TRADE WAR
ALL the best wars used to be trade wars, the Dutch and English being particular masters of the art. It was orie of the perils of mercantilist protectionism, which Adam Smith attacked in The Wealth of Nations, that it embroiled us in such frequent conflicts. He proposed a better policy: It is the maxim of every prudent master of a family never to attempt to make at home what it will cost him more to make than to buy. The tailor does not attempt to make his own shoes, but buys them of the shoemaker. The shoemaker does not attempt to make his own clothes, but employs a tailor. What is Prudence in the conduct of every private family can scarce be folly in that of a great kingdom. If a foreign country can supply us
with a commodity cheaper than we ourselves can make it, better buy it of them with some part of the produce of our own industry employed in a way in which we have some advantage.
The British consumer has enjoyed the fruits of such good sense throughout the post-war period. Japan has offered us cameras, televisions and video recorders of a higher quality and at a lower price than we could make them for ourselves. There would be no more advantage in trying to keep them out than in keeping out the finest French clarets to encourage vineyards here. The Japanese in turn have made so much money that there is not enough scope to invest in Japan and much of their capital now goes into the City of London, pushing up the value of our stocks and shares. These mutually beneficial transactions between Japanese producers and British consumers have, however, left out the Japanese consumer. His govern- ment has not permitted him the same ease of access to the finest British products. Mr Michael Howard's visit to Japan is an opportunity to help put this right. Japan is not properly a capitalist country: it is mercantilist. It is a key doctrine of capital- ism that the object of production is con- sumption. But the average Japanese sees himself first and foremost as an employee of Honda. He is not a frustrated consumer of our whisky or luxury cars. Mr Howard's mission is therefore to preach the virtues of capitalism to the Japanese.
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