The Philosophy of Trade

MOST ECONOMISTS extol the virtues of international trade. The concept of fairness rarely enters into the discussion. But it should, says Mathias Risse, associate professor of public policy and philosophy.

“The common view among social scientists is that this whole language of fairness at worst makes no sense at all and at best is so highly fungible that it’s not even worth being integrated into social science projects,” he says.

Risse has contributed to the discussion with a new research paper called “Fairness in Trade,” in which he concludes that countries should indeed consider fairness issues when formulating their trade policies.

A professor for three years at the Kennedy School, Risse in his research examines issues of global justice, such as the moral constraints that apply to interactions among states. When it comes to the interactions that arise out of trade, most countries adopt a “strong Westphalian view,” he writes, which holds that “[d]ifferent countries do not stand in a relationship to each other that allows for fairness considerations to arise: they do not owe each other anything as far as the determination of prices is concerned, nor do governments actually owe anything to their own citizens based merely on what social costs are elsewhere.”

In contrast, Risse advocates a “weak Westphalian view” in trade policy. He contends that industries in some cases are entitled to seek protection from their government and that governments should consider how measures such as subsidies affect other countries. He also argues that workers have a legitimate complaint against countries that trade with their own country if they are oppressed in a manner that facilitates trade.

This may not be a reason for a country to cease trading with an oppressive country, Risse acknowledges. In some cases, the economic benefits of trade that eventually will flow to oppressed workers in a country may override concerns about violations of rights. As an example, he points to the so-called Asian tiger countries, such as South Korea and Hong Kong, which 20 years ago had problematic working conditions but now have much higher labor standards. Thus, in the long run at least, fairness may be better served by continued trading.

“A government has to do a balancing of duties,” he says, “and this is why I introduce fairness as a balancing of claims — claims domestic industries might make against government and claims that people from abroad might make against governments for foreign aid. And these claims need to be balanced somehow. My proposal is that a government is entitled to support its industries to the extent that that kind of support is not trade distorting.”

Fairness in trade remains mostly a philosophical rather than a practical issue because, according to Risse, “democratic governments will always have the tendency to do things in the short-term interest of their constituencies. There certainly is a tendency for governments to neglect fairness considerations because the accountability is not to a world audience but to the respective constituents.”

The weak Westphalian view of trade could come into practice with strengthened international trade agreements, though the United States is not likely to facilitate such changes, he says. Nevertheless, even if governments don’t embrace fairness in trade, those who study governments can.

“People have concerns about whether individuals are treated properly,” says Risse. “We have to try to articulate the concerns into some language, and this language is as valid as the language of economics.” — LR