The TransPacific Partnership and the capitalist revolution

Yes, I understand you don’t have time to read the TransPacific Partnership (TPP) treaty and would rather wait for some expert analysis anyway.  Never mind that. Click here and try clicking on the button. Go ahead. The link will open in a separate window and I’ll wait.[1]

A friend argues that it is impossible to openly negotiate a deal and refuses to consider the leaked chapters that indicate this is a really bad deal for workers, for the environment, for intellectual property users, and for pharmaceutical users. But the level of official secrecy around this deal has been extraordinary. Even former Labor Secretary Robert Reich complained about it on Facebook.[2] Even a lot of Democrats, putative allies of President Barack Obama, worry that the deal will fail to protect U.S. jobs.[3] Paul Krugman has derided some of the arguments in favor as, at best, misleading.[4]

Instead of addressing real concerns, however, the Obama administration has been dismissive, trying to portray skeptics as uninformed hacks who don’t understand the virtues of trade. But they’re not: the skeptics have on balance been more right than wrong about issues like dispute settlement, and the only really hackish economics I’ve seen in this debate is coming from supporters of the trade pact.[5]

Michael Wessel, a long-time “cleared advisor” who has more access to read the agreement than the rest of us, has criticized a level of secrecy that exceeds anything he’s seen on previous deals.[6] The secrecy is a major argument against Trade Promotion Authority, which will apparently come to a close vote in the House of Representatives tomorrow [Friday, June 12].[7]

There is an enormously rich irony in all of this. The ideology of austerity, capitalism, neoliberalism, and so-called “free trade,” all stem from a centuries-old distrust of royalty (yes, royalty as in monarchy!), government spending and a deep-seated belief that individuals can more efficiently allocate resources than central planners.[8] And this, in turn, is related to a once-royal notion that only the governing elite were well-enough informed to pass judgment on government policy and that no one else should be given access to information to second-guess political authority. As capitalism developed, business people challenged and ultimately undermined that royal prerogative.[9]

Now the governing elite which is not to be second-guessed includes 600 “[m]ulti-national corporations like Monsanto and Walmart [which] are helping to craft the agreement.”[10] In order to negotiate it, they would need full access to the text, even more than that apparently granted to trusted advisors like Wessel. Meanwhile, Senator Rand Paul, who as a capitalist libertarian could normally be expected to support so-called “free trade,” has complained that even he lacks such access.[11] The sense that corporations rank over elected officials is reinforced by the Investor State Dispute Settlement (ISDS) mechanism which “would unfairly shield corporations from local laws”[12] by allowing corporations to challenge even national laws before tribunals in which the judges are drawn from “a rotating cast of corporate lawyers.”[13]

A crucial part of free trade agreements is protection of what are called investor rights. This involves more than just protection from expropriation, as happens with revolutions. It also involves protection from governmental actions that might reduce the value of their property or potential profits by environmental and health regulations, labor laws or other such measures even though they might be for the public good. What in US law is called “regulatory takings” are seen as tantamount to expropriation.

When such governmental actions do occur, free trade treaties give the foreign corporation the recourse to sue. The suit is not adjudicated in a national court, but by a transnational body of experts operating in secret. States are expected to enforce its decisions on their own nation’s taxpayers and consumers. This favors investor rights (i.e. the interests of transnational corporations) over the democratic rights of a nation.[14]

Apparently, only corporations would be permitted to bring disputes before the ISDS tribunals.[15] “What is being created is a global governance order in which corporation are the citizens, not flesh and blood humans like you and me,” writes Cliff DuRand. “With free trade, corporations are making an end run around democracy.”[16]

The “free market” (which is actually far from free) needs the state, and needs it badly. As the disparity between the rich and poor grows in poor countries, states have their work cut out for them. Corporations on the prowl for “sweetheart deals” that yield enormous profits cannot push through those deals and administer those projects in developing countries without the active connivance of state machinery. Today, corporate globalization needs an international confederation of loyal, corrupt, preferably authoritarian governments in poorer countries to push through unpopular reforms and quell the mutinies. It’s called “creating a good investment climate.”[17]

I’ve noted in the past that governments no longer seek to assert their legitimacy but are instead ruling through brute force.[18] What we may be seeing with the TPP and agreements like it is an attempt to pass that legitimacy on to corporations and away from governments. Where we were once expected to trust governments,[19] we would now be expected to trust corporations to be our rulers. The capitalist revolution would then be complete, with the machinery of the state bound to enforce corporate edicts.[20]

  1. [1]I assume this link will eventually break. At the time of this writing, it opens a page bearing an official-looking logo of the United States Trade Representative and a button promising access to the text of the TPP. As the viewer moves a cursor toward the button to try to click on it, it scurries across the screen, dodging any such attempt. Simultaneously, the logo is defaced with the word Trade crossed out in red and the word “Corporate” offered as a substitute, and an explanation that the agreement is classified and therefore not available to read is offered at the bottom of the screen.
  2. [2]Robert Reich, [Facebook post], June 9, 2015, https://www.facebook.com/RBReich/posts/1012254125453850
  3. [3]Mike Lillis, “Obama’s trust-me approach falls flat with Democrats,” Hill, June 3, 2015, http://thehill.com/policy/finance/243969-obamas-trust-me-approach-fall-flat-with-dems
  4. [4]Paul Krugman, “The Mis-selling of TPP,” New York Times, May 19, 2015, http://krugman.blogs.nytimes.com/2015/05/19/the-mis-selling-of-tpp/
  5. [5]Paul Krugman, “Trade and Trust,” New York Times, May 22, 2015, http://www.nytimes.com/2015/05/22/opinion/paul-krugman-trade-and-trust.html
  6. [6]Michael Wessel, “I’ve Read Obama’s Secret Trade Deal. Elizabeth Warren Is Right to Be Concerned,” Politico, May 19, 2015, http://www.politico.com/magazine/story/2015/05/tpp-elizabeth-warren-labor-118068.html
  7. [7]Scott Wong, “GOP to hold trade vote Friday,” Hill, June 10, 2015, http://thehill.com/homenews/house/244472-gop-huddles-on-trade-vote-timing
  8. [8]Mark Blyth, Austerity: The History of a Dangerous Idea (Oxford, UK: Oxford University, 2013); F. A. Hayek, The Collected Works of F. A. Hayek, ed. Bruce Caldwell, vol. 2, The Road to Serfdom: Text and Documents; The Definitive Edition (1944; repr., Chicago: University of Chicago, 2007).
  9. [9]Jürgen Habermas, The Structural Transformation of the Public Sphere: An Inquiry into a Category of Bourgeois Society, trans. Thomas Burger with Frederick Lawrence (Cambridge, MA: Massachusetts Institute of Technology, 1991).
  10. [10]Elaine Magliaro, “President Obama Trying to ‘Fast Track’ the Trans Pacific Partnership—a Trade Pact That Could Be Worse Than NAFTA,” Jonathan Turley, September 28, 2013, http://jonathanturley.org/2013/09/28/president-obama-trying-to-fast-track-the-trans-pacific-partnership-a-trade-pact-that-could-be-worse-than-nafta/
  11. [11]Vicki Needham, “Rand Paul to oppose fast-track,” Hill, May 12, 2015, http://thehill.com/policy/finance/241748-rand-paul-to-oppose-fast-track
  12. [12]Alexander Bolton, “Senate approves Obama trade bill, sending fast-track to House,” Hill, May 22, 2015, http://thehill.com/homenews/senate/243009-senate-advances-fast-track-for-obama-setting-up-final-vote
  13. [13]William Finnegan, “Why Does Obama Want This Trade Deal So Badly?” New Yorker, June 11, 2015, http://www.newyorker.com/news/daily-comment/why-does-obama-want-the-trans-pacific-partnership-so-badly
  14. [14]Cliff DuRand, “Trans-Pacific Partnership: Free Trade vs. Democracy,” Center for International Policy Americas Program, April 12, 2013, http://www.cipamericas.org/archives/9355
  15. [15]Alexander Bolton, “Senate approves Obama trade bill, sending fast-track to House,” Hill, May 22, 2015, http://thehill.com/homenews/senate/243009-senate-advances-fast-track-for-obama-setting-up-final-vote; Elizabeth Warren, quoted in Greg Sargent, “Elizabeth Warren fires back at Obama: Here’s what they’re really fighting about,” Washington Post, May 11, 2015, http://www.washingtonpost.com/blogs/plum-line/wp/2015/05/11/elizabeth-warren-fires-back-at-obama-heres-what-theyre-really-fighting-about/
  16. [16]Cliff DuRand, “Trans-Pacific Partnership: Free Trade vs. Democracy,” Center for International Policy Americas Program, April 12, 2013, http://www.cipamericas.org/archives/9355
  17. [17]Arundhati Roy, “How Deep Shall We Dig,” in Field Notes on Democracy: Listening to Grasshoppers (Chicago: Haymarket, 2009), 58.
  18. [18]David Benfell, “Never mind popular consent, nor even the propaganda seeking legitimacy: Rulers now rely on coercion,” Not Housebroken, April 26, 2013, https://disunitedstates.org/?p=5488
  19. [19]Gerhard Lenski, Power and Privilege: A Theory of Social Stratification (New York: McGraw-Hill, 1966).
  20. [20]Cliff DuRand, “Trans-Pacific Partnership: Free Trade vs. Democracy,” Center for International Policy Americas Program, April 12, 2013, http://www.cipamericas.org/archives/9355

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