Explaining the resilience of free trade: The Smoot–Hawley myth and the crisis

Abstract

Despite the onset of the current economic crisis there has been no significant move towards protectionism amongst most of the world's economies. Although rational institutionalist explanations point to the role played by the constraining rules of the World Trade Organisation, countries have largely remained open in areas where they have not legally bound their liberalisation. While accounts emphasising the increasing interdependence of global supply chains have some merit, I show that such explanations do not tell the full story, as integration into the global economy is not always associated with support for free trade during the crisis. In response, I develop a constructivist argument which highlights how particular ideas about the global trading system have become rooted in policy-making discourse, mediating the response of policy elites to protectionist pressures and temptations. Trade policy-makers and a group of leading economists have constructed an ideational imperative for continued openness (and for concluding the Doha Round, albeit less successfully) by drawing on a questionable reading of economic history (the Smoot-Hawley myth); by continually stressing protectionism's role as one of the causes of the Great Depression non-liberal responses to the current crisis have been all but ruled out by all except those willing to question the received wisdom.

Free trade as domestic, economic, and strategic issues: a big data analytics approach

“…Other scholarship looks at the importance of ideational factors in affecting how the political elite respond to free trade. On the one hand, scholars have argued how ideas about the free global trading system have become rooted in policy-making discourse [ 33 ], underpinning the stability of free trade despite the ongoing resistance. On the other hand, ideological preferences of particular government would have an impact on its trade policy position [ 34 ].…”

Doha stalemate: The end of trade multilateralism?

“…On their own, the Doha stalemate, the shift to FTAs, and the ongoing intellectual and political contradictions within the WTO itself might not carry quite the same significance. However, although there has been no return to the protectionism of the 1930s that some might have -perhaps misguidedly -feared, 56 a number of protectionist measures were adopted by both developed and developing country governments in the aftermath of the crisis. 57 It seems plausible that government bailouts, tariff increases and export subsidies are mainly a short-term expedient to the shrinking global economy, and do not represent an ideological renunciation of the principle of liberalising trade itself (even though they do not sit easily with such a commitment).…”

Crisis theory and the historical imagination

“…1 This reflects a longstanding intuition that such 'crisis' episodes provide a window through which to glimpse the nature of both transnational order and change. Yet where early IPE scholars saw in crises the expression of objective forces and limits, contemporary theorists now also see the work of subjective interventions and historical myths, projections, or fictions (see Hall, 2003;Allon, 2009;Brassett and Clarke, 2012;Broome et al, 2012;Carstensen, 2013;Siles-Brügge, 2014). This shift reflects the recent import of linguistic, semiotic, and social theory into IPE.…”