[Adam] Smith saw things differently. Trade is not zero-sum, he wrote. Rather, trade increases the size of the market, which allows for greater labor specialization. Specialized labor is more productive than non-specialized labor, so that a world of trade and specialization, in which many people focus on one task and exchange their produce with others in mutually beneficial trades, is one in which everyone is much better off than a world in which individual countries seek to buy as little as possible from competitors. The ‘common wealth’ is maximized when people are left free to follow their self-interest and exchange whenever and with whomever they choose.
It is a beautiful and important intellectual model of the world. But it is incomplete. Self-interest governs more than our behavior in labor and product markets. It also governs our attitudes and behaviors towards the societies in which we belong. Societal openness generates broad benefits but localized costs. And so people rationally seek to limit societal openness, out of self-interest.
