Trade Liberalization and Economic Growth in Europe and the United States

Four decades ago, Hayek and Schumpeter – two giants among the social philosophers of this century – foresaw an irreversible shift towards centralization and bureaucracy. Five decades ago, the American Keynesians, notably Alvin Hansen, predicted secular stagnation. They envisaged a saturation of consumer wants, declining population growth, and a dearth of opportunities for autonomous investments that arise from inventions and innovations and from the existence of a geographic frontier. Both predictions turned out to be wrong. A cyclical decline was mistaken for a trend, similar to the Communist Manifesto which, a century before, had misjudged a period of relative stagnation as an indicator of the inevitable breakdown of the market system…