Economics and ethics are inseparable. For any economy to flourish and prosper, the market transactions propelling it forward must be encapsulated within a supporting framework of ethics and non-market institutions. Jewish sociologist Amitai Etzioni called that framework the “moral dimension”. Without it any economy will falter. The same is true of the global economy.
So this week’s allegations that Chinese officials have threatened New Zealand companies over an investigation into possible Chinese steel dumping, raises doubts about the long term prognosis for our Free Trade Agreement with China. Historically New Zealand and its western trading partners have shared a similar cultural heritage. The same Judeao-Christian values have infused our economic, political and cultural landscapes. Respect for honesty and integrity in business dealings, transparency and accountability, and playing by the rules are part of our common cultural heritage. That doesn’t mean we always live up our values, but at least there is a deeply rooted recognition of their importance.
However we are now increasingly reliant on trade with nations that do not have the same cultural background. Indeed some of them like China have spent decades trying to eradicate any ethic other than the progress of the State. In such cultures where the will to power prevails in politics, it should not surprise us that the will to establish and exert market power also prevails. That doesn’t mean we shouldn’t foster positive relationships with such countries. It does mean that we should do so with caution and wisdom.
We should also be careful not to allow our national prosperity to become hostage to a few very large trade relationships. Especially relationships that may not be built on as firm a foundation as we would like to think. With Britain looking for new trading partners after leaving the EU, it is an opportune time for New Zealand to renew old family ties. A free trade agreement with the UK would not only help diversify our trade – we are also on the same page when it comes to the values that sustain democratic cultures and help to grow flourishing economies.