From Silk Roads to Tariff Walls

What William Bernstein’s grand history of trade can teach us about America’s new economic nationalism.

President Donald Trump’s protectionist onslaught and escalating tariff campaign against China, has triggered a seismic shift in the global trade landscape since the start of this month. In this climate of rising barriers and retreating globalization, a book that one can turn to with profit is William J. Bernstein’s ‘A Splendid Exchange’ (2008) – a sweeping global economic history of trade that offers trenchant perspectives for readers wanting understand today’s rapidly shifting patterns of global trade.  

Global trade, observes Bernstein, is one of the oldest and most transformative forces in human history - rivalled only by religion and war in its capacity to reshape societies. His richly woven narrative begins with Sumerian merchants and ends with supertankers and the World Trade Organisation. It is a story of risk and reward, exploitation and exchange, of pepper and opium, conquistadors and container ports.

It is also a painless primer on the ideas of the greatest economic theorists, from Adam Smith and David Ricardo to Paul Samuelson. From Roman times and ancient Mesopotamia to modern economic organizations, Bernstein argues that trade, for all its upheavals, has been the single greatest engine of human progress.

In an interview about the book to Yale University in 2009, Bernstein said that “throughout most of history, the central calculus facing most leaders in the pre-modern era was the trilemma of whether to trade, raid, or protect.”

That is what makes Bernstein’s book so apt for the present moment.

From the Silk Road to the Hanseatic League to the East India Company, commerce has bound distant peoples together in common purpose and conflict. It has spread everything from sugar to slavery, pandemics to prosperity. Its benefits have never been evenly distributed. But over time, trade has made the world not just richer, but more interconnected and, on balance, more peaceful.

Paced like a thriller, Bernstein catalogues in splendid detail, with choice anecdotes, how trade has often destabilised societies: the decimation of Indian weavers by British cotton, the brutal logic of the Atlantic slave trade, the havoc wrought by the Opium Wars. He is unromantic about the costs. But he is also clear-eyed about the alternative. Periods of protectionism, from Ming China’s maritime bans to the mercantilist excesses of 18th-century Europe to America’s 1930 Smoot-Hawley Tariff, tended to end badly.

A vital point that Bernstein drives home is how trade’s economic benefits pale in comparison to its intangible ones. He observes that one can make a pretty good case that before the mid-20th century, trade was not that much of an economic boon. By contrast, trade’s intangible benefits are enormous and indisputable: the desire to do business with your neighbours rather than to annihilate them.

The best instance for this is the Smoot-Hawley Tariff, which, as Bernstein notes, probably triggered the Second World War by embittering the Germans with their inability to recover and pay the Versailles reparations. “No Smoot-Hawley, no Hitler chancellorship; no Hitler chancellorship, no World War II,” he says.

So, the current flirtation with tariffs is hardly new. As Bernstein notes, trade wars have a long and sordid record of unintended consequences. They raise prices, provoke retaliation, and rarely achieve strategic aims. British protectionism accelerated colonial unrest. Even Napoleon’s Continental System - an embargo aimed at strangling Britain - ended up hurting France more.

And yet, the appeal persists. Tariffs are easy to understand and politically seductive. They promise control in an uncontrollable world. But the great irony, as Bernstein shows, is that the wealthiest societies in history were not those that hoarded goods, but those that embraced exchange, be it Venice, Amsterdam, London, New York and Shanghai. Trade, like oxygen, is invisible until it disappears.

Bernstein also highlights that trade is not just about goods, but about ideas. The diffusion of mathematics, medicine, religion and governance models has often followed commercial routes. To throttle trade is to slow the spread of knowledge. And in a world facing planetary-scale problems - from climate change to pandemics - cutting the threads of cooperation may prove even more dangerous than economic slowdown.

This is not to say all trade is good, or that all critics of globalisation are wrong. But as Bernstein reminds us, the answer to the darker side of trade is not autarky but adaptation. Better safety nets, smarter trade deals and fairer taxation matter more than nostalgic delusions of national self-sufficiency.