INTST 101: Introduction to International Studies Brian Orend
Unit 7: International Trade
This section will be somewhat different than the others, since it will include extensive
material from a lecture I have already recorded for a different course I teach, PHIL 215
DE, which is Business and Professional Ethics. There is a whole unit there on
International Business Law, Organizations, Globalization, Bribery (a prevalent practice in
international business) and the Pros and Cons of Multinational Corporations. For now, I
want to do a very brief introduction to all that material, outlining the basic concepts of
international trade and capitalism.
International trade is the exchange of goods and services across international borders.
Like when most of the world buys manufactured goods from China, and then sells them
to their own people back home. Or when Americans buy softwood lumber and water
from Canada, and Canada buys entertainment products, like movies, from the United
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history is as old as human settlement itself.
The basic theory behind international trade is that of specialization and comparative
advantage leading to higher living standards. The argument is familiar, and we can use a
basic analogy of persons instead of countries. Imagine how painful and less enjoyable
your life would be if you, yourself, had to individually produce everything you wanted
and needed in your life: you had to grow your own fruits and vegetables, raise your own
cows and chickens, kill them and carve them up by yourself, build your own home, build
your own car (:^), sew your own clothes, etc. etc. Almost none of us has either the time
or the money or the know-how, etc., to do this. If we had to make everything for
ourselves, our lives would be so much worse. We have discovered the principle of trade:
to buy all the others things I want and need, yet cannot provide for myself. By
1 INTST 101: Introduction to International Studies Brian Orend
improve the standard and quality of my life. The same principle applies to trade between
nations, and the growth of international trade has, clearly, measurably improved the lives
of millions, even billions, the world over. This way of understanding the many benefits of
Ricardo, who first conceptualized it.
Capitalism/Free Market Economy
This understanding of trade fits within a capitalist
framework. You GRQ¶W KHDU▯ WKH▯ SKUDVH▯ ³FDSLWDOLVP´▯
much anymore, as the preferred phrase is the much
note the general principles and realities which it
implies. A capitalist or free-market economy has
several distinguishing features:
There is private property ownership allowed.
This is to say that the state or government does
not own everything in the society; that ordinary
people and businesses can own things and make
use of them as they see fit, subject to some kind
People are free to open up businesses, if they want. This is to say the state does
not prevent or prohibit entrepreneurial activity.
If these businesses are successful, the owners get to keep at least some of the