The Truth About "Free Trade"

by David S. D'Amato
Mar. 19, 2012

On Thursday (March 15), CNNMoney reports, "the long-awaited free-trade agreement between the United States and South Korea … went into effect," representing "the biggest U.S. trade deal since the North American Free Trade Agreement began in 1994." One might assume that a libertarian, promoting individual rights and free markets, would (or should) favor such a deal as the practical implementation of libertarian principles.

And insofar as states' free trade agreements did reify what could be considered libertarian principles, I would support them in earnest. But, as the saying goes, the devil is in the details, and when the details are accounted for, we find the same story of powerful interest groups engaging the state to secure special advantages.

Market anarchists advocate for a society shaped by free associations, community, and mutually beneficial trade. Our "free market" is in no way similar to the version contrived by the spin doctors of corporate public relations departments, in no way supportive of the monopolies that today deprive and exploit the overwhelming majority of people.

The "free trade" agreements that now govern much of global commerce (the United State-South Korea treaty being a representative example) mock the very idea and moral justifications of laissez faire. Where market anarchists champion freedom and individual rights as a means to a peaceful and just society, so-called “free trade” accords routinely include all manner of outrages against those principles.

Notably, the Export-Import Bank of the U.S. figures prominently in "free trade" deals. Created in 1934, its primary function, defended by virtually all members of Congress, is to act as a stanchion to international big business. According to professors William M. Pride, Robert J. Hughes, and Jack R. Kapoor, fiscal year 2008 saw the Ex-Im Bank authorize "$14.4 billion in loans, guarantees, and credit insurance worldwide …. It also cooperates with commercial banks in helping American exporters to offer credit to their overseas customers."

In short, the state's role in so-called "free trade" deals is to shift enormous risks to the unknowing and innocent taxpayer, to the working men and women who haven't spent billions on petitioning for favors and privileges. Parasitic handouts to and special perks for giant, multinational corporations at the expense of productive, working individuals are not a part of a genuine free market.

In a genuine free market, absent coercive braces to established companies, companies would have to bear the heavy costs of managing a business across thousands of miles. Without the unfair advantage of being able to pass their financial risks onto taxpayers, corporations would be limited in size and in power.

Commerce on the local, community level would likely see a resurgence, delivered from the burden of the huge, state-supported monopolies that currently push everyone and everything else to the margins.

Whatever international trade was leftover — able to go on without systematic coercion against innocent people — would necessarily be constituted by sustainable, socially beneficial commerce of the kind market anarchists envisage.

The global capitalism epitomized by the U.S.-South Korea deal is a distinctly and unmistakably statist phenomenon. The road away from its endless output of poverty and inequity is the free market, the legitimate one where every individual has the same rights as her neighbor. When that road is followed, we'll be making real progress toward "free trade."
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C4SS News Analyst David S. D'Amato is a market anarchist and an attorney with an LL.M. in International Law and Business. His aversion to superstition and all permutations of political authority manifests itself at firsttruths.org.