Free Trade and Monopoly: The Legacy of Scholasticism and Jusnaturalism
Trade, the universal economy, natural law and the law of nations
In dealing with trade, the commercial writers, at least some of them, were liable to be influenced by the theories of natural law and the law of nations.
In the seventeenthcentury political thinking, the natural law expresses the principles that govern human beings placed in their natural condition, namely, the rights that are universally and perpetually attached to them. These principles or rights, established by natural reason, are considered to be the foundations for relations between individuals within a commonwealth. They mainly relate to self-preservation and independence or liberty. The law of nations expresses the preceding principles or rights that are applicable to the relations among commonwealths. It concerns the knowledge of the interest of the commonwealth itself.The commercial writers were thus led to think of commerce as an element of a general and all-encompassing trade, which Jacob Viner called the “doctrine of universal economy” (1959 [1991]: 41). Christian belief does not radically condemn trade in general (as in the case of the merchants of the Temple); it rather accepts foreign trade on the grounds that this activity allows resources that are unequally distributed amongst nations to be circulated throughout the world and thus meet the needs of the different peoples. God or Providence has arranged for an unequal distribution of resources precisely in order to enable them to be circulated between men and to encourage peaceful cooperation. Trade can thus be mutually beneficial to mankind as a whole. This doctrine is found inter alios in Bodin (1568 [1997]: 86) and Thomas Smith (1581 [1969]: 62).
The idea of a universal economy does not necessarily call for free trade. English writers invoked Providence to explain the specific situation of the nation (Viner 1937: 101-3).
Endowed with wool, England’s vocation was to manufacture and export it and not to import wool products (see also Henry Martyn 1701 [1856]: 585).The doctrine of the universal economy finds a particular expression in the writings of Francisco de Vitoria (c. 1483-1546), Hugo Grotius (1586-1645) and Samuel von Pufendorf (1632-1694). In De Indis, Vitoria proposed an interesting combination of this doctrine and the theories of natural law and the law of nations, whose purpose was to legitimise Spanish foreign trade. Among the seven proposals he developed to this end, three are of special interest: (1) “That the Spaniards have the right to travel and dwell in those countries, so long as they do no harm to the barbarians, and cannot be prevented by them from doing so”; (2) “That the Spaniards may lawfully trade among the barbarians, so long as they do no harm to their homeland”; (3) “That if there are any things among the barbarians which are held in common both by their own people and by strangers, it is not lawful to prohibit the Spaniards from sharing and enjoying them” (Vitoria 1537 [1991]: 278-80). The logical conclusion was that, if the Indians prohibited the Spanish from exercising their indisputable right to trade, Spaniards had the right to defend themselves and wage a just war.
In Mare liberum (1609 [2004]: 10), Grotius made international trade an element of the law of nations just as explicitly. Presenting international trade as an effect of the division of labour - God did not want men from every place and every nation to be self-sufficient in their consumption of goods but wanted them to specialise where they excel and to communicate with each other - he inferred that most conflicts between nations arose from the obstacles that one or the other nation put in the way of this communication by practising commercial exclusions. Yet, unlike the shore, the sea was not tied to the land, consequently it belonged to no one by virtue of some right of occupation and its use should remain free, “common unto all” (ibid.: 28), in navigation as in fishing and trade.
In De jure naturae et gentium (1672 [1710]), Pufendorf modified the doctrine of universal economy. He started from the same point: it is a human duty that everyone can obtain for himself the commodities which he lacks in another country by exchanges or other lawful contracts, and it is good that these exchanges or contracts are not prevented “by any civil ordinance, or by any unlawful combination, or monopoly” (ibid.: 199). This statement is in accordance with one of the provisos of natural law, namely, the right of everyone to basic necessities of life, but not necessarily to the proviso of independence and liberty that “any one may sell his own when and to whom he pleases” (ibid.: 396). The solution therefore is to distinguish the “necessities of life” from the “pleasure and superfluity of life” (ibid.: 199): everyone is naturally free to sell to whom he pleases, unless the commodity is so vital that one cannot do without it. It would be an offence against humanity to deprive others from the right to procure for themselves the necessities of life.
From the viewpoint of the laws of nations, the reasoning is much the same: as trade promotes the interests of all nations, forbidding or restricting the international circulation of commodities would be contrary to the law of nations. However, in so far as the preservation and the independence of a nation are at stake, some exceptions are acceptable. For example, a state has no obligation to bring to a foreign nation its necessities of life when its subjects lack them. It can quite legally prohibit their exportation, but it has no right to forbid that of luxuries. In the same way, it can favour its subjects more than foreigners (Pufendorf 1672 [1710]: 200) by granting the former a preferential right or by imposing higher taxes on the latter. It can also establish a treaty in favour of one single nation or private company. Along the same lines, as the seas do not belong to anyone, everyone is, by natural law, free to sail and to trade and nothing must prevent him from keeping his goods or selling them to a single buyer; likewise a nation (ibid.: 309-10).