March 12, 2025
Free Trade was Ricardo’s Concocted Theory Used to dispossess the British Aristocracy
Paul Craig Roberts
In their book, Global Trade and Conflicting National Interests published in 2000 by The MIT Press, Ralph E. Gomory and William J. Baumol proved that the free trade theory with which economists today are still indoctrinated is false. Economists have done their best not to notice that a part of their repertory is invalid. A number of years ago I presented Gomory and Baumol’s analysis to libertarian economists at the Mises Institute. They didn’t like it, but they couldn’t confute it.
Over the years I have called attention to the defective theory that economists hold close to their breasts, but it is unpleasant information that they don’t want to hear. With Trump’s talk of tariffs, the invalid free trade theory is being used as a weapon against Trump. Those on Wall Street who are indoctrinated with free trade have been driving down the Dow with their panic.
As for Trump’s tariffs, at the present time it seems that often they are threats leveled at specific countries to get them to do what they should be doing or to get them to give their help to Trump’s agenda. For example, the initial tariffs Trump announced against Mexico and Canada were withdrawn once the two countries agreed to police their borders with the US to help halt the flow of immigrant-invaders into America. It remains to be seen whether a full blown tariff system is put in place.
The American market is a large one, and although US consumer demand has been weakened by the offshoring of middle class manufacturing jobs, debt expansion has kept the American consumer market going, and the US remains a lucrative market for foreign produced goods.
It is possible that tariffs could recover their historic role in the financing of the US government. The US government was financed over most of its history by tariffs. It was not until 1918 that the income tax passed in 1913 affected the population, so the US government has been dependent on income taxation only for about a century. As I have explained, the introduction of an income tax resurrected a form of slavery as it gave government ownership rights in our labor. The definition of a free person is a person who owns his own labor. Today people subject to an income tax are in the same position as medieval serfs who owed part of their labor to feudal lords.
Trump has spoken of substituting tariffs for the income tax. This is a brilliant thought. The income tax taxes labor and capital, factors of production. Thus income tax reduces GDP and living standards. Classical economists, unlike the present day “junk economists” as Michael Hudson correctly calls them, said, correctly, that consumption, not factors of production, should be taxed. That is what a tariff does. If you don’t consume goods produced in other countries, you pay no taxation.
Countries once understood that being dependent on imports of necessities, such as food, was a threat to national existence. A country could be subdued by the cutoff of food.
The British had the Corn Laws (corn was the term for all grains–wheat, barley, oats) that protected English farmers. The Corn Laws protected the incomes of the landed aristocracy, Britain’s leadership class during the years that Britain was the world power.
As income is a basis of power, the rising British middle class wanted the power that was in aristocratic hands. David Ricardo a bourgeois financier, attacked the incomes of the landed aristocracy with his concocted free trade theory. The repeal of the Corn laws shifted power from one class to another. The bourgeois gained and the aristocrats lost, and the British became dependent on food imports. The repeal was followed by Death Duties that appropriated the estates of the aristocrats, thus destroying the leadership class of Great Britain.
Look at the post-aristocratic leadership of Britain.
What do you see?
https://www.paulcraigroberts.org/2025/03...istocracy/
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