Free markets liberated us from the overweening power of church and aristocracy and created a rights culture. Emile Durkheim established back in 1893 the constitutional, commercial and civil law required to govern the society of strangers that capitalism creates. Free markets empower people with a choice of where to buy, work and live, and vendors compete with lower prices right down the supply chain. Free trade operates above our heads, regulating governments and giving capital the right to own, operate and profit, in markets that may be scarred by monopoly, corruption, slavery and child labour. Free markets are democratising; free trade can entrench power, concentrate wealth, limit the scope of civil society, and undermine prospects for economic and political development. With free trade, we are exporting the economics of capitalism while keeping the rights culture for ourselves.
When an African landowner chooses to export, the farm worker still has a job but the product of the local land, water and labour is shipped out of the country for the benefit of someone else. With less food grown for local consumption, everyone faces higher prices. In recompense, the landowner receives more profit.
Unless there is a labour shortage, there is no reason to expect higher profits to fund higher wages. More likely, any hard currency is placed in foreign bank accounts, or spent on imported luxuries, or imported machinery to replace the labourers altogether. Worst of all, the money could be used to buy guns. Then people lose twice over from free trade, seeing the product of the local land, water and labour exported and the tools of their repression bought with the proceeds.
Free trade makes our imports cheaper but at the cost of our long-term security. Moreover, it gives despots a competitive advantage because people without rights are cheaper to employ and easier to exploit. Putting high tariffs on countries that restrict or abuse basic rights would help rich and poor democracies by cutting unfair competition.
Struggling democracies would be the first to benefit, but the captive populations could be the real winners. Longer term, tariffs on tyrants would incentivise democracy and human rights instead of entrenching despotic wealth and power. Near term, captive populations benefit from any switch to domestic demand needed to stem unemployment, which despots fear as destabilising and unprofitable. If selling to the free is much harder, they will have to sell to the un-free, making them better off, consuming their own output with less profit for their abusers. We, in turn, should use our considerable purchasing power to support democracy and human rights, instead of buying imports on the cheap by exploiting people who lack basic freedoms.
The assumption that the benefits of the free market transfer to free trade is part of a mythology that sees poor countries coming up behind us on some capitalist prosperity trajectory, with democracy and welfare as optional extras or the ultimate prize. Yet our history was bloody and violent, so why would we want that? Why make the World’s poor fight for the same rights that our ancestors desperately needed to protect their safety and secure their freedoms? We now take those rights for granted, from factory conditions to the franchise, yet they are an impossible dream for countless millions who work towards our comfort.
Through free trade, we systematically exploit people who are unsafe and unfree. Just because people are poor, their lives should not be cheap. When people have rights, when they can replace their governments and join a trade union, they tend to be happier and richer but also more expensive to employ. Pitting them against an un-unionised, disenfranchised, oppressed workforce rewards the tyrants and entrenches their power, so both populations lose out. Captive populations would benefit from the shift to domestic demand when tyrants lose their export markets, and we would benefit from a safer, freer, fairer world.
There is more on how to democratise the global supply chain at www.changingeconomics.blog.
Over recent weeks I have outlined progressive policies to transform capitalism into a force for good as well as for gain. We need to: use taxes rather than interest rates to control inflation, so reducing government debt and reversing the rise in inequality that is fuelling social division; recognise that market prices favour the wealthy and make the liberal case for redistribution; and use the trade system to force democracy and human rights down the supply chain and stop subsidising dictators. With Labour offering business as usual, the Liberal Democrats need to step up. Offering a positive economic agenda that is radical, transformative and new may even be popular!
* Alastair Bowman is a life-long Lib Dem who chaired Camberwell and Peckham from 2007 to 2010. He now lives in the French Pyrenees.
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32 Comments
Sorry, but I disagree with the central thrust of this article. You do not have genuinely free markets without free trade. You may wish to restrict the ability of consumers to purchase less expensive goods produced abroad, perhaps on the basis that the production costs are only lower because of much lower wages in those countries, but any such restrictions interfere with the working of the market for those goods.
Therefore, you can have free trade and free markets or choose to not have free trade and free markets, but you can not choose to have restrictions on trade and somehow still have free markets.
Yes and no.
Yes, “free trade” has always been the mendacious slogan deployed by rich, powerful nations against exploited poor nations. Why shouldn’t we rich Westerners buy up your Third World minerals and agricultural produce at a “fair” market price, i.e. what you will have to settle for if you don’t want to starve? No, Third Worlders, don’t you dare adopt evil, protectionist, anti-neo-liberal tariffs. That would offend against sacred free trade economics, and if these warnings won’t scare you off, we’ll (metaphorically) send a gunboat.
But no, Alastair, I fear that your demand for “tariffs on tyrants” is an impossible ideal in today’s Trump-world. It is the diametric opposite of what is actually happening. Trump has declared that might is right. And he is winning. Even the EU has rolled over. The UK has earned the right to be screwed a little more gently than everyone else, because Starmer is Trump’s number 1 toady.
Sorry, I can’t find any good answers. People fondly hope Trump will come unstuck due to inflation, but that’s probably just wishful thinking. Leaders like Carney have won elections on the promise to stand up to Trump, but have quietly and pragmatically caved once elected.
Yes and no.
Yes, “free trade” has always been the mendacious slogan deployed by rich, powerful nations against exploited poor nations. Why shouldn’t we rich Westerners buy up your Third World minerals and agricultural produce at a “fair” market price, i.e. what you will have to settle for if you don’t want to starve? No, Third Worlders, don’t you dare adopt protectionist tariffs. That would offend against sacred free trade economics, and if these warnings won’t scare you off, we’ll (metaphorically) send a gunboat.
But no, Alastair, I fear that your demand for “tariffs on tyrants” is an impossible ideal in today’s Trump-world. It is the diametric opposite of what is actually happening. Trump has declared that might is right. And he is winning. Even the EU has rolled over. The UK has earned the right to be screwed a little more gently than everyone else, because we have taken the lead as grovellers.
Sorry, I can’t find any good answers. People fondly hope Trump will come unstuck due to inflation, but that’s probably just wishful thinking. Leaders like Carney have won elections on the promise to stand up to Trump, but have quietly and pragmatically caved once elected.
You take as a paradigm of free trade an abusive relationship between countries with vastly different standards of living.
But our biggest trading partners by far are the EU, the US, China etc!!!
Also you are taking a mercantilist attitude – zero-sum game – to free trade. Please read Ricardo.
Thank you for your interest and your comments.
@ Brenda
I started by defining free markets as those empowering people, and free trade as the legal framework governing international trade, so a country could have a free market without foreign trade, or run a slave economy and trade internationally. Even if you interpret free trade as that of goods and services, it is not so clear-cut. A supply chain can be a free market in some parts but not others.
@ David
Re ‘Yes’, tariff escalation is particularly egregious practice, whereby tariffs rise the more value a country adds to its exports i.e. we are happy for competition in raw materials which we lack, but not for the processing jobs we want for ourselves.
Re ‘No’, I concede that being anti-tyrant is not exactly Trump’s vibe but he has called free trade into question as never before. If he united the World’s democracies, he could address unfair competition coming from China and other dictatorships while also improving the lives of the captive populations and promoting peace and prosperity. Move over Noble Peace Prize, this would make him a Global Hero. So he could well be tempted, particularly if he wants to piss off Xi or Vlad at some point, or when his current tariff policy losses its shine when, as you say, the inflation hits.
@ Mohammed
Care to share a little more? If China faced a decade of gradually-increasing tariffs, what would the Communist Party do? They would need to replace their declining export markets or face the unemployment they have always feared. They will have to supply domestic demand and thereby improve the lives of Chinese people. Meanwhile our business helps a fellow democracy and although we pay a little more for our imports, we would be investing in a better world. Everyone wins except the CCP. What have I got wrong?
@ Chris
Free trade brings together rich and poor, and how it affects the poorest should matter most in my view. I’m not mercantilist or zero-sum, but Ricardo’s comparative advantage ignores collateral damage to people affected by the decision but not party to it. Although their well-being is not counted, it should still matter to us.
This is one of the silliest articles I have ever read on LDV. Even a few moments thought and a quick review of countries like South Korea, China and Vietnam will show the enormous increases in prosperity brought about by trade. Is that always accompanied by democracy – no , but I suggest the author talk to some of the billlion of people taken out of dire poverty by trade before he rights such nonsense
I agree with Simon McGrath….. especially his first sentence…….. and then we get David Allen stating “Carney has caved in” without the least bit of evidence on the very day Mr Carney is visiting and working with Mexico to counteract Trump.
Liberal support for free trade is probably the longest held political commitment of any political party anywhere in the world, so I was expecting some pushback. Instead of telling me that I’m wrong, tell me why I’m wrong, regarding A) the African landowner scenario (para 2 of post,), and B) why we shouldn’t focus the benefits of trade on democracies, also benefitting the captive populations (as per my reply to Mohammed).
If good do not cross borders armies will. We learned this lesson when 30s protectionism helped spur the rise of fascism and the horrors that this led to. If trade is no longer a path to prosperity, demagogues start calling for “living space”.
Buying commodities on the world market has generally aided tyrants (oil exports have kept many a autocrat in power, whilst wheat exports fueled Stalinist industrialisation), but buying manufactured goods generally helps democratisation by ensuring the enrichment or groups that are hard for those who control the state to capture. It’s why Turkey is more democratic than Russia. 1/2
Whilst trade deals should We shouldn’t come
Whilst there is case for promoting democracy via trade deals, condemning working people to poverty by cutting them off from the global market doesn’t work. Indeed it solidifies the power of traditional elites.
2/2
South Korea’s economic success demonstrates the limitations of blanket free trade advocacy. The country built its prosperity through strategic protectionism and state intervention, only embracing full trade liberalisation after its industries could compete globally.
The economic literature around free trade is far more complex than some posters seem willing to acknowledge. While trade can generate benefits, timing and context matter enormously. Developing countries face real disadvantages when competing against established industries in advanced economies, making “level playing field” rhetoric misleading.
Far from being ‘silly’ or ‘nonsense’ this article is a useful corrective to the idea that ‘free’ trade is an unalloyed good for all parties. While trade liberalisation can promote growth, it can also worsen inequality and constrain developing nations’ policy options. Often free trade rhetoric is used to mask fundamentally unequal relationships that favour developed over developing economies.
Alastair Bowman 8th Aug ’25 – 7:11pm
Liberal support for free trade is probably the longest held political commitment of any political party anywhere in the world,…
Long go. Today, the LibDems advocate membership of the world’s most protectionist trade bloc – the antithesis of free trade.
@ Chris, Simon and David R
Free trade is a sacred cow for some, and my sterner critics are long on invective, short on substance. Again, tell me where I am wrong, regarding current trade practice in my African scenario (para 2), or my reply to Mohammed about a better future.
Given the choice between sharing the benefits of trade with a democracy where workers have rights and taxes are more likely to fund health and education, or trading with a dictatorship that abuses its population and creams off a lot for unproductive palaces and security forces, why choose the latter? Just because it is cheaper? You would need a ridiculous faith in the ‘invisible hand’ to make that decision ethical (discussed in my post ‘Markets work, but not for poor people’ last week).
@ William
I agree with much of what you say. Manufacturing can offer more opportunities, hence my opposition to tariff escalation earlier. But I believe my reply to Mohammed answers your last point – the captive populations would also benefit. Even if they don’t, it is more or less zero-sum since any deal going to a dictatorship over a democracy sees the latter lose just as much (or more in developmental potential).
Plus this has the huge advantage of fundamentally weakening dictatorship in the world at a time when it is on the rise. If a Chinese model of capitalism wins out, achieving similar efficiency and innovation without human freedom, we are all in big trouble. I agree that trade can deter war, although our integrated supply chains also create new vulnerabilities. Ideally we would trade freely with everyone in the world, but until then, why not advantage our friends instead of funding potential enemies.
@ Jeff
Good point. Since I want all democracies to open up, at least to each other, does that make me more of a free trader than my critics?
The UK overwhelmingly trades with countries like EU, China, US, Australia, Japan etc.
You are making free trade the scapegoat for deep structural and political problems in the societies of counterparts in Africa in particular. Stopping trading with, say, Cote d’Ivoire, because it has poor governance will not resolve it’s deep political and social issues, because it isn’t the cause of those issues.
All it will do is make Cote D’Ivoire poorer.
@ Chris
Cote d’Ivoire is far from the worst offender in Africa, but let’s say it faces tariffs for democratic failings. That could mean losing business, say to neighbouring Ghana where human rights are more respected. Your way, Ghana loses GDP, my way CdI does. So the question is: which population benefits most? A democracy is more likely to allocate some of the gain to the public good, while a dictator is more likely to squander and oppress. Why choose the latter?
Let’s say both countries have a problem with slavery on cocoa plantations. If one acts against it, their labour costs will rise. Under free trade they become less competitive and slavery is rewarded; a tariff reduction would prevent such a race to the bottom. Tariffs on tyrants would also allow countries to escape the resource curse, as dictatorial control of natural resources would be much less profitable.
@Alastair: Free trade isn’t a zero sum game – It’s not like, if Cote d’Ivoire gains from it, then Ghana automatically loses out – it’s perfectly possible for BOTH countries to gain from free trade at the same time.
“Long go. Today, the LibDems advocate membership of [the EU] the world’s most protectionist trade block – the antithesis of free trade”
That was the cry of the Brexiteers during the referendum campaign. In fact the EU had at the time more free trade agreements than any other block/country I could find: more than Japan/Switzerland/India/US/Australia/China and the rest. Plus of the course the deepest freest trade of all between major countries in the single market. In an imperfect world I think that was pretty good.
David Raw – OK, my comment on Carney was a bit over-stated. He did at one stage admit Canada would probably have to agree to Trump’s tariffs. However, thus far Carney hasn’t achieved a deal, and Trump has just increased tariffs on Canada unilaterally. So, OK, Carney hasn’t given up trying. On the other hand, nor has he succeeded.
The point I wanted to make was that Trump is winning. It’s not nice. But it is reality. Trump has shown us, sadly, that might is right.
“Tariffs on tyrants” is a pipe dream. In reality, it’s tariffs BY the American tyrant.
@ Simon
You are missing the point. Of course both sides can benefit from free trade, but in this case CdI and Ghana are competitors and only one can win the contract. I see that you do not rise to the challenge I put to you, Chris, David R and Mohammed. Try explaining why I am wrong. That way at least one of us will learn something.
@ David A
We should not give Trump so much power. He cannot close down our options, only stall them. And if/when his current tariff policy ends in slower growth and higher prices, he will be casting around for something new. Tariffs on tyrants appeals to the key blue-collar vote that swung to Trump.
Alastair,
You are implying that Trump is over-reaching himself, and that his policy will hurt him domestically and force him to U-turn. If that is correct, how can you explain the fact that just about all the EU and UK leaders have concluded that their best course of action is to make a disadvantageous deal with Trump, rather than stand up to him and fight back?
Surely, if Trump was seen to be flailing and out of his depth, all the EU and UK financial experts would be advising their governments to stand firm and make no concessions to Trump? They are not giving that advice. They are telling UK and EU leaders to settle for the least-bad deal they can get. They are giving that advice because they can see that (despite the chaos, or contrived chaos), Trump is winning.
Sure, tariffs may cause US price inflation. Trump has told us how he can tackle that. If necessary, he can use the tariff revenues to cut taxes for working people. Problem solved.
Let’s not kid ourselves Trump is likely to lose this battle. Chances are, he won’t.
@Alastair: Are you confusing me and Simon McGrath? I hadn’t posted in this thread before today so I can’t see why you’d put the challenge to me 🙂
But responding anyway, I do think the statement in your title, ‘free trade only benefits tyrants’ is self-evidently wrong: In the last few decades, free trade (as part of the free market) has helped raise the standard of living of millions of people in numerous countries – notably most of Eastern Europe, and much of Africa, as well as most of the Western Europe during the previous century. The example of the African landowner that you use to illustrate the proposition is not a typical example of how free trade works, and the injustice in that example results not from the free trade itself but from the power structures within the (hypothetical) country.
I’m actually one of those who should be on your side – to the extent that I think free trade can cause harm if you’re not careful (for example, countries with lower environmental standards undercutting those with higher ones) so does need to be regulated, but even I think you’re being far too negative and not sufficiently nuanced towards free trade – which is usually a good thing and – in the absence of unfair power structures – does vastly help average standards of living.
Might I suggest a change of language to talk about ‘Free and Fair Trade’? The Fair Trade movement has achieved more than some of us thought at first, though it is still more like a small charitable movement than a significant method of trading. Yet, it has begun to change the concept of trade and is continuing to spread the idea of consumers paying just a little more to help the poorer producers. It also has the potential to switch the emphasis of international aid from giving money just for development, towards using trade to help development.
@ David A
Whether Trump helps or hinders us, we shouldn’t let him stop our efforts to make this a better world. I agree we should not bank on Trump failing (though I think he will), or on his successor being any better.
@ Simon R
First, apologies for confusing you with Simon M. We can argue about who has reaped the benefits of free trade though we can probably agree that democracies share those benefits better than dictatorships. ‘Free trade only benefits tyrants’ because of we traded on preferential terms with fellow democracies, they would be the only losers. Their captive populations would benefit from the shift to domestic demand. I am challenging the conventional defence of free trade with tyrants, in that their already oppressed populations would otherwise suffer even more (already offset by the commensurate advantage to the democracy that secured the business instead). And surely dictatorships enshrine those unfair power structures that you refer to. Yes, my African example is extreme, but highlights that trade is about more than cash. GDP would have gone up even though the population was impoverished.
@ Nigel
I agree the terminology is difficult, but I think ‘fair trade’ is best reserved for those micro interventions, whereas I propose changing the macro framework but otherwise leaving it to the market. Fostering democracy will help achieve the fair trade goals of decent wages, sustainability etc.
@Alastair: Thanks for the explanation. I think my response is that, if you’re going to give an extreme example, it’s usually better to acknowledge alongside the example that it’s extreme, rather than – as I feel your article did – give the impression you’re presenting it as a typical example.
Regarding whether free trade benefits tyrants: With all the nuances and clarifications in your reply to me, I can see what you’re trying to say. But the headline in your article did not contain any of those clarifications – it simply said ‘free trade only benefits tyrants’, which as a generalised statement made without any restrictions or context, is not true. That possibly accounts for the hostile reaction of some people to the article. If I may, might I suggest perhaps being a bit more careful with future headlines 🙂
More generally, there is a debate to be had about the extent we should trade with countries with tyrannical Governments. I don’t think there are any easy answers, but recent history shows that attempting to block trade rarely has much impact on such Governments. The Russian, North Korean, and Iranian Governments for example are as entrenched as ever, despite severe restrictions on trade. 🙁
I think everybody who has commented would agree that trade derives huge benefits, and we only import a certain amount. I think we should share those benefits with fellow democracies. Otherwise we allow free trade to skew the benefits in favour of dictatorships. Do we connive in exploitation just to get the best price, or do we simply believe the market is always right?
Isn’t free trade the result of free markets? The trade is the movement of goods and services and the market the rules that sustain free trade. Trade requires regulation to make it fairer and fulfil social and environmental objectives.
@ Peter
Free trade here means the WTO framework governing international trade, rather than an absence of regulation, which all markets require to some extent. Our imports may come from markets that are unfree (monopoly, corruption), made by people with no rights.
The fundamental problem is that GDP only counts the money so free trade looks like a cost-free win-win. In the real world, time, objects (raw materials to finished goods), space and information are also exchanged.
On the money side, manufacturing and service exports are good for jobs and wages (agricultural exports change land use and may reduce employment). Exports also generate higher profits and more tax. Information flows include skilling (and de-skilling e.g. the loss of agricultural know-how) and the beneficial cultural exchanges that come from trade.
On the down side, a world of finite resources makes the loss of objects costly. Mineral exports are lost to future generations, and finite land and water mean that, without deforestation, any agricultural exports reduce the food grown for local consumption. Worktime, spent transforming objects or providing a service, is exchanged for wages (or the sale price if self-employed). Export workers may earn a premium, but the whole of their output is lost to the local population. They do not have to pay for it either, but with fewer goods and services for local consumption and with more money coming in, prices rise and some may go without.
The owners benefit, as can workers if job opportunities expand, but more money and lower domestic supply is inflationary for everyone. Whether the people benefit overall from free trade depends on how the export earnings are divvied up, between wages, profits and taxes. Democracies are likely to make a more equitable distribution and make better use of the taxes, essentially making free trade much fairer. Free trade as now is unfair, since people without rights are cheaper to employ and easier to exploit.
1/2
2/2
We only import a certain amount, and tariffs on tyrants would see struggling democracies win more business, offsetting the loss to dictators and their captives. Moreover, to replace lost export markets and stem unemployment, which despots fear as destabilising and unprofitable, they will have to switch to domestic demand. So although there is less money coming in, the captive populations will serve each other and keep the objects they make in the country (or supply other captives). Our higher import prices are more than offset by the security gains from promoting democracy and human rights, and it is the right thing to do anyway. So free trade only benefits the tyrants.
Since we all agree that trade is beneficial, why not share the benefits with fellow democracies and stop subsidising dictators? Surely it is a lesson we have learned to our cost with Putin. If we want democracy to last, we should make it pay.
@Alastair – what you’re describing isn’t how free trade normally works. There isn’t some fixed amount of benefit to be shared out, nor is it correct to describe free trade as a subsidy: It’s more like, free trade normally makes all countries better off. Let’s say you have three countries, A, B and C, trading freely. A and B decide that because C is ruled by a tyrant they’ll impose barriers to prevent trading with C. Imposing those barriers won’t make A and B better off at the expense of C – rather, it will make all three countries worse off economically. Of course, if A and B have some specific reason to believe that stopping trading might reduce the tyrant’s power or cause their overthrow, then they might consider that the economic loss is worth putting up with in order to achieve that end, but it will still be an loss, which will reduce the standard of living for the people of A and B.
@ Simon R.
That is too simplistic, as the people of a country do not share a single interest, all getting rich or poor together. If GDP rises but so does inequality, the bulk of the people may be worse off. Some benefit from higher wages, profits and taxes, others are hit by the inflation, from having fewer goods and services and more money coming in. So it is not clear-cut. But why have a trade system that allocates so much to dictators when we could so easily cut them out?