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Free trade extends scope and power of corporate oligarchy

May 19, 2016

9-minute read

This is Part 2 of a three-part series that examines the ideology of neoliberalism and the enormous harm its implementation imposes on people and the planet. Read Part 1 here. 

Photo of a conference room

"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 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 scourge of poverty and inequality runs even more rampant, with a few hundred multi-billionaires hoarding more wealth than two-thirds 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 in 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.

The neoliberal faithful conveniently overlook the insanity of an economic system that is built on the anticipation of infinite growth on a finite planet. Capitalism, of course, could not continue without such a misguided and ultimately destructive delusion. Left unchecked, it is bound to collapse from the depletion of resources and the devastation of global warming — perhaps as soon as the 2050s, but certainly before the end of this century.

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

In a rational society, the recurring economic crises triggered by neoliberal economics would prompt their abandonment. 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.”

Proliferation of junk

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.

Citizens are encouraged to help with this depletion and pollution by consuming the output of uncontrolled growth — even when many of the products manufactured are unnecessary and could legitimately be called junk. In her film The Story of Stuff, Annie Leonard disclosed that, of the goods purchased in the United States, very few remain in use six months after sale. Her study found that, after a recent Christmas holiday, novelty gifts such as a beer-can chiller, an electric wine breather, bacon-flavoured toothpaste, and a talking piggy bank were discarded by their recipients within a week.

But the main criterion of corporations today is not whether something they make is useful, but whether slick advertising or “keep-up-with-the-Joneses” pressure will stimulate profits from the sale of junk. Never mind that the production of rubbish is exhausting resources that could be put to more constructive use. As Monbiot satirically observed in 2012: “forests are felled to make ‘personalized heart-shaped wooden cheese board sets.’ Rivers are poisoned to manufacture talking fish. This is pathological consumption: a world-consuming epidemic of collective madness, rendered so normal by advertising and the media that we scarcely notice what is happening to us.”

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 ruinous long-term consequences. On the other hand, if something is actually needed to enhance public welfare, but wouldn’t be profitable enough to make, it doesn’t get made.

  • Extracting and selling fossil fuels 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 high-def TV, 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 profitable to treat the sick with expensive drugs than help them stay well in the first place.

The same skewed profit priority applies to the continued reliance on climate-changing fossil fuels instead of launching an all-out conversion to clean renewable forms of energy. The list is long.

“A rapacious oligarchy”

One of the books that impressed and enlightened me when I was compiling my Under Corporate Rule columns in the the late 1980s and early 1990s was The Next American Nation by Michael Lind, a senior editor of Harper’s magazine. Though neither a Marxist nor left-wing radical, he described what was happening in the United States – and by extension in Canada – in stark and realistic terms.

His book, published in 1985, shunned euphemisms. He called the small group with most of the money and power in the U.S. at that time “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 the 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 25 years that have elapsed since Lind exposed the baneful behaviour of the oligarchy, its cunning corporate maneuvers have not only persisted, unopposed, but are now 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 articles back in the late 1980s. That was while the first 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 Progressive Conservative party. It was expanded in 1994 by the North American Free Trade Agreement (NAFTA), which added Mexico to the pact.

Under the terms of NAFTA, corporations who feel their profits — or expected profits — have been adversely affected by government legislation 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.

For example, shortly after NAFTA came into effect, 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, and after a preliminary tribunal judgment against Canada, the government agreed to rescind the law and pay the company $13 million for lost sales. That’s how NAFTA compels member countries to make the preservation of profits their top priority, even taking precedence over the preservation of their citizens’ health.

More than two dozen such NAFTA suits have since been filed against Canada, resulting in fines or settlements totaling $190 million. In one egregious recent case, U.S. drug firm Eli Lilly is demanding $500 million from Canada after two of its patents were revoked by a Canadian court because the company had failed to prove the drugs provided the promised benefits.

This outrageous elevation of business interests above the public interest is compounded by another clause in NAFTA and other trade deals that bypasses the country’s sovereignty and legal system. It puts the decision on whether to uphold or reject business vs. government suits in the hands of a tribunal composed of three private adjudicators whose rulings are immediately binding and can’t be appealed. These deals actually constitute a legal bill of rights for transnational corporations. They allow business interests to take priority over all other considerations.

A litmus test for Trudeau

The most recent international trade deal, still not signed 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” because it “solidifies the creeping corporate coup d’etat along with the final evisceration of national sovereignty.” 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.”

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.”

Speaking to the CBC after he recently delivered a speech at the University of Ottawa, Stiglitz expressed regret that our International Trade Minister, Chrystia Freeland, has already put her signature to the TPP on behalf of the Trudeau government. Ratification of the treaty, however, has been deferred while it is being studied by the House of Commons trade committee. Stiglitz later met with Freeland to explain the pitfalls of the TPP, urging the minister and the trade committee to recommend against ratifying it.

Whatever the committee’s advice, however, the TPP should be resoundingly rejected. For Justin Trudeau, this crucial decision will depend on whether he has the perspicacity and courage to put the public need ahead of private greed. He knows that refusing to ratify the TPP will unleash a firestorm of corporate wrath, but will dread of that business backlash shackle him? Or will he boldly defy the business barons?

How this issue unfolds — whether our prime minister accepts or rejects the TPP — will give us the result of a vital litmus test. We will then know if he is leading a government that is truly small-l (as well as capital-L) liberal, or if at its core it’s a government that is as fundamentally neoliberal as the previous one.

In the third and final part of this series, I’ll assess the prospects of exiting the neoliberal mess in time to avert an ecological cataclysm.

Ed Finn was Senior Editor at the CCPA and editor of the CCPA Monitor from 1994-2014. Formerly, as a journalist, he worked 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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