I was first introduced to economics when given Milton Friedman's book, "Free to Choose," when I was still in junior high. By the time I graduated from high school, I had read Adam Smith, Paul Samuelson, Friedrich von Hayek, Ayn Rand, Peter Drucker and a number of authors whose works touched tangentially on economics. Unsurprisingly, I went on to study economics in college, and there read everyone from Bastiat to Harrington, thus giving me a solid background in Keynesian, Monetarist, Marxist and Austrian economics.
Throughout this time, it was only the Marxists who seriously questioned the utility of free trade, although they did not so much criticize Smith and Ricardo as they constructed a conceptual model in which the entire concept of trade, free or not, was largely irrelevant. The practical form of this model empirically demonstrated the validity of that approach throughout the latter half of the 20th century, as no society based on Marxist economics has ever known much success in producing goods that any non-Marxist society is interested in purchasing.
Now, there's no question that the theory behind free trade is relatively solid. There is no shortage of historical examples demonstrating how establishing tariffs has led to a wide variety of negative outcomes, most notably the famous Smoot-Hawley tariff of 1930 which helped exacerbate the Great Depression. However, just as the Information Age has rendered the Marxist Labor Theory of Value obviously moot, and in doing so eviscerated the entire foundation of both Marxian economics and the broader concept of distributive justice, it has also reopened the long-settled question of free trade and its fundamental benefit to an economy.
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The development of an information and service-based economy also raises the question of whether the theoretical logic that prevailed in a manufacturing economy is even applicable at all, especially in the real world of international conflict. Whereas it might make perfect sense from a purely financial point of view to outsource all of the U.S. armed forces to China, where both the manpower and the manufacturing costs of weaponry are less expensive, such an action would be downright insane from the more pragmatic perspective of military history, which teaches that when two societies enter into violent conflict, it is the armed society that is victorious.
Furthermore, it is becoming ever more clear that the foundational assumptions of economics, based as they are on the concept of a rational homo economicus, are incorrect. An increasing number of studies are showing that the basic model of man as a rational consumer capable of reliably acting in accordance with his objectively calculated economic benefit is not only the gross oversimplification that it was always known to be, but may in fact be altogether incorrect. This is significant, because if the foundations of the theories upon which the huge and complex macroeconomic models are constructed are flawed, those models are rendered effectively useless.
And finally, while it would be a travesty to describe the massive trade agreement known as NAFTA as genuine free trade, there can be no question that the supposed benefits which were supposed to be derived from free trade with Mexico and Canada did not come to pass, instead, most of the predicted problems did. The same is true with the European Union, which contrary to all the predictions, has turned out to be even more economically sclerotic and politically fascistic than even its greatest detractors predicted 20 years ago.
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The Marxian model breathed its last breath in the early 1990s. While the Keynesian model is seeing a revival in the misguided enthusiasm for public works spending in the United States and United Kingdom, a second transmutation of a severe recession into a great depression should kill it off for good. The Monetarist model is already on its last legs; the failure of the Fed to inflate its way out of the current crisis should suffice to finish it off. Even the Austrian theory, without question the most useful of the four economic schools, is poorly suited to account for the problems presented by exogenous factors.
None of this matters in the short term, of course. The Obama administration is clearly determined to repeat the mistakes of the Hoover and Roosevelt administrations, complete with all of the many unpleasantries they historically created. But one benefit of an extended economic contraction will be the way in which many economists will find themselves without jobs and with sufficient time to reconsider their long-held assumptions about the way in which an economy actually functions.