Gwartney vs. Schumacher on Globalization and Trade

Introduction to Economic Globalization

Globalization, explained in economic terms, is the ever-increasing interdependence of national economies across the world, driven by the cross-border movement of goods, services, technology, capital, and labor (Warsh and Davis). The influx of foreign resources into local economies can have a significant adaptation effect on native residents. For example, developing countries in Asia have been exposed to American culture — including not only the English language but also music, cinema, and lifestyle — leading to greater inclination toward smaller families, transformed gender roles, and adjustment to urban life. This exposure has also brought an import of advanced Western technologies, along with faster and more affordable forms of transport and communication that facilitate everyday life.

The process of economic globalization was accelerated by the frameworks and treaties launched by the World Trade Organization (WTO), which led to the dissolution of trade barriers between national economies and encouraged cross-border investment. With demand for information technology and other sciences growing worldwide, economic globalization appears to be an irreversible trend — one that nations themselves depend on for domestic and global economic growth.

However, economic globalization is not an entirely new phenomenon; it has existed since the beginning of trade. Over the past few decades, it has simply been occurring at a faster pace. Several observers and economists have voiced concerns about its implications for the world economy. Here, we contrast the opinions of E.F. Schumacher and James Gwartney.

Gwartney's Case for Free Trade and Specialization

James Gwartney is a world-renowned supply-side economist. Supply-side economics is a branch of macroeconomics that argues economic growth can be achieved efficiently by adjusting supply-side factors such as industry regulations and tax rates. Accordingly, all supply-side economists, including Gwartney, favor reducing barriers to entry in order to allow an efficient allocation of resources through the free operation of market forces. Gwartney contends that economic freedom — that is, freedom from government intervention via tariffs and other regulatory barriers — is necessary to achieve economic growth, which all developing nations urgently need.

According to Gwartney, international trade is the key to successful economies. He argues that trade is a positive-sum exercise in which both parties involved in a trade agreement have something to gain. The basis of economic life, he holds, is to better one's condition not only through self-interest but also through actions that benefit others. He insists that trade should not cease at national borders, which were created for political rather than economic reasons.

There is much more to be gained through international trade than through purely domestic exchange, including access to a variety of products unavailable locally. Trade also enriches individuals culturally through interactions with people of other nations, cultures, and backgrounds. Central to Gwartney's argument is the concept of specialization. When an economy specializes in the production of a particular good, it gains a competitive edge by producing that good at a lower cost than other economies (Imbs). The good can then be sold internationally at high profit margins. Conversely, the economy can import goods that would cost relatively more to produce domestically, meaning both trading parties benefit from the arrangement.

Schumacher's Buddhist Economics and Local Production

Schumacher's view of the global trade system is that it is not the only viable method for organizing the exchange of goods. He believes an alternative approach exists, grounded in Buddhist teachings — specifically the principle: "Cease to do evil; try to do good" (Schumacher). Following this approach, Schumacher argues that adhering to simple moral principles leads ultimately to non-violence and enables tasks to be accomplished more peacefully and efficiently, with the needs of every person fulfilled. Fulfillment of needs does not mean unlimited consumption; rather, it means recognizing that the resources we consume are finite and must be used within those limits.

Schumacher believes that all members of society should consume limited resources at modest levels — restraining their own consumption rather than hoarding — so that sufficient supplies remain available for everyone, achieving wider sustainability. He also argues that it is more viable to produce goods locally rather than importing them, which builds pressure on the local economy. Producing locally and consuming locally would create a more meaningful connection between people and the goods they use. Therefore, modest local consumption and the avoidance of excessive imports represent a more efficient and humane economic path for societies.

Conclusion: Contrasting Visions for the Global Economy

In the modern era, with a growing population and the current economic climate of recession, Gwartney's approach offers a path that may lead nations toward growth and economic revival. On the other hand, the Schumacher approach, while morally compelling in its emphasis on human dignity and sustainable consumption, risks further depressing economies without offering concrete mechanisms for uplift.

Ultimately, both thinkers identify genuine tensions within the global economic order. Gwartney's framework aligns with the realities of international competition and the measurable benefits of comparative advantage and specialization, while Schumacher's Buddhist economics offers a vital humanistic corrective to the dehumanizing tendencies of automated, efficiency-driven production. A nuanced understanding of globalization requires engaging seriously with both perspectives.

Bibliography

Cohan, Elchanan and Tei-Wei Hu. "Economies of Scale by Program." Journal of Educational Administration (1973): 302–313.

Imbs, Jean. "Trade, Finance, Specialization, and Synchronization." The Review of Economics and Statistics (2006): 723–734.

OECD. Glossary of Statistical Items. 08 August 2002.

Schumacher, E.F. "Buddhist Economics." Manas Journal (1969): 33.

Warsh, Kevin and Scott Davis. The Retreat of Globalization. 14 October 2012.