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Anti-dumping law in a liberal trade order
Book reviews
241
normative implications of the conclusions. Also, when it comes to a comparison of the various instruments (private and regulatory) used in environmental and antitrust law - two chapters which achieve clarity at the cost of considerable oversimplification - the author remains neutral on policy recommendations. In the former case, he is content to conclude that though it is impossible to formulate a single, socially desirable policy for all forms of externality, nevertheless economics, in the form of cost-benefit analysis provides ‘a uniformly applicable analytical framework for the comparisons of strengths and weaknesses of alternative mechanisms and policies’ (p. 235). The chapters which are used to illustrate how economists may evaluate the effects of law make quite different demands on the reader. Here he must grapple with the application of an econometric model to empirically derived data. Professor Hirsch is indeed conscious of the’problems this poses for the non-specialist for he suggests that some readers may wish to ‘skip this section.’ Those following the advice will save themselves the concentrated effort necessary to follow the analysis, but will also miss the opportunity of seeing one important facet of law-and-economics at work. The area chosen, habitability laws, is valuable both because of the strength of the data and because the conclusion, that this form of control may be counterproductive, serves to underline the problems facing regulators. The implication is not, and the inference is not to be drawn, that one of the functions of economic analysis is to reveal the inadequacies of regulation, but it remains an unhappy paradox that the very process of regulation often generates data which are simply unavailable in the unregulated sector. This conveniently brings us back to the central weakness of this otherwise worthy publication. A perspective which stresses the dual function of economic analysis of law as the economic rationalization of law and the evaluation of its effects but which exemplifies the former mainly through the private, unregulated law and the latter exclusively in the regulated sector, without exploring the theoretical relationship between the two areas, distorts the function of law in a mixed economy. It also lends some credence to the view that the economic analysis of law is ideologically biased, a view which needs to be repudiated if the value of the enterprise is to secure more general recognition. A. I. Ogus University of Newcastle upon Tyne Richard Dale, Anti-Dumping Law in a Liberal for the Trade Policy Research Centre.
Trade Order.
London: Macmillan,
The intranational regulation of economic activity has come under increasing attack from economists over the last decade. Some studies have suggested that such regulatory measures achieve no discernible effect on the allocation of resources. Others conclude that the costs of regulation have been so large as to outweigh the presumed benefits. Yet others have detailed how government regulation of domestic economic activity has reflected not the public interest but the interest of politically influential groups. The general, emerging consensus is that the pattern of domestic economic regulation does not conform at all with the implications of the orthodox ‘market failures’ criterion for government intervention. In this study, Dr. Dale extends a similar line of criticism against intervention in international market activity via anti-dumping legislation. Dumping - the practice
242
Book reviews
of price discrimination as between different national markets - has long been an object of vilification (at least from domestic producer groups subject to foreign competition). It has also long been the subject of both domestic legislation and international treaty (specifically, Article VI of the GATT, commonly referred to as the Anti-Dumping Code). Dr. Dale shows in the analytical part of his study that the arguments for antidumping legislation are flimsy at best: that dumping is generally beneficial to the importing country; and that the conditions for successful ‘predatory’ dumping (to eliminate foreign competition) are rare - and that it is unlikely in any case to be an efficient form of monopolization. The main part of his book is concerned with a detailed examination of antidumping laws and their operation in the post-war world. He demonstrates that the implications of standard welfare-theoretic analysis of dumping are simply ‘not reflected’ in actual anti-dumping policies. His general conclusion for policy is that such legislation is at best superfluous and, at worst - given the cost, complexity and unpredictability of anti-dumping actions - a serious impediment to trade. This book is a scholarly and well-documented expose of the divergence, witnessed in so much of intranational regulatory activity, and here as regards the regulation of international transactions, between the implications of standard welfare economics and the reality of regulatory practice. It is thus a valuable contribution to the study of the effects, operation, and rationale of international economic law. To one point, however, I feel that the author did not address sufficient attention: the question of dumping by Communist countries in markets for strategically important commodities. For example, the elimination of private merchant shipping by long-term predatory pricing by the USSR and its Satellites in the merchant shipping market could, possibly, pose a strategic threat to the West, in the subsequent event of increased international tension or overt hostilities. It may well be, as Dr. Dale argues, that there are alternatives to anti-dumping to deal with the problem of dumping by centrally-planned state enterprise. The general point, however, is that considerations of defence raise some of the most complex questions in the debate over protectionism versus free trade, which require detailed treatment of their own. J. Burton University of Birmingham
Svetozar Pejovich, Fundamentals of Economics: A Property Rights Approach. Dallas, Texas: Fisher Institute. The foreword to this book indicates that it is intended as an elementary textbook. This, however, leaves open the question of whether its author sees it as an elementary secondary school text or as an elementary (i.e. first-year) university text. If the latter was intended then its standard falls far short of what would be required for an English undergraduate Economics course. On the other hand if the book is aimed at secondary school pupils who have no prior knowledge of economics, then with editorial polishing it might form a useful price-theory primer. Equally, I might be inclined to recommend the book to a lawyer (or indeed a student of any other discipline) who wanted to spend a couple of evenings familiarizing himself with the basics of the economist’s terminology and analytical apparatus so far as they relate to the functioning of price-mechanisms. The book’s emphasis on the role of
241
normative implications of the conclusions. Also, when it comes to a comparison of the various instruments (private and regulatory) used in environmental and antitrust law - two chapters which achieve clarity at the cost of considerable oversimplification - the author remains neutral on policy recommendations. In the former case, he is content to conclude that though it is impossible to formulate a single, socially desirable policy for all forms of externality, nevertheless economics, in the form of cost-benefit analysis provides ‘a uniformly applicable analytical framework for the comparisons of strengths and weaknesses of alternative mechanisms and policies’ (p. 235). The chapters which are used to illustrate how economists may evaluate the effects of law make quite different demands on the reader. Here he must grapple with the application of an econometric model to empirically derived data. Professor Hirsch is indeed conscious of the’problems this poses for the non-specialist for he suggests that some readers may wish to ‘skip this section.’ Those following the advice will save themselves the concentrated effort necessary to follow the analysis, but will also miss the opportunity of seeing one important facet of law-and-economics at work. The area chosen, habitability laws, is valuable both because of the strength of the data and because the conclusion, that this form of control may be counterproductive, serves to underline the problems facing regulators. The implication is not, and the inference is not to be drawn, that one of the functions of economic analysis is to reveal the inadequacies of regulation, but it remains an unhappy paradox that the very process of regulation often generates data which are simply unavailable in the unregulated sector. This conveniently brings us back to the central weakness of this otherwise worthy publication. A perspective which stresses the dual function of economic analysis of law as the economic rationalization of law and the evaluation of its effects but which exemplifies the former mainly through the private, unregulated law and the latter exclusively in the regulated sector, without exploring the theoretical relationship between the two areas, distorts the function of law in a mixed economy. It also lends some credence to the view that the economic analysis of law is ideologically biased, a view which needs to be repudiated if the value of the enterprise is to secure more general recognition. A. I. Ogus University of Newcastle upon Tyne Richard Dale, Anti-Dumping Law in a Liberal for the Trade Policy Research Centre.
Trade Order.
London: Macmillan,
The intranational regulation of economic activity has come under increasing attack from economists over the last decade. Some studies have suggested that such regulatory measures achieve no discernible effect on the allocation of resources. Others conclude that the costs of regulation have been so large as to outweigh the presumed benefits. Yet others have detailed how government regulation of domestic economic activity has reflected not the public interest but the interest of politically influential groups. The general, emerging consensus is that the pattern of domestic economic regulation does not conform at all with the implications of the orthodox ‘market failures’ criterion for government intervention. In this study, Dr. Dale extends a similar line of criticism against intervention in international market activity via anti-dumping legislation. Dumping - the practice
242
Book reviews
of price discrimination as between different national markets - has long been an object of vilification (at least from domestic producer groups subject to foreign competition). It has also long been the subject of both domestic legislation and international treaty (specifically, Article VI of the GATT, commonly referred to as the Anti-Dumping Code). Dr. Dale shows in the analytical part of his study that the arguments for antidumping legislation are flimsy at best: that dumping is generally beneficial to the importing country; and that the conditions for successful ‘predatory’ dumping (to eliminate foreign competition) are rare - and that it is unlikely in any case to be an efficient form of monopolization. The main part of his book is concerned with a detailed examination of antidumping laws and their operation in the post-war world. He demonstrates that the implications of standard welfare-theoretic analysis of dumping are simply ‘not reflected’ in actual anti-dumping policies. His general conclusion for policy is that such legislation is at best superfluous and, at worst - given the cost, complexity and unpredictability of anti-dumping actions - a serious impediment to trade. This book is a scholarly and well-documented expose of the divergence, witnessed in so much of intranational regulatory activity, and here as regards the regulation of international transactions, between the implications of standard welfare economics and the reality of regulatory practice. It is thus a valuable contribution to the study of the effects, operation, and rationale of international economic law. To one point, however, I feel that the author did not address sufficient attention: the question of dumping by Communist countries in markets for strategically important commodities. For example, the elimination of private merchant shipping by long-term predatory pricing by the USSR and its Satellites in the merchant shipping market could, possibly, pose a strategic threat to the West, in the subsequent event of increased international tension or overt hostilities. It may well be, as Dr. Dale argues, that there are alternatives to anti-dumping to deal with the problem of dumping by centrally-planned state enterprise. The general point, however, is that considerations of defence raise some of the most complex questions in the debate over protectionism versus free trade, which require detailed treatment of their own. J. Burton University of Birmingham
Svetozar Pejovich, Fundamentals of Economics: A Property Rights Approach. Dallas, Texas: Fisher Institute. The foreword to this book indicates that it is intended as an elementary textbook. This, however, leaves open the question of whether its author sees it as an elementary secondary school text or as an elementary (i.e. first-year) university text. If the latter was intended then its standard falls far short of what would be required for an English undergraduate Economics course. On the other hand if the book is aimed at secondary school pupils who have no prior knowledge of economics, then with editorial polishing it might form a useful price-theory primer. Equally, I might be inclined to recommend the book to a lawyer (or indeed a student of any other discipline) who wanted to spend a couple of evenings familiarizing himself with the basics of the economist’s terminology and analytical apparatus so far as they relate to the functioning of price-mechanisms. The book’s emphasis on the role of