American Economic Pre-eminence: Goals for the 1990s.

FREE TRADE" has been more Or less a fetish of the American Right for most of the twentieth century. Nevertheless, in American Economic Pre-eminence: Goals for the 1990s (U.S. Industrial Council Educational Foundation, 220 National Press Building. Washington, D.C. 20045; $8.95), Anthony Harrigan and William R. Hawkins-old-fashioned conservatives both-make a persuasive argument for the adoption by the United States of modern mercantilist principles which, they aver, determine the economic policy of nearly every other nation in the world today. They are in agreement with Charles Wilson, the contemporary historian who has written of the period since World War II that the "tendency of international trade [has been] to revert to conditions which in some ways resemble those of the seventeenth century more than those of the nineteenth," and with Robert H. Ballance of Purdue University and Stuart Sinclair of UCLA, who argue that the United States is "the only large affluent country that [still] believes in the sophistry of 'free trade.'"

A major reason for this perceptual lag, the authors claim, is that "conservatives, who are normally the most sensitive to national threats and the most supportive of economic growth, have been paralyzed by the notion that any act of government involving the economy is a sign of socialism." Another is the belief that the U.S. has historically been devoted to the principle of free trade-in fact, the opposite is more nearly the truth. Alexander Hamilton, as the country's first Secretary of the Treasury, explicitly rejected free-trade theory, and "the United States advanced to first place among the industrial powers behind protective tariff walls." Following the Civil War, protectionism was a hallowed tenet of the Republican Party: "Thank God," exclaimed President Theodore Roosevelt, "I am not a free-trader." American economic policy, Roosevelt explained, was based "on certain fixed and definite principles, the most important of [them] . . . an avowed determination to protect the interest of the American producer, be he businessman, wage-worker, or farmer."

Since World War II, economic policy has been regarded in this country as an aspect of domestic rather than of foreign policy, according to a habit of mind that Messrs. Harrigan and Hawkins deplore and that they believe the United States can no longer afford. "The [U.S.]," they explain, "is a market-rational state. Its leaders speak in terms of 'a level playing field' or 'fair trade.' They are not concerned with who wins or loses the global economic 'game,' only that it is played by a certain set of rules. Japan and virtually every other industrial state is plan-rational. Its leaders are very interested in who wins the 'game' and are determined to give their 'team' every advantage, fair or foul. . . . They see [the U.S. attitude] as just another sign of America's naivete . . . Thus they resort to tariffs, subsidies, cartels, tax breaks, and other devices to strengthen their companies in competition with foreign rivals."

The very notion of "competition" has been played down, and even ridiculed in certain quarters, among them American business interests wishing to profit by sales to America's enemies and Pollyannish intellectuals who rejoice at the coming of the "globalized" world economy. Thus Walter Olson of the Manhattan Institute looks forward to the day -when the men in charge of the great international financial institutions will become "men without a country," and George Gilder denounces "nationalistic fetishes." They and other purveyors of the globalist fantasy believe, as Harrigan and Hawkins put it, that 'Just because a corporation operates in many different countries, its leaders will forget their roots and their basic loyalties." For Gilder, who has written that "there is no more reason for a balance of trade between the U.S. and Japan than between New York and Ohio," national borders are meaningless because they are arbitrary. In truth, the world is still an aggregation of states organized around specific historical memories and cultural identities, nearly all of them at odds with one another. "Thus [we have] an international economy, not a global economy. Any economic theory, no matter how interestingly crafted within itself will fail if it attempts to assume away the real world or run against it."

In the 1990s, the authors insist, America's leaders must recognize that the U.S. has already paid dearly for "the mistaken views and policies" it has adopted during the past quartercentury, and for these substitute more realistic ones:

More than forty years ago, U.S. policymakers defined the national interest in terms of a military containment policy. This military emphasis was necessary then and it continues to be necessary today. But the military containment policy has to be supplemented and expanded by a matching economic containment policy. . . . All domestic, foreign, and defense policies, from dealing with the trade deficit to immigration control to limits on wasteful federal spending, have to be considered parts of the national containment policy that safeguard vital American interests. This important small book suggests how we might begin to think about a very important large task.