The Future of World Trade BOOKS OF THE DAY

By PROFESSOR LIONEL ROBBINS

THE leitmotiv of Sir Arthur Salter's Cooper-Lectures on " World

Trade and Its Future" is well expressed in the concluding sentence—r"IVe must regard- our present Economic Na- tionalism not simply as an enemy we have to slay but as the possible parent—with proper encouragement and education —of a better system than itself "—and again on page 90- " We must now . . . not attempt to start from a conception of general free trade or stable low tariffs, and try to impress this policy upon individual countries, but on the other hand start with the national policies and try to develop them gradually through bilateral arrangements, towards a more liberal and extensive policy." • • • The prescription is modest : the physician is famous : and, since we all agree that many of the most pressing difficulties of the world today arc due to economic nationalism, it would be reassuring to think that our present mistakes could be made the basis of future improvements. To swim against the tide

is nat a very easy or a very agreeable occupation. How pleasant to be convinced that it is quite unnecessary.

But such conviction must rest upon demonstration if it is to be very comforting for long. Now the main tendency of Sir Arthur's recommendations, both here and in other con- nexionr, is to strengthen just that machinery which makes national separation possible. He wants national governments

to reserve their right in certain circumstances to manage national currencies 'independently. He wants national

governments to control trade as a whole. He wants inter-

national investment managed as part of general national policy. It is obvious that the mechanism which would make such

controls effective would be a mechanism well adapted to the execution of policies opposed to international harmony.

And unfortunately it is not obsiOus that it would not be used for this purPese. Before Sir Arthur can persuade us to join

him in building an instrument so potent for the destruction of what international unity still exists, it is incumbent on him

to demonstrate that there is some probability that it will not be used in this way. : Unfortunately, it is just here that his argument leaves sonic sense of disquietude. He is most impressive when he is point- ing out the great difficulties of other lines of action. His temperate and sympathetic dismissal of those who would adopt less circuitous ratites to the achievement of inter- national unity has great argumentative force. But when he conies to unfold his own policy, at any rate for one reader who would fain be convinced to the contrary, he does not altogether remove the fear that the forces to whose consolidation he

lends his powerful sanction may not use the alliance for ends precisely the opposite of those that he has in view.

Take for example the machinery of quotas. Sir Arthur is convinced that many of the quota regulations of today

are a came of grave dislocation. They introduce rigidity into the channels of trade. They obstruct the operation of equilibrating force's. He urges very strongly that they

should go. But at the same time he discerns another kind of quota which may form " a permanent and even perhaps a useful feature of the commercial system of the future " :

" When a government is deliberately controlling a given sphere of production it may sometimes need to regulate the quantities of i!aports and for this purpose a quota is more suitable than a tariff. • • . In this form they are likely to develop just so far as planned eat controlled national systems increas3." . -

This is surely a little 'disturbing. 'The free trade economists the past had no difficulty in thinking out a series of hypo- thetical cases in which it Was Conceivable that a protective 'hay might bring some benefit le' the inhabitants of the World Trade and Its Future. By Sir Arthur Salter. (Oxford University Press. 7s. 6d.)

area applying it. But they did not entertain the belief that such duties which were probable in practice were likely to have this effect. They knew that they would be made the instruments of special interests, the cause of a futile geographical separatism. Accordingly they declared that it was wisest to attempt no experiments in this direction. And experience does not seem to have invalidated their prescriptions. Now it is perhaps possible--he does not attempt it—for Sir Arthur to work out an example in which the regulation of trade by national quotas is not destructive of national wealth. But there does not seem, and he .does not show, any reason why such eases should be expected in practice. It is true that there arc quotas which have been described and defended in terms similar to his own. The official apology for the lamentable British Pig Quota uses very much the same words. But the whole weight of recent experience seems to suggest that in practice the innocuous or beneficial quota is even less likely to appear than the innocuous or benelicial tariff. The fact that Sir Arthur lends his great authority to the view that quotas maybe a useful feature of the commercial system of the future is not likely to inereaie the numbers of quotas that arc useful. But it is greatly to be feared that it may considerably retard ' the abolition of quotas that arc not.

Much the same feeling of disquietude is left by the treatment of general trade policy.. Sir Arthur is most careful to sur- round his recommendation of bilateralism by all sorts of reservations designed to guard against its dangers. The most-favoured-nation clause in commercial agreements; hitherto the bulwark of liberal policy against discrimination, is not to be abolished. Its operation is only to be suspended if the agreenients satisfy certain criteria— notably that they are to be open to outsiders on similar terms. Nevertheless the feeling remains that the net effect of his pronouncements will be to strengthen the general tendency to bilaternliste without compensating advantages. It is difficult to share Sir Arthur's belief that, in the absence of what he calls " a conception of general free trade," many bilateral agreements would be negotiated if the " concession " were to be available to third parties giving similar terms. How much of the notorious Ottawa system would remain if this condition were enforced?? And in spite of the many qualifications with which he guards his explicit pronouncements it is difficult to resist the impression that the general tendency of the lectures can hardly fail to be construed as an implicit defence for many kinds of bilateral agreements which evade these safeguards. How, for instance, can agreements re- quiring that capital lent from a country be spent in purchasing exports from that country— an arrangement in which Sir Arthur appears to acquiesce—not be regarded as exclusive and restrictionist in character ?

Now, of course, Sir Arthur is far too sensitive and intelligent not to be aware of all these and similar dangers. But he would urge, if I understand hint rightly, that they would be met if only the national authorities would frame their policicii having regard to the interests of the nation " as a whole "-

the — the italics arc his. No doubt formally this is a sufficient

answer. Rightly considered the interests of most geographical groups, however delimited, arc not out of harmony with the interests of the rya. If national authorities were perfectly wise and perfectly disinterested, no doubt they would move to- wards the world-optimum; and the fact that the areas over which they ruled were grotesquely unsuited to placing operations in the field Of trade would not matter. But the substantial question; the question of tactics for men of good will with which Sif :kith& is avowedly concerned; remains. Will the/ do these things ?