Table Of ContentA B
In this book, Australian economist Graham Dunkley explains and
critiques the crucial concept of free trade. A policy of free trade
is central to today’s world-dominating globalization project. The
more euphoric globalists uncritically assume that it has universal
and unequivocal benefits for all people and countries. And the
perpetual negotiations of the World Trade Organization are wholly
based on this presumption.
Graham Dunkley shows, however, that leading economists have
always been more sceptical about free trade doctrine than the dog-
matic globalizers realize. There are more holes in free trade theory
than its advocates grasp. And the benefits of free trade in practice
are more limited and contingent than they acknowledge.
He also argues that the World Bank’s long-time push for
export-led development is misguided. A more democratic world
trading order is necessary and possible. And more interventionist,
self-reliant trade policies are feasible, especially if a more holistic
view of economic development goals is adopted.
‘An incisive and informative analysis of why free trade de-
rails development…. An indispensable road map for those seek-
ing to hack their way out of the neoliberal thicket.’
Walden Bello, Focus on the Global South; author of Deglobaliza-
tion: Ideas for a New World Economy
‘This thought-provoking book is a valuable contribution
to one of the greatest debates of our time, namely, trade and
development.’
Ha-Joon Chang, University of Cambridge, author of Kicking
Away the Ladder: Development Strategy in Historical Perspective
A BRAVE NEW SERIES
GLOBAL ISSUES
IN A CHANGING WORLD
This new series of short, accessible think-pieces deals with lead-
ing global issues of relevance to humanity today. Intended for the
enquiring reader and social activists in the North and the South,
as well as students, the books explain what is at stake and question
conventional ideas and policies. Drawn from many different parts
of the world, the series’ authors pay particular attention to the
needs and interests of ordinary people, whether living in the rich
industrial or the developing countries. They all share a common
objective – to help stimulate new thinking and social action in
the opening years of the new century.
Global Issues in a Changing World is a joint initiative by Zed
Books in collaboration with a number of partner publishers and
non-governmental organizations around the world. By working
together, we intend to maximize the relevance and availability of
the books published in the series.
PARTICIPATING NGOS
Both ENDS, Amsterdam
Catholic Institute for International Relations, London
Corner House, Sturminster Newton
Council on International and Public Affairs, New York
Dag Hammarskjöld Foundation, Uppsala
Development GAP, Washington DC
Focus on the Global South, Bangkok
IBON, Manila
Inter Pares, Ottawa
Public Interest Research Centre, Delhi
Third World Network, Penang
Third World Network–Africa, Accra
World Development Movement, London
F T
Myth, Reality and Alternatives
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ZED BOOKS
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Free Trade was first published in by
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Copyright © Graham Dunkley
The right of Graham Dunkley to be identified as the author of this work
has been asserted by him in accordance with the Copyright, Designs and
Patents Act, . All rights reserved.
Cover designed by Andrew Corbett
Designed and typeset in Monotype Bembo by Illuminati, Grosmont
Printed and bound in the United Kingdom by Cox & Wyman, Reading
A catalogue record for this book is available from the British Library
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C
LIST OF TABLES, FIGURES AND BOXES viii
ABBREVIATIONS USED IX
ACKNOWLEDGEMENTS AND DEDICATION XII
PREFACE XIII
INTRODUCTION: TRADE, MYTH AND OBSESSION
Trade: The Making of an Obsession
In-Your-Face Globalisation
Globalism: Three Myths
Free Trade: Five Myths
Challenging TINA – There are Alternatives!
Different Goals for Different Trade and Development
THAT’S THE THEORY! DEBATING FREE TRADE
DOCTRINE FOREVER
The Smith–Ricardo Revolution
Free Trade Doctrine: Models, Assumptions and Question
Marks
Comparative Advantage
Gains from Trade
Assumptions, Assumptions!
Here Come the Corollaries
The Rise of Not-Quite-Free Trade
Conclusion
A CONFEDERACY OF HERETICS: TWO CENTURIES
OF FREE TRADE DISSENT
Heresy before Orthodoxy
The Keynesian Bombshell
History versus Equilibrium
Heretics in the Temple
Conclusion
WHAT ABOUT THE PRACTICE? TRADING AND
FREE TRADE IN HISTORY AND REALITY
A Clash of Propensities
Trade and Markets Embedded
Trade’s Loss of Innocence
The Necessity of Virtue: The Myth of Free Trade
Beneficence
Free Trade, War and Peace
The Legend of the Thirties
Trade and Manifest Destiny
Conclusion
DEVELOPMENT, MYTHS AND ALTERNATIVES:
A CRITIQUE OF GLOBALISING GROWTH
Inventing Development
There Are Alternatives!
Trading Development
Of Ladders, Lock-in and Scale Economies
Two Steps Backwards: The Terms-of-Trade Problem
Two Cheers for the Poor: Globalisation, Poverty and
Inequality
Belaboured Playing Fields
Human Development and the r-Curve
Greening Trade or Trading the Green?
Don’t Forget the Ladies! Development, Globalisation
and Women
A Poor Relation: The Neglect of Agriculture
Small Farms Are Beautiful
Re-greening My Valley: The Organic Agriculture
Revolution
The Four Lost Causes: Culture, Community, Values and
Tradition
Conclusion
THE EXPORT CULT: THE IMPORT-SUBSTITUTION
VERSUS EXPORT-ORIENTATION DEBATE
An Elite Consensus
Models, Numbers and Export Cults
Welfare Methods
Modelling Methods
Case Study Methods
Industry Policy Does Work!
Conclusion
THE SELF-RELIANCE OPTION: GLOBAL MYTHS
AND ALTERNATIVE DEVELOPMENT
Self-Reliance: A Respectable Lineage
Defining Self-Reliance
The Case for Self-Reliance
The Feasibility of Self-Reliance
Ten Reasons Why Self-Reliance Is More Feasible
than Globalisers Admit
Alternative Development and Self-Reliance
Conclusion
THE FREE TRADE ADVENTURE: THE WTO,
GLOBAL MYTHS AND ALTERNATIVES
Foundation Assumptions
The WTO in Principle
The WTO in Practice
Alternatives: Global Free Trade versus Co-operative
World
A More Participatory, Cooperative World Order
Conclusion
CONCLUSION
REFERENCES
INDEX
L T, F
B
BOX . What is free trade?
TABLE . Ricardo’s model
FIGURE . Harberger triangles
BOX . Consumer surplus
TABLE . World merchandise and service exports
TABLE . Growth rates of world trade and world industrial/
manufacturing production
TABLE . Trade ratios: merchandise exports as % of GDP
FIGURE . The r-curve
BOX . Some costs of development
BOX . CGE models
FIGURE . The relationship between trade and economic
growth
BOX . The WTO in brief
BOX . GATS and the water monsters
BOX . The Banana War
BOX . Summary of arguments against Free Trade
A U
CGE Computable General Equilibrium (mathematical
models)
EO(I) Export-Orientation (Oriented Industrialisation)
EU European Union
FDI Foreign Direct Investment
GATS General Agreement on Trade in Services (of the WTO)
GATT General Agreement on Tariffs and Trade
GDP Gross Domestic Product
GNP Gross National Product
HD Human Development
HO Heckscher/Ohlin (theory of international trade)
ILO International Labour Organisation
IIT Intra-Industry Trade
IMF International Monetary Fund
IS(I) Import-Substitution (Industrialisation)
IT Information Technology
MFN Most Favoured Nation (WTO principle)
NIET New International Economic Theory
NGOs Non-Governmental Organisations
OECD Organisation for Economic Cooperation and
Development
PPP GDP GDP (above) based on Purchasing Power Parities
