No matter how much debt-money we throw at the problems caused by forced free trade and debt-money, the problem continues to worsen because we have further to fall, and we are being forced to fall further due to the undemocratic banking and trade regimes we continue to suffer under.
For some perspective on "free trade" I include here a portion of my chapter on Growthism and Free Trade from CAP-Com, The Economics Of Balance, written in 1995, that explains the root problems in "our" economy.
CAP-COM, The Economics Of Balance by Kent Welton, 1995
Amazon Kindle version - $6.00
Growthism & Free Trade - Chapter 8
Forced Trade & Freedomless Interdependency - 252
Protectionism for Capital 257
Trading Comparative Advantage 260
Compensating Tariffs & Cost-less Trade 263
Welfare For Capital or Compensated Trade? 267
FreeTrade & Marxist Dynamics 272
The Comparative Needs of Nations 274
On Nations & New World Orders 278
Tariff Disarmament & Dependency 284
Independence, Balance & Trade Morality 287
Trading Exploitation 289
On The Smoot-Hawley Bogeymen 291
Free Trade & Anti-Trust 296
The United Corporations 298
Labor, Trade, & Immigration 302
Free trade is a noble goal and objective. However, in a still very disparate and undemocratic world, it is how we arrive at this or any other end, and whether or not the majority decide the objective and shape the result, that makes all the difference and defines true freedom.
Trade policy is not simply a matter of nationalism versus internationalism, or protectionism versus exposure-ism, it is first one of democracy or oligarchy and who defines the terms. Also, a "free trade" without a freedom not to trade - and adjust for national differences, democratic preferences, human rights, local food and resource necessities, and eco-system impacts - is nothing less than a forced and dismal trade.
Today's "free trade" policies were defined, designed, and effectively imposed by ruling elites. Indeed, the current GATT/WTO regime amounts to nothing less than a top-down neo-slavery arranged by stateless capital and mega-corporations, particularly in the Uruguay Round.
As for trade in general, where companies both produce and sell in many markets there is no great problem. The problems arise when, in a still disparate world, we allow trade goals and means to be decided by the few, and allow products to be imported from greater-slave states without compensating tariff, excise, incentive, or offset.
In this case, trade is forced upon countries by corporate oligarchies, and the negative impacts socialized upon the people. There is also no guarantee any "universal gain" benefits will appear, much less be passed on to "sovereign" consumers as global oligopolies emerge.
The current trade scheme - denying the wants and will of the wage-laboring majority - is nothing less than a coup d'etat by capital and a gross taking of the political power of the people over their own lives, economy, and environment. Despite the lofty goals and claims of salutary effect, the greater-slave rewarding trade scheme we see today has quickly become dismal, counterproductive, and working to undermine First World wages and standards via capital's global extortions of labor and democracy.
In a disparate world, uncompensated trade gives market power and advantage to the most predatory, rewards the greater-slave, and works not to multiply but simply transfer wealth and power into the hands of the few. As we have seen after less than a decade under the new GATT, uncompensated trade does not guarantee universal benefit, human rights, democracy or higher wages and standards. Instead, it insures destruction of small and medium-sized businesses, diminishes diversity and competition, creates monopoly and global oligopoly, lower wages and standards, fosters eco-ruin and exploitable dependencies, and produces massive trade deficits.
In any case, only the truly free, enfranchised, and democratic countries can freely trade. Otherwise, a cost-less trade and universal gain is not possible within effectively-forced, factor-imbalanced, trade regimes dominated by capital or labor. When factor imbalance and capital corrupt democracy, a world of disparate nations is easily extorted. Where labor is landless, dependent, and desperate capital is easily supreme and "democracy" but a ruling-class sham.
Under these conditions there can be no free or costless trade, only a dismal and predatory affair serving up global oligarchy and oligopoly.
What the current GATT Agreement guarantees is nothing less than effectively forced-trade - i.e., a regime dictated and "fast-tracked" by capital-fed politicians and devoid of participation by labor and community. As a result the current trade ethic and dynamic is geared to seeking the "efficiency" and "advantage" of the greater-slave - i.e., those with the lowest wages, least democracy and regulation, and fewest protections for the environment. Within only a few years, this scheme is already proving irrational, dismal, and dangerous to peace, prosperity, eco-security, and civilized society in our still very disparate and dangerous world.
The central problem is that no real trade freedom, or necessary levers and incentives, exist to assure a balance of trade, or that benefits outweigh costs. For this reason benefits now flow to those at the top while the costs are heaped upon the people and public sector.
With trade policy inappropriate for a still disparate and dangerous world, and with a scheme the people neither fashioned nor mandated by their referenda, we are forced to become "interdependent" in a lever-less condition - whether we like it or not, and regardless of cost or consequence. To call this condition democratic, rational, smart, or "free trade" is to re-invent slavery and institutionalize oligarchy.
No such oligarchic trade regime would ever emerge from any truly representative, democratic, assembly - one attuned to the interests of wage-laboring majorities, and brought to power by publicly-financed elections. For this reason, capital's exploitive and irrational trade policies must be imposed and accomplished via ruse, corruption, and propaganda from capital's media. What informed, First-World, majority would ever vote to compete with the greater-slave without any compensating, and incentivizing, tariffs and levers to elevate wages, standards, human rights, and facilitate democracy?
Aside from corruption in the passage of GATT/NAFTA/WTO, as for trade theory, given labor's enclosure, factor imbalance, and great disparities in wages and social contracts, we clearly do not yet inhabit any equalized or ideal world. As Freidrich List realized long ago, only in such a world could any costless trade arise and avoid dismal dislocations and perverse results. As the world is, trade without serious cost, dislocation, ill-distributed gain, recession, depression, currency ruin, oligopoly, oligarchy, and revolution is impossible... with the possible exception of trade amongst G7 countries of proximately equal wages and standards.
While trade within and between markets and societies of relatively equal social contracts and economies is one thing, an uncompensated trade amongst nations with wide disparities in wages, standards, freedoms, and human rights is quite another. In this environment, for trade to be free of "external" costs for one or both partners "advantage"disparities must be offset, and market openings incentivized, until disparities disappear and compensating tariffs are no longer necessary. Otherwise, only capital is empowered and greater-slave states rewarded at the expense of labor, community, and progressive society. Progress is then set into reverse, dependency secured, and eventual revolution against capital made certain.
Despite serious dislocations, depressions, and currency collapse emerging after only a few years of "free" trade, true believers in capital's regime do not appear to have any concerns about who defines trade policies, how objectives are attained, or even what is produced. Further, the few who shape economy and society argue the majority must not challenge their trade orthodoxy, or make any attempt to democratically re-fashion trade to their liking. Capital's forced "free" trade must then stand and mean impotence for the majority and protectionism for capital.
In this effort, endless propaganda of the "we have no choice" variety fills our airwaves and news pages, and apologists find excuse in technological change to force trade and subvert democracy.
As with enclosures of labor, under the current GATT, nation-states have essentially lost their natural freedom and "perfect liberty." Once sovereign and responsible states are now similarly enclosed, dependent, impotent, and caught in capital's global web. In addition, the people do not elect their trade representatives, World Trade body justices, or even their own representatives to the United Nations. Oligarchy is rife, and what we see today is but globalization without representation.
As disparate nation-states with varying wage levels, social contracts and ecological responsibilities we cannot freely or fairly trade unless we reserve a right to enter into, refrain from, or suitably offset foreign commerce as the people see fit - and without being subject to penalty, extortion, and censure by stateless capital. Unless nations and regional federations democratically determine trade priorities, and remain free to adjust relations to a global economy, the "free world" and "sovereign" consumers are simply prisoners in a regime not of their making.
In practice, wherever great disparities prevail then, without offset, excise, compensating and incentivizing tariffs, the higher-wage and standard nation is brought down and progress set into reverse. This dismal dynamic is underway. Within only a few years, capital has come to dominate society, define the market game, write "free trade" rules, and deny responsibility for chaos, costs, eco- ruin, and dependency created.
Given great disparity, factor imbalance, oligarchy, and corruption the ideal state of affairs imagined by free traders cannot come to pass. To speak of "free" trade in what have become effectively freedomless and repressive environments for labor is "Newspeak" of the lowest order. What is left in the wake of the demise of natural freedom, effective democracy, and self-sufficiency is simply a monopoly of capital... within a world of the landless, enclosed, desperate, and dependent.
Where people and nations alike are laregly devoid of natural liberty and factor-balanced economy then free markets and free trade are simply myths. No truly free, costless, or consensual trade can emerge in the absence of natural freedom and democratic institutions. Given the landlessness and impotence of labor, a disparate world, and today's electronic freedom of movement for capital, First-World nations must be cajoled, corrupted, propagandized into jeopardizing their higher wages, standards, and progress so multinationals may profit via forced "harmonization."
Yet, to benefit capital our freedom, historic independence, economic autonomy, and democracy are now being dismantled in the naive and venal belief we "gain" from trade - regardless of rules, real-world results, absence of popular referenda, and varying estates of market participants. Naturally, all such oligarchic nonsense must be rooted in the promise of a future "universal gain" meant to assuage immediate losses.
Aside from nations freely deciding to accept all the blows and costs a world of disparate trading partners, and stateless capital, may inflict (a highly unlikely scenario given any informed vote) there are only two outcomes for an uncompensated trade in a disparate world - either of which may occur severally or simultaneously: First, dominant nations force open foreign markets, eliminate local competitors, and increase global oligopoly, monopoly, and thereby decrease competition. Second, lower-wage and less democratic countries - armed by stateless capital with the latest in technology - begin to decimate developed nations and leave them out of balance, dependent on imports, and drowning in social costs while stocks of multinationals soar amidst immense transfers of wealth and productive power to greater-slave nations.
Both these outcomes negate real trade freedom, equally-gainful and increased competition, and ruin labor's progress as civilization is up for sale to the lowest bidder. With GATT as written, we are maximizing the enclosure and extortion of labor, transferring wealth and power from the many to the few, and giving birth to a totalitarian capitalism. In this sorry schema local sustainment, trade balance, democracy, economic security, and all higher wages and standards are gutted by "the market."
To the extent of enclosure, factor imbalance, and political corruption "the market" is clearly no longer the people, and so is not preserving democracy, justice, or ecological sanity. Control over markets, legislatures, resources, livelihoods, and labor have been transferred to the few, to authoritarian states, private central banks, unelected tribunals, and into cyber-space where capital roams free of community recourse and effective democracy to reward the greater-slave and despotic state.
Nevertheless, a good deal of the new rationale for old, imperial, trade schemes revolves around the impact of communications technology. Capital pretends this development alone somehow portends the death of nation states and, in effect, all potent and local democracy. In the imperial worldview, given global communications, this is thought to mean the people's wants and democratic will of the majority are suddenly irrelevant This idea and reality leaves the "free market" utterly fascist, one-factor dominated, and with majorities everywhere subject to endless extortion by capital - all in all, a classic recipe for riot, ruin, revenge, and revolution.
In short, due to communications technology and capital's mobility, the argument is we must be exploited rather than see effective democracy born or extended. We must surrender sovereignty and local powers, and live with no choice but to embrace a greater-slave rewarding scheme and become utterly dependent, enclosed, and eviscerated.
Never has the rationale for "free markets" and "free trade" been so dismal, undemocratic, totalitarian, counterproductive, ultimately inefficient, amoral, and wrong.
Regardless of rationale, however, in a disparate world devoid of rational trade offsets, the wages, living standards, and productive capacity in advanced nations must ultimately decline. Thus any potential for a greater social contract for all - i..e, true universal gain - is reduced if not eliminated. Along with universal loss, and growing wealth disparities, political corruption has increased as corporate-state oligarchies dismantle effective democracy and destroy local sovereignty and autonomy in general - all under the guise of "interdependency."
At the same time, capital escapes taxation, offset, and liability for the human, social, economic, and environmental costs generated by trade "restructurings" forced upon the people. With the costs of dismal trade excluded from capital's calculations, some still believe "universal gain" is possible despite utter amorality, irresponsibility, and the fact it emerges from a "comparative advantage" rooted in labor's lack of natural freedom, parity with capital, economic autonomy, and effective democracy.
Obviously, in the first years of uncompensated trade, an increase in business occurs for dominant corporations - precisely why they support it. Early results are then interpreted as supporting capital's "rosy-scenario." At the same time, a degenerate and self-defeating dynamic is set into place. As a result, within a few years or decades, few will be able to mount any serious challenge to dominant corporations acquiring an insurmountable global advantage, control over resources, and hegemony in both local and global politics. The end result is decreasing competition, massive combination of enterprise, perverse concentrations of wealth and political power, and pervasive oligarchy around the world
Given a lack of compensating tariffs and trade freedom for the vast majority, serious dislocations and restructurings begin in earnest as the real costs of "free" trade emerge. In the short run, the decline of living standards in advanced nations may, at first, be obscured as profits of global employers soar even while First-World wages and benefits for most decline. Later, what soon becomes massive shifts of capital, jobs, and wealth to lowest wage and freedom jurisdictions - beyond the reach of progressive democracies - is well underway. At this stage, "silent" and "rolling" depressions and resource eviscerations begin and gather momentum while the inevitable backlash emerges.
When undemocratic trade processes emerge in a still very disparate world, every higher standard and benefit is soon attacked as preventing competition... with the greater slave. Labor's freedom, and democracy's right, must be traded away "in order to compete" with greater-slave nations protected by an unelected World Trade Organization. Compete with whom, at what costs, and to what end we are not to ask.
This sorry scheme is in lieu of lower-standard and less democratic nations being being taxed or tariffed for their lack of democracy, corruption, eco-ruin, and uncompetitiveness on the upside, and First-World nations being free to utilize compensating tariffs to incentivize market openings to achieve real universal gain over time.
The nature of capital's effectively forced trade means a world where freedom is for business and capital only. Not only is "the market" not the people but capital's sorry definition of "advantage" is also synonymous with lower wages, standards, benefits, and lack of democracy.
Capital's imperial trade policies translate into a powerfully extortive force working upon labor and every higher-standard environment... to our collective detriment. All nations enjoying higher wages and standards are forced into a global market - without compensating mechanisms or benefit of any elevating and incentivizing levers. As a result, "free" proves very costly, ruinous, and politically de-stabilizing - exactly why these corrupt policies have never been a historical constant, and why turmoil is emerging after only a few years of this regime.
In practice, the only real gain occurs for employers able to extort domestic labor by comparison-shopping for the greater-slave. What occurs for wage-dependent majorities everywhere is a general loss of freedom, security, fairness, and higher standards due to concentrations of wealth, productive power, and political influence. What emerges is a "trickle-up" transfer of income, wealth, and social power to the few as oligarchy, oligopoly, and revolution emerge - i.e., the most backward, costly, and counterproductive of results.
Profits soon become stateless and further work to supplant the freedom and productive power of progressive nations. Only dis-order and instability abroad slow this process and temporarily keep capital and capacity at home. Further, as trade imbalances balloon, profits do not necessarily return to advanced, "uncompetitive," countries since greater-slave states come to produce everything, and undercut everyone.
The profits of greater-slave states, increasingly armed with First-World technology, are currently being used to expand armies and acquire the treasury debt of First World nations suffering trade imbalances. This means influence over once progressive nation's monetary policies. Year after year, more and more capital traded away is placed beyond the reach of progressive "inefficient" nations drowning in dislocation, immigration, and financial speculation costs.
In a still disparate and factor-imbalanced world, any premature destruction of national sovereignty and elimination of tariffs empowers capital alone, and rewards the most authoritarian of competitors. This leaves "interdependent" majorities without effective choice or freedom to retain any higher-wage and standard world via rational use of compensating, incentivizing, tariffs. For advanced nations, degeneration is begun by entering into uncompensated trade. Thus, the most progressive social contracts are placed under the greatest strain while the worst are rewarded. Oligarchy, oligopoly, and enclosure are strengthened as laissez-faire chaos accelerates... and begins to manufacture riot, ruin and revolution.
The growth and concentration of profit alone, and not economic balance, well-being, or democracy is the real motive for seeking uncompensated trade. Without offsets or penalty, "efficiency" is synonymous with greater slavery and eco-ruin. As long as growth emerges for dominant corporations what happens to our freedom, wages, civilization, democracy, and environment is secondary as the end justifies the means.
On the other hand, if trade were rational and democratic in origin, it would be employed where advantageous, constructive and moral, and fine-tuned, levered, or ended where not. Smart trade means the people as a whole retain freedom to define, control, and balance economies - just as "we" use interest rate changes to fine tune the economy.
Truely free trade implies a freedom not to trade, and/or fine tune the terms. If this is not the case, capital-run markets and global concerns are our masters and not simple corporate charters operating within rules set by democratic communities. If the market is not the people, and marketplace rules are not defined by referenda, then "free markets" are fascist, freedomless, and totalitarian - as, indeed, they are fast becoming today.
Historically, "free trade" has been more imperial device and factor tyranny than result of any democratically-derived consensus. Having proven counterproductive and ruinous so often, there is good reason why capital's "free trade" policies have never been a constant since the days of Adam Smith and David Ricardo - much less any salvation for advanced nations in a disparate world. If free trade had ever proved so benign and universally beneficial no interruptions would likely have occurred. Further, the early beneficiaries of trade (the Dutch, French, Spanish and English empires) might still be the major powers whereas Japan, Germany, and the United States would be lesser states for avoiding "free trade."
As with any scheme designed to benefit dominant interests, corrupt and fast-tracked trade regimes must be hatched behind closed doors, and in theoretical vacuums. They must be cleansed of relation to a real world filled with great disparities, enclosure, disenfranchisement, political corruption, oligarchy, monopoly, despotism, and eco-ruin. In this world, other than for dominant interests, uncompensated trade is worse than irrational and simply an isolated, amoral, end in itself.
Classical "free trade" dogma is not only imperial in origin but also clearly outdated. It was then, and remains, a policy embraced by the few to serve the interests of dominant nation-states and the largest of enterprises... regardless of consequences. In a still disparate and undemocratic world nearly devoid of natural freedom and effective democracy, a trade theology fit for a vacuum now proves costly indeed - particularly when applied at the wrong time and place, for all the wrong reasons, and without compensating levers or moral reservations.
Missing from a classical economic theory rooted in the exploitation of landless labor, and deification of the greater slave's advantage, is any idea of offsetting disparities, remedying factor-imbalance and enclosure, or securing a balance of trade. Further, Adam Smith and David Ricardo assumed trading partners were wage and social-contract equals. They further assumed trade would always be in balance due to the difficulty of moving production and capital in their day. Thus did Smith and Ricardo dispense with the "external" costs of trade and any necessity for counterbalancing measures to deal with disparities, imbalances, and capital shift. By ignoring all such externals, there is no necessity for any leveling, incentive, compensating tariff or protectionist device. As a result,"free trade" serves and protects big capital alone.
Capital's economists not only ignore Smith and Ricardo's caveats but dispense with the differences between our world and theirs. Into a world of disparate conditions they apply theory which once assumed that, due to the difficulties of capital movement in a bygone era, there was no need to consider variations in wages and standards, or trade imbalances. Two centuries ago, no negative results were thought to flow from international divisions of labor as capital and capacity were then largely stationary.
Further, by ignoring enclosure, a lack of democracy, and instantaneous capital movement one dispenses with any need for intervention, regulation, balance, compensating lever or tariffs, or concern for the ruin of progressive states. Once freed from all such external considerations capital is free to ignore reality, morality, and democracy.
In effect, no matter how dismal in origin, or dangerous in practice, every "comparative advantage" must be exploited, and maintained, rather than be ameliorated, offset, or compensated. It matters not whether such "advantage" resides in disenfranchisement, wage slavery, child labor, land piracy, oligarchy, and ruin of the commons if a greater profit for the few emerges and "efficiency" triumphs. The promise of "lower prices" must be allowed to lower everything and everyone in order to maximize profits for the few. What else can we expect from imperial trade dogma emerging from an era of enclosure, colonialism, and human slavery?
The theoretical imperative was then, and remains today, to exploit labor's enclosure, desperation, and wage and resource differentials regardless of how they arise, what they imply for society and human rights, or any ecological impacts.
Without labor's re-enfranchisement and factor parities, or a freedom for democracies to civilize and balance trade (and nurture local industry to add to competition) only global oligarchy and oligopoly can emerge. Without appropriate tariff mechanisms, fit for a disparate world, we are forced to subsidize growing trade imbalances benefiting employers but jeopardizing labor, society, and environment. For First-World nations, evermore declines in real wages, benefits, and standards, and ever greater dependence upon imports from greater-slave jurisdictions, prove to be the only "gain" from a trade eliminating domestic freedom and responsibility.
In a disparate world, profits emerging as a result of uncompensated and amoral trade do not represent real, progressive, gains but rather a transfer of wealth and power from labor to capital, from the many to the few. Effectively involuntary transfers of social capital and profit accrue to international employers rather than domestic labor, consumers, small business, and high-standard nations. Wealth, power, and production gaps are exacerbated in a trade scheme encouraging exploitation of disparities rather than their gradual amelioration and incentivized offset.
Given that we no longer live in Smith and Ricardo's world but in an age of instant capital transfer, what emerges from uncompensated trade between disparate economies is clearly problematic and filled with unrecognized costs. Not only are advanced nations slowly ruined in order to compete, but democracy itself becomes a casualty.
In any event, global communications technology does not suddenly make this irrational, corrupt, and freedomless trade inevitable, right, moral, or beneficial for all. It does not necessitate a treatment of fossil-fuel transported physical goods in the same way as vaporous services.
Without rational incentives then "free trade" will reward the worst of predations and generate the greatest of social costs. Dismal incentives mean we "gain" by reducing wages, estate, freedom, democracy, currency value, and ecological balance to benefit the few. We "succeed" with downward mobility, currency ruin, and becoming completely amoral, enslaved, and dependent upon stateless capital for our work, food, and necessities of life.
Yet for free trade to have real meaning and plus-sum effect, in a still disparate world, each nation must be free to democratically determine its needs and responsibilities in relation to its domestic economy, local environment, and stage of development.
Regardless of global communications, for people to retain any freedom, every nation-state and local jurisdiction needs domestic, democratic, and local powers to remain capable of managing trade, economy, and ecology without being extorted by stateless capital, unelected central bankers, and the IMF. Otherwise, the freedom of the majority everywhere is destroyed and power handed to mega-capital and unelected trade panels. Achieving this imperial power is why capital's trade policies are aimed at destroying our sovereignty and tariff freedom.
FORCED --TRADE --& --FREEDOMLESS --INTERDEPENDENCY -
"The unregulated international sphere makes it possible for the most powerful capitals to escape limits and minimize their contributions to social reproduction by setting up in the most advantageous locations and using a wide range of well-documented mechanisms to reduce taxation and maximize global profits. This process intensifies the problem of uneven development internationally and undermines the economic and political viability of all the states which cannot offer capital the most favorable conditions. These become "weak links" in the capitalist chain and are then increasingly unable to make adequate provision for economic growth or for social reproduction. Their capacity to consume declines as does their ability to contain social and political unrest."4
"We should not be naive globalists. Not everything that is global is good. Interdependency has really paradoxical consequences."5
Classical "free trade" theory is rooted in the belief that, with each nation concentrating on areas where they have the highest labor productivity and resource availability then, via specialization, and without consideration of any social condition or environmental concern - the greater will be the material product.
This naive premise and expectation of lower prices, has little relation to reality and our disparate world - wherein instantaneous money movement now gives capital immense power over labor, corrupts democracy, generates global oligopoly and rewards the greater slave. It says nothing about First World wage and standard declines via "harmonization," trade's fossil-fuel-driven climate ruin, or global oligopolies emerging and raising prices. Lastly, regardless of product or externals, the more we specialize and trade in order to live, the more we become abjectly dependent and must pay for imports with exports.
Clearly, one more vital concern which did not enter Smith or Ricardo's formulations is extremely important today. It is the possibility of fatal ecological error in a circus of "goods" careening around the globe in fossil-fuel vehicles fostering climate change. One jet load of "goods," in take-off alone, ejects as much fuel into the atmosphere as 47,000 cars emit in a year. Yet we have no distance-based tariffs, and so a product which travels 50 miles to market is treated the same as one traveling 10,000 miles.
Nevertheless, in capital's outdated and irresponsible trade theory only "gain" is assumed to emerge and not First World wage-labor decline or eco-ruin. Despite disparities, dislocations, declines, climate havoc and potentially fatal ecological error, a dismal trade's "gain" is thus assumed to be of greater value and right than virtually any other estate of domestic freedom, autonomy, and eco-stability.
In theory, an "interdependent" world of the dependent and disenfranchised is assumed to be more efficient and beneficial for all. This does not mean we are more free, democratic, and secure - only more efficient in turning freedom and resources into greater wealth and power for the few"
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