BRICS Wants to Shape the Rules. The Price System Will Judge Them.

In Delhi, we are told, some of the most powerful persons in the world sat around a vast circular table and were urged to become “rule‑shapers, not rule‑takers.” The phrase is admirably frank. To shape the rules of trade, of finance, of war and peace, is to shape who bears the costs and who reaps the gains. Every tariff, every sanction, every new financial arrangement writes itself, in the end, into the prices paid by ordinary consumers and the wages earned by the labouring poor. When leaders speak of the architecture of the global order, the impartial spectator ought to hear also the rent, the price of bread, and the chance of honest employment.

In my inquiry into the wealth of nations, I traced the astonishing productivity of a humble pin‑factory to the division of labour, and the division of labour to the extent of the market. Whatever widens that market – roads, ports, security, open commerce – deepens specialization and raises the annual produce of the land and labour. Whatever narrows it – war, prohibitions, jealous rivalries – diminishes that produce and falls heaviest on those least able to bear loss. If the BRICS leaders seek rules that widen their markets and knit their peoples more closely into peaceful exchange, they will find in me not an adversary but a cautious ally.

Yet the same gathering voiced alarm at war in the Middle East, at “deliberate attacks” on civilian infrastructure and peaceful nuclear facilities, and it condemned unilateral sanctions. Here justice and commerce meet. To strike at civilians and the works that sustain their lives is not only a crime against fellow‑feeling; it is an assault on the very channels by which distant regions supply one another’s wants. In The Theory of Moral Sentiments I argued that our resentment is most strongly roused by unprovoked injury. To destroy the innocent’s means of subsistence, or to choke it off by economic siege, is injury twice over: it offends both humanity and the natural progress of opulence.

Unilateral sanctions are a species of that economic siege. Sometimes they are presented as instruments of justice; often they serve, more quietly, as instruments of trade war. In The Wealth of Nations I observed that the policy of many governments had been, not to enrich the people, but to enable particular producers to sell dearer than they otherwise could. Sanctions can perform this office very well. They raise prices to one set of consumers, shut out rival producers, and gratify the exporters and courtiers of the sanctioning power. The gains are concentrated and applauded; the losses are diffused and silent. One must follow the price, not the proclamation, to discover their true character.

When, therefore, a new coalition of states denounces “unilateral sanctions,” it speaks a language I largely understand. It is no small matter if a single power presumes to interrupt the higgling and bargaining of the market on which many others depend. Such acts fragment the market and narrow the scope for the division of labour. But I have long warned that people of the same trade seldom meet, even for merriment, without the conversation ending in some contrivance against the public. States can be as mercantile as merchants. A bloc that resents the sanctions of others may be chiefly vexed that it did not itself impose them.

Here the ambition to be “rule‑shapers” deserves the most suspicious attention. To object to the arbitrary power of one rule‑maker is commendable; to replace it with the arbitrary power of several is only to multiply the danger. If this association designs new financial instruments, new payments arrangements, new standards for trade, the question is not whether they are novel, but whether they are open. Do they widen the circle of peaceful exchange, or do they bind members into a closed club and leave outsiders to face dearer goods, fewer options, and perhaps fresh political intimidation? Two rival systems of rules can easily mean two shrunken markets, with the labouring poor of both sides paying for the dignity of their betters.

My old caution about the man of system applies with peculiar force here. It is tempting, after the shock of war and the irritation of contested sanctions, to imagine that the whole great chess‑board of human society might be rearranged by a bold design issued from a conference table. But every piece on that board – every state, every merchant, every workman and consumer – has a principle of motion of its own. Grand plans for “reshaping the global order” which neglect these independent motions risk mischief: they promise harmony and deliver confusion, promise justice and deliver only a new pattern of privileges.

The impartial spectator will therefore judge these proceedings, not by the splendour of the hall in Delhi nor by the vehemence of the communiqués, but by quieter effects. Are attacks on civilians and their infrastructure actually restrained, or only deplored in carefully chosen theatres? Are sanctions, whether imposed by one power or many, in fact reduced, or merely rebaptized? Do prices for food, fuel, and employment prospects in the Middle East and beyond improve, or do they suffer in the cross‑fire of rival rule‑shapers? If the rules they shape permit the invisible hand of ordinary self‑interest, under justice, to raise the condition of the poor, they will be praise‑worthy; if not, they will be only the latest illustration of the vile maxim of the masters of mankind.