The History of Trade and Copyright

by on April 25, 2008 · 2 comments

Dingel points to a paper (non-paywalled draft here) exploring the historical connection between the free trade movement and the movement for worldwide copyright harmonization:

Free traders failed repeatedly for sixty years after the end of the Civil War to reduce the average tariff to its immediate prewar level. They failed despite making a case that, by comparison with the one made for free trade today, was compelling. Speci?cally, the principles of free labor engendered an antimonopoly argument for trade. Free trade, its advocates argued, would eliminate the special privileges granted to producers in speci?c industries, most notably cotton goods, iron, and steel. It would promote competition, lower prices, and raise consumers’ real incomes… Carey attempted to turn the tables on the free traders: he argued that free trade promoted monopoly, and protection mitigated it. His conviction was sincere—but that particular part of his argument was unpersuasive, and relatively few of his followers bothered to repeat it. He was much more persuasive in arguing that international copyright promoted monopoly. In the face of the latter argument, the proponents of free trade and international copyright were put on the defensive… One wonders whether the tireless advocacy of international copyright by free traders like Bryant—who framed the cause as one inextricably related to free trade—hindered the advancement of their principal cause. The long-awaited sweeping tariff reductions were deferred until 1913. Might the wait have been shorter if the antimonopoly credentials of the free-trade advocates had not been called into question?

This is a fascinating question. One of the things I find really interesting about the 19th century political debate is that the opposing political coalitions were more sensibly aligned, perhaps because people had a slightly clearer sense of what was at stake. My impression (which may be wrong in its details) is that the free traders tended to be liberals and economic populists. They clearly understood that protectionism brought about a transfer of wealth from relatively poor consumers to relatively wealthy business interests. In the opposing coalition were a coalition of business interests and xenophobes making fundamentally mercantilist arguments about economic nationalism.

Today’s free trade debate is much weirder, because there are enough businesses who want to export things that significant parts of the business community are for freer trade. On the other hand, the liberals who fancy themselves defenders of relatively poor consumers find themselves in bed with predatory industries like sugar and stell that have been using trade barriers to gouge consumers. And the “trade” debate has increasingly come to be focused on issues that don’t actually have much to do with trade, whether it’s labor and environmental “standards,” copyright and patent requirements, working retraining programs, cross-border subsidies, etc.

I suspect part of what’s happening is that in the United States, at least, consumers are so rich that they really don’t notice the remaining costs of protectionism. A T-shirt at Target might cost $10 instead of the $8 it would cost if there were no trade barriers with China, but this is such a tiny fraction of the average American’s budget that they don’t really care. Likewise, if the domestic price of rice or flour were to double, a significant number of Americans wouldn’t even notice. In contrast, in the 19th century, we were still poor enough that a 10 or 20 percent increase in the price of basic staples might be the difference between being able to afford meat once a week or having to skip meals once in a while to make ends meet. We may now be rich enough that we can afford to be politically clueless.

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About Tim Lee

Timothy B. Lee (Contributor, 2004-2009) is an adjunct scholar at the Cato Institute. He is currently a PhD student and a member of the Center for Information Technology Policy at Princeton University. He contributes regularly to a variety of online publications, including Ars Technica, Techdirt, Cato @ Liberty, and The Angry Blog. He has been a Mac bigot since 1984, a Unix, vi, and Perl bigot since 1998, and a sworn enemy of HTML-formatted email for as long as certain companies have thought that was a good idea. You can reach him by email at leex1008@umn.edu.

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  • http://enigmafoundry.wordpress.com/2008/04/12/jerry-brito-getting-upset-at-e_f-comments/ e_f

    This is a fascinating question. One of the things I find really interesting about the 19th century political debate is that the opposing political coalitions were more sensibly aligned, perhaps because people had a slightly clearer sense of what was at stake. My impression (which may be wrong in its details) is that the free traders tended to be liberals and economic populists. They clearly understood that protectionism brought about a transfer of wealth from relatively poor consumers to relatively wealthy business interests. In the opposing coalition were a coalition of business interests and xenophobes making fundamentally mercantilist arguments about economic nationalism.

    Karl Polanyi covers this period in his book The Great Transformation. His perspective is a little different.

    First, he notes that opposing the liberal agenda there were the defenders of the old order, ultimately derived from the feudal social structure, as well the working urban proletariat. Their interests never coincided and their visions of an alternative to the dominant liberal creed were very different, so they never formed a united opposition. It is true that once the middle class realized that free trade meant cheaper food they were temporarily won over to its cause. But there were a few others who realized how disastrous free trade would be in the long run.

    Second, you are making a whole series of informational exclusions about what comes along with liberalism. For example, it cannot be an accident that Great Britain, during the time of the ascendancy of liberal ideals, also maintained a very large colonial empire. Ultimately, adherence to the dogma of the self-regulating market requires state intervention to ensure that the prices of labor, land, and money are all controlled only by economic factors internal to that self-regulating market. When social, environmental, religious or national policies interfere with the operating of that self regulating market, state intervention is required. Case in point: US invasion of Iraq. When political ideals interfere with the functioning of the self-regulating market, state intervention is also called for by supporters of the market. Case in point: the DMCA.

    The bottom line is: you cannot separate the economic functioning of society from its broader social, political, environmental, national and social contexts, as liberals are wont to do. Human society just cannot be distilled into neatly separate fungible categories. They are all connected. Failure to come to grips with this reality is why libertarianism can only be maintained by making excluding whole categories of information.

    Today’s free trade debate is much weirder, because there are enough businesses who want to export things that significant parts of the business community are for freer trade. On the other hand, the liberals who fancy themselves defenders of relatively poor consumers find themselves in bed with predatory industries like sugar and stell that have been using trade barriers to gouge consumers. And the “trade” debate has increasingly come to be focused on issues that don’t actually have much to do with trade, whether it’s labor and environmental “standards,” copyright and patent requirements, working retraining programs, cross-border subsidies, etc.

    Again, some of those issue (environmental and labor standards) most emphatically are related, that is directly connected, to trade policy. Especially environmental issues, because enacting tough pollution laws in USA does no good at all if a company can just move the factory to China, where there might be little regulation, and the power would come from a coal fired plant. This is an example where the self-regulating market has come up against a hard stop: there is a limit to how much pollution that the biosphere can absorb, and therefore the self-regulating market alone will not be able to set the price for land.

    I find it significant that in Polanyi’s framework the coalescing of different interests in support of the self-regulating market is predictable, while you, coming from a liberal/libertarian background, find those alliances puzzling.

    (I am using land in the same sense that Polanyi did, where land means essentially all of nature. Incidentally, you switched your use of the word ‘liberal’ in one case meaning the classical sense and in the other clearly having the current day meaning.)

    I suspect part of what’s happening is that in the United States, at least, consumers are so rich that they really don’t notice the remaining costs of protectionism. A T-shirt at Target might cost $10 instead of the $8 it would cost if there were no trade barriers with China, but this is such a tiny fraction of the average American’s budget that they don’t really care. Likewise, if the domestic price of rice or flour were to double, a significant number of Americans wouldn’t even notice. In contrast, in the 19th century, we were still poor enough that a 10 or 20 percent increase in the price of basic staples might be the difference between being able to afford meat once a week or having to skip meals once in a while to make ends meet. We may now be rich enough that we can afford to be politically clueless.

    It’s not the costs of protectionism but the costs of free trade that consumers are starting to notice. The instability of the credit markets which seems to have lead to a much wider economic downturn will further educate consumers on the social and political fall-out from free trade. Unfortunately, that education will be painful. But that’s what happens when we decide that an economic system can be so freely shorn from any social context: instability. That instability increases as the self-regulating market’s free inputs become priced. It’s going to be a wild ride, and could well look a lot like the 1930′s. Then, when instability of markets and the realities of the national nature of money were both ignored by the liberals, there occurred the rise of fascism across nearly all of Europe during the 1930′s.

    The price of rice and flour have more than doubled in some countries, by the way, and that is unsustainable and not without political consequences. The obvious consequence is the immediate death of the neo-liberal creed in all but a very few very rich countries. In those richer countries, the death will perhaps not be as immediate, but it is it is inevitable nonetheless. It’s not a matter of intervention or non-intervention any more, but what the character of that intervention will be.

  • http://enigmafoundry.wordpress.com eee_eff

    This is a fascinating question. One of the things I find really interesting about the 19th century political debate is that the opposing political coalitions were more sensibly aligned, perhaps because people had a slightly clearer sense of what was at stake. My impression (which may be wrong in its details) is that the free traders tended to be liberals and economic populists. They clearly understood that protectionism brought about a transfer of wealth from relatively poor consumers to relatively wealthy business interests. In the opposing coalition were a coalition of business interests and xenophobes making fundamentally mercantilist arguments about economic nationalism.

    Karl Polanyi covers this period in his book The Great Transformation. His perspective is a little different.

    First, he notes that opposing the liberal agenda there were the defenders of the old order, ultimately derived from the feudal social structure, as well the working urban proletariat. Their interests never coincided and their visions of an alternative to the dominant liberal creed were very different, so they never formed a united opposition. It is true that once the middle class realized that free trade meant cheaper food they were temporarily won over to its cause. But there were a few others who realized how disastrous free trade would be in the long run.

    Second, you are making a whole series of informational exclusions about what comes along with liberalism. For example, it cannot be an accident that Great Britain, during the time of the ascendancy of liberal ideals, also maintained a very large colonial empire. Ultimately, adherence to the dogma of the self-regulating market requires state intervention to ensure that the prices of labor, land, and money are all controlled only by economic factors internal to that self-regulating market. When social, environmental, religious or national policies interfere with the operating of that self regulating market, state intervention is required. Case in point: US invasion of Iraq. When political ideals interfere with the functioning of the self-regulating market, state intervention is also called for by supporters of the market. Case in point: the DMCA.

    The bottom line is: you cannot separate the economic functioning of society from its broader social, political, environmental, national and social contexts, as liberals are wont to do. Human society just cannot be distilled into neatly separate fungible categories. They are all connected. Failure to come to grips with this reality is why libertarianism can only be maintained by making excluding whole categories of information.

    Today’s free trade debate is much weirder, because there are enough businesses who want to export things that significant parts of the business community are for freer trade. On the other hand, the liberals who fancy themselves defenders of relatively poor consumers find themselves in bed with predatory industries like sugar and stell that have been using trade barriers to gouge consumers. And the “trade” debate has increasingly come to be focused on issues that don’t actually have much to do with trade, whether it’s labor and environmental “standards,” copyright and patent requirements, working retraining programs, cross-border subsidies, etc.

    Again, some of those issue (environmental and labor standards) most emphatically are related, that is directly connected, to trade policy. Especially environmental issues, because enacting tough pollution laws in USA does no good at all if a company can just move the factory to China, where there might be little regulation, and the power would come from a coal fired plant. This is an example where the self-regulating market has come up against a hard stop: there is a limit to how much pollution that the biosphere can absorb, and therefore the self-regulating market alone will not be able to set the price for land.

    I find it significant that in Polanyi’s framework the coalescing of different interests in support of the self-regulating market is predictable, while you, coming from a liberal/libertarian background, find those alliances puzzling.

    (I am using land in the same sense that Polanyi did, where land means essentially all of nature. Incidentally, you switched your use of the word ‘liberal’ in one case meaning the classical sense and in the other clearly having the current day meaning.)

    I suspect part of what’s happening is that in the United States, at least, consumers are so rich that they really don’t notice the remaining costs of protectionism. A T-shirt at Target might cost $10 instead of the $8 it would cost if there were no trade barriers with China, but this is such a tiny fraction of the average American’s budget that they don’t really care. Likewise, if the domestic price of rice or flour were to double, a significant number of Americans wouldn’t even notice. In contrast, in the 19th century, we were still poor enough that a 10 or 20 percent increase in the price of basic staples might be the difference between being able to afford meat once a week or having to skip meals once in a while to make ends meet. We may now be rich enough that we can afford to be politically clueless.

    It’s not the costs of protectionism but the costs of free trade that consumers are starting to notice. The instability of the credit markets which seems to have lead to a much wider economic downturn will further educate consumers on the social and political fall-out from free trade. Unfortunately, that education will be painful. But that’s what happens when we decide that an economic system can be so freely shorn from any social context: instability. That instability increases as the self-regulating market’s free inputs become priced. It’s going to be a wild ride, and could well look a lot like the 1930′s. Then, when instability of markets and the realities of the national nature of money were both ignored by the liberals, there occurred the rise of fascism across nearly all of Europe during the 1930′s.

    The price of rice and flour have more than doubled in some countries, by the way, and that is unsustainable and not without political consequences. The obvious consequence is the immediate death of the neo-liberal creed in all but a very few very rich countries. In those richer countries, the death will perhaps not be as immediate, but it is it is inevitable nonetheless. It’s not a matter of intervention or non-intervention any more, but what the character of that intervention will be.

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