Gabriel Mihalache on Trade

Though it may come as a surprise to some readers, my aesthetic predilection is towards libertarianism. My politics, alas, have moved beyond pure principle, and are now hostage to the messy business of outcomes, the management of which is, of course, anathema to perfect liberty. Nevertheless, I wish I could agree with this piece by Gabriel Mihalache. Gabriel writes an eloquent statement of the principled libertarian position. His candor is refreshing, about the philosophy, the politics, and the economics of trade. I don’t agree with him. But reading the piece made me homesick. Here’s a taste:

The knee-jerk, crypto-utilitarian reaction is to ask if [trade] improves the life (of the community?) on the net. (Isn’t it magical how “on the net” solves all conflicts between members of the same community?) But that’s not my thing. Any such calculus is philosophically suspect and highly conjectural at best.

A more robust alternative is to ask ourselves… by which interactions do these changes in welfare, the focus of so much debate, come about? And the answer is simple: by a “reshaping” of the decentralized, free trade pattern. Old contracts/associations are simply not renewed, new ones are created.

The “losers” from free trade lose because they can’t get the same trading terms they used to get. Others are no longer willing to associate with them under the previous terms. Is this legitimate? Yes. It’s the basic definition of the freedom of contract, which implies not only the freedom to draw and enter into contracts, but also to choose not to do so (anymore).

Hence, all trades and changes in trades/associations following the opening of borders are legitimate actions. There are no guilty parties. On the other hand, keeping borders closed is a direct violation of the freedom of association.

Innocent free men should not be subjected to coercion and persecution if they choose (not) to associate with foreigners and fellow countrymen alike. This is a basic political principle of any nation that calls itself free, at least in spirit, if not in letter also, but never in practice, it would seem.

Trade is a simple issue. Basic human decency, not to speak of the spirit, if not the letter, of contemporary constitutions demand it.

Is free trade without compensations Pareto inefficient, in the sense discussed here? Yes! But so is breaking up with your girlfriend, quitting your jobs or changing your favorite shop. So what? The Pareto & compensation criteria are at best dubious politics and at their worst, a cheap excuse to obfuscate and obstruct the issue of free trade.

Update History:
  • 05-May-2007, 10:23 1.m. EDT: Fixed embarrassing use of “principal” where I meant “principle”…

3 Responses to “Gabriel Mihalache on Trade”

  1. Luke… Nozick is your father!


    Sometimes I need to let the fundamentalist beast out for a walk. :-)

  2. P.S. In the context of these recent blog-wars on trade, your posts have been really good!

  3. don’t worry, ayn is my mother, but we’re estranged. thanks, and likewise!