Free Trade Further

Free Trade Further

Free Trade Further qualifications to the free trade doctrine were introduced by Alexander Hamilton (Report on Manufactures) and J. S. Mill (Principles of Political Economy, 1848), on the ground that there was a case for the temporary protection of 'infant' industries. These arguments were broadened, chiefly by Friedrich List, an admirer of Hamilton and a leader of the German Customs Union movement in the 18305, into a more general case for protection as a stimulus to national economic development. In his National System of Political Economy (1841), List argued that free trade hindered economic development once a country had passed beyond primitive agriculture. But even he was not prepared to see the principle of free trade thrown overboard indiscriminately or permanently.

Other qualifications to the free trade argument have from time to time been advanced: for example, to encourage diversification in order to preserve or promote a more 'balanced' industrial structure, to stimulate home employment during depression or to protect home industries against 'dumping'. Monopolistic practices in world and national markets suggest two further qualifications. First, a country, by tariff manipulation, may attract to itself a larger share of the total gains from trade at the expense of other countries (provided they do not try to follow suit). Secondly, if home monopoly causes economic resources to be allocated between uses inefficiently, free trade could magnify these distortions, although on the other hand the widening of markets through trade tends to limit sellers' monopoly power, and protection promotes the growth of monopoly power ' the tariff is the mother of trusts' (F. W. Taussig).

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Since then his writings have in turn been increasingly reinterpreted as a special case both by some followers and by some economists who had not wholly accepted his writings. The content of economics is in a state of change, and this consumeraffairs.org.uk site is therefore not a final statement of economic doctrine.

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