The history of free trade is a history of international trade focusing on the developments of open markets.
It is known that various prosperous world cultures throughout history have engaged in trade. Based on this, theoretical rationalizations as to why a policy of free trade would be beneficial to nations developed over time. These theories were developed in its academic modern sense from the commercial culture of England, and more broadly Europe, in the past five centuries. In opposition to free trade, a policy of mercantilism was developed in Europe in the 1500s and persists in various forms to this day. Early free trade theorists who were opposed to mercantilism were David Ricardo and Adam Smith. Free trade theorists offered trade as the reason why certain cultures prospered economically. Adam Smith, for example, pointed to increased trading as being the reason for the flourishing of not just Mediterranean cultures such as Egypt, Greece, and Rome, but also of Bengal (East Indies) and China.
Free trade policies have battled with mercantilist, protectionist, isolationist, communist, and other policies over the centuries. Wars, such as the Opium Wars, have been fought primarily over trade.
All developed countries have used protectionism, but usually reduced it as they gained more wealth. Some critics say that having more wealth guarantees that the country would benefit from free trade, although some scientists think that poor countries would also benefit from free trade.
The Constitution of the United States explicitly prohibits state governments from enacting barriers to trade between citizens and firms of the various 50 states, making the United States the largest empirical example of free trade in the world.
Intellectual property and free trade
Historically, the free trade movement was skeptical and even hostile to the notion of intellectual property, regarding it as monopolistic and harmful to a free, competitive economy. Indeed, during the late 19th century, free trade advocates succeeded in reducing the length of the patents available in many European countries. The Netherlands, remarked for its laissez-faire policies in the 19th century, even abolished its patent system (mostly used by foreign companies) in 1867. Under the stipulations of the Convention of Paris however did the Netherlands have to re-introduce the patent system (made law in 1910), and was the last European country to do so (after Switzerland).
The 19th century anti-patent cause failed largely because the recession of 1874 weakened the free trade movement of the time [1] (and also because patent advocates used a public relations campaign which was remarkably sophisticated for its time).
It is thus remarkable (maybe even ironic) that corporations lobbying for expanded intellectual property rights have succeeded in including Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), a very strong treaty on intellectual property rights, as a membership requirement for the World Trade Organization, the international organization dedicated to furthering the cause of free trade (although some modern free traders would argue that markets are impossible without property protections, and that incentives to produce highly capitalized intellectual property would be diminished if inventors could not profit from inventions). |
