As a campaigner on the front line of exploitation, Nat Dyer has seen the impacts of economic ideology and has turned to explaining its origins. His is the story of one of the great economists, David Ricardo, and how he invented economics’ now standard trick of turning complex political-economic interactions into simple stories with a happy ending—in this case, the benefits of “free trade.”

Once the complexities are restored, it turns out that “free” trade isn’t necessarily free at all, especially for the most vulnerable such as slaves in Brazil. The Mint talked to Nat to learn more about this magic trick’s origins and the implications for today as Trump trash-talks free trade.

Key points

Ricardo’s Free Trade Theory

• Known as theory of comparative advantage
• Showed countries benefit by specializing in what they’re comparatively best at producing
• Seen as beautiful proof justifying free trade and globalization
• Methodologically revolutionary in using abstract models

Critique of Ricardo’s Theory

• Missed key complexities like colonialism, slavery, uneven development
• Portugal-England example ignored Brazilian gold and slave trade
• Specialization in agriculture limited Portugal’s development
• Theory used to justify corporate-friendly globalization policies

Longevity of Free Trade Theory

• Calcified into dogma in 1990s-2000s during “hyper-globalization” era
• Used rhetorically to justify expanding corporate power globally
• Intellectual property expansion, investor-state dispute settlements, unregulated capital flows
• Economists reluctant to question due to institutional/career pressures

Signs of Rethinking Free Trade

• More contested now than in recent decades
• Concerns about overreliance on Russian gas, China’s rise, climate change
• New antitrust movement challenging consumer welfare standard
• But change is difficult due to entrenched interests and academic incentives

Broadening Economic Analysis

• Need to engage more with history, institutions, pluralistic values
• Examples of Piketty on inequality, anti-monopoly movement
• Challenge is economists may lose status/jobs by questioning orthodoxy
• Senior/famous economists have more freedom to critique mainstream views