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Page 12 Street Roots • June 23-29, 2017 Commentary Corporate-sponsored globalization is not free trade BY ROBIN HAHNEL C O N T R IB U T IN G C O L U M N I S T Robin Hahnel is a professor o f economics emeritus at American University in Washington, D .C ., faculty affiliate at Portland State University and co-director of economics for Equity and the Environment. here is a grand debate over international economic policy now raging, and the outcome will have profound impacts on how the world evolves over the next several decades. But don’t be tricked into thinking this is a debate about “free trade” - the unhindered exchange of goods - because it is not. The grand “neoliberal” transformations of the international economy over the past few decades are, first and foremost, about increasing international protection for intellectual property rights (patents and copyrights) and making it easier for financial capital and productive facilities to relocate Street Sm a rt Economics is a periodic series anywhere they choose. written fo r Street Roots by professors emeriti in Those pushing for these changes want economics. people to think the debate is about trade liberalization - mutual reductions in tariffs on imported goods - to distract people from what measures” (TRIMS), and “trade related is really being done, which is to further international property rights” (TRIPS), empower multinational corporations at the whereas the WTO has made acceptance of expense of everyone else. these provisions a requirement for This includes setting up tribunals completely membership. T R IM S is techno-babble for outside national judicial systems in which outlawing regulations on direct foreign corporations can sue to stop governments from investment and TR IPS is techno-babble for passing regulations their citizens favor to extending coverage and enforcement of patents protect the environment and worker safety. and copyrights to all countries. What is Trade liberalization has been the least important to know about this is that no country important component of the neoliberal has ever succeeded in achieving economic globalization process over the past 30 years. development without sometimes placing The General Agreement on Tariffs and restrictions on foreign investors and without Trade did far more to reduce tariffs and being able to adopt technologies developed promote “free trade” in the first two decades elsewhere at low cost. So don’t be distracted after World War II than the World Trade by talk of “free trade.” Instead, ask yourself Organization (WTO) has done to reduce tariffs whose interests are served by protecting since its founding over two decades ago - international property rights and liberalizing giving lie to the claim that neoliberal both direct foreign investment and globalization is primarily a push for trade international financial investment (IFI, or liberalization. portfolio investment), and whose interests are Not only was trade liberalization the main harmed. The answer to who benefits is obvious mission of General Agreement on Tariffs and - multinational corporations. Here is the Trade, the emphasis under it was primarily to answer to who has been harmed: reduce tariffs in the more developed 1. In more developed economies, less skilled "Jbfe yo u rself whose Interests economies. This industrial workers have been hurt first and are sew ed b y p ro te ctin g provided some foremost by liberalization of direct foreign leeway for less investment, as their employers both threaten In te rn a tio n a l p ro p e rty rig h ts developed countries and do move their jobs to less developed and llb e r a llr ln f both d ire ct to protect their countries where wages are much lower and fo re ig n Iw e s tm e n t and In domestic industries working conditions are much worse. Combined te rn a tio n a l fin a n c ia l Invest- through early stages with a decline in unionization, liberalization of m ent? and whose Interests are of industrialization in direct foreign investment has led to a dramatic harm ed, The answer I® who what was referred to deterioration of employment and wages of less as an “import benefits Is obvious — skilled workers in more developed economies. substitution” After 30 years of this, it is hardly surprising sn n ltln a tlo n a l corporations?8 development that many less skilled workers in the strategy. It also “industrial heartlands” of more developed initially advantaged economies have rebelled against the political the United States establishment that presided over this grand because unlike other, more developed, transformation, and voted for Brexit in the economies, the U .S. productive infrastructure U .K ., Sanders over Clinton in the Democratic had not been reduced to rubble during World primaries, Trump over a field of establishment War II, so that lower tariffs for all more Republicans in the Republican primaries, and developed economies boosted U ,S. exports finally Trump over Clinton in the general more than imports in the post-war years. More election. importantly for present purposes, the General Agreement on Tariffs and Trade negotiated 2. In less developed countries, the effects of reductions in tariffs without forcing countries financial liberalization was disastrous, as to acquiesce to “trade related investment currency crises triggered deep recessions T which took years to recover from in Mexico (1995), Thailand (1997), Malaysia (1997), Indonesia (1997), South Korea (1998), Russia (1998), Brazil (1998), Turkey (2001) and Argentina (2002). And since neoliberal globalization threw more peasants off the land in less developed countries than it added new jobs in labor intensive manufacturing, there was often little or no increase in less developed countries wages. 3. For decades the ill-effects of international financial liberalization were confined to less developed countries. But in 2008 the biggest financial crisis since the crash of 1929 hit the United States and the European Union harder than elsewhere. When establishment political parties in more developed economies bailed out the banks but not the victims of foreclosures, and allowed unemployment to linger far longer than necessary, conditions were ripe for political rebellion. > otn < center right and center lett >establishment political parties in more B developed economies have suffered huge electoral losses everywhere as they struggle to maintain power. Sometimes the populist revolt has Trade H b o ra la a fio a has bees been led by the least » p o r t a » ! oo»po»® at progressive forces, of the n e o lib e ra l f lo b a lb a tlo a such as Syriza in process w e r the past 3 0 years« Greece, Podemos in Spain, Uncut and Jeremy Corbyn in the U .K ., and Occupy and Bernie Sanders in the U .S. But unfortunately the right-wing rebellion against the establishment has more often been led by right-wing politicians such as Marine Le Pen in France, Nigel Farage in the U .K ., Geert Wilders in the Netherlands, and most spectacularly, Donald Trump in the United States. Right-wing populists scapegoat immigrants and refugees from wars and poverty caused in no small part by havoc unleashed by neoliberal globalization, denounce all international economic treaties and organizations and threaten to raise tariffs dramatically. It remains to be seen how much of their pre-election rhetoric is a program with concrete substance and how much is pure demagoguery. Over the past three decades progressives honed a compelling critique of neoliberal globalization. More recently progressives have forthrightly denounced racist campaigns by right-wing populist forces against immigrants, refugees, Muslims and people of color as little more than vicious scapegoating. But progressives have struggled to present an attractive alternative to both neoliberal globalization and right-wing populism. I will try to fill this gap and describe what a progressive alternative might look like in my next article.
