Ep 28. Adam Smith's Argument for Free Trade

In this episode of An Economic History of the World Since 1400, we explore the argument for free trade put forward by Adam Smith in his influential book, The Wealth of Nations. Smith believed that free trade was essential for economic growth and prosperity, arguing that it allowed countries to specialize in the production of goods and services in which they had a comparative advantage, leading to increased efficiency and higher levels of output.

The episode begins by examining Smith's background and his belief in the importance of individual freedom and limited government intervention in the economy. We then delve into his theory of absolute and comparative advantage, which states that countries should focus on producing goods and services in which they have the lowest opportunity cost, rather than trying to produce everything themselves. This, according to Smith, would result in greater productivity and more wealth for all countries involved in trade.

The episode also explores Smith's views on tariffs and protectionism, which he argued were harmful to economic growth and led to decreased competition and higher prices for consumers. Smith believed that free trade allowed for greater competition and innovation, leading to lower prices and better quality goods and services.

Throughout the episode, we see examples of countries that have implemented free trade policies and have experienced economic growth and prosperity, such as Great Britain in the 19th century. We also see the negative effects of protectionism and isolationism, such as the Smoot-Hawley Tariff Act in the United States in the 1930s, which led to a decrease in international trade and contributed to the Great Depression.

Ultimately, the episode highlights the continued relevance of Smith's argument for free trade in today's global economy, where countries are increasingly interconnected and reliant on international trade. It also raises important questions about the role of government in shaping economic policy and the balance between free markets and regulation.

Overall, Adam Smith's Argument for Free Trade is a thought-provoking episode that provides valuable insights into the history and economics of trade, and the importance of free markets and competition for economic growth and prosperity.