Free Trade and Protectionism

When it was created in 1842, the very liberal Société d’économie politique coined the slogan, ‘Nobody is an economist if he is a protectionist.’ That shows the extent to which, in liberal milieus, free trade was already at that time considered to be a factor contributing to ‘progress.’ Today, the situation is unchanged. Since the end of the Second World War, free trade has become the dominant economic doctrine. The creation of free trade zones such as the European Union, NAFTA (in North America), and the Mercosur (in South America) has been one of the consequences of the opening up of national economies. The World Trade Organization (WTO), which has been in operation from 1 January 1995, is also devoted to promoting free trade. In 1979, international sales of goods and services represented barely 12% of international GDP; today it represents almost 30%.

Free trade is based on the idea that rules and regulations should be the same everywhere, in order to arrive at ‘pure and perfect’ competition to the greatest possible extent, which permits the ‘invisible hand’ to exert its influence on every market. In the jargon of economists, its ideal is the ‘level playing field’ free from everything that might present an obstacle to the free play of the market: borders, controls, regulations, customs tariffs, and so on. From this perspective, the problem is not international trade, which is devoted to extending itself indefinitely, but the ‘rigidity’ of salaries and labour regulations, considered as curbing the competitiveness of developed countries. As for equal rules for everybody, the goal of free trade is ultimately the abolition of all rules, of everything that could impede the planetary expansion of the logic of credit and profit. Free trade is, in the final analysis, nothing but the absolute freedom of capital and its capacity to control the world, without submitting to any rules.

The general idea is that international trade represents the principal driving force of economic growth, and that we will therefore see more growth the more completely we suppress everything that might disturb trade. That is translated in reality into a general rush towards exports. The studies pertaining to the correlation between the degree of the opening up of economies and growth rates, however, do not confirm this idea. They show, on the contrary, that free trade does not necessarily result in an equalisation of prices across the board; but rather that if it benefits certain countries (generally the richest), it also seriously hurts others, for it induces deeply destructive distortions between countries endowed with different socio-productive systems, because adjustment of supply and demand does not happen at the same speed everywhere (the theorem of Mordecai Ezekiel). Besides, it is inaccurate to depend only on the GDP (or gross national product [GNP]) to measure wealth, for these indices cannot, by definition, take into consideration goods and services traded off-exchange. ‘The commodification of an economy which initially possesses a non-mercantile sector,’ recalls Jacques Sapir, ‘is always translated into a rise of the GDP, even when the real wealth of the country diminishes.’

The economists, blinded by their adherence to the dogmas of economic liberalism, are in fact incapable of thinking of the collective dimension, the national or continental entities, or the phenomena of influence and power that always get in the way of ‘pure and perfect’ competition. They also refuse to admit that it is not consumption (demand) which is the goal of economic growth (supply), but economic growth which is the fruit of consumption. Moreover, they do not see that the system of supply and demand, which is supposed to adjust itself spontaneously, can at best satisfy only the solvent demand, which is rapidly diminishing. They imagine that the liberalisation or total deregulation of trade will allow all participants to benefit equally from their commercial relations, when, in fact, inequalities grow steadily worse, both between and within countries. The principle of ‘free and undistorted’ competition is a contradiction in terms: every ‘free’ competition is necessarily distorted, and every undistorted competition is no longer ‘free’.

The Nobel Prize-winner Maurice Allais recalled this a long time ago, stating in 1988: ‘A liberalisation of all exchanges and movements of capitals is possible and desirable only within the scope of regional groups uniting countries which are economically and politically related, and with comparable economic and social development.’ In other words, free trade is only possible between socio-productive systems endowed with similar structures. That is why ‘total liberalisation of trade on the international level, the stated objective of the World Trade Organization, must be considered at once unrealisable, harmful, and undesirable.’

As regards international trade, free-tradeism is also based on the theory of ‘comparative advantage’ enunciated by David Ricardo. This theory, according to which every country has an interest in specialising in the production of those goods in which it is most competitive, is based on the implicit idea that economies are defined by constant returns on scale, which does not correspond to reality. A country that is extremely specialised and focuses heavily on exports will, in reality, soon find itself in a position where it is unable to satisfy its domestic demand, and becomes dependent on fluctuating exchange rates that it does not master. By abandoning the productive sectors in which it is considered to be less competitive, it also abandons an expertise, an ‘intangible resource’, which will impede the future development of its entire economy.

Of course, this anti-protectionist dogma is also very hypocritical. The United States, the big promoter of free trade, has never hesitated, as everyone knows, to take recourse (by devaluation, direct or indirect subsidies, customs duties, etc.) to protectionism every time they consider it to be in their interest to do so. The Americans, in particular, finance their military-industrial complex through public purchasing. And the Chinese massively subsidise their exports when they manipulate their currency in order to inundate the Western markets with cheap products, and so on.

Globalisation, which has sparked the spectacular economic take-off of emerging countries (China, India, Brazil, etc.) we have seen since 2000, has combined three factors: the progressive lowering of customs barriers, the deregulation of financial markets, and technological advances in communication and transport. The extension of free trade has gone hand in hand with globalisation, favouring the free circulation of labour, goods, and capital. This has facilitated the outsourcing of industry to emerging countries with little technological competence but extremely low wages, as well as massive exports of cheap goods originating in countries which, like China, essentially base their growth on external demand, and support their exports by keeping their currencies undervalued. Such countries have virtually unlimited reservoirs of manpower at their disposal, at salaries 30 to 80 times lower than those of Western countries. These extremely low salaries are, of course, a ‘comparative advantage’ for developing countries, but constitute unfair competition for those who suffer as a result of them.

Globalisation has allowed the bourgeoisie and the local ruling strata to deterritorialise production in the hope of freeing themselves from the constricting frameworks of nations and states, by transplanting a growing part of this production to regions of the planet that are the least conscientious in such matters as salaries, taxation, social security, and environmental protection. This development results in growing social costs. Free trade, in fact, breaks the equilibrium between production and consumption. By placing countries at completely different economic levels and with different social structures in competition on an equal footing, it creates dumping conditions and unbearable social distortions. It leads businesses to consider their wage-earners as nothing but a cost and, in reducing their salaries, pushes them into brutal, inhumane competition.

The globalisation and deregulation processes initiated in the 1980s, which reached its height in the middle of the 1990s, has not only dug an ever deeper ditch between the financial system and the real economy. It has caused the surplus value of production to be increasingly allocated to shareholders and holders of capital while wage-earners receive less. By exposing the workforces of developed countries to competition from the underpaid labourers of emerging economies, capital owners have managed to depress salaries, forgetting that workers are also consumers.

In this sense, globalisation has indeed marked the end of the Fordist system in which it was in the interest of capital to regularly increase the remuneration of wage-earners in order to maximise their capacity for consumption. The increase of production and consumption thus went hand-in-hand. This ‘virtuous circle’ was broken the moment that, in order to satisfy the demands of free trade, it was necessary to reduce salaries with the sole aim of remaining ‘competitive’ in relation to countries where similar goods can be produced, but at much lower wages. Increasingly subject to shareholder pressure — shareholders demanding maximum returns on investments, which implies redundancies, reduction of salaries, outsourcing, and so on — wage-earners have had to accept increasingly worse working conditions in order to keep their jobs. (In many countries having social structures similar to those of France, the total cost of illness due to work-related stress already represents close to 3% of the GDP.) Their standard of living began to decrease, while unemployment increased. The gap between the average income and the median income grew wider. The deflation of salaries has led to a relative impoverishment of the working and middle classes, and thus to a relative weakening of domestic demand. While most governments undertook ‘reforms’, the concerned parties were well aware that those reforms consisted essentially in making them work more while earning less.

Under these conditions, the political and sociological capacity to increase the demand for goods and services has not stopped falling, even though the technological and economic capacity to offer goods and services has continued to grow. This is thanks in particular to productivity gains, of which one of the consequences is to increase unemployment, these gains allowing the production of increasingly more goods with increasingly fewer men, and making work at the same time a rare commodity. (Since 2005, the International Labour Office remarked that there was increasingly less correlation between economic growth and the creation of jobs.)

The principal result of the expansion of free trade, beyond the immediate marginal benefits that might have resulted from it (economies of scale, more efficient allocation of certain factors of production, etc.), has thus been decreasing growth rates coupled with a very strong rise of economic inequality in all countries. The only way to compensate for the decreasing growth resulting from the deflation of salaries, lack of social security, and the consequent decrease in internal demand has been through borrowing. When salaries stagnate and workers are underpaid, demand can only arise from borrowing and credit. Threatened with impoverishment, wage-earners go into ever greater debt to try to maintain their standard of living, even though their real incomes diminish. When they have reached a certain threshold, they become unable to repay their debts, and the entire system runs the risk of collapse. This is what happened in the fall of 2008 when the American ‘subprime’ crisis initiated the present international crisis. The boom in credit mechanisms resulting from the attempt to artificially maintain the consumption capacity of households through credit, even while their real incomes stagnated or diminished, finally culminated in a widespread crisis in the private sector (encompassing households as well as businesses).

This crisis has broken out in the United States because it is a country where one consumes more than one produces, and savings there are non-existent. Their incomes diminishing, the Americans were destined to become indebted, and this indebtedness has reached heights never seen before. From 2007, the debt of American households represented 100% of the GDP! After the United States, the countries most affected have been those with the highest debts, and those inspired by the Anglo-Saxon model of a very open and financialised economy: England and Spain first of all, but also the Netherlands, Ireland, Hungary, and South Korea. Several other countries today are practically bankrupt: Ireland, Greece, Iceland, Ukraine, and Romania.

Emmanuel Todd very correctly observes that the negative effects of free trade are rising from the bottom to the top of society. In the 1980s, it was the workers who were most affected by the increasing inequalities. Then, in the 1990s, the decline hit the middle classes, who began suffering the effects of impoverishment and the consequent loss of social position. Today, the profits of free trade benefit only the top 1% of society, who become ever richer, while the gaps in salaries widen and the mass of wage-earners become increasingly poorer. ‘The adherence of the elites to free trade,’ says Emmanuel Todd, ‘henceforth causes society as a whole to suffer.’

The most threatened groups are no longer the least qualified, as in the past, but those whose jobs are easiest to outsource to other countries. The champions of free trade could not care less about that, outsourcing being justified in their eyes solely because it increases competitiveness, and thus allows capital owners to acquire a still larger share of the wealth produced. (It is the same argument which was used to justify child labour in the nineteenth century.) ‘I am proud of being a boss who outsources,’ Guillaume Sarkozy, President of the Union des industries textiles (UIT) and the brother of we-know-who, recently declared.

Whether directly or indirectly, already realised or used as a threat to blame labour agreements and social regulations acquired through struggle in the past, the outsourcing of businesses first affected the low-end products of mass consumption. Then, from the late 1980s, consumer electronics, electrical household appliances and cars, and finally, since the middle of the 1990s, also the most sophisticated products as well as ‘intangible’ services (information processing, interpretation of radiological examinations, etc.) were hit. The distance between the places of production and consumption has thus become increasingly greater.

Contrary to the generally held view, the predatory policies of emerging countries have not only had a devastating effect on the economies of developed countries, but have also destabilised the countries of the Third World. Developing countries have in fact gained little from the rules of the World Trade Organization. ‘Contrary to what is often claimed’, writes Jacques Sapir, ‘free trade has not been a positive factor in the development of the poorest countries, and its effect on the reduction of poverty has been greatly overestimated, when it has not been the product of errors of calculation.’ The argument according to which the imbalances that one notes today profit, more or less, the populations of less developed nations is thus contestable, since the inequalities between countries continue to increase. In fact, the gains realised in the emerging countries serve above all to enrich a small ruling segment of society whose fortunes have literally exploded in the course of the last ten years.

The risk today is of a deflationary spiral arising from a dramatic increase in unemployment and a general lowering of incomes, but also from a strong decline in industrial production in the developed countries. Already in 1999, Maurice Allais, in his book La crise mondiale d’aujourd’hui, predicted the ‘general collapse’ of an ‘international economy based entirely on a pyramid of debts’. We are approaching that point.

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Since the present international economic crisis broke out, all the leaders of the planet declare that they are ready to take ‘drastic’ measures to deal with the ‘urgency’ and the gravity of the situation. But at the same time they vie with one another in declaring — one saw it in April 2009 during the G20 meeting in London, and at the more recent Italian summit — that the principle of globalisation should not be questioned, and that it is necessary to fight against all forms of protectionism. The main reason for this attitude is that they think the crisis comes down to financial deregulation, and that it would be sufficient to purge to guarantee a return to normalcy. In actuality, however, it is also a consequence of the real economy and derives from the very nature itself of the dominant economic system.

Denounced by the leaders of states and governments, protectionism is also rejected on the Right (and on the extreme Right) by liberals who are loyal to the free-trade dogma, but also by a large part of the Left and the extreme Left, Trotskyists in particular, for whom the problem of protectionism clashes strongly with their internationalist convictions. (In the last European elections, as Jacques Sapir has remarked, the party of Olivier Besancenot was the only one to refuse to address this problem in any way whatsoever. As for the Socialist Party, which thinks it can resolve the problems by limiting itself to fighting for a more ‘social’ Europe, it considers protectionism a taboo subject.) In a more general way, it is the entire New Class, of the Right and the Left, which never tires of thundering against the ‘protectionist menace,’ the very words ‘barriers’, ‘protection’, ‘regulation’, and so on becoming for them synonymous with isolationism, nationalism, and even xenophobia. Obviously, for the free-trade ideology, protectionism is the devil. And that goes even beyond simple economics. From a symbolic point of view, in fact, protectionism is a barrier against unlimited change, a measure against immoderation, the ‘earthly’ element as opposed to the ‘liquid’ element.

‘The refusal to identify free trade as a cause of the present distress,’ writes Jacques Sapir, ‘shows that its champions have abandoned the universe of reflection to enter into that of magical thought.’

In France, Jacques Sapir is probably the one who argues most vigorously for a return to protectionism. He is not the only one. Emmanuel Todd, who had already denounced free-tradeism in L’illusion économique (The Economic Illusion), develops anew the same arguments in his latest work, Après la démocratie (After Democracy). He is joined in the defence of protectionism by Hakim El Karoui and Jean-Luc Gréau. El Karoui, Sapir, and Gréau were, besides, all present at the conference on the crisis of international free trade organised by the Fondation Res Publica on 27 April 2009 in Paris under the presidency of Jean-Pierre Chevènement. Some economists of international renown are also beginning to rally to the idea of protectionism, such as the strongly neoclassical Paul Samuelson, who recently observed that the Chinese case made Ricardo’s old theory of comparative advantage untenable. As for public opinion, all studies published in recent years show that protectionism is supported by the majority of Europeans, especially in France, where 73% of the people think that globalisation represents a threat to employment. ‘The mood is rather for protectionism’, noted the newspaper Les Echos twelve years ago.

‘Contrary to all liberal thought’, observes Laurent Cohen-Tanugi, ‘globalisation cannot today be separated from the return of geopolitics with a vengeance, or from power strategies, nationalisms, even historic empires … This return is heavy with consequences, primarily of an ideological nature: the depoliticisation of economic movements, a dogma of liberal globalisation since the 1980s, is going to come up increasingly against the geopoliticisation of the international economic space resulting from the economic take-off of continent-sized nations legitimately animated by strategic ambition.’

The anti-protectionist arguments themselves are not new. Protectionism is still accused of encouraging ‘isolationism’, of causing a contraction of international trade, of creating unfair privileges by instituting systems of production artificially protected from the positive effects of competition, of weakening the purchasing power of the poorest through higher prices of protected products, and so on. But the big argument is historical: it consists in a biased evocation of the protectionism instituted in the 1930s, which is claimed to have aggravated the effects of the depression of 1929, and, in the end, to have led to war. As the present crisis is everywhere being compared to 1929, the conclusion would seem to follow automatically.

In the United States, the adoption of the famous Smoot-Hawley Tariff Act, which was signed into law by President Herbert Hoover on 17 June 1930, resulted in the establishment of customs tariffs of up to 52% on more than 20,000 products. Three years later, the total production of the country had fallen by 27%, while the imports had decreased by 34% and the exports by 46%. More than 60 countries had then raised their customs tariffs or set up quotas. The global volume of international trade fell by 40% between 1929 and 1932. Liberal economists conclude from this that these measures only aggravated the crisis: the closing of the borders is said to have provoked the implosion of international trade before leading to war. That is why protectionism was so strongly stigmatised during the Bretton Woods conference in July 1944, which laid the foundations for post-war free-tradeism.

As we have said, this argument is biased. That has already been shown by Paul Bairoch who, in Mythes et paradoxes de l’histoire économique (Myths and Paradoxes of Economic History), indicated that international trade did not decline at the same pace as the production of the countries concerned, and that the decline in international trade could therefore not have caused the Depression. The same demonstration has been made more recently by Jacques Sapir in a text dated 8 January 2009 entitled, ‘Will the Present Crisis Lead to War? False and True Lessons from the 1930s’. In it Sapir recalls that ‘the essential part of the contraction of trade took place between January 1930 and July 1932, that is, before the institution of protectionist, or autarchic, measures in certain countries’. Besides, if the share of exports of goods in the GDP of the big, industrialised countries indeed moved from 9.8% to 6.2% between 1929 and 1938, we must remember that it was only 12.9% in 1913. The champions of free trade also forget that, in the 1930s, international trade consisted essentially of raw materials, which then represented two-thirds of such trade, whereas today two-thirds of international trade consists of manufactured goods. In fact, the real cause of the collapse of international trade in the 1930s was not protectionism, but the sharp rise in the costs of transport and delivery, the widespread disorganisation of the financial system which followed the accumulation of ‘competitive’ devaluations decided on after the mistake of the London Economic Conference in 1933, and the contraction of international liquidity (which fell by 35.7% in 1930 and 26.7% in 1931), which resulted in a crisis of demand ending in what John Maynard Keynes called ‘the balance of underemployment’. As for the Smoot-Hawley Tariff Act, it only made the level of protectionism in the world rise marginally.

It was his consideration of this crisis of the 1930s which made Keynes realise the importance of feeding the international system with liquidity, and led him, who had until then been rather favourable to free trade, to consider that free trade had no more benefits to offer, and to declare himself increasingly in favour of protectionism, notably in his famous article of 1933, ‘National Self-Sufficiency’. Keynes writes there, ‘The decadent international but individualistic capitalism, in the hands of which we found ourselves after the [Great] War, is not a success. It is not intelligent, it is not beautiful, it is not just, it is not virtuous — and it doesn’t deliver the goods.’

American production in 1938 was still inferior to that of 1929. It is, we know, the war effort that would make the relaunching of the machine possible, at the cost of an explosion of public debt, which would not stop increasing. One may ask oneself if it is not actually the obstinate refusal of the capitalist system to be limited that even today risks leading to war (with Iran, for example). There comes a moment when capital, confronted with the tendential lowering of its profit rates and the impossibility of finding new outlets, can only bank on war to find a new stimulus, first in the form of armaments production, and then in the reconstruction following the massive devastation caused by the conflict.

Another tactic of free-tradeists consists in denouncing protectionism at the national level. Then they do not have any difficulty in showing that protectionism would today be both impossible to establish and inefficient. The nation-states, in terms of financial fluxes and exchange of goods, are no longer equal to the international economy. It was not always so. In the past, protectionism was incontestably a necessity for emerging countries wishing to build, free from competition that they were not yet in a position to face, industries destined to confront international competition at a later stage. Friedrich List (1789–1846) was one of the first theoreticians of such protectionism. For List, who was not anti-liberal — his positions are clearly distinct from those adopted before him by Fichte in The Closed Commercial State — protectionism represented an arsenal of transitory measures allowing the attainment of the threshold from which competition between countries could be exercised on an undistorted basis. He was not wrong: the economic rise of all the big industrial countries, beginning with the United States and Japan, began within the framework of protected markets from which investment strategies could be developed.

But that does not mean that protectionism is only of temporary use, and that it should be reserved for countries that cannot yet pay for the luxury of free trade (it is always indispensable to protect strategically important industries, for example). Today, the question is whether to establish protectionism at the European continental level. This furnishes a response to the argument that protectionism would henceforth be ‘impossible’ because there are practically no longer any strictly national products, by virtue of the international fragmentation of the processes of production and the geographic dispersal of subcontracting, which results in one part of a car or a plane being manufactured in one country, another part in another country, and so on.

A canal lock is not a dam: it does not prevent the water from flowing, but allows its level to be regulated. Similarly, protectionism is not autarky. It is not the institution of insurmountable walls transforming states into so many impenetrable fortresses. In a Europe that is primarily threatened by wage deflation and outsourcing, the first objective of protectionism would be to allow internal demand to recover. Only a protected Europe can revive demand through salaries. As Jacques Sapir writes, ‘to increase salaries without touching free trade is either hypocrisy or stupidity’. For Europe, it is a question of becoming a space of economic regulation protecting itself from the most harmful effects of economic and financial globalisation in the form of price dumping and outsourcing to low-income countries, and of imposing a rule of reciprocity in international trade.

Only a system of commercial protection and of ‘compensatory duties’ can put an end to the devaluation and underpayment of work and cause internal demand to rise again, by controlling the exchanges of goods and services in such a way that European economies are no longer penalised by the de facto opportunities offered to countries whose social and environmental conditions of production differ radically from ours. The raising of salaries and the revival of demand through consumption can only be accomplished by adopting measures of customs protection, at the same time compensating for the losses that could eventually result from the closure of certain foreign markets.

Regarding commercial matters, one can certainly imagine a new common customs tariff, but this system risks running into the difficulty of fixing the exact level of compensatory tariffs in the present system of fluctuating exchange rates. The exchange rates between the dollar, the euro, and the yen vary constantly, and a customs duty on imported products could therefore rapidly be rendered ineffective. That is why the best system remains the one recommended by Maurice Allais, which is based on import quotas, which could possibly be auctioned out. From the moment that, for example, Chinese textile manufacturers exceed their quota of imports, they would have to pay a certain sum of money to the European Union, or move production facilities to Europe in order to create jobs there. Another solution could be to set up an anti-dumping tax, as already exists for certain products (for example, on bicycles imported from China).

But protectionist measures need not be reduced to customs tariffs and import quotas. They can also include laws limiting the investments of foreign enterprises, subsidies to producers or buyers, devaluations, social or fiscal measures, the establishment of technological and sanitary standards, safeguard clauses, and so forth. To remedy the heterogeneity of national economies in Europe, Jacques Sapir also advocates a return to the compensatory monetary sums adopted in the 1960s, which would allow the creation of a fund in which social and ecological needs would converge at the heart of the European Union.

Finally, protectionism must go beyond purely negative measures. To begin with, it could help stop the outsourcing of production, since having markets closer by will lower the costs and the environmental risks that outsourcing causes at the planetary level (for example, almost all gherkins consumed in France are today produced in India; Chinese strawberries are much cheaper than the strawberries from Périgord, but 20 times more petroleum is used for their transportation!) which may also allow for better quality control of products. It could also lead to the establishment of a veritable European sovereignty in industrial matters, thanks to a reinforcement of cooperation between big industrial actors, which could agree on common strategies in matters of production and the conquest of foreign markets. Protectionism, in a word, is the adoption of a preference for the European Community in all fields.

The objective being to generalise the principle of self-centred economies and to ‘regulate commercial exchanges by imagining large geographic zones of sufficiently important size to avoid the creation of vested interests — the risk of protectionism — while making of it a means of organising the world’, there is evidently a strong congruence between a protectionism organised at the continental level and the movement towards a multipolar world, where the different poles would also play a regulatory role in relation to the globalisation in process. Protectionism, in this sense, is not only an economic weapon, but also a political weapon which permits the imposition of borders on a sphere of influence or on a cultural and civilisational bloc. As Raphaël Wintrebert has written, ‘“Commercial politics” is, above all, politics and thus cannot be reduced to technical issues reserved for experts.’

The adoption of these measures hardly poses any particular technical problem. But it comes up against the total lack of will on the part of European leaders. The most determined champions of free trade are found in the European Commission, at the heart of multinational corporations, the World Bank, and the IMF. Apart from its Common Agricultural Policy, Europe is today the ‘free trade continent in a protectionist world’. This free-tradeist orientation has dominated from the beginning, since the Treaty of Rome of 1957 already foresaw the ‘progressive elimination of restrictions of international trade’. The Treaty of Amsterdam of 1997 even went so far as to abrogate the only article (44[2]) of the Treaty of Rome referring to ‘natural preference’. Today, the ‘Community preference’ is considered to contradict the clauses of the European treaties as well as the commitments made to the World Trade Organization. This is why Europe, in recent years, has been the best pupil of the free-tradeism advocated by the WTO: at the heart of the European Union, the total of customs duties represents no more than 2% of the total value of trade (which, to cite but one example, has led to a trade deficit in relation to China of more than 80%). The official doctrine of the European Union is to accept the disappearance of a certain number of labour-intensive industries to concentrate instead on industries with high added value, but which employ few people. Under these conditions, the jobs created in the innovative sectors clearly cannot compensate for the jobs lost in the sectors which are abandoned. That is why the European Union has never been able to distinguish clearly between market and non-market activities, or to determine if it should or should not protect itself against competition that proves to be destructive for its member states. It is not surprising, then, that its industry steadily declines and that its middle classes sink into poverty.

Emmanuel Todd does not hesitate to say that the future will be either protectionism or chaos — or protectionism following chaos. For his part, Jean-Luc Gréau considers that ‘The return of a new protectionism is inevitable.’ As for Jacques Sapir, he writes, ‘In view of the crisis which is developing today, the combination of protectionism and a return to control systems on capitals, such as would stabilise the convertibility of currencies on the basis of commercial transactions of goods and services alone appears to be the basis for any solution, as was the case after the crisis of the 1930s. But, as in 1944, such a position can only run into the opposition of the United States … The defence of economic sovereignty is not compatible with the objectives of American policy … There can therefore be no reform and no way out of the crisis except on the basis of a confrontation with American policy.’

The unanimous minds of the New Class will nevertheless continue to rage against the protectionist devil, regularly described as the ‘worst of solutions’ (Jean-Marie Colombani) and the ‘deadly poison of the economy’ (Claude Imbert). Observing this unanimity, Emmanuel Todd finds it easy to show that the true obstacle to protectionism lies in an ideological state of mind that can be described as libertarian-liberal: narcissism, individualism, obsession with money, and blatant contempt for the people. ‘For me,’ he declares, ‘ultra-individualism is not a primordial adherence to the market economy, to the rejection of all customs barriers; it is an adherence to the idea of the individual as absolute monarch, to the idea that it is forbidden to forbid, to that phenomenon of narcissisation of behaviours analysed by [Christopher] Lasch, something extremely massive and diffuse at the same time … The big heavy negative factor is this atomisation, this narcissisation of behaviours, this very heavy bias against collective action.’ But this individualism is, in fact, an individuo-universalism, and universalism is also consonant with free trade to the extent that it is classified under the idea of ‘a world without borders’, where nations will inevitably be ‘superseded’. Todd also notes that, ‘On the international level, universalism and anti-racism are directly related to the domination of free trade. The idea of opening up, of overcoming all differences, leads to that.’

Protectionist legislation is certainly only a corrective to, and a version of, the market economy, not an alternative to the market economy. It does not fundamentally challenge all the prerogatives of capital, or the power relations in business. Protectionism is for this reason a reformism. In the present conditions, one is led to it by a concern to avoid the worst.