Over the past few decades, when Communism is in the process of dying a natural death, some die-hard loyalists to the ideology will not allow it to die peacefully. Yet the politicians of the communist countries, facing the harsh global realities, had to demolish some of the barriers of the ideology. Internal political compulsions also played their part in this development. The philosophy which they ardently and ruthlessly followed was heading for a disaster. The intellectuals, who were against communist philosophy, were waiting for their opportunity, made use of their charming pen to hit hard against communism. Serious re-thinking on international trade theories and policy issues commenced within the communist countries.
The literary devise of fiction helps to understand the theory of trade protectionism correctly. This applies to all the countries. Take the example of the growth of human life—when a human being is born, he/she needs protection from the parents. Without protection and care, the child cannot grow, and to put it correctly its survival itself is in question. The child requires care in food, clothing and practically in every aspect of its life. Such a protection needs to be given judiciously by the parents and other members of the family. Once the child attains the age of 3-4 years and begins to attend the school, the pattern of protection changes. The child is taught about its responsibilities gradually, it does many of the jobs independently without the help of the parents. As the child grows, becomes youth, the level of its independence increases. When the youth starts earning, he does not depend on the parents at all. He leads an independent life, either as part of the joint family or shifts to form his own unitary family. When the youth becomes old, infirm, he would need the care of his children, or a government health/welfare agency. The problems of an industry are similar.
In the name of upholding an ideology, the interests of an industrial segment cannot be sacrificed. Adherence to rigid policies is not the hallmark of good governance. So, depending upon the situation and requirement of the country/industry, protectionism is a good tool. The government need not be at war with it, in the name of ideology. For some countries, depending upon their economic, sociological or even religious needs, protectionism may be necessary. Countries of the world believing and practicing a different political/ economic philosophy have no right to object to it. Just as an individual does not require a walking stick permanently—one requires it in case of disability or old age—trade protectionism for a segment of industry is not required in all stages of its existence. But when it is necessary, it should be provided necessarily.
Globalization – How it impacts trade and protection?
An individual is most concerned about today’s bread than tomorrow’s promise of butter. That which is not practical cannot be theoretical either; every economic theory must stand the test of practicability and applicability as relevant to particular time. A theoretician in economics may win an argument. But a common man is not interested in knowing the meaning of economic terminologies such as ‘zero-sum-theory’, the nature of supply and demand, the real wages, trade deficit, the meaning of import-export etc. He is definitely interested in the welfare of his family.
Globalization is the natural extension of free trade economy. But too much specialization followed by rapid-fire advertising, has the dangers of monopoly and unrestricted profiteering. For example, take some well-known brands of potato chips. The selling price of some branded chips is 2000% more than the original cost of the raw material! This is no service to the common man. That the business dream of an individual is realized is of no consequence to the society at large. What cost the society has to pay for the creation of such an individual? When a business magnate takes monopolistic control of such a product in the global market, its consequences are not going to enhance the value of the concept, “the world is one family.”
Globalization from the point of view of economics is an attainable reality, but lots of imaginative and legal work is necessary from organizations like World Bank to make the changes in the world trading system possible. The poor countries must have equal opportunities from the contemplated change. Even when the globalization concept becomes the accepted way of life for all countries, finding solutions to the trade and economic issues of a particular country will continue to exist. All countries cannot produce all types of goods, due to climatic conditions and geographical location; or due to man-power shortage and lack of infrastructure.