This article challenges the liberal (or “neoliberal”) argument that free trade in goods and services (including financial services) makes for better overall economic performance at the level of the world economy and the level of national economies. Liberal champions infer that those who oppose the liberal prescriptions either fail to understand the theory or seek to protect vested interests, and hence regional bodies such as the European Commission and international bodies such as the World Bank and International Monetary Fund should properly push the liberal agenda under the banner of “the general interest.” The author presents theoretical and empirical grounds on which to challenge the argument. He shows that Henry George's enigma— the association of poverty with progress—is still with us, and relates its persistence to the way that the positive feedback of the Matthew effect— “to him that hath shall be given”—dominates the negative feedback of neoclassical diminishing returns.
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