Case for Free Trade and Warns Against the Sophistry of Domestic Producers Seeking Protectionism. https://www.aei.org/carpe-diem/adam-smith-makes-the-case-for-free-trade-and-warns-against- the-sophistry-of-domestic-producers-seeking-protectionism/. Consulted: 25/08/25 11 Perry, M. Watch Milton Friedman Refute Steel Protectionism Back in 1978. https://fee.org/articles/watch-milton- friedman-refute-steel-protectionists-back-in-1978/ Consulted: 25/08/25. 12 Lester, S. Paul Krugman: ‘Protectionism Reduces World Income, But…’ https://fee.org/articles/paul-krugman- protectionism-reduces-world-income-but/. Consulted: 25/08/25. 13 Editors of Encyclopaedia Britannica. Corn Law . https://www.britannica.com/event/Corn-Law-British-history. Consulted: 25/08/25.
20
Made with FlippingBook - PDF hosting