Contradictory Protectionist

Barry Lynn has a ridiculous article in the May 30th FT. He points to the state as the only entity able to control the economy. He views America's faith in the market as "utopian." However, to look towards the market and not the government is actually realist. Free-market economics is the better of the two options (Socialism vs. Capitalism). By taxing less, protecting national economies less, etc. you decrease the probability of deadweight loss in the global economy. In fact, the only utopian ideal is Marxism where one would have to believe the government to be run by saints.

Next, Lynn points to the "power vacuum" created by globalization...

Similarly, there is no better time than now to grasp that the real question is not, as Americans like to frame it, free trade versus protectionism. It is whether the world trading system will be regulated by private companies that are answerable only to the rich and powerful, and are profoundly un­equipped for the task of processing complex information for the sake of society, or by states built to assess risk and to be answerable to all citizens.

However, Lynn misses the point that consumers have most of the power in a market economy. If a product fails, so does the company. Monopolies are, for the most part, unsustainable when there is constant threat of competition. Only with regulation do consumers lose out and monopolies are created (see Mexico).

Lynn continues with...

Utopian universalism is dead. The sooner nations gather to bury its corpse – and harness, hobble or break up the immense companies that have grown so powerful in the shadow of that myth – the more likely we will be to save globalisation. This, of course, can happen only if we define globalisation, once again, as a political process that must be managed by nation states. The result may not be perfect, and it certainly will be no utopia. But it is the best we can expect on this earth. And that may be enough.

States are destrutive when it comes to economics. Lynn must have failed to learn economics before he began teaching at LSE. Look at what happened to SE Asia. They grew because of market economics but in an unsustainable way (see 1998 crisis) due to the inefficiencies created by protectionism and infant industry industrialization (does not prepare companies for future competition).

However, the best part of Lynn's piece is that he admits the destruction caused by a collapse of a free (for Lynn: free means no state intervention) trading system.

It would be Pollyannaish to deny that grave dangers abound. The last time a free-trade system unwound, when Britain’s “invisible empire” vanished almost overnight in the 1880s, one result was a scramble for territory. Europe’s powers carved up Africa, then began to hack away at China, in a process that helped set the stage for the first world war.