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President Donald Trump did not wait until he took office on January 20 th , to start implementing part of his economic program, mainly through protectionist pressures and the calling into question of free trade agreements.

What is laying in store for the next months, and how could then shape the future of global trade? These questions are now major on the agenda of all important developed nations. It is quite significant that free trade was being challenged, here and now, by the United States. Usually challenges were coming from Nations of the South and from leftist or populist leaders. For nearly forty years, the United States had been the driving force in most of free trade treaties. This trend was obvious since the XIXth century, and quite prominent in the early Bretton-Woods years.

Of course, these proposals had met a very good reception within the framework of the European Union who turned to develop a notorious love affair with free trade. This organization shared with the United States the belief that free trade was the way of the future. This vision, moreover, was rooted in a very ideological conception of the virtues of free trade, supposed to bring peace, or at least the end of conflicts.

But the last twenty years have been far from bringing water to the mills of free-trade advocates. In fact, the latter did not eliminate the conflicts.

The progress of free trade stopped with the crisis of The Doha Round has been a resounding failure. This could explain why the turning point taken by the United States under the direction of President Donald Trump, however spectacular it may be, is less astonishing than one might have thought.

Still, the warship preceded the merchant ship. The dominant powers have constantly used their strength to open up by force markets and modify the terms of trade as they see fit. The globalization that we have witnessed for nearly forty years has resulted from the combination of financial globalization, which has taken place with the unraveling of the system inherited from the Bretton Woods agreements in and the globalization of trade, the latter embodied in free trade.

At each of their stages, the latter imposed their batches of violence and wars. It has led to the overexploitation of natural resources plunging more than one and a half billion human beings into ecological crises that are getting worse every day. It has caused the destruction of social ties in a large number of countries, and there are also countless masses in the specter of the war of all against all, to the shock of an exaggerated individualism that suggests other regressions [1].

At the root of this reversal we could see the decline in incomes of the lower middle classes and the working class. And this drop is largely due to globalization [2]. This discontinuation was confirmed by another study dating from [4]. This discrepancy is also reflected in the drop-off between the rate of increase in labor productivity and the rate of hourly wages.

While the two curves appear almost parallel between and , which implies that productivity gains have also benefited wage earners and capitalists alike, it is no longer the case after Since then, wages schedules have increased significantly more slowly than labor productivity, implying that productivity gains have now essentially benefited business and shareholder profits. This situation worsened in the s, obviously as a result of globalization and open borders [5].

This trend, already perceptible before the crisis [6] , was not reversed by the implementation on anti-crisis policies, to the very contrary. This had been one of the major failing of the Obama administration, one that fostered anger among the middle-class and would explain Donald Trump success in the Presidential race. This was marked by the very clear difference between the rates of change in average income, which continued to rise, and the median income [7].

But the United States was not the only country where this situation manifested itself. It should be noted that it is also present in Great Britain, which is not politically without consequences if we look to the BREXIT in this context [8]. It is therefore clear that free trade has not had the beneficial consequences predicted by mainstream economic theory on the economies and on the workers who live in these economies.

It is true that the various subsidies and barriers to competition, which are the essence of protectionist policies, have a very bad press today. On the right as in the liberal left, they belong to the absolute taboo. The law attached to his name and he pushed forward when he was minister was about de-regulating some activities. This was done, but results have so far been less than successful. It should also be pointed out that Mr. Macron distinguished himself by his support for the very contested treaty between the European Union and Canada, the so-called CETA treaty, a treaty that has been adopted very recently by the European parliament [9] after what could only be described as a nasty joke of a debate.

The same speech is also held daily by the European Commission, which has reacted vigorously to the statements of Donald Trump. There is obviously a point of consensus here. But this point is built on self-proclaimed evidence.

Prescriptive discourses that seek to extend free trade are based on extremely questionable normative bases [10]. The assumption that competition is ever and everywhere beneficial for all is neither theoretically nor in practice grounded.

The first demonstration against this belief in competition had come for agricultural economics, through the Hog-cycle theory. But as shown by a careful reading of the founding article written by Mordecai Ezekiel in [11] , we are faced with a problem that goes far beyond the phenomena that allowed its initial identification, the fluctuation of agricultural prices.

The analysis of the conditions giving rise to the cobweb mechanism shows a major flaw in the theory of competitive equilibrium.

It leads to restoring legitimacy to measures restricting the exercise of competition, whether subsidies or limits on entry into certain markets through the presence of quotas or customs duties. The late Wassili Leontief made quite a similar reflection at the same time. Equilibrium then appears as a special case and not as a general case, which was confirmed by more recent work did by Sonnensheim and Mantel [15].

Moreover, if the objective is to avoid or to limit fluctuations, because these can have short- and long-term negative effects on both producers and applicants in particular for the investment process [16] , the conclusion that can be drawn is that measures suspending competition such as subsidies, quotas or customs duties become useful and legitimate.

Gilbert Abraham-Frois and Edmond Berrebi have shown that the introduction of realistic clauses into reasoning for example, by accepting that the economic agent has a choice between not two but three options leads to the generalization of situations of instabilities as long as competition is maintained [17].

In fact, this debate has already taken place. John Maynard Keynes was one of those, and certainly the one who exerted the most considerable influence. The text of J. Keynes on the necessity of national self-sufficiency was published in June in the Yale Review [18].

Today, as in , the reasons for doubting the value of Free Trade are accumulating. Far from fostering development, the WTO could well have contributed to global poverty. Even foreign direct investment, long regarded as the miracle solution to development, is now under attack [21]. Competition in many countries to try to attract them has clearly negative effects in the social and environmental fields [22].

But the overall consequences of its action for the protection of the environment could prove to be very positive indeed, which, it must be emphasized, would be an amusing paradox. Of course, the important opening of global trade since the s and s marked the mind all across the world [23]. Works, including those of Dollar in [24] , Ben-David in [25] , Sachs and Warner in [26] , and Edwards in [27] , have sought to link international trade and growth.

These years had been marked by extremely important changes. In both cases, it was found that the trade flows as recorded have grown strongly. Specialists, the same who intone the credo of globalization, only very rarely mention this problem.

A second cause is subtler but no less important. The increase in international trade flows has been linked to the evolution of these economies during the early years of their transition.

In the case of the USSR, for example, a large part of the production of aluminum and steel did not find jobs within the economy, due to the decline in manufacturing activity. The export of this surplus was immediate, whether it was legal or illegal. Similarly, there has been a phenomenon of substitution of imported products for local production, which has been favored by the sharp exchange rate developments.

In this respect, the extremely high figures of international trade in seem to have been the product of a statistical illusion. It is these figures, recorded over four years that have largely conditioned our vision of growth as linked to international trade. This implies to look again to the issue.

Were not mainstream economist victims of the old mercantilist fallacy? Various test have been attempted to try to find a positive correlation between trade and growth. In general, the tests performed give results that are at least very ambiguous. It can be deduced that for some countries openness has had positive results, but not for others.

Economic success depends more on the quality of the macroeconomic measures than on the openness [28]. Indeed, countries that have associated protectionist policies with good macroeconomic policies are experiencing growth rates that are much higher than those of the more open countries, which invalidates the primacy of openness [29]. This brings us back to the problem of development, which turns out to be far more complex than what the proponents of generalized free trade are saying.

The work of Alice Amsden [30] , Robert Wade [31] and also those regrouped by Helleiner [32] show that in the case of developing countries the choice of protectionism, combined with genuine national policies of development and industrialization [33] had pay off.

Growth rates were far above those of countries that did not made the same choice. Dani Rodrik emphasized the fact that the fastest growing Asian countries had systematically violated the rules of globalization, established and codified by the World Bank and the IMF [34]. Here is what brings us back to the question of national policies and the problems of the development State that have re-emerged in the debate over the last few years [35].

This issue is really at the heart of the industrial revival of Asia. In fact, it is these national policies that are the real critical variables for growth and development, not the existence or otherwise of measures to liberalize international trade. But to admit this is to reconsider the role of the State in economic policies and the role of nationalism as an ideology associated with development.

Here one touches on powerful taboos of mainstream thought in economics as well as in politics. It looks like Free Trade ideologues have been moved by their horror of the State and played games with theory, completely disregarding historical experience.

And, to their horror now the developmental State theory could well be politically vindicated by changes President Trump is introducing. This is not to say that Donald Trump is a supporter of the developmental State. He probably even ignores the term and the history of the phenomenon.

But by challenging the Free trade orthodoxy he would open a new window of opportunity for policies aiming at creating strong developmental states.

Over the past three decades, international trade has largely driven economic development. This is the result that has been popularized by some economists. And yet, on closer inspection, the latter dissipates. Indeed, the free trade vulgate is rapidly passing on elements important for its demonstration, which has been highlighted by the current crisis.


La démondialisation et ses ennemis

Du bon usage de la mondialisation. Globalisation is often perceived as an anonymous force imposing change from the outside on various countries. Globalisation forms part of the dynamics of modem economies, wnere innovation and the need for risk management have led governments to rely increasingly on market-based solutions. An analysis of two decades of globalisation shows that its impact is "filtered" by the national context, which itself reflects collective choices. This is what emerges from the analysis of poverty reduction in the world and the evolution of inequalities in the industrialised countries.


President Trump, Free-Trade and income growth



Jacques Sapir




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