Monday, 4 July 2011

Does free trade promote prosperity and peace in Catan?

Free Trade and the WTO
I came across Why Free Trade Matters by Jagdish Baghwati in the Opinion section of Al Jazeera online where the author is waxing lyrical about free trade and how it will make us all rich and start loving each other. 

Critics of free trade think that free trade only benefits the rich and developed countries. The rich countries practice the Do To Others What You Don't Want For Yourself Policy. In other words, they want to free trade with you but not the other way around. They want poorer countries' markets to open to their goods and services but if the poor countries want access to rich countries' markets, forget it. The US and European governments award agricultural subsidies that amount to billions of dollars or euros annually. Farmers in poor countries cannot compete creating a dire situation because their economies are agriculture-intensive and less industrialised. Anti-globalisation activists further point out the evils of labour exploitation, inequality and environmental destruction. Dependency theorists believe that resource rich poor countries only end up serving the raw material needs of rich countries and if they remain locked in this unequal relationship, will never develop and reach the same level of development as rich countries.

Mark Malloch Brown, former head of the United Nations Development Programme, estimated that farm subsidies cost poor countries about USD$50 billion a year in lost agricultural exports:
"It is the extraordinary distortion of global trade, where the West spends $360 billion a year on protecting its agriculture with a network of subsidies and tariffs that costs developing countries about US$50 billion in potential lost agricultural exports. Fifty billion dollars is the equivalent of today's level of development assistance."

Mr. Baghwati points out that India and China produced tremendous rates of GDP growth after they pulled down trade barriers and lifted hundreds of millions of people out of poverty. How sure is he that free trade solely lifted millions out of poverty and not a combination of free trade and developmental policy? How sure is he that India and China's plans were not to first practice protectionism to build up their industries and then open up to the global markets? 

But why hasn't Africa managed to do the same? Can proponents of free trade provide any explanation? Classical free trade theory is ahistorical and rests on simple, simple assumptions. Its supporters believe that unhindered free trade would encourage specialisation, efficient markets, prosperity and peace. However, did the West achieve all this through free trade and free trade, alone? The West has a history of brutal colonialism and slavery with which it enjoyed free extraction of resources and labour. After World War II, Europe was given billions of dollars in assistance through the Marshall Plan lest it fall back into hands of fascism. Africa has yet to see any reparations for the centuries of pillage. 

Read Kicking Away the Ladder by development economist Ha-Joon Chang who states that Europe practiced outright protectionism which is ironic given that the West advocates free trade in the developing world. Furthermore, the successes achieved by certain states in the developing world were done so in a much shorter time period than in Europe if comparing the same relative milestones.

Let's summarise the pro's and con's of free trade and see if we can apply them to Settlers of Catan and vice versa, back to the real world.

Pro's: Specialisation, Prosperity, Reduction of Poverty, and Peace
Con's: Exploitation of Labour, Inequality, and Dependency

Settlers of Catan is the ultimate strategy game where wealth cannot be enjoyed by more than one player. You can only win the game by strategising, theft, clever trading and building devious partnerships against who ever is ahead in effort to bring them down and increase your chances of winning. No one ever earned their victory through free trade, dammit!

Players build settlements on numbers which through their high or low chances of probability on the roll of a dice will produce resources like wood, wheat, sheep, iron ore and brick. Each time the dice rolls, you collect resources and in the correct combination trade with the bank or other players to advance settlements into cities and build roads to link them. You can also buy development cards from the bank which can help you advance enormously by building an army, the longest road or create a monopoly. The army is of course highly useful as it can help you to pillage from opponents who pose a threat and help you to increase your wealth. The monopoly card allows you to steal a particular commodity from all the players. If you are not able to produce a certain resource from your settlements and cities, you can trade with your opponents if they are willing to trade with you. In fact, sometimes you can end up specialising in a certain resource if you are the only one producing it and the other players would be much more willing to trade with you at very favorable terms. We are talking about a 4:1 ratio! However, trading is usually a desperate option and you would much rather rely on internal production. Interestingly, trade flows freely to stop a strong player from advancing and to level the playing field.

Free trade does benefit those players that choose to engage in it and it can award mutual benefits allowing the players to create wealth and move forward. However, that friendly atmosphere is short lived because the ultimate goal to is win. You could end up pillaging the very same players with which you have been trading creating untold misery, poverty, inequality, bonded labour and vendettas. Players can even form coalitions of the willing against a certain player who is either doing too well or just plain annoying and continuously place the robber on his or her settlements and cities, causing his/her's wealth to deteriorate.

In short, it is doubtful that free trade creates the much desired Kantian peace created by free trade in Catan.

Trade is but one of the tools which will lead you to success and heroic victory in Catan. Pillage and construction of an impressive transport infrastructure - so reminiscent of colonial empires of yore - sigh - are important too. Even verbal propaganda and rhetoric can be helpful. And lastly, dumb luck! If your numbers roll frequently, wealth and victory is assured.

In conclusion, this illustrious and well researched thesis has shown that free trade does not promote prosperity and peace in Catan and neither in the real world. Prosperity and peace are not even the ultimate goals - to be shared by everyone (and neither are they in the real world). In the real world, too, peace and prosperity are the luxuries enjoyed by the West amongst itself and not shared with just anyone. In fact, Europe is now becoming a fortress discouraging economic and political refugees and the US has built a wall along its border with Mexico. Even if poor countries want to trade with the West, they can't because they cannot afford billions of dollars in subsidies or can only trade in certain areas. Likewise, pillage and monopolies are essential in Catan. We have the equivalent in the real world too if memory serves in the recent wars of aggression against oil-rich Iraq and Libya. 

So Mr. Baghwati, your statement that " the case for free trade is robust" is clearly and sadly, not valid! Good try but you are not fooling anyone, especially the settlers of Catan!

Peace. Not Kantian, though. 

1 comment:

  1. Farzana,
    You got it so right! Free trade, Ha ha!
    If the West actually wants "Free" trade they should stop the continious exploitation of Africa. If i ruled Africa i would place an embargo on trade with the West and starve them of most needed resources to feed their industries. The West would not be industrialized if not for the raw materials from Africa.
    I would demand a 4:1 trade on the lines of Catan and they would accept or go to hell.
    Africa is a source of nearly all the possible resources, viz: Oil, Iron Ore, Cocoa, Coal, Gold, Diamonds, Timber, and so on and so forth.
    Wake up Africa! Now is the time to get even and become eventual WINNERS.