Jean-Baptiste Say on Free Trade

Abstract

Jean-Baptiste Say is generally portrayed as an unrelenting champion of laissez faire who believed commercial activity promoted economic well-being. However, I develop a more nuanced portrait of Say’s thinking by showing that he did not believe that free trade was an unmitigated good. He thus identified several exceptions to free international trade that justified government intervention in the form of restrictions on imports, and public subsidies to domestic industries. Going beyond Adam Smith’s arguments for protective tariffs, Say maintained that government could play a role to protect infant industries, insisting on the fact that protectionism could only be gradually and carefully removed. Drawing upon Say’s published writings and archival sources, I show that Say developed original views on domestic and international trade, several of which were distinct from those of Smith. Overall, Say’s analysis of free trade sheds greater light on his conception of the role of government in a market economy. It illustrates under what conditions the government should intervene in order to achieve both economic efficiency and social justice.