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Against the Tide: An Intellectual History of Free Trade
About two hundred years ago, largely as a result of Adam Smith's Wealth of Nations , free trade achieved an intellectual status unrivaled by any other doctrine in the field of economics. What accounts for the success of free trade against then prevailing mercantilist doctrines? And how well has free trade withstood various theoretical attacks that have challenged it since Adam Smith's time? In this readable intellectual history, Douglas Irwin explains how the idea of free trade has endured against the tide of the abundant criticisms that have been leveled against it from the ancient world and Adam Smith's day to the present. An accessible, nontechnical look at one of the most important concepts in the field of economics, Against the Tide will allow the reader to put the ever new guises of protectionist thinking into the context of the past and discover why the idea of free trade has so successfully prevailed over time.
Irwin traces the origins of the free trade doctrine from premercantilist times up to Adam Smith and the classical economists. In lucid and careful terms he shows how Smith's compelling arguments in favor of free trade overthrew mercantilist views that domestic industries should be protected from import competition. Once a presumption about the economic benefits of free trade was established, various objections to free trade arose in the form of major arguments for protectionism, such as those relating to the terms of trade, infant industries, increasing returns, wage distortions, income distribution, unemployment, and strategic trade policy. Discussing the contentious historical controversies surrounding each of these arguments, Irwin reveals the serious analytical and practical weaknesses of each, and in the process shows why free trade remains among the most durable and robust propositions that economics has to offer for the conduct of economic policy.
Irwin traces the origins of the free trade doctrine from premercantilist times up to Adam Smith and the classical economists. In lucid and careful terms he shows how Smith's compelling arguments in favor of free trade overthrew mercantilist views that domestic industries should be protected from import competition. Once a presumption about the economic benefits of free trade was established, various objections to free trade arose in the form of major arguments for protectionism, such as those relating to the terms of trade, infant industries, increasing returns, wage distortions, income distribution, unemployment, and strategic trade policy. Discussing the contentious historical controversies surrounding each of these arguments, Irwin reveals the serious analytical and practical weaknesses of each, and in the process shows why free trade remains among the most durable and robust propositions that economics has to offer for the conduct of economic policy.
280 pages, Paperback
First published April 29, 1996
15 people are currently reading
445 people want to read
About the author
Douglas A. Irwin
22 books26 followersDouglas A. Irwin
An economic historian, he is the John French Professor of Economics at Dartmouth College, one of the eight Ivy League universities in the United States, and a research fellow at the National Bureau of Economic Research (NBER). He previously taught at the University of Chicago Booth School of Business and served as an economist for the Federal Reserve and the President's Council of Economic Advisers. He has published seven books on U.S. economics and trade policy, making him a leading authority in the field. He is also a frequent contributor to The Economist, The Wall Street Journal, The New York Times, and The Financial Times.
An economic historian, he is the John French Professor of Economics at Dartmouth College, one of the eight Ivy League universities in the United States, and a research fellow at the National Bureau of Economic Research (NBER). He previously taught at the University of Chicago Booth School of Business and served as an economist for the Federal Reserve and the President's Council of Economic Advisers. He has published seven books on U.S. economics and trade policy, making him a leading authority in the field. He is also a frequent contributor to The Economist, The Wall Street Journal, The New York Times, and The Financial Times.
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Displaying 1 - 6 of 6 reviews
September 27, 2007
This stellar text is an intellectual history of the idea of free trade. Irwin masterfully traces the origins of the doctrine back to the ancient Greeks and illustrates its evolution up to the present. In describing how philosophers and economists thought about trade prior to Adam Smith, Irwin highlights numerous fascinating thinkers that many have forgotten. Of particular interest is Henry Martyn, who made an exceptionally advanced analytical case for free trade in 1701. And in tracing the history of free trade since Smith's breakthrough work, Irwin aptly summarizes the most important debates with the clarity and insight afforded by contemporary analysis.
Paul Krugman found the text "full of new insights and unexpected delights." I recommend it without hesitation.
Paul Krugman found the text "full of new insights and unexpected delights." I recommend it without hesitation.
April 24, 2025
This fantastic work is really two short books in one. The first is an intellectual history of the free trade doctrine, starting with Greek and Roman thought and culminating in Smith, Ricardo and the classical economists. The second is a collection of surveys on different arguments against free trade, organised by topic. All in all, the author provides an insightful and in-depth discussion to the key concepts and arguments for and against free trade, yet maintains accessibility for non-technical readers throughout. Essential reading in our times.
May 7, 2025
Excellent book! … but unfortunately I didn’t read it as carefully as I should have, due to a stupid and random loss of momentum in between. The abrupt shift to theory in Part 2 which threw me off a bit, also contributed to this loss of momentum but that is fine. I will read this again. Good job, Doug! (shout-out to a 30-years-younger Doug who probably still had hair) It’s the perfect length, too.
My main practical takeaway from this book by Doug is that since the world is so old, NOTHING under the sun is new. I was stunned to my core, whilst reading these pages, to identify EVERY form of rhetoric, apology, and appeal to populist sentiment that politicians (of course, most notably, Donald J Trump) use to argue for neo-mercantilism. The most important reason, in my view, is that mercantilism is intuitively appealing – the ‘pull yourself up by your bootstraps’ idea. Produce things by yourself. Don’t depend on others. Don’t give business to others. Give preference to domestic people and industries (which is, of course, way more appealing to racist demographics like the Malaysian Chinese Gen X). Hoard money – but every single counter-argument that Doug covers (with great nuance and fairness), has been evoked time and time again.
Thus, history is tremendously important. (Insert that Jennifer Burns quote about the importance of studying history, when I can find it.)
Revising old ideas isn’t just a political practice – economists do it too! For example I did not know that the increasing returns argument was first proposed by Frank Graham of Princeton. I had always assumed that it was a novel concept in Krugman’s New Trade Theory.
The most important THEORETICAL takeaway here is that I learned that the terms of trade argument, by Bob Torrens, appears to be the most robust counter-argument to free trade, and remains the most widely acknowledged restriction to free trade, as admitted by economic theory. To my mind I perceive no significant difference in terms of persuasiveness between the terms of trade argument and the infant industry argument, but it is good to know the consensus of the profession. Also wonder how the literature has moved on.
However, I still deem 1 critique necessary. From my experience I can tell that economists are exceptional in evaluating and even quantifying 1st-order effects. But for 2nd-order and even 3rd-order effects, economists have proven to be lax or even naïve.
I say this because this book, as expected, exclusively focuses on 1st-order effects, i.e. the GAINS of trade. This is not a bad thing per se.
But Munger’s insight (and eerie prediction) from more than 20 years ago has not ceased to occupy me. Everyone gains when everyone specializes in their comparative advantage and trades, sure. But if you have a vast, deep, and talented ethnic group like the Chinese, and the US trades with them, both countries are better off, sure. But who will grow faster in economic terms? Of course it’s China. That’s the 2nd-order effect – your competitors growing faster than you, even if you’re still better off than if you hadn’t traded with them.
Economists hate these considerations because it muddies this nice and elegant little discipline of ours. The discipline can stay elegant and scientific if we limit our focus to 1st-order effects. Introduce too many 2nd and 3rd-order effects, and we descend to a Humean skepticism and can’t publish papers.
But even if you don’t trade with China, other people will! And they’ll take advantage of your geopolitical caution, and get ahead of you economically. What gives?
China’s rise was inevitable, perhaps. That’s the uncomfortable truth. A dragon cannot be suppressed, only checked and delayed.
Idk, maybe considerations like these have been subtly covered (and even refuted) by Doug, but I wasn’t in the headspace to notice them.
'Til next time, Doug.
My main practical takeaway from this book by Doug is that since the world is so old, NOTHING under the sun is new. I was stunned to my core, whilst reading these pages, to identify EVERY form of rhetoric, apology, and appeal to populist sentiment that politicians (of course, most notably, Donald J Trump) use to argue for neo-mercantilism. The most important reason, in my view, is that mercantilism is intuitively appealing – the ‘pull yourself up by your bootstraps’ idea. Produce things by yourself. Don’t depend on others. Don’t give business to others. Give preference to domestic people and industries (which is, of course, way more appealing to racist demographics like the Malaysian Chinese Gen X). Hoard money – but every single counter-argument that Doug covers (with great nuance and fairness), has been evoked time and time again.
Thus, history is tremendously important. (Insert that Jennifer Burns quote about the importance of studying history, when I can find it.)
Revising old ideas isn’t just a political practice – economists do it too! For example I did not know that the increasing returns argument was first proposed by Frank Graham of Princeton. I had always assumed that it was a novel concept in Krugman’s New Trade Theory.
The most important THEORETICAL takeaway here is that I learned that the terms of trade argument, by Bob Torrens, appears to be the most robust counter-argument to free trade, and remains the most widely acknowledged restriction to free trade, as admitted by economic theory. To my mind I perceive no significant difference in terms of persuasiveness between the terms of trade argument and the infant industry argument, but it is good to know the consensus of the profession. Also wonder how the literature has moved on.
However, I still deem 1 critique necessary. From my experience I can tell that economists are exceptional in evaluating and even quantifying 1st-order effects. But for 2nd-order and even 3rd-order effects, economists have proven to be lax or even naïve.
I say this because this book, as expected, exclusively focuses on 1st-order effects, i.e. the GAINS of trade. This is not a bad thing per se.
But Munger’s insight (and eerie prediction) from more than 20 years ago has not ceased to occupy me. Everyone gains when everyone specializes in their comparative advantage and trades, sure. But if you have a vast, deep, and talented ethnic group like the Chinese, and the US trades with them, both countries are better off, sure. But who will grow faster in economic terms? Of course it’s China. That’s the 2nd-order effect – your competitors growing faster than you, even if you’re still better off than if you hadn’t traded with them.
Economists hate these considerations because it muddies this nice and elegant little discipline of ours. The discipline can stay elegant and scientific if we limit our focus to 1st-order effects. Introduce too many 2nd and 3rd-order effects, and we descend to a Humean skepticism and can’t publish papers.
But even if you don’t trade with China, other people will! And they’ll take advantage of your geopolitical caution, and get ahead of you economically. What gives?
China’s rise was inevitable, perhaps. That’s the uncomfortable truth. A dragon cannot be suppressed, only checked and delayed.
Idk, maybe considerations like these have been subtly covered (and even refuted) by Doug, but I wasn’t in the headspace to notice them.
'Til next time, Doug.
November 19, 2024
O livro é extremamente informativo e essencial para qualquer pessoal estudando o comércio (livre) de forma profissional. O autor navega por temas diversos que corroboraram o livre comércio ou o questionaram, desde Smith até argumentos de indústria nascente, diferencial de salários, retornos crescentes, a dicotomia riqueza/bem-estar, e muito mais. O livro serve como testamento de quão poderosa a doutrina do livre comércio é. Ao lê-lo, fico com a impressão de que se o comércio livre é desejado ou não não é consenso entre economistas. Nenhuma versão do comércio livre é assunto trivial e consolidado, apesar de que o comércio livre não foi suplantado por nenhum argumento contra ao longo de seus mais de 200 anos de existência.
January 25, 2024
The book is exactly what it claims to be and an incredibly comprehensive telling of a subset of intellectual history. Of course, as with any denser history book, there are some more mundane sections, but none of the mundanity was without merit or pursuant use.
Displaying 1 - 6 of 6 reviews