Classical liberalism vs liberal internationalism

Dr Edwin van de Haar // 10 June 2022

In his speech to the World Economic Forum (WEF) in Davos last month, NATO Secretary General Jens Stoltenberg said that ‘protection of our values is more important than profit’, and that  ‘freedom is more important than free trade’. The similarity with Adam Smith’s famous remark that ‘defence is of much more importance than opulence’ was striking, although there is no indication in his speech that Stoltenberg was aware of this.

Stoltenberg made his remark in the context of trade with authoritarian countries, foremost Russia, whereas Smith made his remark while defending the protectionist Navigation Acts. The sentiment is the same: that defending one’s country sometimes trumps free trade.

Commentators have seen Stoltenberg’s remarks as a critique on the theory of liberal internationalism. This is one of the most important theories of international relations, which – put very briefly – aims at world peace through the introduction of international law, organisations and regimes, to limit the influence of nation states and to diminish the logic of power politics. Free international flows of capital and trade are also part of it, as is the building-up of domestic institutional arrangements such as democracy, since robust democracies do not fight each other. This is all based on the expectation that humans are rational enough to overcome war and conflict.

The idea that trade promotes peace has also been one of its building blocks. It has a long history, going back to Antiquity. Yet the influence of modern writers, such as Montesquieu was greater, writing about ‘doux commerce’ and its alleged peaceful effects. He was followed by many in the course of history, not least a number of modern academics who prefer the outcomes of their number-crunching exercises with limited datasets, above common sense and centuries of real empirical evidence. The latest sad piece of evidence comes from Ukraine and Russia. Despite a decrease in mutual trade since 2014, in 2020 both countries still traded with one another. In that year, Russia exported goods and services worth around $6.31 billion to Ukraine, while Ukraine exported goods and services worth $2.97 billion to Russia. Unfortunately, many liberals, from the left and from right, still hold this mistaken view.

Smith never believed in this idea, although his ideas have been often misinterpreted, not least by Richard Cobden in the 19th century. Smith had a far more realistic view of human nature and the limited power of reason as part of it. Getting rid of conflict between people was impossible, also in the international realm. Of course, he is rightly known for his strong support of free trade, pointing at its economic value, the possibilities for individual liberty it provides, and its importance for development and cultural exchange. Yet he never predicted trade would have positive external effects on the avoidance of international conflict. Trade makes nations richer, so they can more easily afford more armament, which disturbs power balances, and can leads to more conflict.

Also, Smith was never a cosmopolitan. He thought that individuals were attached to their nation, and saw no reason to plea for a different international order to the existing one, which was made of states. Keeping an international balance of power as great political wisdom, and he valued international law only to an extent, because in his assessment it was more about intentions than about application. He stood in the Grotian ‘just war’ tradition, which aimed at making war a little fairer, and attempted to limit the reasons to start a war. However, the idea that war could be eradicated did never occur to Smith.  In short, despite some overlap, his classical liberal ideas were very far removed from liberal internationalism.

Stoltenberg was right and he has Adam Smith on his side. Global politics is no place for dreamers.   The world needs less liberal internationalism and more classical liberalism.

This article appeared first on the IEA’s blog

EPICENTER publications and contributions from our member think tanks are designed to promote the discussion of economic issues and the role of markets in solving economic and social problems. As with all EPICENTER publications, the views expressed here are those of the author and not EPICENTER or its member think tanks (which have no corporate view).


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