I have an article on the site Pieria, arguing something I have argued before, but this time from an international perspective:
The reality of trade is that it is always, necessarily, regulated. There is no ‘free’ baseline, untouched by politics, history and culture, to which we can aspire. There are merely a series of political decisions, special interests and historical accidents, some of which are hidden, some of which are less so, but all of which have very real impacts on trade and specialisation
The article (naturally) contains an attack on comparative advantage:
However, although comparative advantage is – in the words of Paul Krugman - something of an “economist’s creed”, its relevance as a theory is incredibly limited: in fact, it has long been acknowledged that the theory explains a relatively small amount of international trade.
and goes on to argue for Bretton-Woods style institutions.
Obviously I’m not the first person to make these arguments (Chang and Rodrik spring to mind), but sometimes I worry those on the side of ‘protectionism’, which I’d broadly align with, get sucked into caricature arguments similar to those of their ‘free trade’ opponents. What we really need is an institutional perspective on development and trade.
