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Free trade extends the scope and power of corporate oligarchy

By: | November 30, 2016

What we need to know about neoliberalism. (Part 2 of 3)

Ed Finn
The Nonagenarian’s Notebook

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On Nov. 26 people in Toronto took action against the TPP and other trade deals outside Trade Minister Chrystia Freeland's constituency office. Photo by Albert Yang / Leadnow Canada..

Ill fares the land, to hastening ills a prey,
Where wealth accumulates, and men decay.
                                  — Oliver Goldsmith

Seventeen years ago, I wrote a column in which I described free-market capitalism as “the most unjust and barbaric economic system ever created, and one that now oppresses and abuses most of the world’s people.” I was later vilified by neoliberal pundits, and even chided by some progressives who thought that calling the dominant economic system “barbaric” was going too far.

This is how I responded to my critics:

Look up the word “barbaric” in your dictionary, and you’ll find several synonyms, including brutal, cruel, and savage. They all apply to the current capitalist system – and even more so to its leaders. These suave chief executives don’t look or act like Attila the Hun. They dress smartly, talk smoothly, and their table manners are impeccable. But strip away the glossy veneer, and you find the ruthless autocrats beneath the surface.

These modern barbarian chieftains don’t personally lead their hordes to invade other countries. They don’t physically destroy cultures, openly loot and pillage cities, or brutalize their citizens. But they engage in the equivalent of all these barbaric activities from the seclusion of their boardrooms, sometimes with just a phone call or a tap on a computer key.

Their invasions take the form of “free trade.” Their looting and pillaging is done through strip-mining, deforestation, privatization, deregulation, currency speculation, and IMF-enforced repayments of onerous debt-loads.

In the wake of these corporate depredations, billions of people are doomed to poverty, hunger and disease, and hundreds of thousands to premature death. They are as much the victims of barbarism as were those slaughtered by Attila the Hun and Genghis Khan. The business brigands who plan and direct these pogroms don’t have blood on their well-manicured hands, but they make the Goths and Vandals look like teen-aged delinquents.

That malediction dates back to 1999, but I wouldn’t change or take back a word of it today. If anything, corporate barbarism has intensified on a colossal scale, to the point of endangering the very sustainability of human life on the planet. The scourges of poverty and inequality run even more rampant, with a few hundred multi-billionaires hoarding more wealth than three-fourths of the world’s populace.

“There’s no alternative” – really?

The defenders of this inhumane system argue that the “free market,” though admittedly flawed, is still the best way to run the economy. Its publicized faults –  job cuts, outsourcing, tax evasion, financial fraud, recurring meltdowns, and the enshrinement of competition over co-operation – are all brushed away as unavoidable defects of an otherwise ideal system, one that in any case allegedly has no viable alternative.

“If our economy wasn’t run by capitalists,” I was often asked, “would you rather have it run by communists or anarchists?” These critics had either never heard of the democratic socialism that thrives in Sweden, Norway, Denmark, and Finland, or chose to dismiss it as an aberration confined to the Scandinavian countries and a few other nations in Europe.

Neoliberal fanatics conveniently overlook the insanity of an economic system that is built on the expectation of infinite growth on a finite planet.

Neoliberal fanatics conveniently overlook the insanity of an economic system that is built on the expectation of infinite growth on a finite planet. Capitalism, of course, could not continue without such a demented and ultimately self-destructive delusion. Left unchecked, it is bound to collapse from the depletion of resources and the devastation of global warming — perhaps as early as the 2030s, but certainly long before the end of this century.

In the meantime, continual economic growth will continue blindly to be pursued and sanctioned, not just by the corporations, but by their subservient governments and mass media outlets. In this Alice-in-Wonderland world, the unimpeded growth that threatens any semblance of civilization is welcomed while the curbing of growth that is so urgently needed is spurned. So, in effect, cancerous growth is being treated as the “cure” to the economy’s malaise instead of its cause.   

In a sane society, the recurring economic crises triggered by neoliberal economics would not just expose its lunacy, but prompt its abandonment. So would the worsening levels of global poverty and inequality spawned by uncontrolled capitalism.

Instead, as Guardian columnist George Monbiot points out in How Did We Get Into This Mess?, “The greater the failure, the more extreme the ideology becomes. Governments use neoliberal crises as both excuse and opportunity to cut taxes, privatize remaining public services, rip holes in the social safety net, deregulate corporations, and re-regulate citizens.”

Profit motive prevails

Secure from government intervention, corporations are left free to generate economic growth and profits by any means they choose. Equally irresponsible governments will cut corporations’ taxes, raise their subsidies, and facilitate their ongoing destruction of the ecosphere.

The profit motive drives corporate conduct and sets the priorities. If something can be developed, produced, and sold for a profit, it keeps getting produced and sold, regardless of the ruinous long-term consequences. On the other hand, if something is actually needed to enhance public welfare, but wouldn’t be profitable enough to produce, it doesn’t get made.

Extracting and selling global-warming fossil fuel is profitable.
Pillaging non-renewable resources is profitable.
Deforestation is profitable.
Pollution is profitable.
War is profitable.
Offshore tax havens are profitable.
Poverty and inequality are profitable.
Hooking kids on sugar is profitable.
Ill-health is profitable.
Drugs are profitable.
Child labour and slave labour are profitable.
Low wages and high unemployment are profitable.
Unsafe workplaces are profitable.
Purchasing politicians is profitable.

Conversely, of course, anything that would benefit most people, but not make as large a profit as frivolous trinkets or the latest electronic gadgets, will not be undertaken. Repairing our crumbling infrastructure could be profitable and create more jobs, but not as much as outsourcing jobs to a low-wage country. Reducing the high rates of disease caused by poverty and malnutrition would lower health care costs, but it’s more immediately profitable to treat the sick with expensive drugs than help them stay well.

“A rapacious oligarchy”

One of the books that enlightened me when I was compiling my Under Corporate Rule columns in the 1990s was The Next American Nation by Michael Lind, a senior editor of Harper’s magazine. His book, published in 1985, shunned euphemisms. He referred to the small group holding most of the money and power in the U.S. at that time as “a rapacious oligarchy.” This oligarchy, he said, “supported by the news media (which it largely owns), has waged a war of attrition against the wage-earning majority through regressive taxation and the expatriation of industry through free trade.”

Lind listed the four tactics deployed by the American ruling class to maintain and increase its dominance. These were: (1) adopt a “divide and rule” strategy that pits various groups against one another in zero-sum struggles for a share of declining wage income; (2) gain complete control of both major political parties; (3) withdraw from the rest of society into heavily guarded enclaves; and (4) successfully promote the belief that their oligarchy doesn’t really exist.

During the 26 years that have elapsed since Lind exposed the baneful behaviour of the oligarchy, all these cunning corporate flimflams have become even more pervasive. As a result, corporate rule has ballooned from the national level to encompass the entire planet.

The principal means by which this global corporate conquest was accomplished was through the negotiation of multi-country “free trade” agreements. Though widely promoted as deals that benefit workers and consumers, in reality they are primarily designed to further bolster the power and profits of corporations.       

I was among the journalists on the left who started writing anti-free-trade tirades back in the late 1980s. That was while the first Free Trade Agreement (FTA) was being negotiated between the United States and Canada by Ronald Reagan and Brian Mulroney. That deal was the main issue of contention during the 1987 federal election, which unfortunately was won by Mulroney’s Conservative party. It was expanded in 1994 by the North American Free Trade Agreement (NAFTA), which added Mexico to the pact.     

What followed was a worsening of living standards and quality of life for millions of workers in all three countries. Unemployment skyrocketed as production and jobs were shifted to low-wage regions. Canada’s industrial sector was decimated.

Governments forfeit sovereignty

One aspect of “free trade” that hasn’t received the attention it should is the extent to which governments that ratified these treaties have surrendered their sovereignty.

Under the terms of NAFTA, for example, corporations who feel their profits — or anticipated profits — have been adversely affected by government laws or actions can sue such a government, either to have such laws rescinded or to be compensated for alleged profit losses. Many such claims can and have been filed, even against laws or policies enacted to protect public well-being — and they are ruled upon by NAFTA’s foreign three-person panels, completely bypassing national sovereignty.

Shortly after NAFTA came into effect, for example, our federal government decided to ban the import of a gasoline additive that studies found could cause cancer. The American producer of this additive filed a charge under NAFTA that was upheld by a secret tribunal, which ordered the Canadian government to pay the company $16 million for lost sales. That’s how NAFTA compels member countries to give the preservation of profits priority over their citizens’ health and welfare.

It’s clear to any objective observer that NAFTA and other “free” trade deals actually constitute a legal bill of rights for transnational corporations.

Another egregious claim under NAFTA was filed by AbitibiBowater Inc., which abandoned its paper mill in Grand Falls-Windsor in 2008, laying off 800 workers and eliminating the town’s main source of employment. When Newfoundland Premier Danny Williams took back the fleeing company’s timber and water rights — a move that was both economically and morally justified — the company filed a suit for damages under NAFTA’s notorious Chapter 11 process.

Since NAFTA is an international treaty, the company’s claim was directed at the federal government. Normally, the government could have been expected to fight such an unwarranted suit, even though it likely would have been upheld eventually by NAFTA’s business-biased kangaroo court. Instead, the newly elected Conservative government of Stephen Harper decided to capitulate and give AbitibiBowater a hefty out-of-court settlement of $130 million.

Almost two dozen similar NAFTA suits have since been filed against Canada, nearly all of them finding the government guilty of infringing NAFTA’s investors’ rights provisions and awarding the corporate claimants similar multi-million-dollar settlements.

So it’s clear to any objective observer that NAFTA and other “free” trade deals actually constitute a legal bill of rights for transnational corporations. It allows business interests to predominate over all other considerations.

Whither the TPP and NAFTA?

The most recent international trade deal, still not finalized by all 12 participating countries, is the Trans-Pacific Partnership (TPP), which has been vociferously denounced by many eminent economists and commentators.        

Former New York Times foreign correspondent Chris Hedges calls it “the most brazen corporate power grab in history. It solidifies the creeping corporate coup d’etat along with the final evisceration of national sovereignty. Citizens will be stripped of their ability to protect themselves from corporate predators, safeguard the ecosphere, and find justice and redress in our now dysfunctional democratic institutions. The TPP can be summed up in two words: corporate enslavement.”

Ralph Nader charges that “the TPP allows corporations to bypass our three branches of government to have enforceable sanctions imposed by secret tribunals. It establishes a transatlantic autocratic system of governance in defiance of our domestic laws.” 

Nobel Prize-winning economist Joseph Stiglitz says the TPP “may well be the worst trade agreement ever negotiated. It was negotiated with corporate interests at the table, and could be used to prevent or overturn rules that prevent usury or predatory lending practices.”

Speaking to the CBC after he delivered a speech at the University of Ottawa, Stiglitz deplored that federal International Trade Minister Chrystia Freeland had already put her signature to the TPP on behalf of the Trudeau government. He later met with Freeland “to explain the many pitfalls of the TPP, among them its potential to curb workers’ rights and even prevent increases in the minimum wage.” He urged the minister to recommend against ratifying the TPP.

Trudeau seems bent on emulating [Harper] in putting corporate interests ahead of the public interest.

But it has become clear that Justin Trudeau is just as fervid a free trade ideologue as was Stephen Harper. Maybe even more so. Despite the many damaging clauses in the TPP, and also in the Canada-Europe Trade Agreement (CETA), Trudeau seems bent on emulating his predecessor in putting corporate interests ahead of the public interest.

Ironically, it looks like his desire to ratify the TPP will be scuttled by none other than U.S. President-Elect Donald Trump. Despite his many atrocious political and personal traits, Trump shares a fierce aversion to free trade with the millions of working-class victims of these job-destroying deals. If he keeps his pledge to stop U.S. participation in the TPP, he will effectively kill that treaty. And if he forces Canada and Mexico to renegotiate NAFTA to block further corporate outsourcing, as he has also promised, he could, believe it or not, emerge as the champion of workers in all three countries. 

Whether Trump will dare incur the wrath of big business and major investors by making such anti-free-trade moves, or even secure the support he would need from the Republican House and Senate, is another matter. He has already backtracked on several other campaign promises he made, but he would be risking most of the blue-collar support he mustered from the rust-belt states if he also reneged on crucial trade deal reforms.   

In any case, we Canadians — including Justin Trudeau and his cabinet — will have to wait for the unfolding of political events across the border to ascertain the fate of both the TPP and NAFTA.

Again, it’s the height of irony that such a crucial aspect of this country’s economic and social future will be decided by a new U.S. President whom most of us fear and detest, and hoped would never be elected. 

In the third and final part of this series, I’ll assess the prospects of getting out of the monstrous neoliberal mess in time to avert the looming ecological cataclysm and start paving the way to a better and brighter future.

(A previous version of this article was published by the CCPA on May 19, 2016.)

Ed Finn was editor at the CCPA Monitor for 20 years. Formerly, he was editor of the Western Star in Corner Brook, a reporter at The Montreal Gazette, and for 14 years wrote a column on labour relations for The Toronto Star. He also served for three decades as a communications officer for several labour organizations, including the Canadian Labour Congress and the Canadian Union of Public Employees.

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