Trade can also explain such basics of civilization as the birth of cities. Some people settled down in one place for the first time and specialized in agriculture, trading their surplus for goods and services. This led to a better life. As Iain Murray and I point out in our new paper. “Traders of the Lost Ark.”
Over time, people found they could achieve a more stable lifestyle by tending to domesticated crops and animals—at least compared to nomadic hunting and gathering—but this required specialization and trade. For example, some people specialized in farming and traded their surplus crops to others in exchange for tools or shelter. Others specialized in services, such as milling grain into flour or brewing it into beer. Without trade, such specialization would have been impossible.
Trade also made the first governments possible:
The late University of Maryland economist Mancur Olson theorized that the first governments were “stationary bandits,” who traded protection from other bandits—or themselves—for a fee in the form of taxation.
As governments became more established, they later decided to bite the hand that feeds them:
When governments get involved in trade, it is usually to erect barriers to it. While special interests have always benefited from the reduced competition trade restraints bring, historically, most traders have objected to such interventions. Important clauses of [the] Magna Carta enjoin the King of England from stopping traders from entering the country. The American Declaration of Independence, in its litany of offenses blamed on King George III, chides him for “cutting off our Trade with all parts of the world.”
This is why the first “international” trade system was actually a mechanism for restricting and redirecting trade to fit some government prerogative. The mercantilist system that governed trade during the colonial era was based on the “rights” of monarchs to maintain a “balance of trade” that would allegedly enrich them and their favored commercial partners. It accomplished this by imposing a series of tariffs, import quotas, and prohibitions to affect the balance of trade in favor of these interests. In effect, the mercantilist system was the first example of crony capitalism writ large.
This kind of big-picture historical sketch might seem academic. But when it comes to trade, it’s very practical. It is important to remember our roots. No trade, no civilization. The debate over tariffs and other trade barriers goes back much, much further than the last two years. We are the current participants in a debate as old as our species—and knowing exactly what we have been fighting over for so long gives context for exactly why it is important to fight, and fight hard, against every new trade restriction that politicians concoct.
For more on why the freedom to exchange is so important, read the full “Traders of the Lost Ark” study here.