Friday, June 24, 2016

The Brexit Vote: Ethnic Nationalism versus Commercial Cosmopolitanism in Big History

Arriving at one of his golf courses in Scotland, Donald Trump praised the British vote to leave the European Union: "They took their country back, just like we will take American back."

Back to where? Protectionist trade barriers? Xenophobic nationalism? Back to the first half of the 20th century, when the global trading system was broken up, the world fell into economic depression, and the world fought the two bloodiest world wars in human history?

The fundamental debate here is over the costs and benefits of free trade and of the commercial societies based on free trade.  To see what is at stake in this debate, we need to understand the history of trading as part of the Big History of human societies from the Paleolithic Era (200,000 to 10,000 years ago) to the present.  One good text for this is Big History: Between Nothing and Everything by David Christian, Cynthia Stokes Brown, and Craig Benjamin (McGraw-Hill Education, 2014).  The story I tell here is elaborated in this book.

Like all animals, human beings must find a way to make a living so that they can extract and use the energy necessary for their survival and reproduction.  Most of that energy comes from sunlight as captured by photosynthesis and stored in plants, animals, and fossil fuels.

There are at least four different ways that human beings can make a living--by foraging, farming, herding, or trading.  Throughout the Paleolithic Era, human beings lived mostly by foraging--hunting wild animals and gathering wild plants.  But they also engaged in trading.  There is archaeological evidence for trade going back as far as 140,000 years ago.  For example, obsidian (a naturally occurring volcanic glass) has been found at human sites that are over 300 km from the sources of the obsidian, which suggests that the obsidian was being traded between human groups.  In the Upper Paleolithic (50,000 to 10,000 years ago), there is extensive evidence that raw materials such as elk teeth, mammoth ivory, amber, marine shells, and fossils were obtained from distant sources and transformed into decorative objects.  So here we see that what Adam Smith identified as the psychological motivation for exchange and specialization--"the propensity to truck, barter, and exchange one thing for another"--arose early in human evolution.  (As I have argued in other posts, this contradicts Frederick Hayek's argument that the evolved instincts of human beings favor socialism rather than capitalism, and that the modern extended social order based on trade requires a suppression of our natural instincts.)

By about 10,000 years ago, there is evidence that some foragers were harvesting wild grains, and some were combining the cultivation of some plants with the gathering of wild plants and hunting of wild animals (similar to what anthropologists have seen among semi-nomadic horticultural foragers like the Yanomami in the Amazonian rain forest).  Starting about 5,500 years ago (3,500 BC), we see evidence for the first agrarian cities and states in Mesopotamia.  Later, agrarian civilizations, linking villages and cities into communities of millions of people, appeared in the Fertile Crescent of the Middle East, in Egypt, in the Indus River Valley, in China, in Mesoamerica, and in Peru.

From 4,000 years ago (2,000 BC), there is evidence for extensive trade networks connecting Egyptian, Mesopotamian, and Indus agrarian civilizations in commercial relationships.  A few years ago, archaeologists discovered a sunken trading ship off the southwestern coast of Turkey.  In the hold, they found ingots of copper and tin, cobalt-blue and turquoise glass; terebinthine resin (an ingredient for perfume), ebony logs from Egypt, elephant tusks, hippopotamus teeth, ostrich feathers, tortoise shells, exotic fruits and spices; pottery from Cyprus; and Mycenaean weapons.

Around 100 BC, the decision of the Han Chinese to engage in long-distance trade began the development of the Silk Roads trade routes that stretched from China through Central Asia to India, Arabia, and finally to Rome. 

In 65 A.D., the Roman Senator Pliny the Elder complained that the importation of Chinese silk and spices was draining Rome of its money.  The Donald Trump of Rome!

We should keep in mind that this international trade was a trade not only in goods but also in ideas, and thus an exercise in the distinctive human capacity for collective learning through the exchange of information.  The flourishing of ancient Athens depended on its being a commercial city embedded in extensive trading networks, which promoted the intellectual life of philosophers like Socrates, Plato, and Aristotle who exchanged ideas.  Thus, the philosophic life flourishes in commercial societies.

During the third century A.D., China and the Roman Empire withdrew from the Silk Roads trade.  But then during the Tang Dynasty (618-903 AD) and the Song Dynasty (960-1279 AD), the Chinese renewed trade over international trading routes (both land and sea).  Muslim, Byzantine, Indian, and Southeast-Asian merchants migrated to the Chinese trading cities.

By the thirteenth century AD, the entire Afro-Eurasian world was connected by trading networks stretching from Genoa to Timbuktu to Bagdad to Beijing.  Unfortunately, not only goods and ideas but also diseases were transported along these trading routes.  In the fourteenth century, the Black Death plague brought devastating reductions in population and economic activity.

But, then, by 1500, the Chinese and European voyages of exploration began to create the first truly global exchange networks, which eventually brought the Modern Industrial and Commercial Revolution.  Previously, the world had been divided into four world zones that had little or no contact with one another: Afro-Eurasia (Africa and the Eurasian landmass, and the islands like Britain and Japan), The Americas (North, Central, and South America), Australasia (Australia, Papua New Guinea, and other islands), and the Pacific island societies (New Zealand, Micronesia, Melanesia, and Hawaii).  For the first time, in the 16th and 17th centuries, these four world zones were joined in trading networks that encompassed the entire Earth, for the first time in human history.

Finally, the full emergence of the Modern Revolution came with the Industrial Revolution in Great Britain in the 19th century, which depended upon Great Britain being in the center of a global trading system.  Over the past 200 years, the Modern Revolution of Commercial Cosmopolitanism has produced a stunning increase in human population and prosperity that now extends around the world.

But there also have been periods of resistance in which societies have turned against the principle of free trade and the virtues of commercial society.  At the beginning of the 20th century, many people in the major industrialized societies rejected the argument of Adam Smith and the classical liberals that free trade and the bourgeois commercial life would promote economic growth and individual liberty in ways that would benefit everyone.  Many people argued that the nations of the world were in conflict over scarce resources, and therefore each nation must protect its own interests against other nations.  Protectionist restrictions on trade and immigration were put in place.  Some people (like the Nazi theoretician Carl Schmitt) argued that politics was ultimately about the violent conflict between friends and enemies.  This kind of thinking led to economic and military warfare.

There was a sharp decline in international trade.  While the total value of world exports increased at an annual rate of about 3.4 percent between 1870 and 1913, this fell to 0.9 percent between 1913 and 1950.  This was linked to declining rates of growth.  Global GDP per capita rose by 1.3 percent each year between 1870 and 1913.  But it rose only 0.91 percent each year from 1913 to 1950.

After 1950, North America and Europe moved towards a world system of cosmopolitan liberalism based on free trade and free migration.  As a result, both international trade and economic growth increased at the highest rates in all of human history.  This has also been a time of peace--the longest period in which the Great European Powers have not fought one another.  Thus, we have seen all the benefits of what Montesquieu called "gentle commerce."

Big History shows that trading has always been part of the evolved psychology of human nature, beginning in the Paleolithic Era.  But the modern move to fully commercial societies based on trade has allowed for the fullest expression of that "propensity to truck, barter, and exchange" that has been latent in human nature for hundreds of thousands of years.

If we are persuaded by people like Donald Trump, we can choose to move away from this era of commercial cosmopolitanism and turn back to the era of protectionism and ethnic nationalism.  But why would we want to do this?


Anonymous said...

""They took their country back, just like we will take American back."
Back to where? Protectionist trade barriers? Xenophobic nationalism?
But why would we want to do this?"

I've been making fun of you lately, but I'm seriously beginning to worry about you. You're making incredible leaps of logic you wouldn't ordinarily make. Obviously the question is about sovereignty. Sovereignty is fully compatible with trade. And controlling borders is fully compatible with trade. I mean, these recent posts are embarrassing. Why would we want to do this? Because people actually don't want to put themselves under the rule of others, and don't want their kind to go extinct, and controlling borders is how you do it. THAT'S WHAT HAVING COUNTRIES IS FOR.

Larry Arnhart said...

"their kind"? What kind would that be?

Anonymous said...

"this fell to 0.9 percent between 1913 and 1950."
Gee what started in 1913 and what ended around 1950? I can't figure out what happened in this time period that might have slowed global trade. It's a brain teaser alright. On the other hand "the total value of world exports increased at an annual rate of about 3.4 percent between 1870 and 1913" and since clearly there were no ethnically bases states between 1870 and 1913 it obviously must be the existence of ethnostates that is the culprit.

Anonymous said...

"What kind would that be?"
Ethnic groups.

Larry Arnhart said...

Ethnic groups? Obviously, in America, Britain, and other pluralist societies there are many different ethnic groups. Which ones do you have in mind?

May we assume that your slogan is "Make America (and Britain) white again?"

Anonymous said...

Britain is composed of the English, Scottish, Welsh, and Irish. And guess what? there are ethnostates called England for the English, Scotland for the Scottish, Wales for the Welsh, and Ireland for the Irish. This allows these groups to continue to exist because they have a territory. And until recently this went for France, Germany, Italy, Israel, Japan, and so on, because people want a homeland for their people.
I get a kick out of someone in 75% white Dekalb, Illinois virtue signalling his purity. I guess you've never had your beloved town become a Somalian or Chinese or Mexican town seemingly overnight. It's easy virtue for you to attack others for hating to see their people get replaced. But my guess it that like every white person ever as soon as your town gets "too diverse" you'll suddenly become concerned with property values, or crime, or "bad schools" and white flight like every other white person ever. I bet if your dream libertarian state was established in Somalia or China or India you wouldn't move there. But it's easy for you to act morally superior because you'll never be tested.

Kent Guida said...

I don't see Brexit as necessarily an anti-free trade position, nor do I see future British policy as protectionist. More a statement about political independence than economic policy.

Larry Arnhart said...


You might be right. If you are, we should expect that in the negotiations with the EU, the Brits will ask for a free trade agreement with EU.

W. Bond said...

To follow up on the always insightful Kent’s point, did you by any chance read Richard Epstein on Brexit? He gives a nuanced pro/con assessment from a classical liberal point of view and ultimately favors “leave.” I’ll leave his arguments to stand on their own. Link here:

On the issue of immigration/borders there is a tension in classical liberal thought (and Christian theology, I might add) between the natural inclination towards hearth/home/kin and the underlying universal principles.

A practical question, however, about the full libertarian/open-borders argument. Immigrants to the U.S. vote consistently left, i.e. we do not import libertarians on average. Small differences in percentages change the electoral outcomes significantly, as you know. Historically it takes one to two generations for the votes to approach those of the average native-born Americans. Here is a link from Cato (from pro-immigration libertarians!) on this topic:

So the question: Is the pro-mass-immigration/open borders position taken by many libertarians not make that form of libertarianism in practice a self-defeating – and hence, ultimately, utopian – set of principles?

W. Bond said...

Sorry. Correct last paragraph: Does the pro-mass-immigration/open borders position taken by many libertarians not make that form of libertarianism in practice a self-defeating – and hence, ultimately, utopian – set of principles?

Larry Arnhart said...

Richard Epstein's essay is good. I agree with his argument. He rightly defends the European Economic Community (EEC), or European common market, first established in 1958, as establishing a free trade zone, but without imposing a uniform set of regulations on all nations. For the European common market, there was no need for a broad social and economic union or a common currency. Britain joined the common market in 1973.

The mistaken shift from a free trade zone came in 1993 with the Treaty of Maastricht, which allowed for social and economic regulation from the Brussels bureaucracy to "harmonize" the laws of the various nations. The Euro then became the single currency for 19 members in 2002. This established centralized control in Brussels, and the Brits were right in the Brexit vote to assert their independence from this.

The problem now, as Epstein observes, is whether Britain and the EU can see that it is in the mutual interests of both to restore a European free trade zone without centralized planning from Brussels. Such a free trade zone should allow free movement of people, goods, services, and capital across national borders. This does not allow the citizens of one nation to become citizens or permanent residents of other nations in the free trade zone. So each nation is free to set its own immigration laws.

Kent Guida said...

Mr Bond,
Thanks for the Epstein pointer. His distinction between free trade and political centralization is the crux of the matter. It will be fascinating to watch -- can those for whom centralization is the benefit, the American-style progressives, give it up and be content with free trade? I doubt it. For some, free trade was merely the means to centralization. They may fight a rear-guard action that drags on for many years. Or the lesser possibility -- the EU collapses suddenly in the next few years and just dries up and blows away like the Soviet Union.

Larry Arnhart said...

"For some, free trade was merely the means to centralization." Yes, that's my fear--that the EU will refuse to admit Britain into the free trade zone without Britain submitting to EU centralization. That would be bad both for Britain and the EU--and for the rest of the world doing business with Europe.

Larry Arnhart said...

So what will the Brits say in their negotiations with the EU? We want the parts of the EU that we like (the free trade zone) but not the parts that we don't like (the centralized regulation from Brussels)? Why will the EU agree to this? If the EU agreed to this, wouldn't this mean that the Brits would have an economic advantage over the EU countries--because Britain would have all the advantages of free trade but without the disadvantages of centralized regulation? Is it reasonable to expect that the EU countries will agree to this? And if not, does that mean that Brexit will deprive Britain of free trade in Europe?

Kent Guida said...

It will be fascinating to watch the dance unfold. I doubt anyone has a sound basis for prediction at this point. That upsets some people who fear uncertainty.

Roger Sweeny said...

Larry, I thought of your post just now while reading a recent (very interesting) article by Jonathan Haidt. He closes,

"The great question for Western nations after 2016 may be this: How do we reap the gains of global cooperation in trade, culture, education, human rights, and environmental protection while respecting—rather than diluting or crushing—the world’s many local, national, and other “parochial” identities, each with its own traditions and moral order? In what kind of world can globalists and nationalists live together in peace?"

It occurs to me that this is related to a tension in Darwinian Conservatism, between what is often called the traditional and the libertarian. The traditionalist likes Burke's "little platoons" and doesn't want too much change, especially change that seems to be imposed from without. The libertarian wants maximal freedom and is willing to accept, even celebrate, whatever the consequences are. There is a similar tension--the less charitable would say contradiction--in Thomas Sowell's brilliant A Conflict of Visions.

Such tension wasn't very important in the conservatism symbolized by Ronald Reagan but it sure seems important now.