Q: In a recent paper, you argue that contrary to the prevailing view among economists, trade agreements are the result of rent-seeking by politically well-connected firms. Can you elaborate?
Trade agreements are political documents. Special interests, lobbyists, industry, and labor groups have always played a critical role in shaping them. I think what has changed is not that trade agreements involve special interests and political horse-trading, but the balance of interests.
The traditional economists’ story about trade agreements is that they tend to restrain or rein in protectionist interests. In this story, trade agreements are political, but essentially are a way of limiting the influence of groups that would close off the economy from the rest of the world. I think economists haven’t sufficiently appreciated that the world and the nature of trade agreements have changed and that the balance of interests, in terms of who shapes these trade agreements, has also changed. I think there is less and less reason to believe that, on balance, trade agreements are pursuing what an economist might consider the gains from trade or appropriate social objectives and are more and more being shaped by the agenda of special interests.
Q: When did this change occur?
I think the watershed event was probably the 1990s. The creation of the World Trade Organization, for me, is the turning point. In the ’50s and ’60s, the world was very heavily protected, economies were insulated from each other, and the struggle then was to push against the prevailing protectionism. By the 1990s, the world economy had already become fairly open, and the WTO marked a fundamental transformation in the nature of trade agreements. They changed from trying to remove barriers at the border—the traditional import tariffs or quotas that economists tend to think about when they talk about trade barriers—and instead began to focus increasingly on behind-the-border rules and regulations, things like investment rules, rules on subsidies and health and safety, intellectual property rights.
These are all areas where the economic benefit of global agreements has to be scrutinized very, very carefully because there is no natural benchmark. It becomes very difficult in these new areas to determine whether more trade agreements and international rules is a good thing or a bad thing.


Q: You write that the populist backlash to globalization “should not have been a surprise, least of all to economists.” And yet, most economists did miss it. How did so many economists miss what you suggest is a fairly straightforward lesson from history?
When I say economists should not have missed this, I am suggesting that the very economic theory that we teach in the classroom has very stark implications for inequality and social divisions, and therefore we should have expected these divisions having political consequences.
I think fundamentally, economists were so enamored with the principle of comparative advantage and free trade that they felt that what they needed to do in the public domain was to defend free trade and globalization, even though the specific form that it took diverged very much from what they teach in the classroom. Still, I think they just instinctively sort of felt that they needed to be cheerleaders for this process rather than skeptics. Frankly, I think we didn’t do our job very well because of that.
Q: Many of these developments—namely financial deregulation and globalization—have been tied to a set of policies often referred to as neoliberalism. In a recent piece for the Boston Review, you described much of neoliberalism as ideology masquerading as economic science, and criticized mainstream economics for embracing it. Should economists have been skeptic?
I think in a way, economists were definitely a little bit politically naive. During this whole process, if you asked economists about neoliberalism, I think most of them would have said, “What is neoliberalism? I have no idea what neoliberalism is.” And yet neoliberalism is a real thing. I think economists either didn’t appreciate that they were cheerleading for something that the rest of the world called neoliberalism, or they implicitly made the judgment that on balance this was better than sitting on the sidelines or expressing skepticism, because of their fear that the other side, so-called “protectionist barbarians,” would have the upper hand.

経済学者は、ある意味で間違いなく政治的に少しナイーブでした。こうしたプロセスが進行している間に経済学者にネオリベラリズムについて訊いたならば、その大半は「ネオリベラリズムとは何? ネオリベラリズムが何なのかまったく分からない」と答えたことでしょう。しかしネオリベラリズムは実際に存在しています。経済学者は、世間がネオリベラリズムと呼ぶものの旗振りを自分たちがしていると認識していなかったか、もしくは、「保護主義蛮族」と呼ばれる反対側の勢力が優勢になることへの恐れから、傍観者になったり懐疑論者になったりするよりもそちらの方がトータルではまだましだ、という判断を暗に下したのだ、と私は思います。

*1:cf. ここ

*2:cf. ここ