I am immersed in rereading Tolstoy's classic, "War and Peace." It is a new translation by Pevear and Volokhonsky and it is marvelous. I read the book first as a teenager, partly for show, and mostly because I love books. But if I loved the novel the first time around, I can appreciate so much more of it now.
Take Tolstoy's digression on the various strategists and generals who advise the Russian Emperor, Alexander I, as Napoleon threatens and then crosses into Russian territory. I was struck by the description of Pfuel, a German "theorist-general." Tolstoy is unkind to the Germans in his description of Pfuel (see Book II, Part I, Chapter X if you want to read Tolstoy's views on how various European nations exhibit self-assurance). But what stood out was this quote, "Pfuel was one of those theorists who so love their theory that they forget the purpose of the theory -- its application in practice."
The quote leapt out at me because it applies so readily to the debates on free trade. These debates involve too many rounds of one side, usually people living the consequences of a policy, saying, "This does not work!" And those on the other side, usually people who have the power and position to advise, but who do not live with the negative consequences, saying, "That is because you did not try hard enough. You didn't follow all the policy prescriptions - go back and try harder." At what point can we abandon a world driven by mathematical economists, to get back to our real, imperfect world? A theory of perfect markets is a wonderful intellectual tool, but it cannot substitute for public policy.
In the end, the pure theorists can only take the same grim satisfaction as Pfuel, who does not deem Napoleon's campaigns in Austria, Prussia and Russia to be worthy of the label war, because they don't conform to the theory of how a "proper" war is waged. Yet the cannons and rifles are fired, the soldiers are killed, and the local population and their crops are raped and pillaged, as the hundreds and thousands of men, women and horses that make up the armies and their entourage seek food and fuel to survive. A war by any other name?
During the 1990s, governments created the World Trade Organization, refused to deal pragmatically (let alone morally) with the debt crisis, and insisted on privileging private interests in trade agreements, investment pacts and development spending. At the same time they signed Agenda 21, the Convention on Biological Diversity, the Convention on Tobacco Control and a dozen other agreements that committed them to putting the pubic interest ahead of private gain for a select few.
So who is winning this war of ideals? Tolstoy's Prince Andrei says a battle is not lost by the side that loses the most soldiers, but by the side that runs away. For those of us who do not believe that free trade is the answer to every public policy problem we face, it is time to stop running. More importantly, however, it is time to stop fighting, too. After all, Tolstoy was a pacifist. It is time to focus on the pragmatists, guided by a vision of a better world, but not enslaved to a theory that ignores people's experience.
In her 2006 WIDER Annual lecture, Nancy Birdsall, President of the Center for Global Development, points out how economic policies that ignore existing inequalities exacerbate them. In her lecture, Birdsall points out that the "level playing field" so beloved of trade negotiators and their economists does not reflect the real world, with the result that their policy prescriptions increase poverty and disparities among countries.
Untidy though it may be, so-called "second-best" economics grounded in the real world is richer, more interesting, and much more likely to recognize the whiff of gunpowder than the first-best crowd. Read Dani Rodrik on the subject - he is clear and succinct on the differences.
Whoever wins the U.S. election in November, let us hope he or she is firmly guided by a respect for diverse opinions and a refusal to embrace ideal solutions, where the messy question of who loses and what will happen to them is left for someone else to answer.
