Wed, Jan 22, 2014 - Page 8 News List

Free-trade focus bets on bunkum

By Lin Minn-tsong, Wu Chi-jen 林敏聰,吳啟禎

Therefore, comparative advantage and free trade are merely starting points from which to approach the needs of complex economies, and they are just a couple of individual economic tools among many. Their effectiveness depends on the specific political and social conditions of a given country, and its stage of economic development.

Unfortunately, free trade is all too often simply a weapon that politicians and bureaucrats routinely brandish against the public. The politicians and the suits spout this type of superficially intellectual academic bunkum because it is in their interests to do so, but such ideas are also responsible for consigning manufacturing in Taiwan to long-term decline in which it has to resort to mass producing low-cost goods, unable to return to an economic policy promoting innovation.

In point of fact, the harm dealt to human society by narrow economic theories is not unrelated to the intellectual hegemonies consolidated by the natural sciences’ narrow intellectual arrogance and formidable technological might in the 20th century.

Now that the world of the natural sciences has already started to seriously question the fallacy of its own intellectual hegemony, we hope that mainstream economists can re-evaluate the limits of applying an instrumental rationalist approach to validating free-market theories.

In his book The Road to Serfdom, Austrian economist and philosopher Friedrich Hayek, a proponent of free trade, wrote of the positive values of capitalism, in reference to the suppression of political freedoms under socialism. Indeed, the rejection of socialism in the Eastern Bloc lent credence to his ideas.

However, if Hayek were to see the wealth disparity and social injustice, as well as the suppression of personal freedoms and individual values, that exist in the world today as a result of the economic policies being used, with the excessive deregulation and liberalization of trade, he might change his view. He might write that the free market, controlled by capitalist monopoly groups, is, in fact, the “road to serfdom.”

Excessive economic liberalization not only veers away from the original spirit of the capitalism of which Hayek wrote, it is also detrimental to one of the highest values of modern democracies, that the citizen is free.

Lin Minn-tsong is a professor of physics at National Taiwan University. Wu Chi-jen is a postdoctoral research fellow at the university’s Center for Public Policy and Law.

Translated by Paul Cooper

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