Do We Really Have to Learn All Over Again What the Enlightenment Taught Us About the Downsides of Trade Wars?

by Andrew J. Hamilton

Andrew Hamilton is Associate Professor of History and Chair of the Department of History and Philosophy at Viterbo University. His publications include Trade and Empire in the 18th-Century Atlantic World (2008) and, most recently, the biographical essay on Benjamin Vaughan in the Bloomsbury Encyclopedia of the American Enlightenment (2015).

As Europe grapples with Brexit and America faces a president-elect promising to wall off-off its neighbors and raise tariff barriers, we might recall how these questions of borders and the limits of international cooperation were approached by eighteenth-century thinkers. One of the Enlightenment’s great innovations, laissez-faire economics, systematized in Adam Smith’s Wealth of Nations, was promoted on claims that it transcended national borders and was an international, cosmopolitan arrangement. Well-known members of the Enlightenment – writers like Adam Smith and David Hume in Scotland, and the French philosophes Voltaire and Montesquieu – promoted the new system of open trade, making the case for the civilizing, humanizing effects of laissez-faire economics, a connection which has been implicit ever since.

Recently, a relatively unknown Enlightenment writer has emerged as an important contributor to this chapter in the history of political economy. Benjamin Vaughan was a well-connected Anglo-American merchant and writer. He played a significant (though secret) role in the peace deal to end the American Revolution, serving as go-between for British Prime Minister Shelburne and the American statesman, Benjamin Franklin, at the Paris peace negotiations in 1782-3. Vaughan was a student of Smith’s economic theory and he used that knowledge to recommend a novel relationship between Britain and the newly-independent America. Moving beyond the hierarchy of imperial rulers and subjects, Vaughan urged the two sides to establish a transatlantic partnership based on free, open trade. In suggesting that international relationships be based not on self-interested politics but rather on mutually-beneficial trade agreements, Vaughan was making a very modern argument.

Five years after Paris, in 1788, Vaughan published his chief contribution to the field of political economy, New and Old Principles of Trade Compared. It was an unabashed celebration of the economic principles found in The Wealth of Nations, designed to amplify Smith’s argument for free and open trade as the only reasonable basis upon which to build peaceful international relations.

Vaughan framed his discussion in terms of what the economist Albert Hirschman identified as the doux-commerce thesis. This was a set of arguments that promoted free trade based on the premise that unhindered commercial development would bring with it important side benefits, including social harmony and international accord. In this vein, Vaughan promised that in addition to the commercial benefits of free trade, a country embracing the “new,” “liberal” system stood to benefit from a variety of non-material advantages, or what Hirschman called an “external economy.” In particular, Vaughan made the case that laissez-faire economics would have civilizing effects upon social manners and international relations. Vaughan made a clear connection between free trade and international accord. “Peace,” he wrote, [is] the best friend both of commerce and mankind,” while protectionism leads to “animosity and bloodshed.”

Vaughan did not imagine that wars could be completely eliminated, even in a situation of free and open international trade, but he reasoned that the logic of the “easy system” might compel “states reciprocally to allow a mutual freedom to commerce during the very period of hostility.” Vaughan insisted that “if commercial ideas of a proper kind could … be introduced among turbulent and martial neighbors, they would clearly contribute to soften and dispose them to tranquility.”

And Vaughan pushed his argument further, suggesting that the very geography of the globe seems to reflect the Creator’s favorable view of laissez-faire economics. For example, he pointed to the fact that different trade items are found in disparate locations, not equally dispersed throughout the world. Clear evidence, he reasoned, that God is motivating us towards international trade and cooperation. Referring to such providential diffusion of goods around the globe, Vaughan surmises that these commodities have been distributed in such a way as to compel nations to engage in open commerce with one another, and to acknowledge their common humanity:

In seeking national opulence, we must not entirely lose the idea of men being of one race, and of men and animals and the great globe itself belonging to the common Creator of them all. …[W]e must avail ourselves of that mutual aid which nature has provided for man, when she allows different places abounding in different commodities and different wants, to have the means of a mutual intercourse.

By Vaughan’s reasoning, free trade becomes not just the most rational, efficient economic policy, but a powerful social system that promotes the values of modern civilization, which he takes to include civility, peace, and international harmony.

Vaughan concluded his text with a cosmopolitan pledge, quoted from Hume: “…[N]ot only as a man, but as a British subject, I pray for the flourishing commerce of Germany, Spain, Italy, and even France itself.” Historian Anthony Pagden used this same quote to exemplify the shift from ancient attitudes of imperial competition towards more modern postures of international cooperation centered on commerce. Pagden employed the quote to defend his assertion that for modern theorists like Hume (and Vaughan), “commerce replaces conquest; conversation and the voluntary exchange of goods are substituted for war.” This is all taken to be part of a more general civilizing process, the development of rule of law, and what have come to be known as open, market societies.

Here we can make a connection to contemporary strategies of international cooperation. Historians of the European Union have suggested that the ideological roots for such a federation can be traced to the Enlightenment. For example, Sebastiano Maffetone has reminded us that Kant’s 1797 treatise, “On Perpetual Peace,” identified three principles that would address the woes then afflicting Europe. Kant’s key postulate was “the creation of an international community based on commerce and free trade.” In this regard Vaughan seems to have anticipated Kant by almost a decade.

It is clear that in Vaughan’s essay the focus has, in the words of J.G.A. Pocock, “shifted decisively … from the political and military to that blend of the economic, cultural and moral which we call the social for short.” Here again is the pivot from notions of empire to ideas of federation, from conquest to commerce, the very shift that Vaughan had seen first-hand at the Paris peace negotiations as America broke free from the British Empire, and reformed itself as a republic.

Reflecting upon these eighteenth-century arguments in favor of increasing internationalism is important today because they inform our notions of modernity and remain implicit in much of our political and economic discourse. The Enlightenment set the terms for the bulk of our contemporary conversation about how states should interact in the world. If we are now reconsidering that understanding, it is important for us to comprehend exactly what it is that we are reconsidering. It is also worth noting that just as Vaughn’s ideas about cosmopolitanism developed in the context of Britain’s reconceptualization of itself as it lost its American colonies, so now Britain must again reconsider its sense of self in a world where it has separated from the European Union. Should America decide to go down the same path, further isolating itself from its southern neighbors and others in the global community, these precursors are surely worth taking into consideration.

Further reading:

Scott Breuninger and David Burrow, eds., Sociability and Cosmopolitanism: Social Bonds on the Fringes of the Enlightenment (London: Pickering and Chatto, 2012).

Pankaj Mishra, “Down with Elites! Rousseau in the age of Trump and Brexit,” The New Yorker, August 1, 2016, pp. 68-72.

Andrew Hamilton, Trade and Empire in the Eighteenth-Century Atlantic World (Cambridge: Cambridge Scholars Press, 2008)

Felix Gilbert, To the Farewell Address: Ideas of Early American Foreign Policy (Princeton: PU Press, 1961).

Albert O. Hirschman, The Passions and the Interests: Political Arguments for Capitalism before its Triumph (Princeton: Princeton University Press, 1977).

Benjamin Vaughan, New and Old Principles of Trade Compared; or a treatise on the principles of commerce between nations, with an appendix (London, printed for J. Johnson and J. Debrett, 1788).

Jacob Viner, The Role of Providence in the Social Order (Princeton: Princeton University Press, 1972).

Anthony Pagden, Lords of All the World (New Haven, London: Yale University Press, 1995).

Sebastiano Maffetone, “The Legacy of the Enlightenment and the Exemplarity of the EU Model,” in The Monist, vol. 92, no. 2 (2009), pp. 230-257.