Business Maverick Analysis: A heroic, if somewhat sceptical, defence of free trade

At the centre of these endless news items about “trade wars” is that itty-bitty, struggling, once-great nation the USA, with its appalling, record-low, 4% unemployment rate. Oh, how it suffers from the noxious influx of – spit – Chinese telecoms equipment. How terribly, terribly undignified it is to be forced to accept cheap Mexican strawberries. This must end. Now.

Yet, it is with great delight I notice that the creation of the African free trade zone has officially begun because a sufficient number of African states have signed up in principle. While Trump huffs and puffs, signing endless orders and declarations, it is Africa that is showing foresight and maturity. What a grand spectacle.

In his view, by caring about their own well-being while at the same time being focused on the needs of others, commercially created invisible bonds which conformed, generally, to human ethics.Was he right? Well, everyone has a view on that. But what is indisputable is that nation after nation succumbed to the blandishments, to a lesser or greater extent, of the market economy guided by Smith’s “invisible hand”.

Except that it isn’t – clearly. It’s worth noting the great underpinnings of Smith and Ricardo’s work. They both operated within the realm of individual benefit, or what we would now call an incentive system. They were both rationalists. Both ethicists. They were seeking that great utilitarian ideal, the greatest good for the greatest number.

In some ways, South Africa’s own post-democratic history provides a good example. South Africa and China effectively cut a Ricardian deal; they got our raw materials, we bought their manufactured goods. For years, this deal worked out well, the trade was balanced and each side did what they do best.

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