Free Trade or State Domination?

January 30, 1950

In the winter of 1944–45, when we were still fighting Germany and Japan, and before the international fund or bank or the United Nations had become realities, I wrote a piece with the above title in the pages of The American Scholar. It took a dim view of the brave new postwar world then being proposed by the bureaucrats.

“The demand now,” I wrote, “is for International Cooperation. But when the concrete proposals for this international cooperation are examined, it turns out to be something radically different from the international cooperation hoped for by the older liberals. It is not the freedom of the private citizens of any country to trade with the private citizens of any other. It is not primarily the cooperation among private citizens of different countries at all. It is primarily cooperation among governments.”

I went on to express misgivings concerning the way in which this might work out. In analyzing the proposed setup of the International Monetary Fund, for example, I voiced the fear that it might encourage inflationary money policies followed by a wave of devaluations—“the modern euphemism for debasement of the coinage.”

I wish I could report that my misgivings proved to be entirely groundless, and that the devaluations since last September of some 30 national currencies did not in fact occur. But they did.

I confess, however, that I did not foresee the full flowering of international bureaucratism. I did not foresee the innumerable sub agencies of the coming United Nations, with their thousands of bureaucrats daily flooding the world with propaganda in favor of still more bureaucratic controls. I did not foresee, for example, the nightmarish project just proposed by “a group of five outstanding economists” at the request of the United Nations Economic and Social Council.

But I can perhaps provide a useful guide to the reader through the current international bureaucratic maze, He will find that the thousands of international-control schemes resolve themselves, on analysis, into one or more of just three basic schemes:

Scheme One: To seize still more from the American taxpayer and turn it over to foreign bureaucrats.

The Marshall Plan, arms aid, and Point Four are mere beginnings. Thus one of the five economists warns that the United States “must be prepared to abandon the practice of doing too little.” We have, for example, handed out only some $28,000,000,000 to foreigners since June 1945, Do we expect to save the world with chickenfeed?

Scheme Two: Each government is to keep constantly inflating, constantly shooting more paper purchasing power into the economy and constantly debasing its monetary unit. No matter what peak of inflation it reaches, it is never to permit any decline below that peak.

The recent recession in the United States, for example, is regarded by the five economists as an “ominous signal.” All sorts of irresponsible gadgets are proposed by the same economists to keep pumping in this paper purchasing power in “emergencies.” Of course, for the record, lip service is also paid to means of curbing excessive inflation, apparently with the calm assurance that no government that values its tenure of office will ever adopt them. The same governments that are to inflate for constant “full employment” are also to help “prevent any continuous upward pressure for wage increases.”

Scheme Three: Don’t permit things to be bought or sold for their real market values, but only for the fiat values put on them by the bureaucrats. (Price fixing, wage fixing, profit control, exchange control, etc.)

My conclusion of 1944 still stands: “If the planners succeed in tying up the idea of international cooperation with the idea of increased State domination and control over economic life . . . the plain man’s living standards will decline with his liberties.”