Sunday, May 15, 2011

This Is What Happens When You Surrender to "Free Trade"

My stomach churned as I read this paragraph in The Guardian:

"More and more, we hear that nothing can be done to tax major corporations because of the threat of how they would respond. Likewise, we cannot stop their price-gouging or even the government subsidies and tax loopholes they enjoy. "

It's a fair statement.  It might even be an understatement.  The question becomes how did major corporations gain the power to threaten our governments, our societies - the power to write our legislation?   The answer is simple.   We gave it to them.

Free trade, first regional and later global, was pitched on the notion of free movement of capital.   That was a lie.   With a few exceptions, capital has always been relatively free to be moved around the planet.   What Free Trade initiatives were all about wasn't capital but markets or, rather, unfettered access to lucrative markets for companies that took their capital elsewhere in search of lower taxes, laxer environmental regulation and weaker labour laws.

Why would Nike pay an American $25 an hour when it could get a guy in Vietnam to do the same job for $2 a day?   Why indeed when its target market nations had yielded their sovereignty over their marketplaces?  It's great to get labour at $2 a day provided there are still enough people making $25 an hour elsewhere to buy your damned shoes.  It's win/win for the corporations and lose/lose for the affluent nations that allow those companies free access to their markets.   Oh the richest of the rich, the rentiers, win of course.   Their dividends skyrocket on the spread.   But it's tough titty for the guy who loses his factory job and winds up in the "service" industry at half salary, propping up his lifestyle on cheap and easy credit.

Yes, corporations threaten us when we want to do something they don't like but that's only because we've loaned them the knife.   Why don't we take that knife back?   Why aren't we the ones able to threaten corporations?   Why don't we reclaim our sovereignty so foolishly surrendered by people of the ilk of Reagan and Mulroney?   All we have to do is call their bluff.   There will be "repercussions" initially but, then again, haven't we been living with the horrible repercussions of Free Trade for decades?

Bear in mind that globalization stands to become a far greater drag on world economies in coming decades.   World oil prices are going nowhere but up which is why we're so eager to exploit toxic, polluting, even deadly sources of unconventional petroleum.   We can't get the good stuff any more so we'll smoke the Burley Scrap right off the floor of the barn.   Globalization is founded on cheap, long distance transportation to move materials and products around the world.  That's going to become increasingly less viable.

Likewise as we enter upon an era of depleted or even exhausted resources, globalization again becomes less viable.   And, in case you haven't noticed, social and political upheaval which has already coined the term "Century of Revolution" is well and truly upon us.   Again that doesn't bode well for the future of globalization.

It's quite foreseeable that, overall, globalization may be poised to collapse under its own weight.   Shouldn't we be considering the possibility?   If globalization isn't the Holy Grail of global prosperity for the 21st Century, why in hell should we be allowing corporations to hold us hostage to their demands?   We should be launching a deglobalization initiative - something that would stop corporatism exploiting the poor and vulnerable in the Third World in order to exploit the rest of us in the developed world.  Enough is enough.   Time to take back our knives.


LeDaro said...

It is a very complex issue. Governments and public have lost control. There was a lengthy documentary on CBC that how big corporations have phoney head offices in places like Switzerland to avoid taxes. GE paid zero income tax in 2010 and instead is receiving refund in billions from IRS. Go figure that out. This cancer has spread to the whole body of the society and cure does not seem to be in sight.

John Prince said...

"Achilles heel of these massive companies is in their articles of incorporation. Under the law, a company's articles can be revoked and it has to cease doing business. Should 'three strikes' be applied to corporations as well? Some corporations do damage. Some are persistent violators of the public trust. Perhaps three convictions (or three public interest law suits lost) should be the limit, and their corporate articles revoked."

The Mound of Sound said...

I don't know, John. That seems to me a formula for chaos and particularly ineffective to the real scourge, multinationals. Sort of like cutting off one head of a Hydra.

Uncommoner said...

You make good points, but the harsh truth is that until and unless some government in the first world is willing to take drastic measures to break the hold that multinationals and corporations have things will continue to be business as usual.

Canada's politics are not so captured as the United States (a happy legacy of our private funding for elections) but lobbyists for moneyed interests still have a lot of influence on policy decisions.

I don't see that as likely to change in the near future, not under a Conservative dominated parliament. The Harpercons ARE captured by corporate (and especially Oil Industry) interests. To Canada's detriment.

Maybe Vonnegut was right: "We could have saved the Earth, but we were too damned cheap."

The Mound of Sound said...

I guess we'll have to be content with waiting until external forces bring down multinational corporatism. In so many ways the world is on a path today that is incompatible with sustained globalization. As the world transitions from a growth-based economic model to an allocation-based model our tolerance for the excesses of globalization will be very strained.

John Prince said...

“Some corporations have now grown gigantic; actually becoming global forces with more power and resources than some countries... they float above the world's constraints... They are alien to the notion of democratic responsiveness, internal or external. In the universe of corporations everything focuses on the acquisition of resources, labor, and markets. These are the sources of power. Inside corporations Equality hides her face... In democratic America most corporations are iridescent examples of autocracy, thriving on soil where the Constitution guarantees everybody's freedom and equality... First, we are all educated to look elsewhere, for instance to unchecked government, as the primary threat to freedom. Second corporations make and sell our creature comforts, so we can't tamper with them without threatening our prosperity. Third, we feel powerless. The concentration of corporate power is inverse to people's feelings of personal power. Fourth, we see no alternative.”

We're in a historical shift. The modern activist is different. The rationale: culture today is driven by commercial advertising... conforming = rebelling... Peace = War, Slavery = Freedom... self-contradiction; you are able to both work for a company, and rebel against it. Corporate rebellion = loyalty... Go in, behave - and take over... The next revolution will be inside corporations.

The Mound of Sound said...

John, the four truisms of corporatism you cite are genuine but again overlook the crucial point that we - our markets - are the very air that corporatism breathes. Reversing what has happened these past four decades requires that we abandon our arresting fear of their powers and explore the far superior strength of our own.

Modern corporatism is the product of 18th century economics, 19th century industrialism and 20th century geopolitics. It has proven remarkably resilient thanks to the continuation of a growth-based economic model. Yet infinite growth is the stuff of hypothetical arguments in economics textbooks. It is antithetical to the inescapable limits of our very finite planet. When we hit the wall, the fallacies of our economic model emerge and undermine the very way we have conducted ourselves for three centuries. I just think that global corporatism is on the brink of losing a great deal of its historic utility.

Luke Miguez said...

"Free trade, first regional and later global, was pitched on the notion of free movement of capital. That was a lie."

This is incorrect. Capital was limited in its movement after the Second World War by the existence of the Keynesian developmental state; which specifically aimed to limit access to domestic markets from foreign capital, particularly American capital. It required a conscious effort on the part of the American state during the 1970s on-wards to undermine these developmental states via 'rescues' such as IMF-originated structural adjustment programs that introduced neoliberalism to the Third World.

Capital's effort to entrench itself and reduce the democratic capability of the mass of the population to confront it is deliberate. The corporate gravy train is only likely to continue running so long as the working class in the first world is utterly powerless to confront it.