Protectionism bad, self-sufficiency good

 Last week, Melvyn Bragg and his guests on Radio 4's In Our Time discussed the mercantile system. This was the term coined by Adam Smith to describe the philosophy that nations should restrict imports and encourage exports in order to build up wealth. All three economists present were of one mind, that mercantilism was a Bad Thing, although it was conceded that a degree of protectionism could help a developing country get on the trading ladder.

This primer explains further:

Adam Smith refuted the idea that the wealth of a nation is measured by the size of the treasury in his famous treatise The Wealth of Nations, a book considered to be the foundation of modern economic theory. Smith made a number of important criticisms of mercantilist doctrine. First, he demonstrated that trade, when freely initiated, benefits both parties. Second, he argued that specialization in production allows for economies of scale, which improves efficiency and growth. Finally, Smith argued that the collusive relationship between government and industry was harmful to the general population. While the mercantilist policies were designed to benefit the government and the commercial class, the doctrines of laissez-faire, or free markets, which originated with Smith, interpreted economic welfare in a far wider sense of encompassing the entire population.

The logic is impeccable and seems to have been confirmed by the success of international trading in and around the First World, benefiting virtually all participants. However, it seems to me that this does depend on Good Chaps, the sort who built up GATT followed by the WTO, remaining in charge. It needs only one head of a nation, which has control or decisive influence over a key resource, to seek to take advantage for the whole global economy to come under threat. Such happened with wheat, sunflower oil and artificial fertiliser thanks to Vladimir Putin. 

So in the Commons session on Thursday arising from the Urgent Question on food price inflation, Tory MP Bob Blackman was not howled down when he asked: 

The Government’s short-term measures are of course welcome, but we also need a long-term food security plan to encourage farmers to grow more and to ensure that more of our food is produced in this country rather than our relying on expensive imports. What action is my right hon. Friend taking to ensure that that long-term plan is implemented?

It is highly unlikely that we shall ever be totally self-sufficient in food (turnips are nice, but they contain little Vitamin C) or key minerals for that matter. Striving for complete self-sufficiency may be vain and ultimately self-destructive.  However, successive governments have failed to prepare plans which can be implemented in the event of such emergencies as the Ukraine invasion.