Brief History of International Trade - since 1945

The most important contemporary historical event linked to the fluctuations of current international trade is the accelerated growth of globalization. The theorists of globalization have not established a precise starting date for this process, however, I believe that, from the year 1945, at the end of the Second World War, the establishment of conditions and rules in transactions between countries began. encourage the exchange of goods, financial assets, information, data, knowledge, etc; between the nations.

Evidently, globalization will be the event that will begin to subordinate the functioning of communities around the world, therefore, any fact that alters the progress of this process will have major consequences on the functioning of the various national economies.

In such a way that, the increase in the importance of globalization in the lives of citizens has diminished the influence of world leaders on the daily lives of the governed. It is expected then that many governors and established powers oppose an event that is born of society itself.

Go to: Globalization, Power, and Security - SEAN KAY* - Ohio Wesleyan University

During the year 1945, in the midst of the generalized horror caused by the world wars, two lines of academic thought emerge that dictate how to guide the economic activity of nations from that moment.

On the one hand, Development Theories appear, which cover various fields of study of the economy, but also argue that, to avoid future world wars, it is necessary that:

• all nations achieve a high degree of economic development and, therefore, a high standard of living for their citizens.
• prevent the ex-colonies from being forced by other nations to return to a new colonialism.

The Theories of Development highlight as absolutely necessary the absence of high tariffs in the context of trade relations between nations so that all nations can achieve their development goals.

On the other hand, Macroeconomics emerges, an approach that highlights the value of internal economic activity as a means to achieve the economic objectives of a society, but which, at the same time, grants a secondary role to external economic activity, that is, to that linked to the international commercial and financial movement.

Macroeconomics reaches a notorious prestige because it allows the rulers to successfully counteract the cyclical crises of capitalism. This theoretical apparatus becomes extremely useful in industrial economies but completely useless in the context of non-industrial economies.

Starting in the 1970s, analysts highlighted the growing role of international economic activity, which is a matrix of opinion that has been gaining strength since then. Thus, at some point in the 1990s Megaeconomics was born, but without yet having any relevant theoretical construction. The most important successes achieved by the mega-economy, up to now, consist in the increasing emission of global data and statistics, such as those published by the World Bank, such as: global GDP.

Since 1945, the United States has emerged as the nation with the greatest economic, political and military power of the group conformed by the capitalist countries and opposes the USSR, which leads the group of countries with a socialist orientation; initiating in this way what is known as "cold war".

As we see, globalization begins within the group of countries belonging to the capitalist front due to the increasing increase in the volume of trade between them. Trade between capitalist and socialist countries was extremely low and, even among socialist countries, international trade was practically nonexistent; they only highlight some economic aid granted by the USSR to some of its satellites.

Within this process of globalization, the dollar reaches to be the preferred currency of international use for transactions of various types; This occurs due to the facilities that the use of the currency of the country with the greatest volume of commercial and financial activity abroad gives to the normal development of the world economic activity. The leadership of the dollar is a phenomenon that will undoubtedly condition the functioning of exports, imports and capital flows throughout the world.

On the other hand, starting in 1945, the purchasing power of the Americans with respect to their peers from the rest of the world increases radically accelerated, perhaps exponentially, resulting in the incentives to acquire goods produced in the rest of the world. world are growing. Of course, this is the result of belonging to the nation with the highest GDP in the world and that also has a positive, constant and continuous annual economic growth rate. Definitely, the accelerated growth of the purchasing power of the Americans with respect to goods from the rest of the world, is a phenomenon that conditions the behavior of international trade and the flow of financial assets on the planet.

Evidently, the two phenomena recently mentioned determine the fundamental characteristic of today's international trade: it is oriented to sell products in the United States.

Obviously, the global productive activity and global trade are not intended to meet the consumption needs of buyers around the globe, no, the global productive activity and global trade have as their primary purpose to satisfy the needs of the American consumer. This is how the demand for consumption of international goods required by the rest of the nations is only residual.

This is how, approximately, from the end of the 1970s, Asians; conscious of the increasing size of the purchasing power of the North Americans, they are dedicated to producing goods of high added value and low cost with the purpose of exporting them, fundamentally, to the United States; indeed, the growth strategies of the Asian economies are based on the goal of selling manufactured products in the USA.

Knowing the current international trade situation and having some idea of how, through history, it reached this point; We could make some projections of what the future of international trade would be from the moment in which the set of events known as commercial war begins.

At this time, no one can establish, precisely, what will be the consequences of the onset of commercial war on international trade. However, we are able to suspect which are the fundamental lines within which the results of this process of increasing tariffs must be located.

These will be the following:

• establishment of a new international economic order,
• return to the colony system
• the coexistence of protectionism and free trade.

For many these three scenarios are unlikely and they bet on a disappearance of the commercial war.

Brief History of International Trade - until 1945

The incidents that we have been observing through the world press since 2018, in relation to the hostility shown by the North American commercial policy with respect to the nations from which the largest volume of imports by the United States comes, a process that has been called "commercial war"; it can not be studied without a historical context that allows us to estimate, in a more or less accurate way, the importance of this event.

Indeed, many analysts limit themselves to observing these events as simple increases in tariffs and insignificant instaurations of some prohibitions that will have a small impact on the value of macroeconomic variables in several national economies.

On the other hand, some scholars take as historical precedents of these events the rate increases that occurred in other decades or in other centuries and emphasize that, as in those opportunities no relevant events happened, now it does not have to happen something different.

Finally, others appeal to the theoretical systems created in the past that, although they did not serve to explain the reality of those years, much less will they be able to explain a current phenomenon generated within a reality much more complex than at that time.

From a brief review of the history of international trade we noted that the protectionism practiced before 1945 took place in a context in which international trade either did not reach magnitudes that affected normal economic growth, or was conditioned to the functioning of an even greater process, such as colonialism. Nowadays, international trade represents a too important proportion of global economic activity, therefore, any event that impacts this variable will undoubtedly have its consequences on the global product.

Undoubtedly, it is clear that, in order to understand the important phenomena that occur in the global economy, we must be aware of the importance that international trade has taken on the lives of the seven billion people who live in the world.

The characteristics of current international trade is the consequence of a series of events that took place in the past; I think many of you will agree with me in pointing out that the appearance of Chinese products in Europe since approximately the 13th century is the most remote historical fact that affects the reality of today's international trade.

Then, we could affirm that the establishment of the colonial commercial system or colonialism is the event of universal history that has a stronger impact on the particularities of current international trade; This system was established by the European metropolises in America, Africa and Asia immediately after the discovery of America.

Finally, I believe that none of you will refuse to acknowledge that the process of globalization, begun at the end of the Second World War and still in development today, constantly influences the development of current international trade.

Go to: The value of global exports - OurWorldInData.org

In such a way that, if we look closely at the relevant facts associated with the history of international trade and, in the same way, we note the sequence in which they have been given; we will be able to warn that the alarms fired by some investigators could be sufficiently sustained.

Undoubtedly, it is the appearance of Asian products in Europe during the time of feudalism that marks the beginning of international trade as we know it today.

The cronistas of those years indicate that the feudal gentlemen were fascinated by the beauty and exquisiteness of the Chinese products and paid in gold sums raised by products that in China, for then, they possessed a smaller value; in the same way, other members of the fief were able to acquire useful products.

This activity gave rise to a set of processes that led to the emergence of capitalism.

Evidently, many merchants amassed fortunes quickly, awakening the greed of all and the anxiety to find a maritime route to China. Most of these adventurers did not arrive in China but discovered territories that were placed at the disposal of the kingdom they served, that is, these territories were turned into colonies; from there the colonial commercial system or colonialism was born.

The colonial commercial system begins in the 15th century and culminates in the 20th century at the end of the Second World War. We see that a large part of the history of international trade took place during the years of operation of the colonial system. Evidently, the colonial system promotes the commercial exchange between the metropolis and the colonies since the former imposes on the latter all the conditions under which this commercial activity must be carried out, the fundamental characteristic of these conditions being the use of force. In such a way that the metropolis is encouraged to trade with its colonies due to the high benefits that this implies, while the colonies are forced to have permanent and growing trade with the metropolis so as not to suffer the threats wielded by the colonizers .

During these years, China disappears as a protagonist of trade between countries; most of the international commercial transactions are carried out by the metropolises and their corresponding colonies. On the other hand, commercial operations between metropolises do not reach a significant level due, perhaps, to the fact that, frequently, they became rivals of war. Nor can any level of trade between metropolises and neutral countries be considered important. Finally, trade between colonies or between a colony and another metropolis was absolutely forbidden.

Evidently, the metropolises were enriched enormously by oppressing their colonies in this way. However, their governments showed real concern to reach even higher levels of wealth in order to satisfy the great number of political commitments that the aristocracy acquired to maintain itself in power. Of there, that stimulated the investigation in economic systems that elevated still more their opulence; in this way, Mercantilism and Free Trade Theories appear.

Mercantilism holds, fundamentally, that nations, in order to increase their wealth, should seek to increase their exports and reduce their imports in order to have a favorable trade balance and accumulate, in this way, all the gold necessary to adequately meet their commitments.

This economic system tried to apply in France and other European countries, both metropolitan and non-metropolitan, but failed completely because there is no practical way to "increase exports" or a feasible way to "reduce imports." Imports are a necessity in the absence of conditions that allow products to be manufactured at lower prices than foreign ones, while exports are, fundamentally, the result of an exclusive advantage that the exporter has; therefore, increasing exports would require increasing these advantages, a factor that is not under someone's control.

On the other hand, free trade theories maintain that, in a context of commercial freedom, economic agents, by seeking to obtain the maximum possible profit through their daily activity, will be dedicated to import only those goods absolutely necessary and efficiently use the economic advantages that each nation has in terms of international trade. In this way the nation will acquire the best possible economic situation, given the existing conditions.

Mercantilism and Free Trade Theories were criticized very much because they fail to explain the reality of the colonial commercial system, which increasingly shows more evidence of cruelty and injustice. This criticism takes many aspects, but it becomes disordered and incoherent. However, a particular current, that which maintains that colonialism is a commercial system inherent in capitalism and inseparable from it, achieves an impressive intellectual success. This current of thought was called communism and criticism was put forward by a revolutionary called Lenin.

Lenin argued, at the beginning of the 20th century, that the colonial commercial system would reach a state in which the metropolises would constantly confront each other in order to dispute access to raw materials and consumer markets; the consequence of these confrontations would be what he called the appearance of the imperialist wars and the extermination of millions of human beings. A few years later, after this work was published, two world wars occurred, which meant death, according to estimates, of between 80 and 120 million people.

Within the colonial system, the role played during those years by the United States stands out. This is a very controversial subject in which imprecise or erroneous contents abound. Finding an absolutely credible source that describes with sufficient certainty the most important economic events that occurred in the USA during the 19th century demands a great deal of effort that is not available to all researchers. However, I believe that the few lines that I offer here will give us a fairly acceptable idea of what happened at that time.

During the 19th century, the United States, despite not being a metropolis, because it had no colonies; She was involved in an impressive economic process that led her to have a volume of economic activity not previously known by any nation. This country developed a process of fairly accelerated domestic economic growth driven by various factors (territorial extension, railroad, fertility rate, etc.) that led it to demand numerous goods from abroad (imports) and to sell abroad the products manufactured by its industry (exports). Obviously, the rapid internal growth accelerated the economic and commercial role played in other economies, that is, led it to have an external commercial activity that went beyond the magnitude of the volume handled by some metropolises. How was this possible?

An accelerated and continuous domestic economic activity not only demands a large amount of imports but also generates the production of novel or high quality goods, that is, goods that are capable of competing in international markets. Indeed, the United States had commercial relations with both metropolitan and non-metropolitan nations and, it seems, freely traded with the colonies of these metropolises. How did the United States achieve commercial activity with such a number of countries?

These countries did not reject the presence of the United States in their markets due to the characteristics that possessed these goods, fundamentally, they were goods that did not compete with any native product and that, it was considered, met a very specific need. It should be noted that, for those years, it was not possible to find evidence of political influence that could justify the free entry of American products to these nations. That is to say, everything seems to indicate that the international commercial success of the United States can be attributed to the quality of the products that it produced. To support this position, the Americans, through various publications, attributed the reasons for this success to the practice of free trade. That is to say, America built an entire apparatus of worldwide disclosure of the principles of free trade as a fundamental cause of the evident global economic success that enjoyed

However, at the end of the 19th century and the beginning of the 20th century there seems to be a change in the commercial and foreign policy of the United States in Latin America by promoting political intervention in these countries with the aim of building, apparently, a colonial system similar to the who owned the European metropolises. The two world wars stopped this process.

Indeed, the two world wars completely destroyed the colonial trade system or colonialism because the metropolises were completely devastated by them. From that moment, a new international economic order was established in which international trade will be guided by the guidelines of free trade, therefore, a process of dismantling tariffs and import prohibitions is initiated.