Liberal Perspective On BritainS Trade Policies Essays -

Liberal Perspective On Britain'S Trade Policies Ideologies can play a significant role when it comes to politics. Once politicians strongly believe in something, it is hard for them to realize that their conducts might be destructive. Political ideologies committed Great Britain to free trade in the late nineteenth century. During seventeenth and eighteenth century, Great Britain pursued protectionism. However, in the first half of nineteenth century, as a result of its establishment as industrial hegemon in Europe, Britain began to adopt free trade policies (?Protectonism,? Britannica). ?Liberal economists emphasize the importance of the free market and call for only a limited government role in economic activities?(Cohn 81). They argue that ?freely operating markets based on a division of labor serve to maximize efficiency and prosperity and that such productive gains are likely to be positive-sum in nature? (Cohn 84). That means that all countries participating in free trade benefit from it. The gains of the states engaging in free trade are greater than its loses. Adoption of free trade policies was inspired by Liberal writings of Adam Smith, classic liberal, who believed in free trade. Adam Smith was attacking protectionist policies and pushing forward liberalization of trade. Eventually, the repeal of Corn Laws in 1846 symbolized final installment of the free trade philosophy in Britain (Rubinstein 19). According to Charles P. Kindleberger, Britain's trade policies in the nineteenth century were characterized by a ?strong, widely-shared conviction that the teachings of contemporary orthodox economists, including Free Traders, were scientifically exact, universally applicable and demanded assent? (Frieden and Lake 81). Therefore, the major reason for Britain's commitment to free trade was a great influence of ideologies of liberal economic theories. Despite the fact that in the period between 1870 and 1900 most countries adopted protectionist commercial policy, Great Britain maintained free trade to its disadvantage. In order to understand wh y Britain followed such path, it is important to analyze history, political and economic environment of Britain in the nineteenth century. During the nineteenth century the Corn Laws of 1828 governed the tariff on corn (wheat). Corn Laws protected agricultural producers. Under this provision, in cases where the price of wheat rose above 73 shillings per quarter, it was admitted virtually free. If, on the other hand, the domestic price fell to 54 shillings or less, it would carry tariff of 20 shillings per quarter. Britain also had a sliding scale of duties, which was changing in accordance with the price of wheat in Britain. Liberal writings of Adam Smith attacked this policy in the beginning of the nineteenth century, fighting instead for the free trade. He opposed the barriers imposed against the free exchange of commodities. He claimed that free trade should not be a unilateral policy. Free trade should be conducted in a way that does not infringe national security or social stability. Therefore, he accepted very little intervention by government in order to protect national security and shield society from unfair ta riffs of foreign states (84-85). The support of free trade was further strengthened by David Ricardo in his Principles of Political Economy and Taxation. He demonstrated how trading countries could all gain from free trade because of comparative advantage. The example involved trade of wine and cloth between Britain and Portugal. Both countries produce same two goods, wine and cloth. Labor costs are the only production coasts. In Britain it takes one laborer in three days to produce one bottle of wine and one laborer in seven days to produce one bolt of cloth. Portugal requires one laborer in one day to manufacture one bottle of wine and one laborer in five days to manufacture one bolt of cloth. The Portugal, with its climate, was much better able to produce good wines than was Britain. Conversely, Britain had ideal conditions for raising sheep and getting wool for clothing. Thus, Britain was more efficient in manufacturing cloth than Portugal and Portugal was more efficient in producing wine than Britain. The autho r explains that: The ratio of the production coast for the two goods is different in the two countries. In England, a bottle of wine will exchange for 3/7 of a bolt of cloth because the labor content of the wine is 3/7 than for