In July 1944, still celebrating the success of D-Day, economic thinkers from around the world gathered in Bretton, New Hampshire, to establish the first International Monetary Fund. Like the nymph Calypso from Homer’s Odyssey, these delegates from 44 countries were detached from the world they were meant to observe. They planted seeds in Ogygia (Calypso’s island, disconnected from space and time), which sprouted into the roots of a global liberal trading system and a doctrine of peaceful economic cooperation. Seventy-eight years later, most international systems have been uprooted by interconnected conflicts. The consumer is at the mercy of Taiwan’s semiconductor tycoons, the citizen imprisoned with the robber barons of the New Age, and the free-thinker at war with China’s expansionism. All aspects of our humanity have been compromised by these ungodly human constructions that have accumulated more wealth, capital and power than any historical organisation. As countries let themselves be pulled into the abysses of autarky, a philosophy that the past 300 years of economics have abandoned, the solution continues to manifest itself through the early writings of liberalism. It is our role as believers of this liberalism to seize it and never let it escape us again.
Adam Smith has long been perceived as the father of economics, the precursor of the classical school of economic thought, and a heavyweight moral philosopher of his generation. He is also responsible for the advent of liberalism as an economic construct. The context of Smith’s intervention through the Wealth of Nations, his masterpiece, was mercantilism, a network of guild-protected monopolies that structured European economies and limited interaction within and amongst nations. In Smith’s world, prices, wages and goods were held hostage by a tranche of the system, which, in effect, affronted the liberties of people, the nation’s economic sovereignty and its ability to strengthen. With the ideological momentum of the physiocrats, Smith penned his labour theory of value: relative prices of commodities are determined by the relative amounts of labour needed to produce them, as a guide to correct the balance of power in society. When market prices equate to their natural counterpart, free competition is in place, firms lose their market capture and people’s demand for specific goods guides prices. However, Smith was not disillusioned by human nature – when left to themselves, capitalist owners would not promote the public interest – and identified the interests of the “manufacturers” as “opposite to that of the public.” His contributions to the legal arguments of anti-trust and anti-guild policies are immense, declaring in Wealth of Nations that nothing must be done to “facilitate such assemblies, much less render them necessary”.
One hundred years after the Wealth of Nations, the United States was effectively engrossed in applying Smith’s legacy. By the early 19th century, Americans were master shipbuilders and arms producers, industries that had been so profitable that they extended an olive branch to the newer nations of Southern America. This was known as the Monroe Doctrine. As one of the cardinal pillars of American foreign policy, the Monroe Doctrine, on the surface, was an effort to banish European colonialism from further spreading in the Southern Americas. Critics have branded it as another demonstration of the unipolarity of America’s international relations, but that would be overlooking the fact that it was welcomed wholeheartedly by most Southern American nations. It defied those who would suppress individual governments and seek to restore commercial monopolies. In those days, America put its faith in the self-development of other countries, never allowing nations under its influence to be seduced by the monopolistic structure of European colonial economies. During the Gilded Era, America’s foreign policy concerning China displayed another example of its rejection of monopolistic power. The Open Door policy encapsulates this opposition. Enunciated at the close of the China-Japan conflict, it prevented European powers from tearing up the continent by scrambling to lease territories. Remember that at the time, European nations’ interests were held by trading companies that pursued monopolies on trade in foreign countries for the good of the nation they represented.
Domestically, the America of the 20th century grew into its most refined antimonopolistic form. The New Deal was the response to a crisis that displaced millions of people and left many more unemployed. It also resulted in a legacy of unprecedented government intervention and the extension of executive powers until then only authorised in times of war. Liberal capitalism was saved by Franklin Delano Roosevelt, as he understood the necessity of American purchasing power and revolutionised factories, mills, and mines by legalising unions. Pro-union discourse and anti-trust policies stabilised the American economy, promoting an egalitarian income distribution and the realisation of the American Dream. The New Deal did more than elevate a country out of misery; it demonstrated to the world that any effort to minimise the polarising force of monopolies is crucial for economic survival, as these policies ushered in the most prolonged period of balanced growth in the country.
At the turn of the 21st century, everything changed. America capitulates.
In March 2021, photos of the container ship Ever Given stuck in the Suez Canal punctured the apparent invincibility of international liberal systems. The blockage had a snowball effect, disrupting the global transportation of consumer goods from one hemisphere to another. Cataclysms arising from technical failures in the supply chain are damning and avoidable; they are also preferable to the darker threats that lurk in ports and trading sites across the globe. The “concentration of capacity and control in global industrial systems” would loosen anarchy upon the world. Take the semiconductor industry, where recent shortages have caused entire major industries to halt, and a single chipmaker Taiwan Semiconductor Manufacturing Corporation (TSMC), has held a monopoly, until recently unnoticed, on producing high-end semiconductors. In plain English, these are technological components used notably in cars. In 2021, a shortfall in production from this company had idled plants of significant carmakers, such as Ford, Volkswagen and Toyota, and warranted the attention of European leaders, such as President Macron and former chancellor Merkel. The auto industries’ pleas for help have been capitalised on politically both in Europe and ‘across the pond’, with President Macron declaring the need for the bloc’s “technological sovereignty”; the US Congress introduced the “CHIPS for America Act” to open semiconductor chip plants across the country. Recently, the Trump administration has taken the first coherent actions since the Reagan administration to limit the reach of offshore concentrations of power, sanctioning several Chinese communications companies. Biden has followed somewhat in these steps by abandoning the optimistic globalism of the Obama and Clinton eras. These are steps in the right direction.
Within the United States, the threat of monopolies looms. The business models of these significant communications companies, such as Amazon, Facebook and Google, centralise control of the everyday decisions made by Americans. These firms have monopolised advertising revenue, undermining consumer choice, free press and the general well-being of America’s public square. Allegations of press intimidation by Facebook and Google have terrifying implications and should trigger an outcry for the preservation of this great democracy.
The consensus on America’s foreign policy entering the new millennium is resumed by the Godfather Doctrine:
However, nothing could be further from the truth. The United States has the tools of competition to limit its dependency on a multi-faceted threatening world. These tools are foundational, and for Washington to continue penning a successful legacy, it must not abridge the principles of competition to monopolists, who are already well established on its lands and in its cultures. Nor must it allow monopolists to creep into the dark rooms where foreign policy is decided. This reading of liberalism is neither socialist nor utopist. All it seeks is to champion liberty once more.
Edited by Isaac Yong
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