Compendium: Impact of Work-Standard on Trade Policies

Unlike regular national economics, the field of international economics covers a broader political dimension that spans the entire planet. It is normal for nation-states to engage in international trade with others for whatever they need for their own economies. The question that needs to be addressed, in regards to the Work-Standard, is the sort of trade policy that would be complementary to its role in the everyday affairs of the national economy.

In international economics, the three most common variants of trade are “Free Trade,” “Protectionism,” and “Autarky.”

A “Free Trade Agreement” (FTA) refers to a trade policy that has no conceivable restrictions on the movement of goods, services, labor, and Kapital across international borders. These restrictions are identified as “Barriers to Trade” because nation-states impose them to deter any excessive trading across its borders. Its basic premise claims that no State should impose those Barriers to Trade out of supposed consideration for the ‘consumers’ and the ‘producers’, as if the people of a nation-state can never be anything more than just those two simple categories.

FTAs proliferated in the wake of the official end of World War II, when the Allied Powers led by Jeffersonian America insisted that removing Barriers to Trade will prevent future conflicts. Widespread prevalence of FTAs beyond the Western world since the Cold War is a consequence of the Bretton Woods System establishing the International Monetary Fund (IMF), the World Bank and the General Agreement on Tariffs and Trade (GATT), the precursor to the World Trade Organization (WTO). The claim of Free Trade deterring actual wars is a recurring meme that originated from the Enlightenment. It states that two nation-states, under the Incentives of Supply and Demand, would be dissuaded from engaging in open hostilities if their economies are interdependent with each other. ‘Open hostilities’ according to this claim has consistently taken into account only the martial factor in the context of the Balance of Power; it never bothers to consider the economic and financial ones as in the Balances of Trades and Payments.  

Since the death of Bretton Woods, it has become commonplace for entire nation-states to have their economies dependent on exports or imports. The temptation of export-driven or import-driven economies shares the same negative debilitations, with the real difference being a matter of perspective. An economy dependent on exports cannot afford to reduce its exports without a noticeable reduction in the nation-state’s standard of living. Conversely, an economy dependent on imports cannot afford to reduce its imports without also an equally noticeable reduction in its nation-state’s standard of living. Worse, it also contributes to the possibility of economic or financial difficulties spreading beyond the borders of its country of origin, as evidenced in the Energy Crises of 1973 and 1979, Black Monday of 1987, Black Wednesday of 1992, Asian Financial Crises of 1997, the Dot-Com Bubble, Great Recession and Coronavirus Pandemic.    

Past decades of crises have slowly reintroduced the practice of Economic Nationalism and the Protectionist trading policies that it condones. These developments have occurred without going straight to actual Autarky or even the formation of trading blocs similar to the Western and Eastern Blocs of the Cold War. Knowing the methodology behind Protectionism is not just crucial for understanding this ongoing phenomenon but also pivotal in realizing how it affects the performance a Currency pegged to the Work-Standard.

The most common methods of Protectionist trading policies have been Tariffs and Import Quotas. Tariffs are excise taxes imposed on imported goods and services. The higher cost is to compel the ‘consumers’ to support their local ‘producers’ as an Incentive. Import Quotas are limitations on the quantity of imported goods and services. The lower availability is the Supply and Demand aspect by imploring the ‘consumers’ to support their local ‘producers’. Other methods involve allotting Subsidies as Incentives to encourage more exports and Direct Subsidies as another set of Incentives to encourage even more exports.   

Less frequent methods of Protectionism are not necessarily reliant on the Incentives of Supply and Demand insofar as they can also be reliant on the Intents of Command and Obedience. The latter can be seen as examples of what Hamiltonianism is capable of as Federal Socialism, of which other Socialisms are just as capable of implementing. One example is the recent emergence of “Administrative Barriers,” where the State imposes a number of safety, quality and environmental controls to deter Free Trade. Anti-Dumping Laws can forbid foreign nation-states from ‘dumping’ large quantities of cheap, inferior goods and services at low Prices that undermine their true Value. Technical Patents are another example by protecting national industries from industrial espionage by potential rivals, as are adjustments to Exchange Rates by the Financial Regime and greater prioritization on national industries by central planners.

Another, albeit less common trade policy, is Autarky. An Autarkic policy has the nation-state engaging as little international trade with other nation-states as possible. Such a policy does not necessarily have to be pursued by a lone nation-state; it can also be pursued with fellow nation-states as part of a trading bloc, economic or currency union. Should Autarky be realized by political-economic alliances, it becomes feasible for a nation-state to import what its economy will need at more preferential rates that can be revised in the near future.

The Work-Standard in particular stresses the need to maintain the Balances of Trades and Payments, favoring a trading policy somewhere between the Hamiltonian side of Protectionism and the Autarkic practice of engaging in trading blocs and economic or currency unions. The State should make the necessary adjustments to the nation’s trading policies as it would with economic and monetary policies. Once its Currency is pegged to the Work-Standard, the State is able to look after its economy and ensure that it will receive what needs to serve the people.  

From these priorities, it is possible to conceptualize a “Real Trade Agreement” (RTA) as an alternative to the Free Trade Agreement. An RTA takes its formal taxonomy from the Realpolitik approach to diplomacy and the economic measurement of Currency Depreciation/Appreciation according to the Attrition/Inaction Rate and overall Mechanization Rate of the Work-Standard. The goal here is to provide the State and the people the Intent of discerning the Value of their Currency based on how much they can afford at any point in Zeit. Depreciation leads to cheaper exports but more expensive imports, whereas Appreciation leads to more expensive exports but cheaper imports.

Ideally, had the world been under Socialism instead of Liberal Capitalism, an international currency would have been in place to oversee transactions. But until then, it is best that the transactions be conducted with the involved Currencies. The significance of such a bold statement pertains to the distinct manner in which the State conducts itself under an RTA. The State must maintain a balanced budget in its trade expenses, otherwise it begin accumulating Schuld for failing to exercise modesty within international trade.

RTAs may either be bilateral in its transactions between two States or else multilateral as part of an alliance. Once an RTA has been signed, special enterprises will be established in the involved nations to facilitate international trade.

Categories: Compendium, Politics

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