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Thread: Free Market - Circumstances

  1. #1 Free Market - Circumstances 
    Forum Masters Degree Golkarian's Avatar
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    I was thinking about niches and adapative radiation. It seems to me that free markets allow an essentially evolutionary process to occur in economies. This would cause the dominant economies (eg. the US) to stay superior until some disaster caused the larger economies to fall (like a mass extinction). So would free markets be better for these economies than for smaller economies?


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    Forum Masters Degree Numsgil's Avatar
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    It depends what you mean exactly by "free market". If you mean open borders without tarrifs (ie: free trade), then there is an argument to be made that it benefits industrial nations more than agricultural nations.

    During the birth of the US, Alexander Hamilton was a strong voice for developing the financial independence of the States. He strongly fought against the suggestion that the Revolutionary War debt be forgiven so that the US govt would appear like a sound investment, for instance. That way the US govt could issue IOUs in the form of dollars (which it had control over), instead of in British Pounds or something similar, which it wouldn't have control over.

    To the point at hand, he strongly favored aggressive import taxes on foreign made industrial goods, as a way of promoting industrialization in the States. Jefferson, and agrarian farmer at heart, strongly opposed these tarrifs. This would be a major issue between southern states and northern states well into the Cival war. Tarrifs on British industrial goods caused the Nullification crisis of 1828(1830? somewhere in there), because the southern states wanted the superior industrial goods from Europe to be cheaper, whereas the northern states wanted price protection for their goods so they could remain competitive.

    So free trade, in the experience of the United States at least, strongly favors keeping industrial nations industrialized, and agrarian nations agrarian. It largely prevents the development of industry in the agrarian nation. So in modern times, there's been a lot of talk about whether free trade hurts developing nations by keeping them agrarian, and thus presumably poor. It gives them access to superior industrial goods (washing machines, iPods, etc.) but at the cost of preventing specialized industries with presumably higher wages from forming.


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