market.”rnThe “force” exerted by capitalism is ofrna rather peculiar sort: It leaves people freernto depart from the arrangements that Mr.rnGray prefers them to have. They wouldrnnot enter the global market unless theyrnwish to do so. This, for him, constitutesrnthe spread of compulsory Enlightenmentrnrationality. Mr. Gray would have donernwell to study economic theory more, ifrnneed be by reducing his perusal of Heideggerianrnbanalihes. He crucially misunderstandsrna central theorem of economics,rnRicardo’s law of comparativerncosts.rnAs suggested already, a basic argumentrnfor the free market is that it provides arnframework for mutually beneficial trades.rnRicardo showed that space for suchrntrades exists even if one party to the exchangernis in all respects more efficientrnthan his trading partner. A surgeon whornis better at taking the temperatures of hisrnpatients than his nurse may find it morernto his advantage to concentrate on his operations,rnleaving the less skilled task inrnthe inferior hands of his aide. This phenomenonrnextends the benefit of mutualrngains from trade to those absolutely lessrnfit and thus should be welcomed by allrnfriends of the less fortunate.rnAnd so it was by free-market economistsrnsuch as Ludwig von Mises. Herntermed Ricardo’s principle the “law of association”rnto emphasize its importance asrna rule promoting general welfare. Mr.rnGray misses the nature of this principlernentirely. Far from being the key to socialrncooperation, it is in his view somethingrnthat holds good only under very restrictedrnconditions.rnHe contributes the following incrediblernparagraph:rnIn the classical theory free traderncapital is immobile. Ricardo’s doctrinernof comparative advantage .. .rnsays that when comparatively inefficientrnenterprises or industriesrnshrink in any country, others willrngrow, absorbing the capital andrnlabour released from the decliningrnactivities. Within each tradingrncountry capital will move to thoserneconomic activities in which it isrnmost productive. Ricardian comparativernadvantage applies internallyrnin trading nations, not externallyrnbetween them.. .. Ricardo understoodrnthat this could be true only sornlong as capital is not to any significantrnextent internationally mobile.rnNo, no, Mr. Gray! The whole point ofrnRicardo’s theorem is that both parties in arntrade —both countries, in internationalrntrade—benefit if each concentrates onrnthe product it can make better, whenrncompared with the other trader. Grayrnhas things the wrong way round: whatrncounts is not “most productive” activitiesrnconsidered just internally.rnMr. Gray’s error leads him to the risiblernassertion that if capital is mobile, thenrnthe “effect… is to nullify the Ricardianrndoctrine of comparative advantage.”rn/gain, the realit)’ is just the reverse. Bothrnin trade with immobile capital and in internationalrncapital movements, the mutualrnadvantage of all parties to an exchangernis the fons et origo of eeononiicrnactivity. If all parties did not expect tornRECEIVED WISDOMrnKri:iis no. 22 (March 19Q9); edited by Alain de Benoist and Jean I^alonx; 1 iO F or 20 euros.rn”Federalisme?” is the title of this special number ofKrisis, which begins with an essay by M. dernBenoist on the German Calvinist Althusin.s, who worked out pediaps the only systematic theoryrnfor a federal system. Benoist contrasts the Altlmsian principle of subsidiarity with Bodin’s conceptrnof imitary sovereignty: “It is the eternal debate between the nation-state and imperial Europe,rnJacobin nationalism and decentralized federalism, between republicans and democrats.”rnThe issue also includes articles by Paul Piccone and Robert D’,mico, |ean Baechler, andrnThomas Fleming, as well as conversations with European federalists, including Jean-Lonis Clergerie,rnwho holds the Jean Monnet professorship at Limoges. Prof Clergerie tries to rescue federalismrnfrom decentralization, a notion he finds alien to French itistituhons. Tocqneville understoodrnthe principle, however, as well as anyone, and so in their hearts did the Catholic peasants of thernVendee uprising during the French Revoluhon and the aristocrats who mounted the Fronde rebellionrnagainst centralized authority. The greatest French governor of Canada, the Comte dernFrontenac, was a Frondeur in his youth, and he tried to establish a free parliament in Quebecrnuntil Louis XIV’s ministers undermined his efforts.rnThe wisdom of Frontenac might have saved Louis’ dynasty from extinction and France from arngreat many problems. Even Jean Marie Le Pen, often regarded as a national socialist, seems tornknow that the strength of France lies in her regional cultures. The federal principle is a humanrnprinciple, as M. de Benoist realizes, and those who flout it suffer the consequences.rnbenefit, no trade would take place.rnIf our author has misunderstood Ricardo,rnhe has at least not done it in so egregiousrna way as in his earlier study. Liberalism,rnwhere he located Ricardo withinrnthe Scottish Enlightenment. But Irnshould not be too kind to Mr. Gray, whorncommits equally awful lapses in FalsernDawn. We learn, e.g., that Russia “abolishedrnserfdom in 1861, a year before slaveryrnwas abolished in the United States byrnAbraham Lincoln.” I hope it is not consideredrnan exercise of sterile pedantry tornpoint out that the Emancipation Proclamationrndid not abolish slavery; in anyrncase, Mr. Gray has got the year wrong.rnRegardless of the author’s mistakes,rnthough, does he not have a case that Irnhave so far underestimated? I have argued,rnin a naivelv rosy fashion, that sincerntrade under capitalism is voluntary, allrnparties to an exchange are, by their ownrnexpectations, better off. But what aboutrnthird parties not directly involved in anrnexchange? If my small bookstore cannotrncompete with a local branch of Barnesrnand Noble, surely I will not think my situationrnimproved as I tearfully board myrnwindows.rnIf, in f;3ct, free market capitalism led tornmassive and permanent dislocations, norndoubt a strong indictment could bernbrought against it, but no such case isrnraised here. Instead, Mr. Gray simplyrnpoints to high unemployment rates inrnvarious European countries. Truernenough, the rates are lower in the UnitedrnStates, but this fact ought not to induce inrnus a false complacency: “Lastly, all estimatesrnof America’s employment recordrnmust take into account America’s incarcerationrnrates — over a million peoplernwho would be seeking work if Americanrnpenal policies resembled those of anyrnother western country are behind bars inrnthe U.S.”rnOnce more, Mr. Gray appears ignorantrnof economic theory. If workers cannotrnfind jobs, why will they not bid downrnwage rates until it becomes profitable tornemploy them? If laws and union regulationsrnprevent them from doing so, whyrnblame the free market? Mr. Gray’s examplernof the prison population rests forrnits force on the assumption that only arnfixed number of jobs exists. If so, thenrnthose in prison would, if free, competernwith those already employed for a limitedrnnumber of jobs. But why assume this?rnWliy not assume that a greater labor supplyrnwould find new jobs not now occupied?rnNOVEMBER 1999/29rnrnrn