Libertarianism and Restrictions on Trade With Socialist States:

Libertarianism is generally seen as requiring free trade. Certainly, libertarian thinkers from Adam Smith to the present have strongly condemned protectionism. How then can a libertarian endorse trade restrictions such as the Jackson-Vanik Amendment, which denied free trade to totalitarian states that refused to allow their citizens to emigrate freely?

Perhaps I am blinded by my parochial interest in the Jackson-Vanik Amendment, but I think there is a compelling answer to this question. Libertarianism does indeed imply free trade between private individuals and firms. But trade with socialist governments is very different. When two private individuals trade with each other, it is reasonable to assume that both legitimately own the goods they exchange. Thus, at least as far as libertarians are concerned, the law should not restrict their transactions unless there is specific proof that one or both are trading in stolen or otherwise illicitly acquired goods. By contrast, a socialist state engaging in international trade is usually exchanging goods that it forcibly acquired from its citizens. The socialist state's goods are either confiscated from former private owners or produced by compelling workers to work for the state (which they generally must do whether they want to or not, because there is no competitive employment market). Socialist states also make extensive use of out and out forced labor. In a true socialist state - one where the government owns all the means of production and the state has a monopoly of foreign trade - trade in forcibly acquired goods is the only kind of international exchange that is possible at all. Just as in the domestic context libertarianism is perfectly consistent with forbidding trade in stolen goods, in the international context it is consistent with forbidding trade with socialist governments that, by definition (as libertarians see it), have acquired their wealth by plundering their citizens.

True socialist states must be distinguished from nominally socialist societies (such as China today) that nonetheless permit a large private sector to exist and engage in international trade. However, the USSR at the time of the Jackson-Vanik Amendment (like Cuba and North Korea today) was a fully socialist society with almost no private enterprise and a complete government monopoly of foreign trade.

Restrictions on trade with socialist states may or may not be good policy. Sometimes trade with such states can serve important strategic interests (as with US trade with the Soviet Union when the two nations were allied during World War II). Critics of trade sanctions claim that they fail to achieve their goals and may even be counterproductive. Be that as it may, restricting trade with socialist states does not violate any libertarian principles.

Related Posts (on one page):

  1. Libertarianism and Restrictions on Trade With Socialist States:
  2. Representative Charles Vanik, RIP: