The first official government policy for free trade occurred in which country?

Free trade

While many free trade winds have buffeted the US farm sector in the past decade and a half, none has had more impact on the domestic sugar industry than the North American Free Trade Agreement. The NAFTA was officially put into force on 1 January 1994. ‘Side letter’ agreements addressing sugar-related issues were needed for US Congressional approval of the pact. On 4 November 1993, the then US Trade Representative, Mickey Kantor, announced that an agreement had been reached to correct some ambiguity in the original NAFTA regarding the treatment of high fructose corn syrup (HFCS) in determining Mexico’s status as a net surplus producer of sugar. It was agreed that HFCS consumption would be factored in to the formula employed in determining if Mexico was a net surplus producer of sugar.

This was done to allay fears held by US congressmen from sugar-producing states that a shift away from sugar to HFCS, such as that seen in the US in the early 1980s, would quickly turn Mexico into a net surplus producer. The side letter agreements also limited Mexico’s access to the US market from 1 October 2000 to 30 January 2008 to 250 000 tonnes per year.

On 2 September 1997, the Mexican Trade Ministry, while acknowledging an exchange of letters of understanding, formally stated that the side letters represented a ‘technical matter in the case of sugar and for that reason it was not formally sent to the Senate’. Thus, Mexico stated that it did not recognize the side letter agreements and was eligible to ship its entire surplus production to the US after 1 October 2000 as per the original NAFTA text. The USDA and US Customs held that the side letters were valid and binding. On 12 March 1998, Mexican Trade and Industry Minister Blanco requested consultations, according to the dispute settlement procedures established under the NAFTA, with the objective of finding a mutually satisfactory solution that would specify technical points that Mexico did not feel were made clear through the side letter agreements and to define clearly the conditions for access of Mexican sugar to the US market after 1 October 2000. Sugar consultations are inextricably linked to permanent duties levied on imports of US HFCS into Mexico ranging from $55.00 to $175.00.

A second avenue for legal over-quota Mexican sugar imports into the US market is provided for in the US Harmonized Tariff Schedule, sections 1701.11.50 and 1701.99.50, which specify second-tier duty levels for raw and refined sugar respectively. Duty levels for countries that enjoy special trade status with the Caribbean Basin Initiative, Generalized System of Preferences, Most Favored Nations are fixed at prohibitive levels. Countries with MFN status are faced with a fixed duty of 33.87 cents per kilo for raw sugar and 35.74 cents per kilo for white sugar for the years 2000 to 2008. Furthermore, agricultural goods shipped into the US are subject to safeguard measures as approved by section 101 of the Uruguay Round Agreements Act, which allows the imposition of additional duties based upon either the value or the quantity of goods imported into the US. These prohibitive duties increase as the value of the target commodity decreases, thus cheaper sugar is subject to a higher tariff, all but precluding high-tariff imports from most countries.

The duty on Mexican raw and refined sugar, however, was subject to annual reductions, eventually dropping to nil in the year 2008, and Mexico’s NAFTA status exempts it from safeguard statutes. Thus, there was an ever-increasing potential for Mexican exports to the US at the second-tier level. A schedule of Mexican second-tier duty levels as per the US Harmonized Tariff Schedule basis 100° polarization can be seen in Table 20.2. The duty is the same for Mexican whites or raws, but is polarization-sensitive. Thus white sugar with a polarization of 99.8° would incur a higher duty than raw sugar with a polarization of 99°.

Table 20.2. Mexican second-tier-tariff schedule

YearTariff basis 100° pol (cents/kilo)Deduction for each pol degree under 100199931.7780.45200028.2470.40200124.7160.35200221.1850.30200317.6550.25200414.1240.20200510.5930.1520067.0620.1020073.5310.05200800

Thus, through the provisions of the NAFTA, the stage was set for the first time since 1982 for a foreign country essentially to have unfettered access to the US market. While the Harmonized Tariff Schedule provides a structure for substantial second-tier imports from MFN countries, Mexico represents a unique case with regard to the US sugar industry. Second-tier imports from Mexico first occurred in the second quarter of 1999. A world raw sugar price of less than 5.00 cents per pound fobs and a US domestic price in excess of 22.5 cents per pound cif dp allowed for second-tier imports from Mexico.

As stated above, the basis for the US sugar program is the USDA’s ability to maintain imports at levels restrictive enough to preclude loan forfeitures by domestic cane producers or beet processors. While this goal had been attained through the restrictive tariff rate quota scheme and by marketing allotments for many years, Mexican imports are beyond the USDA’s control. The differential between the US market and the Mexican market for raw or refined sugar is the sole determinant of Mexican exports to the US.

Despite attempts at preemptive action by both the US and Mexican industries and their respective governments, the NAFTA sugar provisions came into full effect on 1 January 2008. Free trade had finally become a reality across the US Mexican border. While trade remained orderly through the first several months of open trade, with sugar moving from Mexico into the US and from the US into Mexico, the potential for Mexican exports to its northern neighbor to overwhelm the US sugar program remained not only a possibility but an inevitability with regard to estimating the cost of the US sugar program in the context of the 2007 Farm Bill, which was still a work in progress at the end of March 2008 despite over a year of legislative wrangling.

The US Department of Agriculture is under a mandate to run the US sugar program at no cost to the US taxpayer – thus a sugar program that anticipates unlimited Mexican shipments to the US is not practical. As JB Penn, then USDA Undersecretary, noted in early 2007, it is not possible to have a supply management-based program such as the sugar program when the USDA is no longer in control of supply.

For the first time in nearly a quarter-century, the viability of the US sugar program as it had traditionally been managed had been seriously called into question. The 2007 US Farm Bill had not yet been completed as of late March 2008, thus the details of the sugar program remained unknown as the Sugar Trade Manual went to print, but the realities of free trade with Mexico seem certain to change the character of the US sugar complex for the first time in 25 years. The shape of the US market as well as the US sugar industry will be largely determined by the writing of new farm legislation.

10.2 International Trade Union Bodies

The ICFTU and the ITSs were able to move forward after Cold War tensions abated in the last decade of the twentieth century, but they lacked the financial support and organizational linkages needed to engage effectively the corporate and financial interests that came to dominate the international economy in the late twentieth century. International capital deployed a wide range of strategies that continued to build more concentrated corporate power; labor's inventory is more limited. Use of strikes, boycotts, sharing information, building popular support, use of media, and domestic political work all play a role, but unions remained on the defensive in most areas of the world. Union densities declined and labor-linked political parties shifted toward the right or center. The center of gravity of intellectual work in international economics endorsed the values of markets and competition; progressive views about social welfare, labor markets and industrial relations had lost ground and confidence in the closing decades of the twentieth century.

This had begun to change as the costs and consequences of globalization were examined and doubts raised about the validity of these global paradigms. Large-scale and long-lasting unemployment, increased inequality and poverty, illiteracy, and malnourishment (UNDP 1999) all raise the level of skepticism and the degree of openness to new or dissenting views. Popular movements showed signs of new life, and the academic analysis of global issues found more room for critical and dissenting views. In the future, as in the past, the balance of political forces will determine the outcomes of these struggles.

5.2.6 Russia

While China’s performance since its transition to capitalism has been spectacular, the same cannot be said for Russia’s performance since its transition to capitalism. Whereas China has closed some of its income gap with the leader, Russia has fallen further behind the leader. Between 1985 and 1998, Russia’s per capita GDP fell from 30 percent to 22 percent of the U.S. level. [See Heston, Summers and Aten (2002, p. 62).] Why has Russia failed to catch up to the leader following its switch to capitalism?

Russia is not a free trade club and does not belong to a free trade club. It is not economically integrated with Western Europe. It is large enough both in terms of population and land that its regions could make up a free trade club. However, this is not the case. Local and regional governments in Russia have the power to discriminate against producers from other member states operating within their borders and to restrict the flow of goods and people into and out of their region. For example, in response to the financial crisis of August 1988, regional governments prohibited exports of food goods from their regions and put in place price ceilings for many of those items. Regional governments further have the discretion to use federal funds for purposes they see fit. Often, these funds are used to keep inefficient industries afloat. Local governments also have control over the use and privatization of land. There are essentially no land and real estate markets. In general, the purchase of land and the conversion of nonindustrial structures for new commercial activity are not possible. During the privatization phase, local governments refused to lease any property that had not been used commercially.35

North American trade woes, NAFTA stalemate

The North America Free Trade Agreement is in its 13th month of negotiations. Currently, negotiations are at an apex between Canada and the United States, with Mexico and the U.S. already having agreed on a preliminary deal. Currently, negotiations are ongoing, but concern of the deal being scrapped has diminished slightly. The U.S. has backed down from its Buy American demand for lucrative procurement projects. This would have prevented Canada and Mexico from bidding on American government infrastructure projects. An externality of these negotiations may be a renewed interest in U.S. infrastructure investment. The Buy American demand is cited to be a cause of dispute between the Canada and the U.S. Donald Trump has threatened the Canadian automobile industry with tariffs if Canada does not meet its demands in renegotiation. Other core issues are dairy and panel disputes. Despite these issues, Canada is the number one buyer of U.S. exports, and some form of a renegotiated deal is likely. Also, the U.S. Congress has permitted a trilateral deal—it is not certain that a Mexico-only deal will be allowed.

4.5.2 Trade Deficit

Being preoccupied with entitlement programs, such as Medicare and Social Security, and revenue increases through taxesAmerican politicians have paid no attention to one of the largest contributors to the national debt—America's failed trade policies. If in the early 1990s the US net exports were about −1% of GDP, they were −3.4% of GDP in 2016.

One can find the following definitions of the term free trade:

international trade free from protective duties and subject only to such tariffs as are needed for revenue;

the buying and selling of goods, without limits on the amount of goods that one country can sell to another, and without special taxes on the goods bought from a foreign country.

a system of trade between nations in which there are no special taxes placed on imports;

trade between countries, free from governmental restrictions or duties;

free trade is the unrestricted purchase and sale of goods and services between countries without the imposition of constraints such as tariffs, duties, and quotas.

free trade, also called laissez-faire, a policy by which a government does not discriminate against imports or interfere with exports by applying tariffs (to imports) or subsidies (to exports).

Some above definitions differ so that it is impossible to state that the term has a unique interpretation. The word free in the above term assumes that the trade is based on an agreement that is assumed to be mutually beneficial for all participants. A logical inference is that if this does not take place, a participant has the right to ask to reconsider the agreement or simply cancel it. Unfortunately, the existing trade agreements contain many gaps that are used by many governments to impose some protectionist policies that are intended to support local employment, such as applying tariffs to imports or subsidies to exports. Governments may also restrict free trade to limit exports of natural resources. Other barriers that may hinder trade include import quotas, taxes, and nontariff barriers, such as regulatory legislation.

During the 1960s, the United States exported more than we imported, but our total trade was less than 3% of GDP. Now trade is close to 25% of GDP, and over the past 40 years, trade has become a larger and larger portion of the US economy.

Since the beginning of the globalization era, America has consistently (excluding two times after 1970) imported more goods and services than it has exported, leading to larger and larger trade deficits over the years. In recent years, the trade deficit has regularly topped half a trillion dollars annually. According to the Census Bureau, Canada, China, Mexico, Japan, Germany, South Korea, and the United Kingdom are America's top trading partners. These seven countries represent more than 50% of the US total trade deficit. In 2015, the trade deficit with China was $367.2 billion, with Germany $74.8 billion, with Japan $68.9 billion, and with Mexico $60.7 billion.

As usual in economics, there are different views of trade deficits. Some economists see only positive in trade deficits and believe that they enable the United States to import capital to finance investment in productive capacity and boost employment. Another group of economists emphasize negative features of trade deficits—borrowing to finance current consumption rather than long-term investment that hurts employment. Each group supports their views by concrete historic examples. However, it looks like they do not want to see that the examples correspond to different periods of time and absolutely different economic conditions. In a period of economic booms, trade deficits are not dangerous. On the contrary, they can be useful to help financing long-term investment and target the most prospective projects. However, in the period of economic recessions accompanied by rising unemployment and lack of growth in consumer demand and business activity, trade deficits present an economic burden.

Using frivolously, without deep understanding, the term free trade American politicians signed trade agreements strongly believing that they were good for their counties in the globalization era. Signing in 1993 the North American Free Trade Agreement (NAFTA) Implementation Act, eliminating trade and investment barriers between the United States, Canada, and Mexico, President Clinton said: “NAFTA means jobs. American jobs, and good-paying American jobs. If I didn't believe that, I wouldn't support this agreement.” The above data show that he was wrong. President Clinton opened the way for China to be a member of the World Trade Organization (WTA) and to use all advantages of its membership. Now China is the most important competitor for the US exporters in markets around the world. It is no coincidence that China is also the world's foremost currency manipulator that uses this strategy to raise its trade surplus at the expense of other countries.

The most recent trade agreement, the Korea U.S. Free Trade Agreement (KORUS FTA), which went into effect in March 2012, was also a mistake. Nevertheless, President Obama asked Congress for fast-track trade authority to move forward on the two trade agreements that have been in negotiations behind closed doors for the past 4 years: the Trans-Pacific Partnership Agreement and the Trans-Atlantic Trade Agreement. It looks like the incompetence of current politicians has no limits. Failed free-trade agreements and lowered tariffs have added more than $10 trillion to the national debt. That means that the nation's cumulative trade deficit is directly responsible for a significant part of the national debt.

The failed trade policies open doors to cheap imports from around the world. As a result, millions of American jobs have been lost. Those jobs represent tax revenues that could be used to help cover annual budget gaps. In addition, the failed trade policies encouraged companies to outsource jobs. Once outside of America, those companies can hoard money overseas and avoid paying their tax obligations despite still being considered an American. Hence, the outsourced factories also contribute to the debt. The free-trade agreement destroyed the nation's very important manufacturing sector, which lost ground to competitors not only in China but also in Germany, Japan, and Korea that have pursued advanced industrial and trade policies. The jobs in manufacturing have been shipped to China, India, or Mexico. The offshoring of manufacturing of so many products has resulted in the loss of 5.8 million American manufacturing jobs, nearly a third (32%) of manufacturing employment, and the closure of over 57,000 manufacturing firms. As a result, the government created unemployment and lost tax-related revenues.

Economists usually disagree about whether or not the trade deficit constitutes a debt to be repaid. Without discussing whether this is right or wrong, we consider how a smart trade policy can decrease national debt.

According to Scott et al. (2013), “Global currency manipulation is one of the most important causes of growing U.S. trade deficits, and of unemployment and slow economic growth in the United States and Europe. Currency manipulation distorts international trade flows by artificially lowering the cost of U.S. imports and raising the cost of U.S. exports. This leads to goods trade deficits that displace U.S. jobs, particularly in the manufacturing sector.” Currency manipulation involves artificially reducing the value of a country's own currency, in effect providing a subsidy for national exports. Currency manipulators often buy US treasury bonds to prevent their own currencies from strengthening. Eliminating currency manipulation would reduce the US trade goods deficit by at least $190 billion and as much as $400 billion over 3 years, allowing the United States to “reap enormous benefits” without any increase in federal spending or taxation; this would create 2.2–4.7 million jobs; 620,000–1.3 million of those jobs would be in manufacturing; in addition, the US GDP would increase by 1.4%–3.1% (see Scott et al., 2013).

President Trump deserves credit for attracting attention of a wide public to the US trade deficit with China, Mexico, South Korea, and Japan and the currency manipulation problem. However, his proposed solution to raise tariffs against foreign competitors up to 45% was labeled by many politicians as protectionism. Some ideas to decrease the trade deficit and recover manufacturing, which is one of the best generators of wealth for the economy, range from cutting regulations that kill businesses and raise the cost and effort of running a manufacturing operation to imposing a VAT on imports and even the broad-based VAT (see Senator Cruz's tax plan) that is used by more than 130 countries. Almost all countries with VATs waive them on exports but impose them on imports, at an average rate of about 17%. According to Harry Moser, president of the Reshoring Initiative (bringing manufacturing and services back to the United States from overseas), a 17% tax on $2 trillion a year of imports could generate more than $300 billion a year in revenue. In addition, a VAT would make imports more expensive, boosting the demand of US-made goods that would be more attractive to consumers if the mentioned initiative realization is accompanied with tax cuts.

A world-known investor Warren Buffet offered an alternative approach to tax imports. The companies that export goods from the United States would accumulate certificates equal to the value of their exports. However, companies that wanted to import goods would have to purchase certificates from exporters. As a result, US exporters, with the cash cushion from the sale of their certificates, could offer US-made goods to foreign customers at lower prices, making them more compatible and shrinking the trade deficit over time. At the same time, foreign-made items imported in the United States would be more expensive to reflect the cost of import certificates, making US-made goods more cost compatible with cheap imports. The market forces would regulate the price of the certificates, and the price could eventually tend to zero if the trade surplus was achieved. Buffet believes that his approach is a more efficient way to decrease significantly the trade deficit than waiting for the US export to become more attractive as a result of a weaker dollar. Unlike standard tariffs that usually penalize a specific product from a certain country, the certificates provide direct and immediate benefit to US exporting companies. However, this approach is based on the unrealistic assumption that the opposite side would not undertake at least similar countermeasures.

In addition to the aforementioned ways to reduce or eliminate currency manipulation, certain legal and regulatory tools can be used to reach this goal. The government can refuse to sell Treasury bills and other government assets to China and other countries that refuse to allow the United States to purchase their government assets (currency manipulators generally refuse to sell their government assets to the United States, effectively closing their capital markets). The United States and other countries may legally refuse to sell government assets to currency manipulators because the World Trade Organization and International Monetary Fund do not require the United States to maintain free markets in capital flows, only in goods and services. Refusing to sell assets to currency manipulators would eliminate the principal tool used by foreign central banks to manipulate their currencies: purchases of Treasury bills and other government securities (see Scott (2012) for a summary of research on trade, currency manipulation, and policy alternatives that could be used to address it).

Some economists believe that it is economically implausible to solve currency wars by tax policies. Floating currencies can be depreciated faster than import taxes can be adjusted. Rising impost taxes would intensify the very problem of protectionism. They believe that the currency problem, or a monetary problem, must be solved by the same kind of tools—by a currency and monetary solution, more precisely—by the currency that does not encourage predatory currency depreciation. In their opinion, floating exchange rates should be eliminated, and a system of stable exchange rates without official reserve currencies should be created. The offered solution is to establish a system of stable exchange rates among the nations of the G-20 or at least the G-7 to which other countries will conform. Such an international monetary system of stable exchange rates would eliminate the burden and privilege of the dollar role as a reserve currency.

Is this a realistic solution? Now the international monetary system consists of a disordered arrangement of floating currencies, and any country can depreciate its currency against the dollar. As an example, China's industrialization growth in the 1990s coincides with establishing interest rates to the dollar at an undervalue level. That is why some economists believe that the floating exchange rate system, combined with the official reserve currency role of the world dollar standard, hurts the American economy. However, it is naïve to expect that the G-7, with its member, China, constantly manipulating its currency and imposing tariffs on American imports, can agree to create the proposed system. There is no need to fear currency wars and try to avoid them. Trade wars existed and will exist. In 2016, the United States slapped Chinese cold-rolled steel imports with 267% duties accusing China of selling products below cost.

Of course, the mentioned approaches to make the trade fair (there is no need to be afraid of using the word protectionism) can result in higher prices for imported consumer items. However, benefits from them overbalance the potential consumers' losses, especially if the chosen policies are combined with tax cuts. Without arguing whether the above indicated $300 billion estimate is accurate, based on the above material, it is possible to state that the successful implementation of the discussed measures will allow the US government to balance its budget in 10 years (maybe even earlier) and to produce a healthy economy. However, the average GDP growth rate should be at least 3% (see Chapter 3), and appropriate measures are needed to grow the economy with such a growth rate.

4.1 Introduction

Chapter 3 made very clear that under free trade with no transaction costs, perfect factors of production mobility, and full information, a country will have a lower per capita output only if it reaches an equilibrium in which the proportion of some other factors of production to labor, which is proportional to population, is lower than that in the country of reference. These other factors of production have to be relatively more abundant in countries with higher per capita output, while labor has to be relatively more abundant within the poorer country.

Economists normally divide the factors of production into labor, physical capital, human capital, and natural resources. These broad categories are used throughout this chapter. Investigation begins with identifying the factor of production whose supply is proportionally lower in Brazil than in the benchmark countries. This search is the major target of this chapter, to advance identification of the sources of Brazilian relative backwardness.

The chapter is organized as follows. The next section introduces some basic arithmetic of development, which sets up the basic concepts underlying the subsequent empirical investigations. Sections 4.3–4.5 rely on international data to compare Brazilian relative availability of human capital, physical capital, and natural resources, respectively. Data include the benchmark countries of Chapter 2, but extend the sample to other countries whose data are also available. This extension helps create an international standard on the relationship between per capita GDP (gross domestic product) and the availability of particular factors of production. These standards are created by simple linear functions relating the two variables, per capita GDP, and the factor of production availability indicator. Section 4.6 extends the initial analysis of the previous sections, drawing on a more rigorous development accounting method, in line with recent literature on this subject, to search for the role of relative availability of factors of production in Brazilian relative backwardness. Section 4.7 summarizes the major conclusions of the chapter and introduces additional comments on the results of Section 4.6, comparing them with those found in similar studies in the literature.

2.4.2.1 Morocco’s Economic Growth

In 2006, Morocco signed a bilateral Free Trade Agreement with the US and an Advanced Status agreement with the EU in 2008. Additionally, with an export dominated outlook in full swing Morocco embarked upon a series of infrastructure projects including wide ranging improvements in its ports, transportation, and industrial infrastructures to position itself as an industrial and business hub, with new port and free trade zone near Tangier, going some way toward improving Morocco’s competitiveness. Additionally, in order to reduce outlays that burdened the country’s budget and current account, Morocco eliminated in 2014 subsidies for automotive and heating fuels, dramatically. However, subsidies on cooking fuel and certain staple food products were retained. Based on continued reduction in consumption subsidies as well as “strong revenue performance,” Morocco is expected by the World Bank to be able to stabilize debt owed by its central government at around 64% of GDP.63

Agriculture, tourism, aerospace, automotive, phosphates, textiles, apparel, and electronics subcomponents constitute mainstay of Morocco’s economy. Agricultural production suffers frequent swings and tourism is also highly dependent on external demand, which is very much influenced by security concerns. By contrast, mining and industrial production constitute more stable sectors. On the energy front, Morocco’s championing of electrical power production from renewable sources should allow coverage of around 50% of its energy requirements by 2030.64,65

Morocco’s economy was reported as having grown at a considerably lower rate in 2016 than it did over the past two decades. A large contraction in agricultural production has been pointed out as the cause for this slow down, whereas growth in other sectors was maintained at around 2.5% (see Fig. 2.20). Astute monetary policy and falls in international commodity prices are given by a recent World Bank overview, as reasons for this relatively steady growth in the services and industrial sectors, enjoyed by Morocco and reflected in the country’s GDP.

A forecast by the Economist Intelligence Unit indicates that real GDP is likely to grow by 4% in 2017, from an estimated 1.5% in 2016, with agricultural production expected to returns to normal following its sharp decline in during 2015–16.66 This decline clearly reflects the sensitivity of Morocco’s economy to the performance of its agricultural sector, which employs nearly 40% of its work force, as indicated in Fig. 2.21.

Nevertheless, Morocco is expected to be able to enhance its economic growth rate while maintaining macroeconomic stability in the medium-term. This forecast is based on expected strong performance by the country’s recent industrial ventures, based essentially on FDI projects, initiated toward the present decade, in automobiles, aeronautics, and electronics as well as expansion of Moroccan companies’ activities into West Africa (see Fig. 2.22).

On the other hand, macroeconomic stability as well as widespread benefits across population tranches would require macroeconomic policies aimed at expanding structural reforms, with particular emphasis on enhancing productivity. Based on such policies it should be possible to reduce youth unemployment, increase female participation in the work force, and further diminish poverty and inequalities.67

The Social Sciences after World War II

The four models of peace mentioned – free trade, the republican order, socialism, and the industrial society – continued to have a great deal of influence in modified form even after the end of World War II. However, all of them increasingly gave way to the realism of power politics. Just as the nuclear-armed superpowers and the alliances they set up confronted each other since the beginning of the Cold War, so, too, did the ‘proletarian internationalism’ of the one side and the democratic universalism of the other appear to be diametrically opposed, hostile, and mutually exclusive alternatives. In reality, both positions increasingly deteriorated into legitimatory ideologies that served the objectives of realists in the sphere of power politics. Although many social scientists made various declarations of their personal beliefs with regard to the problems of war and peace during the Cold War, or confessed that they could at best beat a retreat in the face of the intimidating horrors of nuclear strategies, they only rarely contributed more extensive analyses. The representative theorist of the time, Talcott Parsons, made little if any comment on the Cold War in the framework of his studies, and when he did, the statements did not go much beyond noting that international relations had become institutionalized to a slight degree. As leading representatives of Neo-Parsonianism themselves concede, Parsons had difficulty dealing not only with the present but also with the historical role of war when it came to fitting it into the framework of his evolutionary model based on the theory of differentiation. In his theoretical framework, wars, like social movements, are only the agents of overarching processes of differentiation; at worst, they can divert or hinder the course of these processes in a minor way but cannot really have any decisive influence on them. For Parsons, there can be no question of such contingent processes of collective action constituting the direction or extent of differentiation.

The two most important voices in sociology during the 1950s and 1960s who consistently addressed the social meaning of war and the effects of the nuclear arms race were Raymond Aron and C. Wright Mills. Aron is being rediscovered in France and England with such enthusiasm because for decades he did not submit to the thematic repression of war-related problems and made an abundance of important contributions to the topic, both in his theoretical work and in his extensive political journalism. In his theories, he always remained a neo-Clausewitzian strategic realist whose work can be helpful as an antidote to economic reductionists, but in my view it still cannot open up any approaches that take us further. Mills was the actual dissident in the ‘orthodox consensus’ of an American-dominated sociology. His warning, which is still rousing today, on the ‘Causes of World War III’ was based on his analysis of the power structures of American society in which he identified an elitist complex that controls military-strategic and general foreign policy decisions. This thesis of course proved to be too simple in empirical terms; his analysis of contemporary society focused too strongly on the opposition of the two superpowers and did not go into sufficient historical depth to warrant being adopted. Nevertheless, here was someone protesting against the carefree attitude with which the public and, implicitly, many social scientists believed in the stability of the system of deterrence. This belief was indeed very widespread. People called for at most the elimination of isolated elements that threatened the stability of this deterrence through arms control agreements; of course, the interest in the possibilities of conventional warfare below the nuclear threshold was kept alive in order to maintain the political scope for action.

Which country officially embraced free trade as a government policy first?

Where did international trade first begin?

When did international trade first begin?

When did free trade start in America?