[The Tariff Superstition: Why Protectionism Always Fails and Who Really Pays the Price by Marcel Kadosa. Translated by Bálint Téborski. Eger, Hungary, 2025. 159 pp.]
Hungary in the years after World War I isn’t generally associated with a movement that supported the free market, but Bálint Téborski—whom we have to thank for The Tariff Superstition—tells us that,
…this little gem of a book long forgotten for countless decades until we managed to secure a 99-year-old copy and republish it. The author, Marcel Kadosa (1874-1944) belongs to a forgotten intellectual tradition of Hungary; a network of authors, statesmen, and industrialists who fought bitterly against the overwhelming tide of statism in the interwar period of the twentieth century.
Téborski goes on to describe their activities in this way: “They organized the Cobden Association in an attempt to spread the true ideals of liberty and property, holding conferences and publishing books to popularize the arguments in favor of a free market economy.”
Many of the arguments in the book will be familiar to most readers of the Mises page, and the author can be compared to Bastiat and Hazlitt as a popularizer, but in what follows, I’d like to concentrate on some points that are not as well-known as they deserve to be. These points are about protective tariffs, which Kadosa sharply distinguishes from a revenue tariff:
A [revenue] tariff, in itself, is merely a form of taxation and is fundamentally different from what we call a protective tariff. While the collection of duties is an ancient institution, the protective tariff is a relatively recent concept and represents the most widespread, yet most dangerous superstition under which humanity has ever suffered.
It will be evident that Kadosa is not given to understatement.
The idea in the book that I found most valuable is the outstanding refutation of the very common belief that Britain supported free trade only after building up its own industrial strength. Kadosa draws on an exceptionally wide knowledge of European history to refute this error. He describes it in this way:
One of the most deep-seated yet common misconceptions frequently cited to counter the conquering power of British free trade is the notion that the shrewd and calculating English implemented free trade because their industry had become so advanced that they no longer needed to fear any competition; to the contrary, they could only benefit from free trade.
Kadosa has a simple but devastating response. Except for a relatively brief span of time, the British imposed protective tariffs during the period it was industrialized:
If we survey the nations of the world today, we can observe that the more developed a country is, the more desperately it protects itself against the industries of less developed nations. . . England harbored the same superstitious and pathological fear of implementing free trade as other nations did. Only the power of science worked against protectionist tariffs.
By the “power of science,” Kadosa refers to the activities of Richard Cobden and John Bright and their associations in popularizing the defense of free trade by Adam Smith and his followers. (Kadosa and Murray Rothbard differ on the extent to which Smith supported free trade, but Rothbard would certainly not deny that Smith was, for the most part, an opponent of mercantilism. Oddly, Noam Chomsky and the egregious Jacob Soll—a MacArthur “genius grant” Fellow—do deny this.) Smith was well aware of the power and influence of businessmen who wanted protection. “When Adam Smith theoretically expounded the principles of free trade, he declared their practical implementation impossible.”
The most important economic asset of Britain in the nineteenth century was cotton, but this vital product was hampered by efforts of woolen cloth producers to restrict its growth: “Is this not the most shameful failure of government-directed economic forces? Out of supposed wisdom, an emerging industry—destined to become England’s largest—would have been strangled at birth for the sake of an already established one.”
Indeed, the protectionist fallacy is so tempting to most people that—despite the fact that the arguments against it are simple and irrefutable—almost all political figures have supported it.
[The British Prime Minister] Lord Melbourne once declared, in the House of Commons, that in his long career in public life, he had heard many foolish proposals, but it seemed to him that the greatest folly of them all, the absurdist idea he had ever encountered, was the suggestion to abolish the grain tariffs.
Kadosa even finds Edmund Burke lacking, although his high intelligence in general cannot be doubted:
The great English politician and statesman Burke, who with prophetic insight would judge the French Revolution and predict its course from its very beginning, once dismissed Adam Smith’s work by saying; “Such abstract theories are well suited for the quiet lecture halls of Glasgow” [where Smith was a professor].
Here I venture to suggest that Kadosa overstates the extent to which Burke and Smith disagreed:
On September 10, 1759, six months after receiving his copy of TMS, Burke wrote Smith for the first time. One immediately sees the beginnings of a friendship. “I am quite ashamed that the first letter I have the honour of writing to you should be an apology for my conduct,” began Burke. He assured Smith that when he “received the Theory of Moral of Sentiments from Mr. Hume,” he “ran through it with great eagerness,” but “was immediately after hurried out of Town, and involved ever since in a Variety of troublesome affairs.” Hence the delay of six months before his response. Known as a reactionary, not a charmer, Burke nonetheless displayed a keen understanding of an author’s ego, telling Smith “My resolution was to defer my acknowledgments until I had read your book with proper care and attention; to do otherwise with so well studied a piece would be to treat it with great injustice.”
Like Rothbard, Kadosa deploys an ingenious argument against protectionism:
If industrial development could truly be achieved through tariff protection, and if a highly advanced industry were universally desirable, then why not take this simple principle to its logical conclusion? Why not establish increasingly smaller tariff zones, allowing the supposed miraculous effects of protective tariffs to operate freely in each of these tiny territories?
Bálint Téborski deserves our heartiest thanks for making this book available. It is a valuable historical document, and its lessons merit our attention today.
