The trade war at home: Factor mobility, international trade, and political coalitions in democracies

While domestic political conflict has been a constant companion to international trade, the nature of that conflict has varied greatly in Western democracies over the last two centuries. Political battle lines over trade have sometimes divided nations into broad class coalitions and, at other times, into more narrow sectoral or industry-based coalitions. I argue that this diversity is largely a function of historical and cross-national variation in factor mobility: that is, the ease with which individual owners of land, labor, and capital can move between industries in the domestic economy. Class conflict is more likely where factor mobility is high, while narrow industry-based coalitions have a stronger presence when mobility is low. I develop a formal model of the distributional effects of trade that links levels of mobility to coalition formation, the behavior of political parties and lobby groups, and the character of trade policies.;The study examines evidence of historical and cross-national variation in factor mobility in Western economies, indicating that mobility levels are strongly related to industrialization. Early stages of development typically produced a sharp rise in mobility with rapid improvements in transportation and communication. More surprisingly, later stages, involving greater reliance on specialized physical and human capital, appear to have led to a noticeable decline in inter-industry factor mobility. A qualitative analysis of trade politics in several Western economies since 1815, coupled with a statistical analysis of legislative voting on trade bills, indicates that these changes have had significant effects on trade coalitions. The evidence indicates that parties are more unified along class lines when mobility is high, while industry groups lobby more vigorously along industry lines when mobility declines. Further, the coherence of the trade policies and platforms adopted by the parties appears to be directly related to levels of factor mobility.;The research suggests that class-based analysis of trade politics, and perhaps economic policy-making more generally, while appropriate in many Western economies in past periods, have become far less enlightening with continued industrialization.