Volume 2 of "Embarrassing Economic Stories," on markets and trade, deals with economic activities based on exchange.
When we hear the word 'exchange', we often think of barter, but exchange is a much larger and broader category of activity that includes buying and selling using money.
Wherever exchange takes place, a 'market' is created, and the market operates according to its own principles.
This book examines not only the principles of markets but also the changes that occur when different markets are connected through trade.
It also covers current issues.
Through the example of our country, which grew by leveraging both free trade and protectionism, and the ongoing US-China trade conflict, we raise profound questions about the essence of trade.
Covering every aspect of our connected world, this book will serve as a telescope that broadens your economic perspective.

Exchange does not only mean bartering, exchanging goods for one another.
Buying goods with money is also an exchange.
The only difference is whether you exchange it for goods or money.
In economics, any space where exchange takes place is called a market.
Wherever exchange takes place, there is always a market, and so the order of the market and the benefits of exchange are a pair.
It may seem simple now, but it is a very profound truth.
---From "Part 1, Chapter 1, 'Trade That Made Today's World'"

We usually only learn that cities emerged with the advent of agriculture.
However, the development of cities is closely related to trade.
Jericho grew into the first city because it was a trading hub where very special goods were traded.
The protagonist who gave birth to the first city was salt, the seasoning that enriches your table every day.
---"Part 1, Chapter 2: 'The Trading Human Survived'

For a small supermarket to grow into a bakery specializing in bread or a fruit specialty store, the surrounding market must grow.
Even if it's not as much as Gangnam Station, there needs to be some level of demand to support it.
The way goods are supplied depends on the size of the demand, that is, the size of the market.
---From "Part 2, Chapter 2, 'When Different Markets Connect'"

Specialization and division of labor are important in the production process because they can significantly increase productivity without increasing working hours.
The pin factory example from Adam Smith's The Wealth of Nations is very famous.
Let's assume that an ordinary factory worker makes pins by hand from start to finish, without any help from machines.
No matter how hard you try, you can only make about 20 a day.
However, if you analyze the pin manufacturing process in detail and divide it into 18 steps, and have ten people take charge of these divided processes, you can make up to 48,000 pins per day.
Before division of labor, a worker who could only make 20 pins a day was able to make 4,800 pins after becoming part of the division of labor.
Working hours remained the same, but production increased 240-fold.
---From "Part 2, Chapter 2, 'When Different Markets Connect'"

It's obvious that it's not tradeable now, but in the past, there were things that were tradeable, including voting rights.
Before the "one person, one vote" electoral principle became a given, it was common in 18th-century England for landowners to buy peasants' votes.
At that time, voting principles such as secret ballot and direct voting were not properly established, so vote buying and selling occurred frequently.
It was only after the British Parliament amended the electoral law several times that vote buying was eradicated.
---From "Part 2, Chapter 3, 'Shadows of the Connected World'"

Even in everyday life, we often hear the words, “I don’t have enough capital” or “I don’t have any capital.”
Strictly speaking, capital is a different concept from money as we generally use it.
The key is that it grows on its own.
Of course, it doesn't just grow by itself if left alone. It means that it is used to mobilize other factors of production, such as land or machinery, and ultimately returns as greater capital.
The funds we commonly refer to as 'business capital' can be said to be capital.
Furthermore, capitalism refers to a system that guarantees economic activities that utilize capital to produce and consume and obtain profits.
---From "Part 2, Chapter 3, 'Shadows of the Connected World'"

Of course, because the process of economic development is dynamic, there are opportunities for latecomers to turn things around.
Just because you start a little late doesn't mean you have to fall behind forever. You can also try to advance your industry to close the gap with the leaders.
If industrial advancement is successful in this way, the specialized industries of the two countries will become similar, resulting in competition rather than mutual complementarity. If this competition intensifies, it will lead to a situation called trade conflict or even a trade war.
In this way, trade conflicts can be seen as an inevitable and natural occurrence that inevitably arises in the process of expanding free trade.
Because everyone wants to specialize in high value-added industries.
---From "Part 3, Chapter 1, 'Free Trade and Protectionism: The Never-ending Debate'"

To help you understand, let's divide the world's population into four groups: the upper and lower classes in developed countries, and the upper and lower classes in developing countries.
Trade tends to benefit three groups: the upper classes in developed and developing countries, and the lower classes in developing countries.
But for the remaining group, the lower classes of developed countries, the story is a bit different.
Unlike the three groups mentioned above, who can be said to be beneficiaries of trade, there are people in the lower classes of developed countries whose livelihoods are affected by trade.
Like the people of the Rust Belt and the farmers in our country's grape groves.
---From "Part 3, Chapter 3, 'The Return of the Protectionist Era'"

It seems likely that the current protectionist trend will continue for the time being.
Since the tendency to prioritize one's own country has already become stronger, especially in some developed countries, it seems that it will take quite some time for this atmosphere to reverse.
To make matters worse, Russia's invasion of Ukraine in 2022 led to sharp increases in global energy and food prices, exacerbating supply chain crises.
Even if the COVID-19 crisis ends, protectionist movements are likely to remain dominant for 5 to 10 years.
If that happens, cooperation to solve global problems may also become difficult.
It's deeply regrettable that I, too, am forced to draw a negative conclusion, but it seems clear that we have entered an era where we must live with caution.

---From "Part 3, Chapter 3, 'The Return of the Protectionist Era'"