Free Traders

This book is about the political events and decisions in the 1980s and 1990s that established the global economy we have today. Different social scientists and other commentators have described the foundations of globalization very differently. Some have linked the rise of free trade and multinational enterprises to the democratic expression of ordinary people’s hopes and desires; others have said they were a top-down project requiring, if anything, the circumvention of democracy. This book shows that politicians did not decide to embrace globalization because of the preferences of the mass public. Instead, using comparative-historical case studies of Canada, Mexico, and the United States, this book shows that politicians’ decisions reflected the agendas and outlooks of various kinds of elites. On the basis of more than a hundred interviews, and analyses of materials from archives in all three countries, the book tells the story of how the three countries negotiated and ratified two agreements that substantially opened and integrated their economies: the 1989 Canada-US and trilateral 1994 North American Free Trade Agreements. Contrary to what many people believe, these agreements (like free trade elsewhere) were based less on mainstream, neoclassical economics than on the informal, self-serving economic ideas of businesspeople. This folk economics shaped the contents of the agreements, and helped bind together the elite coalitions whose support made them politically possible. These same ideas, however, have reinforced some harmful economic misunderstandings, and have even contributed to the recent backlash against globalization in some countries.