Does free trade lead to peace?

[alanjjohnstone]

'Another quick google produced this. It might not be directly relevant but is interesting.http://library.cqpress.com/cqresearcher/document.php?id=cqresrre1939030900My reading of it was that Germany fully realised autarky although desirable was  not possible – there were raw materials and foodstuffs it just had to import – but the economic policy was skewed towards export and that meant encroaching upon traditional British markets. 

Quote:

" Robert S. Hudson, secretary of the British Department of Overseas Trade, told the House of Commons that British export industries must organize so that they could negotiate as units with their opposite numbers in Germany and say: “Unless you are prepared to put an end to this form of competition and come to an agreement on market prices which represent a reasonable return, then we will fight you and beat you at your own game.” In December the government introduced a bill to provide a “fighting fund” of £10,000,000 for insurance of trade projects regarded as in the national interest but not justifiable as sound commercial risks.R. S. Hudson and Oliver Stanley, president of the British Board of Trade, are scheduled to go to Germany this month with a mission of the Federation of British Industries to engage in conversations with German officials in the hope of reaching agreements that will avert an Anglo-German trade war."

And for the necessary imports, Germany was outbidding their rivals and tying them into bilateral arrangements by use of credit

Quote:

The Reich has sought to make its purchases of raw materials and other import goods as far as possible in countries with which it has clearing agreements, since under those agreements use of foreign exchange is avoided. The German importer makes payment in marks deposited to the Reichsbank account of the country from which the goods have been imported. The foreign creditor, in turn, can get his money out of the Reich only in the form of German goods purchased with the marks in the Keiehsbank account. And the German government has increasingly restricted the types of goods which can be so bought for export. Under this system, with its rigid controls, trading has tended to become in effect a matter of transactions between governments, with individual exporters and importers relegated to a subordinate role and the dominant power enforcing terms and conditions that will accrue to its own advantage. Trade, moreover, is canalized into bilateral channels. Bilateral trade has been called “the modern equivalent of barter.”Under the clearing-agreement procedure Germany began purchasing large amounts of raw materials in the Danubian and Balkan countries, offering prices so attractive that the governments of those countries could not hamper the sales without incurring unpopularity among the producers. A recent article in the London Economist described the ensuing developments:'It was some time before the exporting countries realised that the result of the one-sided purchase of their goods by Germany was the accumulation of large frozen balances owed to them by Germany on their clearing accounts with her. In order to liquidate these balances, it became necessary for the governments of these countries to do their utmost to encourage the purchase of German goods. To that end they refused import licences for British and other manufactures in order to divert purchases to Germany'

http://library.cqpress.com/cqresearcher/document.php?id=cqresrre1939030900 I also came across the Standstill Agreement.

Quote:

In July 1931 financial crisis led Germany to declare a de facto moratorium on its international debts, including normal commercial debts. These became subject to a Standstill agreement, which provided for limited payments to creditors; it was renegotiated and renewed regularly until the outbreak of World War II. British creditors, including the banks, were heavily exposed to German debt, which had suddenly become subject to sovereign and, with the abandonment of the gold standard, currency risk. The British banks appeared less aggressive than most Standstill creditors in reducing their exposures, in what is regarded variously as enlightened pragmatism or economic or financial appeasement. Under pressure from government and the Bank of England, both of which wanted to keep Germany integrated with the international financial and trading system and defuse economic tensions, the banks were obliged to balance patience against their desire for repayment.

http://www.thebhc.org/node/2808Another link produces the figures on foreign exchange and explains that Germany always had a trade deficit

Quote:

German trade statistics make it possible to obtain data at constant 1928 prices for individual countries by major items traded, which in this case represent between 60 and 70 per cent of the respective trade volume. In table 10, the results for this estimation of trade volume by country are shown for German trade with the US, Britain, and France. The real figures obtained for 1938 show that the much-celebrated autarky drive of the Nazi economy almost evaporates: once the dramatic reduction in Germany's trade with its most important creditors is controlled for, the decline in German foreign trade between 1928 and 1938 diminishes from almost 15 per cent to a mere 2.5 per cent. This is summarized in a conclusion: German autarky policies in the 1930s were to a large extent a process of selective disengagement from trade with the US, Great Britain, and France.Imports from the rest of the world remained basically unchanged in comparison with their pre-Depression peak…The evidence collected here seems to suggest that the autarky policy of Nazi Germany may not be readily interpreted as a general withdrawal from international trade in preparation for war. What it shows, instead, is a drive for partial disengagement from Germany's dominant creditor countries, along with the attempt to build up import-substitution industries in the fields of maximum dependence. 

 http://piketty.pse.ens.fr/files/capitalisback/CountryData/Germany/Other/Pre1950Series/RefsHistoricalGermanAccounts/Ritschl01.pdf

[robbo203]

Sympo wrote:

robbo203 wrote:

I think your reply was good but I would like to play devil's advocate here and question a few things."For instance, a seller and a buyer might strike a deal but this might very well have the effect of damaging the interests of another potential seller, for example who had been deliberately excluded from the proceedings and might feel aggrieved as a result."Can't the second seller get in on the action (i.e. why can't the buyer buy half of X from seller 1 and half from seller 2)?"On the contrary the drive to war normally engages irrational factors such as nationalistic sentiments to an extraordinary degree"Are capitalist states inherently irrational? Is there no way for them to permanently stay away from extreme nationalism?

 Hi Sympo In answer to you first point yes I suppose  the scenario you suggest is possible but that still does not negate the basic argument that there is a zero sum situation – a conflict of interest – involved inasmuch as seller 2 now provides half of what the buyer wants to the chagrin of seller 1 who had expected to provide eveything.  Seller 1 would much prefer seller 2 was out of the picture altogther along with seller 3, 4….n.  Also, of course, according to pure market theory, the buyer wants the lowest price possible.  It is unlikely that seller 1 and seller 2 sell their wares at exactly the same price.  Furthermore, bulk buying possibly attracts discounts so splitting the purchase between two sellers might not be particularly advantageous to the buyer. Regarding your second point – that's a very interesting question you raise.  I believe capitalist states necesarily engage nationalism as a kind of secular religion and to that extent are intrinsically irrational.  That is to say, they are predicated on a myth called the "national interest"  which assumes a commonality of interests between workers and capitalists within a given nation state.  Since there cannot be such a thing, a fictional account of the way the world functions has to be presented.  The citizens of another nation are depicted as being uniformly hostile to your interests just as your interests are depicted as being uniformly congruent with those of your employer in some sort of quasi transcendental sense.  You are in the same boat as him/her confronting other national "boats" in a contnual war of maritime attrition.  Its all a load of tosh really but huge amounts of resources are plowed into maintaining this dangerous fiction Whether "extreme nationalism" can be averted is an interesting question.  We have the contemporary case before us of the Europoean Unin being subject to a wave of nationalist sentiment.   The irony is that EU was/is esentially a statist construction.  Yet the advocates of free trade who argue that more trade and less state intervention will mitigate the prospect of war cannot seem to see that insofar as the EU was formed in part to avert the prospect of war in Europe in the future, this has involved a greater role for the state,  not a diminished one,  in the guise of inter-state treaities and so forth.  That in itself is quite a paradox!

[Sympo]

robbo203 wrote:

"In answer to you first point yes I suppose  the scenario you suggest is possible but that still does not negate the basic argument that there is a zero sum situation – a conflict of interest – involved"I assume you think the scenario looks pretty unlikely?"they are predicated on a myth called the "national interest"  which assumes a commonality of interests between workers and capitalists within a given nation state." So the seed of extreme nationalism will always exist in capitalist society.

[robbo203]

Sympo wrote:

robbo203 wrote:

"In answer to you first point yes I suppose  the scenario you suggest is possible but that still does not negate the basic argument that there is a zero sum situation – a conflict of interest – involved"I assume you think the scenario looks pretty unlikely?"they are predicated on a myth called the "national interest"  which assumes a commonality of interests between workers and capitalists within a given nation state." So the seed of extreme nationalism will always exist in capitalist society.

 Yes I think the scenario you depict is unlikely for the reasons given but I dont rule it out completely Also yes I think the seed of extreme nationalism is embedded in capitalism.  In fact the nation state (and nationalism itself) emerged with the rise of capitalism as the unit of spatial and political organisation under capitalism par excellance. Have you read Benedict Anderson's book on Imagined Communities: Reflections on the Origin and Spread of Nationalism? It is an interesting work which I would highly recommend  though Anderson did not consider himself to be a Marxist and took issue with some aspects of the Marxian view of nationalism While the seed of extreme nationalism may exist in capitalism only because nationalism is part of the logic of capitalism in my view, I dont think it necessarily follows that nationalism in its extreme form must always occur.  Capitalist development as ever is a contractory process and the relationship between nationalism and globalisation is a complex one as current events are showing.  Extreme nationalism I would say is the expression of certain historically contingent factors, acting in conjunction with capitalism' inherent tendency to generate nationalist ideology 

[Sympo]

robbo203 wrote:

"Have you read Benedict Anderson's book on Imagined Communities: Reflections on the Origin and Spread of Nationalism?"I've never heard of him (though I'm not that knowledgeable about the subject)"While the seed of extreme nationalism may exist in capitalism only because nationalism is part of the logic of capitalism in my view, I dont think it necessarily follows that nationalism in its extreme form must always occur."Does this, combined with the idea that states could include all sellers in economic transactions, mean that Capitalism could potentially be a system where no military conflicts between states occur?

[robbo203]

Sympo wrote:

robbo203 wrote:

"Have you read Benedict Anderson's book on Imagined Communities: Reflections on the Origin and Spread of Nationalism?"I've never heard of him (though I'm not that knowledgeable about the subject)"While the seed of extreme nationalism may exist in capitalism only because nationalism is part of the logic of capitalism in my view, I dont think it necessarily follows that nationalism in its extreme form must always occur."Does this, combined with the idea that states could include all sellers in economic transactions, mean that Capitalism could potentially be a system where no military conflicts between states occur?

 Sympo .  Here's a taster for you – from chapter 4 of Anderson's books in pdf formathttps://www2.bc.edu/marian-simion/th406/readings/0420anderson.pdf Regarding your other point, well clearly there are parts of the world where war has not occured for quite a while – like the European Union  referred to earlier (discounting internal armed so called national liberation struggle carried out by organsations like the IRA, ETA etc   Moreover, there are today some twenty or so countries in the world  that do not possess any armed forces at all – though usually this is becuase they fall under the protection of another state or are too small, impoverished or remote to pose a threat to , or be threatend by , other countries.  Costa Rica, for instance, abolished its army in 1949 although, as a client state within the US sphere of influence, it has recently welcomed a huge US military presence within the country, supposedly as a deterrrent to drug trafficking in the region.    In addition, there are about a dozen or so countries that are resolutely  and constitutionally neutral.  Switzerland is a good example of the latter.  It has never engaged in a foreign war since 1515, and  has remained neutral since 1815.  The Swiss constitution forbids the state from ever initiating a war or even taking sides in a war  – although Switzerland itself is heavily armed  (ostensibly for purely defensive purposes) and practices military conscription (http://www.swissworld.org/).    Neverthless, none of this prevents even the most neutral state from vigorously promoting a nationalist ideology and its own sense of national identity.  The desire to subordinate the citizenry to the central state is as apparent in such cases as it is in more militarily aggressive regimes.   The homogenising thrust of the modern state in promoting its own national culture has, however, sometimes brought it up against stubbornly  entrenched cultural differences on the ground .   Historically speaking, this has not infrequently made it difficult to extend effective  political control over the entire population falling within the territorial unit over which it has nominal jurisdiction.  Hence the oppressive role that aspiring nationalisms have sometimes played vis-a-vis local cultures – although, even here, we need to be wary of making unwarranted generalisations.    As the above website of the Swiss Federal Department of Foregin Affairs puts it; "The status of neutrality has not only protected Switzerland from war, but has helped prevent the country from being torn apart when its different language communities might have been tempted to side with different belligerents in cases of conflict."   Perhaps there is, as this would suggest , a kind of subtle background interplay  between  the foreign  policy of a country and its internal domestic situation  However countries lie Switzerland are the exceptions that prove the rule,  I dont think they are generalisable for the world as a whole where you have a different kind of dynamic coming into play such as superpower rivalry often fought out through proxy wars and the like. .Ultimately wars, though rationalised on nationalist and even religious grounds, are fundamentally fuelled by economic conflicts over resources trades routes, markets and these conflicts are built into a system of market competition, even if they do not always express themsleves in war.  The very fact the the world spends nearly 1.7 trillion US dollars on weapons  (2016) and that this figure has continued to rise fairly relentlessly, demonstrates to me not just the potentiality for war, but its actuality in global capitalism 

[Anonymous]

There is not such thing called free trade under the capitalist society when capitalists compete each others, and they even go to war fighting for trade and market

[Author]

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