Organizational Behaviour

PETER Mandelson, the European Union trade commissioner and key architect of the New Labour movement that swept Tony Blair to power, appears pretty worried about protectionism in Europe and America, as the prospect of a global downturn combines with a widespread sense among voters that the global financial system is out of control.

Mr Mandelson is a complex character, and is not everyone's cup of tea in his native Britain, where he twice had to resign from the government under a cloud. But this blogger would argue he has flourished in the ideological arena of EU trade politics, where he has often had to fight for liberalism and openness from first principles.

In a speech he is to give in Cambridge tonight, he attempts to do something that too few pro-market politicians bother to do in Europe. He makes a case that open borders are a good thing, on the basis of sound economics. But he also makes a moral case for global free trade as an unbeatable tool for fighting poverty, and creating jobs at home and abroad.

The speech is long, but he is onto something. Working on the continent, it is depressing how many free market liberals are so scared of being thought mean or uncaring that they retreat into a corner, hugging their rationality to themselves. Time and again, this has left the debate to opponents of free trade and open markets: they have been able to caricature liberalism as a sort of laissez-faire resignation to the laws of the jungle, and an advanced form of heartlessness.

Here are some extracts from Mr Mandelson's speech:

"...in 1990, two in ten people on this planet lived in societies that were significantly integrated into a global economy. Today about nine in ten do. These may not be politically open societies, but they are economically open enough to have allowed for membership of the WTO and with it the open global trading system. That is more than three billion people and probably one billion workers entering the global economy Ð'- pretty much creating the modern global economy - in less than two decades. This is the single most important change you need to grasp to

understand the modern world. We are living in the wake of an openness boom.

We have started 2008 in a fairly grim mood. The depth of the financial markets crisis has, I suspect, yet to be fully exposed. Oil and global food prices are both at historic highs, which is raising the prospect of inflation, already at a 14 year high in the Eurozone. The political atmosphere is defined by greater anxiety and greater uncertainty. There is a real risk of a popular backlash against the openness that underpins our prosperity. There is a growing sense not just in Europe but in the US also that globalisation is something that is being done to us, rather than something we can control or can hope to shape. This year's US Presidential election will be fought against the threat of economic recession, a painful slump in house prices and stagnant real wages for many Americans."

and:

"When Hillary Clinton said two months ago that the principle of comparative advantage between countries is no longer what it used be, she was right in one important respect. We are not trading Spanish port wine for English cloth anymore. We are not generating comparative advantage simply on the basis of our home market labour costs and technology base. We are building it by looking for efficiency advantages at a dozen points down global supply lines. Even countries that specialize in making the same things will generate trade and growth if they

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