The Tradition of Free Trade

Published by EH.NET (February 2005)

Lars Magnusson, The Tradition of Free Trade. London: Routledge, 2003. xiv + 194 pp. $100 (cloth), ISBN: 0-415-26215-1.

Reviewed for EH.NET by William K. Hutchinson, Department of Economics, Vanderbilt University.

Lars Magnusson, Professor of History at Uppsala University, has packaged into a book a half dozen of his essays that were written during the past two decades. These essays examine the writings of economic thinkers in Britain, the United States and Sweden during the period from the last half of the eighteenth century to the end of the nineteenth century. The book may be aptly described as a history of the manner in which various writers have used the works of economists such as Adam Smith, David Ricardo, Thomas Malthus, and J.S. Mill in a political economy vein to rationalize various political agendas, positions, or institutions. The focus is on the political economy of free trade as it evolved during this period, in these three locations.

The first essay, “The Invention of a Tradition of Free Trade: An Introduction,” makes a case for using the intellectual history approach to analyzing the writings of economic thinkers. He argues that survival of economic theories, such as the theory behind free trade, is not due to the superior logic of one argument relative to another, but rather, it is due to the circumstances of the time and place in which the theorist lives. Magnusson makes the argument in this essay that political and economic circumstances in nineteenth century Britain determined the way in which Adam Smith’s free trade argument would be interpreted by writers. Moreover, it is the language, customs, stage of development, culture and political institutions extant in a country that determines the way in which writers such as Adam Smith will be interpreted. The five remaining essays offer detailed documentation of arguments made by various economic writers as evidence to support Magnusson’s thesis.

Essays two and three establish the linkages for various writers to Smith’s Wealth of Nations by demonstrating how writers used various aspects of this work to substantiate their arguments for free markets and, sometimes, for free trade. Essay two is a review of the economists in the Classical School, most of whom professed to build on the foundation established by Smith. J.R. McCulloch and Cobden figure prominently in this essay which focuses on the various interpretations of arguments for free trade that are said to appear in the Wealth of Nations. Essay three addresses how the Manchester School attempted to manipulate the Wealth of Nations for their purposes. It discusses the various groups that materialized during the early nineteenth century and the positions they took regarding free trade versus fair trade and the corn laws.

Essay four addresses the issue of Mercantilism in the nineteenth century and how other countries viewed Britain’s encouragement for them to join her in moving toward free trade. Britain is viewed as promoting free trade because it was now in her self-interest to do so, whereas Britain had behaved in a mercantilist manner when that served her purpose. Thus, the writers surveyed argue that the benefits from free trade are dependent on the stage of development at which a country finds itself. Essay five discusses the role of Adam Smith in the economic writing in the United States during the nineteenth century. Discussion focuses on writings of Henry and Matthew Carey, Friedrich List and John Rae while mentioning other minor contributors to the political economy literature of nineteenth-century America. It is generally understood that economic writers in the United States were more likely to support protection for domestic industry until the end of the nineteenth century. Interestingly, this is the time that one could say economists, as opposed to economic thinkers, began to appear in the United States.

The last essay describes the role of Adam Smith in the development of Swedish economics by surveying the economic writings of those who came before Wicksell. An argument is made that Sweden was different and that the focus of Smith and the Classical School on individualism had to be adapted to include a role for the state as protector of social well being. Swedish economic thinking also had an emphasis on agriculture which some argued derived from the Physiocrats and other French economists of the eighteenth century.

This book is not about the development of economic theory that supports free trade as the preferred policy position to maximize the welfare of a nation. Rather, it is about the attitudes of economic writers in Britain, the United States and Sweden who were attempting to convince others of the merits of their views. Many of these writers attempted to use parts of the Wealth of Nations in their arguments to establish credibility. Secondary sources are heavily relied on in assessing the motives and agendas that may have influenced the arguments of various writers. There are 3.4 footnotes per page of text and well over 200 works that are referenced, which indicates the extent to which the text is a collection of other people’s thoughts regarding writings on free trade issues during the nineteenth century. This book would be of interest to one who wishes to learn what writers of political economy were thinking regarding the topic of free trade during the nineteenth century in Britain, the United States and Sweden.

William K. Hutchinson is Visiting Professor of Economics at Vanderbilt University and editor of Abstracts in Economic History. Recent publications include “Does Ease of Communication Increase Trade? Commonality of Language and Bilateral Trade” Scottish Journal of Political Economy (2002) and “Linguistic Distance as a Determinant of U.S. Bilateral Trade, 1970-1986,” Southern Economic Journal (forthcoming).