Even when a line on a map separates two individuals, trade is still trade—that is, mutually beneficial cooperation. Whether the line separates towns, cities, counties, states, or countries, it does not matter. The transactions are win-win.

We could do quite well without the categories of exports and imports. Adam Smith wisely said almost 250 years ago that the balance-of-trade doctrine was “absurd.” In a sense, only two kinds of goods and services exist as far as I’m concerned: those that I produce and those that everyone else produces. That is true for you too. Countries don’t trade. Individual people do. Where governments don’t permit this, they should get out of the way.

Carl Menger, the founder of the Austrian school of economics, eloquently described trade in his pioneering work, Principles of Economics (1871, pp. 175ff). We need to rediscover his insights in this new and perilous Age of Protectionism. Here is some of what he wrote.

“Whether the propensity of men to truck, barter, and exchange one thing for another be one of the original principles in human nature, or whether it be the necessary consequence of the faculties of reason and speech,” or what other causes induce men to exchange goods, is a question Adam Smith left unanswered. The eminent thinker remarks only that it is certain that the propensity to barter and exchange is common to all men and is found in no other species of animals.

First, in order to clarify the problem, suppose that two neighboring farmers each have a great abundance of the same kind of barley after a good harvest, and that there are no barriers to an actual exchange of quantities of barley between them. In this case, the two farmers could give free rein to their propensity to trade, and could exchange 100 bushels or any other quantity of barley back and forth between themselves. Although there is no reason why they should desist from trading in this case if the exchange of goods, by itself, affords pleasure to the participants, I believe nothing is more certain than that these two individuals will forgo trade altogether. If they should nevertheless engage in this sort of exchange, they would be in danger, precisely because of their enjoyment of trade under such circumstances, of being regarded as insane by other economizing individuals.

You’d think they were crazy too. People don’t trade because of some propensity. They do so to make their lives better. Kids know this. Two young baseball fans wouldn’t trade identical Mickey Mantle or Aaron Judge cards.

Suppose now that a hunter has a great abundance of furs, and hence of materials for clothing, but only a very small store of foodstuffs. His need for clothing is thus fully provided for but his need for food only inadequately. A nearby farmer is assumed to be in precisely the opposite position. Suppose too that there are no barriers to an exchange of the hunter’s foodstuffs for the farmer’s clothing materials. It is evident that an exchange of goods is still less likely in this case than in the first one. If the hunter should exchange a portion of his scanty store of food for a portion of the farmer’s equally scanty stock of furs, the hunter’s surplus clothing materials and the farmer’s surplus of foodstuffs would both become even greater than before the exchange. Since satisfaction of the hunter’s need for food and satisfaction of the farmer’s need for clothing were already insufficiently provided for, the economic position of the traders would be decidedly worsened. No one can maintain, therefore, that these two economizing individuals would experience pleasure from such an exchange. On the contrary, nothing is more certain than that the hunter and farmer will both most firmly resist offers to engage in a trade that would definitely reduce their well-being, or possibly even endanger their lives. If an exchange of this sort had nevertheless taken place, the two men would have nothing more urgent to do than to revoke it.

Precisely! People don’t trade for fun. Each expects to profit. And because people value goods and services differently, the parties to a free exchange can profit without exploitation. (Of course, fallible people make mistakes and may regret the choices they made. These days, refunds are routine.)

Since it has been established that exchange is not an end in itself, and still less itself a pleasure for men, the problem in what follows will be to explain its nature and origin.

Menger discussed the case of two farmers, Farmer A, who has a surplus of grain and a shortage of wine, and Farmer B, whose predicament is the reverse.

The first farmer thirsts and the second starves when both could be relieved by the grain A is permitting to spoil on his fields and by the wine B has resolved to pour out. Farmer A could still satisfy his and his family’s need for food as completely as before and indulge besides in the enjoyment of drinking wine, and farmer B could continue to enjoy as much wine as he pleases but would not need to starve. It is therefore evident that we have encountered a case in which, if command of a certain amount of A’s goods were transferred to B and if command of a certain amount of B’s goods were transferred to A, the needs of both economizing individuals could be better satisfied than would be the case in the absence of this reciprocal transfer. [Emphasis in original.]

Who would dispute that?

The case just presented, in which the needs of two persons could be better satisfied than before by a mutual transfer of goods having no value to either of them prior to the exchange, and hence without economic sacrifice on either side, was especially suitable for impressing upon us in the most enlightening manner the nature of the economic relationship leading to trade. But we would construe this relationship too narrowly if we were to confine our attention to cases in which a person who has command of a quantity of one good larger than even his full requirements suffers a deficiency of a second good, while another person has a comparable surplus of this second good and a deficiency of the first. For the relationship in question can also be observed in less obvious cases in which one person possesses goods of which certain quantities have less value to him than quantities of another good owned by a second person who is in the reverse situation.

And so on. Need I add that a tariff is only one way for governments to interfere with benign market relations?

Menger:

If we summarize what has just been said we obtain the following propositions as the result of our investigation thus far: The principle that leads men to exchange is the same principle that guides them in their economic activity as a whole; it is the endeavor to ensure the fullest possible satisfaction of their needs. The enjoyment men derive from an economic exchange of goods is the general feeling of pleasure they experience when some event permits them to make a better provision for the satisfaction of their needs than would otherwise have been possible. But the benefits of a mutual transfer of goods depend, as we have seen, on three conditions: (a) one economizing individual must have command of quantities of goods which have a smaller value to him than other quantities of goods at the disposal of another economizing individual who evaluates the goods in reverse fashion, (b) the two economizing individuals must have recognized this relationship, and (c) they must have the power actually to perform the exchange of goods. The absence of but one of these conditions means that an essential prerequisite for an economic exchange is missing, and that an exchange of goods between two economizing individuals is economically impossible. [Emphasis added.]

We should recognize that at any given time, people’s wants are more plentiful than the available labor and resources. That’s why we economize. If we find that our satisfaction for good X is well taken care of by one producer, other, disappointed producers will shift to producing other things we (might) want. New products we never dreamed of might be invented. (Ya think?) Markets work well when the state keeps its hands off.

One more thing: people unfriendly to a great commercial society may be okay with one-on-one barter. What gets their goat are the profit-seeking middlemen: the wholesalers, peddlers, shopkeepers, and moneylenders. For the record, hostility to middlemen, who have often been stigmatized as parasitic aliens, has led to unspeakable violence against Jews in Europe, Chinese in Southeast Asia, Lebanese in west Africa, Indians and Pakistanis in east Africa, Armenians in the Ottoman Empire, Ibos in Nigeria, Parsees in India, and Tamils in Sri Lanka. Why? Because they allegedly produced nothing while becoming relatively affluent. Historically, ignorance bred hate, which bred atrocities. To condemn middlemen as unproductive is to believe falsely that potential traders live near each other and possess full knowledge of their trading opportunities. Middlemen are information brokers—matching buyers with sellers and borrowers with lenders. They earn their profits.

Menger had something to say about that:

Because they [middlemen] do not contribute directly to the physical augmentation of goods, their activity has often been considered unproductive. But an economic exchange contributes, as we have seen, to the better satisfaction of human needs and to the increase of the wealth of the participants just as effectively as a physical increase of economic goods. All persons who mediate exchange are therefore—provided always that the exchange operations are economic—just as productive as the farmer or manufacturer. For the end of economy is not the physical augmentation of goods but always the fullest possible satisfaction of human needs. Trades people contribute no less to the attainment of this end than persons who were, for a long time, and from a very one-sided point of view, exclusively called productive.