Against the Tide: An Intellectual History of Free Trade

by Douglas A. Irwin

The topic of "free trade" is more dense and complex than is usually presented in political debate or in the slogans or bumper stickers that these days often suffice for political discourse. Douglas A. Irwin, a professor of business at the University of Chicago, helps add depth to the discussion with this sweeping study of the business of trade between nations. He begins with Adam Smith's Wealth of Nations and carries through to some of history's greatest thinkers on the topic of free trade. He shows "how free trade came to occupy ... a commanding position in economics and how free trade has maintained its intellectual strength ... over the past two centuries." It is a timely and needed book.

Genres: Economics, History, Politics, Nonfiction, Business

274 pages, Hardcover

First published April 29, 1996

About the author

Douglas 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.

Reviews

[Jonathan · Rating 5 out of 5]

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.

[Diego Ferreras · Rating 5 out of 5]

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.

[Isaac Chan · Rating 3 out of 5]

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.

[Alan Leal · Rating 5 out of 5]

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.

[Cage Englander · Rating 5 out of 5]

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.

[Fabio Oliveira]

Against the Tide: An Intellectual History of Free Trade