Free Trade vs. Protectionism:the Great

free trade vs. protectionism:the great corn-Laws debate

The case analyzes the corn market in Britain from the 18th century onwards, including the effect of the corn laws passed in 1815 and the decision that the British Prime Minister, Robert Peel, was faced with in 1846 whether to continue with the legislative framework that the corn laws had proposed or to repeal the Corn Laws in favor of a more liberal approach to trade.

The case summarizes the period of time that had preceded the adoption of the laws in 1815, insisting on the market for corn, on supply and demand on this market, on the main actors that influenced the formation of price, as well as how these actors were attempting to lobby for a legislative framework that would favor their own interests. In very simple lines, the characteristics of the corn market implied that an overproduction lowered prices. The reason for this came from the law of demand and supply as applied to this market: as overproduction meant an exceeding supply, the volume of corn offered on the market was higher than the existing demand, which led the price downwards. As such, favorable conditions would lead to overproduction and decrease in price.

With low supply, the price would go upwards, which meant that the two main actors on the market, namely the producers (landlords) and the consumers (population) had opposing interests on the market. Landlords would prefer a limited production and no other imports of corn on the market, so as to continuously keep prices high and generate higher revenues for their corn business. On the other hand, consumers preferred a suprasaturation of the market with corn, which would help keep prices significantly lower. With confronting interests, the case study presents how the corn laws came into debate.

In 1815, the Corn Law attempted to create a legislative framework that would regulate the import of corn on the British market. The import of corn was initially used as an instrument to complete the supply of corn in those seasons when production was law. At the same time, import would have allowed for prices to remain low and affordable for the large part of the population. The problem, as previously shown, was that the import of corn contributed to the volume of corn on the market and kept prices low, which was not in the interests of the landlords.

Landlords also used the argument according to which the import of corn was dangerous for the national interest and security of Britain. Their argument was based on the idea according to which Britain's enemies could affect the inflow and import of corn on the British market and affect the food security of the country. With that argument in mind, they planned to introduce protectionist laws that would limit the import of corn on the market.