Free trade and the American economy: against the mainstream

I am an admirer of the work of New School economics Professor Anwar Shaikh. Here is a wide-ranging discussion with him that covers free trade and its impact on the US over the past 30 years, as well as how both the creative and destructive power of markets should be channelled through appropriate policy.

With regards to trade, Shaikh argues against Ricardo’s theory of comparative cost advantage in favour of Adam Smith’s earlier theory of absolute cost advantage. For Smith, and Shaikh, international trade takes place between businesses rather than nations, which means that there are winners and losers as trade expands. There is also a necessity for interventionist trade and industrial policies to promote development among the poorest nations, if they want to ‘catch up’ with their richer cousins.

Shaikh is pessimistic about the prospects for significant progressive change in American society and more widely, which he sees as a problem of political mobilisation and will, rather than a purely economic one. Having said that, this interview was recorded before the rise of Bernie Sanders, which certainly offered hope to many, at least for a while.


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