Die Neue Zeit
9th December 2010, 06:45
National-Democratization, International Trade, and Trade Policy
“Ivan the Terrible's remarkable enterprise was the fact that he was the first to introduce a state monopoly on foreign trade. Ivan the Terrible was the first to introduce it; Lenin was the second.” (Joseph Stalin)
Despite family intrigues and absolutism, Russia was transformed from a collection of divided fiefdoms into a multicultural but unified military power under its first czar, the more accurately named Ivan Grozny. One of the key economic features driving the rise of the Tsardom of Rus, the empire preceding the formal Russian Empire, was the state monopoly on foreign trade.
Centuries later, the Bolsheviks placed great emphasis on this state monopoly, as noted by Mark Boguslavskii and P.S. Smirnov:
On the economic policy agenda of the proletarian state, drawn up by Lenin for the meeting of the Council of People's Commissars on 27 November (10 December) 1917, establishment of a "state monopoly on foreign trade" occupied third place after the nationalization of banks and compulsory syndication […] The state monopoly on foreign trade came into being with the Decree of the Council of People's Commissars of 22 April 1918, "On the Nationalization of Foreign Trade" […] However, it seems that the principal content of the 1918 Decree was to confirm the authorization-type system for the conduct of foreign trade transactions and for the import and export of goods, which is characteristic today of the regulation of foreign trade in many countries.
Historically, today’s most developed states resorted to protectionism and interventionism to develop, but through aggressive pursuit of free trade in consumer goods and services (and more blatantly imperialist trade agreements as discussed earlier on the likes of food production), have hypocritically prevented other states from doing the same. Beyond combating this and other forms of imperialist trade policy, there are very pragmatic reasons for a national-democratized foreign trade monopoly and accompanying trade policy, whereby all procedures of foreign trade are conducted through special enterprises operating completely under some foreign trade ministry.
Beginning with arguments from mercantilism and real protectionism, states that are comparatively but not absolutely disadvantaged in certain industries should be allowed to protect and develop the related domestic industries until they become competitive in international trade. Again, free trade in consumer goods and services tends to maintain comparative advantages and comparative disadvantages. Furthermore, the economist David Ricardo developed this concept based on the assumption of capital immobility, an assumption torn asunder in recent decades with little to nonexistent capital controls. Mobility in both capital and labour transforms comparative advantage into absolute advantage, including that found in labour arbitrage. Next, even some states that do employ an imperialist trade policy find it difficult to truly diversify trade. The chatter of trade diversification is empty rhetoric without substantive measures, and present regulation of foreign trade is no such substantive measure. Finally, and directly countering both imperialist trade policy and the hollowness of typical foreign aid, is the possibility of subsidized trade for the less developed states to import necessary products at below-market prices and export other products at above-market prices – on top of their own state monopolies on foreign trade, general protectionism, interventionism, and other domestic development measures.
REFERENCES
Soviet culture and power: a history in documents, 1917-1953 by Katerina Clark, Evgenii Dobrenko, Andrei Artizov, and Oleg Naumov [http://books.google.ca/books?id=NXC3626eK_8C&printsec=frontcover]
The reorganization of Soviet foreign trade: legal aspects by Mark Boguslavskii and P.S. Smirnov [http://books.google.ca/books?id=l0mvk3B2TE0C&printsec=frontcover]
Satellites and Commissars: Strategy and Conflict in the Politics of Soviet-Bloc Trade by Randall W. Stone [http://books.google.ca/books?id=IcLSlIv4Lw0C&printsec=frontcover]
“Ivan the Terrible's remarkable enterprise was the fact that he was the first to introduce a state monopoly on foreign trade. Ivan the Terrible was the first to introduce it; Lenin was the second.” (Joseph Stalin)
Despite family intrigues and absolutism, Russia was transformed from a collection of divided fiefdoms into a multicultural but unified military power under its first czar, the more accurately named Ivan Grozny. One of the key economic features driving the rise of the Tsardom of Rus, the empire preceding the formal Russian Empire, was the state monopoly on foreign trade.
Centuries later, the Bolsheviks placed great emphasis on this state monopoly, as noted by Mark Boguslavskii and P.S. Smirnov:
On the economic policy agenda of the proletarian state, drawn up by Lenin for the meeting of the Council of People's Commissars on 27 November (10 December) 1917, establishment of a "state monopoly on foreign trade" occupied third place after the nationalization of banks and compulsory syndication […] The state monopoly on foreign trade came into being with the Decree of the Council of People's Commissars of 22 April 1918, "On the Nationalization of Foreign Trade" […] However, it seems that the principal content of the 1918 Decree was to confirm the authorization-type system for the conduct of foreign trade transactions and for the import and export of goods, which is characteristic today of the regulation of foreign trade in many countries.
Historically, today’s most developed states resorted to protectionism and interventionism to develop, but through aggressive pursuit of free trade in consumer goods and services (and more blatantly imperialist trade agreements as discussed earlier on the likes of food production), have hypocritically prevented other states from doing the same. Beyond combating this and other forms of imperialist trade policy, there are very pragmatic reasons for a national-democratized foreign trade monopoly and accompanying trade policy, whereby all procedures of foreign trade are conducted through special enterprises operating completely under some foreign trade ministry.
Beginning with arguments from mercantilism and real protectionism, states that are comparatively but not absolutely disadvantaged in certain industries should be allowed to protect and develop the related domestic industries until they become competitive in international trade. Again, free trade in consumer goods and services tends to maintain comparative advantages and comparative disadvantages. Furthermore, the economist David Ricardo developed this concept based on the assumption of capital immobility, an assumption torn asunder in recent decades with little to nonexistent capital controls. Mobility in both capital and labour transforms comparative advantage into absolute advantage, including that found in labour arbitrage. Next, even some states that do employ an imperialist trade policy find it difficult to truly diversify trade. The chatter of trade diversification is empty rhetoric without substantive measures, and present regulation of foreign trade is no such substantive measure. Finally, and directly countering both imperialist trade policy and the hollowness of typical foreign aid, is the possibility of subsidized trade for the less developed states to import necessary products at below-market prices and export other products at above-market prices – on top of their own state monopolies on foreign trade, general protectionism, interventionism, and other domestic development measures.
REFERENCES
Soviet culture and power: a history in documents, 1917-1953 by Katerina Clark, Evgenii Dobrenko, Andrei Artizov, and Oleg Naumov [http://books.google.ca/books?id=NXC3626eK_8C&printsec=frontcover]
The reorganization of Soviet foreign trade: legal aspects by Mark Boguslavskii and P.S. Smirnov [http://books.google.ca/books?id=l0mvk3B2TE0C&printsec=frontcover]
Satellites and Commissars: Strategy and Conflict in the Politics of Soviet-Bloc Trade by Randall W. Stone [http://books.google.ca/books?id=IcLSlIv4Lw0C&printsec=frontcover]