Fifteen Eighty Four

Academic perspectives from Cambridge University Press


Trade, Trump, and Brexit

Frank J. Garcia

As an American, I can’t help but read the slow-motion drama that is Brexit through the lens of the 2016 Trump election. Each is a referendum on a half-century of internationalist and neoliberal policies at home and abroad, and on the political establishment (both liberal and conservative) responsible for implementing them. Both have made it painfully clear that many in our own countries feel betrayed by current trade and integration policies, which they see as being imposed on them at their cost but for others’ benefit.

Both Trump and Brexit are thus part of the broader global political backlash against trade and its larger context, economic globalization. The states framing the global economy (largely, the U.S., the U.K. and the core EU states) have pursued a kind of economic globalization that has not only left many countries behind—that is not new news, that has been going on for decades—but also marginalized and undermined the economic lives of many within our own democracies, who feel as impoverished and disenfranchised by them as much as anyone in the developing world. As the effects come home, the political establishment in both countries is now paying the price for this.

In both cases this sense of betrayal has also taken on complex nativist elements, which tend to obscure the root causes and therefore the way forward. When people feel betrayed by their country’s poorly-understood and often non-transparent economic and social policies, the Other is often a convenient excuse. The reality is much more complex: because of economic globalization we can no longer easily distinguish “Us” from “Them” by ethnicity or national boundaries. The important comparison today, as the alarming global inequality statistics indicate, is between a smaller and smaller global Few who are favored by economic globalization in its current form, and the Many who feel themselves to be left out, a group whose increasing membership crosses all national and ethnic lines. Unaddressed, this threatens to undermine the institutions and shared understandings that make a thriving democratic culture possible.

Meeting this challenge, and successfully implementing a post-Brexit (and post-Trump) future means, among other things, a new trade policy for a new economic globalization. As I argue in my book, Consent and Trade, we need to re-capture a vision of trade as mutually beneficial consensual exchange. Simply put, trade is nothing more nor less than the economic bargains we agree to, and the rules we agree on to protect, support and facilitate these bargains. This is not a new idea—as early as Adam Smith we recognized the ancient and deeply human tendency to “truck and barter,” and the avenue this opened towards a thriving society. However, this only works if people, and countries, can accept or reject bargains free of economic and other pressures. By this standard much of what passes for trade today—and disadvantages individuals and communities in both the U.S. and the U.K.—is not really trade at all, but pathologies of trade: coercion, exploitation, or worse, facilitated by an international economic law that has lost sight of what it set out to regulate and protect.

Here Brexit and the Trump election share a sad irony: in both cases, the way forward is in fact the opposite of what those in power are currently pushing for. Brexit reflects in part a concern that European integration has proven inadequate to protect ordinary workers and citizens from the pathologies of trade and the associated costs of neoliberal globalization. The irony of course is that the Brexiteers advocate even more neoliberalism for the U.K., but for a post-Brexit U.K. further isolated and economically reduced, which only increases the space for coercive, predatory and exploitative practices.

It would be a mistake and a loss to turn our backs on the energizing potential of trade on account of its pathologies. The answer to our fellow citizens’ sense of betrayal is not to double down on nationalism or nativism, nor is it to make trade and economic policies more coercive and more unbalanced (as the U.S. seeks to do), however tempting it is to see this as getting power back in the hands of the people. In a complex multipolar global economy where speculative financialization and automation, not trade, are the biggest challenges to people’s jobs, we need coordinated and cooperative solutions to the deep-seated structural issues. This means, and has always meant, creating and supporting space for trade, properly understood: we know of no flourishing society without flourishing trade. Negotiating agreements that protect and enhance consent, both at home and abroad, will not only make trade more broadly fair and sustainable for all parties, but also help strengthen our global economy. In the long term, that makes the best economic sense as well as the best policy sense.

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