Who’s afraid of the WTO? (2001)

From the December 2001 issue of the Socialist Standard

The World Trade Organisation represents the interests of the capitalist class and is a product of the lessons they have learned for protecting their system

The World Trade Organisation is not to blame. Capitalism is. Although the WTO has emblazoned itself in everyone’s consciousness as the unacceptable face of globalisation – indeed as the secretive cabal directing the insidious movements of world finance – what it really represents is a trend as old as capitalism itself, and the continuation of old policies under a new name.

Capitalists are not oblivious to their own interest in preventing their system crumbling. The WTO and its associated world infrastructure is directly related to lessons they have learnt throughout the history of wars and disasters that the market has inflicted on the human race in the past century.

In the 1930s, national governments relied on the free trade in gold to regulate the relative value of their currencies, and structure international transactions. Capitalism’s tendency towards disharmonious movement and uneven economic growth meant that gold tended to concentrate into the hands of a handful of states (America possessed up to 60 percent of the world’s monetary gold at one point), leaving others (such as Germany) desperately short of the means of international trade. This imbalance in trading power led directly to the conditions which prompted the second world war, and devastated almost the entire continent of Europe.

Determined to avoid this situation happening again, the dominant capitalist powers met after the war, to construct an effective international machinery to enable trade to progress between states smoothly. The Bretton-Woods agreement, as devised largely by J M Keynes, sought to regulate international capital movements.

Likewise, the International Monetary Fund and the World Bank were created to ensure nations avoided suffering the same bankruptcy as Germany effectively endured in the 1920s. It was envisaged that these institutions would be joined by an International Trade Organisation, to lay-down the rules by which trade would be governed. This institution was, however, vetoed by the US at the Havana conference in 1947.

Unworkable system 

What stood in place of the ITO was the General Agreement on Tariffs and Trade, which came into force in 1948, and was based on the unobjectionable sections of the Havana Charter. Over time, GATT proved to be unworkable, with inadequate enforcement procedures, unclear rules and the rigidities of consensual agreement systems.

Thus, at the Uruguay round of GATT negotiations which ended in 1993, the World Trade Organisation was agreed upon, as a “superior” successor. The Uruguay round significantly expanded the scope of the international agreement’s remits, bringing agriculture, services and intellectual property within its field of competence, as well as seriously reducing tariffs and other protective measures allowed. This lead to an almost immediate increase in the volume of international transactions: according to the Eurostat Yearbook 2000 external investment by European Union states increased by almost 500 percent from 1995 -1999.

This is simply part of an on-going trend within the development of the market system. As trade progresses, so too does standardisation of the rules and groundwork. In the early nineteenth century England, for example, a merchant would have had to know how to reconcile his Durham pecks with his Dorset grains and his Norfolk drams, when selling goods by weight. Likewise, each town would have its own time (relative to its distance in minutes from Greenwich). These times and weights formed the legal framework for trade in each of these districts, and formed a burdensome cost to any business trying to operate across them.

In time, the need to concentrate capital, and increase the area and scope of the circulation of commodities meant that such discrepancies between local authorities were overcome. Usually, this meant over-ruling them through the authority of the centralised state, and enforcing a uniform set of rules across the whole economic zone. This tendency for the concentration of capital continues, and the same problem manifests itself in differences of trade regulations between nation-states, although this time there is no central authority powerful enough to completely over-rule them and impose its standards.

The reasons for the increasing concentration of capital lie, essentially, in the methods by which labour is exploited by capital. When a commodity is produced the capitalist calculates its cost of production (the cost of goods that went into it, plus labour), and then adds a profit mark up roughly in line with the expected rate of profit of their rivals. This average rate of profit applies regardless of the amount of value added by the specific production process involved, but, rather, the total value added across the whole economy.

What this means is that industries which involve a large input by labour (i.e. which add a lot of value) lose out because the average profit mark-up is less than the value they add. This means that this added value is transferred into the profits of industries which are less labour intensive. It is, therefore a competitive advantage for capitalists to increase the ratio of productive capital to labour (known as the organic composition of capital). With this increase comes an extension of the productive capacity in an industry, with capacity being taken up by fewer and fewer production units.

Alongside this concentration of capital is the increase in the transportation capacity of society. Technological advances in transport continue apace with productive capacity, meaning that, in general, the circulation of commodities and trade can increase faster than the productivity of society (more goods to transport multiplied by a faster rate of moving them). This is born out by the chart below from the WTO

In each period the rate of increase in trade is greater than the rate of increase in output of merchandise. One of the most significant details, however, if the massive increase in trade in 1990-2000, in a period in which merchandise output actually fell compared to the previous period. The effects of the inauguration of the WTO can be seen in this increase. It is an increase in excess of the usual growth in trade, and thus represents an exceptional occurrence.

The motivation for this spurt in trade may well lie in the observable decline in productive output across the whole chart. The rate of output growth is under half that of 1963-1973. Capitalists, misled by theories which see value as being created rather than realised by trade, treat trade as a good in itself, and think that by increasing the circulation of goods they will be able to dig themselves out of the profitability hole indicated by the drop in output growth. Alongside this is the temptation to exploit the differences in national and regional rates of profit to try and realise an exceptionally high profit.

What this means is, effectively, that through increased trade capitalists are attempting to rip each other off, as a result of their incapacity to exploit the workers enough. Through increasing trade competition, they are effectively increasing the scramble for a share of the total global production of surplus value. This can also be seen in the increase in currency speculation and finance capital movements around the world. Since these forms of activities are entirely unproductive they represent a mere redistribution of booty among the thieves.

This tendency can also be observed in the decision to open up services to international competition. Although British ministers maintain fervently that this does not mean the WTO will force privatisations upon countries, the fact is that International Monetary Fund (IMF) structural adjustment programmes usually force countries to attempt to decrease the size of their state sector, paving the way for firms from advanced capitalist countries to take over these services and sweat profits out of the workers there. It represents another way of opening up otherwise marginalised sources of surplus value to be taken back to the industrialised core.

Backwardness 

Vast areas of the world, the “post-colonial” zones are still dedicated to low value yielding primary products such as mono-crop agriculture and mining. Most of the increased trade remains between the industrialised manufacturing centres. The top five exporting states (EU, US, Japan, Canada, China) represent 53.2 percent of the world export market (according to WTO figures), whereas the top four importers take a 54 percent share between each other. The EU and the US both import considerably more than they export, and represent a substantial lucrative market to access.

This imbalance of trade between the core and the periphery indicates the way in which the idea that opening up free trade will benefit poor nations and assist in their development is flawed. The sheer economic clout of the big capitalist states means they can bully and force other states into letting them have their way. As George Monbiot noted in his Guardian column (6 November) one WTO delegate from a poor state saying “If I speak out too strongly, the U.S. will phone my minister. They will twist the story and say that I am embarrassing the United States. My Government will not even ask, ‘What did he say?’ they would just send me a ticket tomorrow”.

Such raw power means that whatever formal equality of the rules, they will still be used to serve the ends of the dominant states. Each national capitalist class seeks to protect its position and its investments, and is exceedingly unwilling to relinquish control of the state force which props up its power. The dominant policy is currently to pursue mutual capital interpenetration, and thus prevent losing control of their national economy at home, whilst having sufficient hostage capital to deter expropriation abroad. Whilst the times are good this policy is tolerable, but come a time of crisis each group will seek to save their own skins first and foremost. Should America sink into deep recession, it may decide to put a stop to the raiders taking a share of its profits, and throw the barriers back up.

Certainly, so long as world society depends first and foremost upon competing capitalist groups vying for profits, it will be subject to the anarchy of capitalist self-interest, and any world body will be subordinated to the Machiavellian manoeuvrings of these groups. So long as capitalism remains any world body will be used as a potential tool for exploitation and robbery. The only genuine way to move forward to a world human community is by the abolition of sectional national élite interest, and the creation of a world human interest of common ownership of the worlds wealth, so that we can end the horrendous divisions the property system has created.

Pik Smeet

Another World (2003)

From the November 2003 issue of the Socialist Standard

Socialists have always known that another world is possible. The world doesn’t have to be capitalist. If, on the other hand, capitalism remains, then a world other than we’ve got now – with global problems of inequality, wars and environmental destruction – is not possible. The only other world possible today is a socialist world, in the original sense of the word of course, as a system of common ownership and democratic control of productive resources, not the travesties that passed for socialism in the 20th century.

Many in the alternative-world movement are prepared to call themselves “anti-capitalists”, but only a few are prepared to argue for a world society of common ownership and democratic control with production directly to meet human needs without passing through money and the market. Most are literally what they say they are – anti-capitalists, i.e. opposed to the actions of capitalist corporations, and the governments that protect them and promote their interests, rather than against capitalism as a total, global system.

They are engaged in a never-ending, uphill struggle to try to contain and restrain capitalist corporations and governments from pursuing profits without regard for the consequences. Some of their less radical colleagues – those running the Non-Governmental Organisations – have made a virtue of necessity and see this as their institutionalised role within capitalism, warning those responsible for running it of the long-term dangers for the system of allowing policies to be dictated by short-term profit considerations. They are not really anti-capitalist at all, just advocates of a “regulated” capitalism. It’s a message capitalist governments are prepared to listen to and even welcome (which is why they subsidize some NGOs, which are therefore not as “non-governmental” as all that). The administrators of capitalism are not as stupid as some of its “free-market” ideologues.

These are the same people who see the solution to the world’s problems as “fair trade” and who danced in the hall at the failure of the recent WTO talks in Cancun. If further proof was required that they stand for an “alternative capitalism” rather than an “alternative to capitalism” this is it. Trade – as the exchange of goods for money (an exchange of ownership title as opposed to the physical transfer of products from one part of the world to another that will of course continue in socialism) – is a key feature of capitalism which is in fact a system of universal buying and selling, i.e. trading, on a world scale. “Fair” trade is a capitalist concept according to which producers, or rather producer-countries, would get the full value of what they sell instead of less than this due to more powerful countries distorting the market in their own favour.

Disputes such as took place in Cancun are essentially an argument amongst capitalist countries, with the less powerful trying to regulate the world market so that it does not operate to the undue – in capitalist terms – benefit of the big boys. In this internal squabble amongst capitalist states, the NGOs take the side of the underdogs and offer this as “another world”.

The unequal distribution of the benefits of production is indeed, to continue with their language for a moment, “unfair” and “unjust”. In a sense, socialists start from the same premise as them that every human being, just because they are human beings, should be able to enjoy a life free from material deprivation and insecurity no matter where they live in the world. But we don’t agree that this can be achieved by a regulated capitalism which would put all capitalist states on an equal footing so far as realising the surplus value created by their workers is concerned. This might benefit – enrich – the capitalists of India, Brazil, China and Indonesia and put more money into the pockets of the rulers of African states, but it would not eliminate inequality between humans in the distribution of material goods.

Even in countries such as the United States and those of Western Europe which benefit from current world trading arrangements, there is still inequality: there is still a wealthy property-owning class whose income as rent, interest and profit gives them a privileged consumption and the rest of us, while nowhere near as worse off as those in the shanty towns and villages of Africa, India and Latin America, still suffer from problems of material insecurity. In any event, the division in the world is not between all the people living in North America and Western Europe and those living in the rest of the world. There are plenty of rich people – some of them filthy rich – living in the so-called Third World.

The only way to ensure that every single human being on the planet has an equal chance to enjoy a life free from material deprivation is a world where all the resources of the planet have become the common heritage of all humanity. On this basis, these can be used to provide enough for all, without conflict (between ruling classes) over access to key raw materials and without plundering the Earth’s resources or polluting the biosphere. We are not claiming that this would be an easy task – there will be problems of co-ordination and co-operation to solve, not to speak of having to clear up the mess left by the profit system – but it is technologically possible as well as socially desirable.

Yes, another world is possible but it has to be a non-capitalist – a socialist – world.

Adam Buick

Voice From The Back: Free (?) Trade (2000)

The Voice From The Back Column from the January 2000 issue of the Socialist Standard

Free (?) Trade 

The embattled head of the World Trade Organisation, Mike Moore, is pledging to use next week’s global trade talks in Seattle to open up the rich markets of the west to poor countries in an attempt to defuse the biggest demonstration in America since the Vietnam war. With the FBI fearful that the arrival of up to 150,000 protesters against the start of a new round of trade liberalisation talks may result in widespread disruption and violence, Mr Moore said in an interview with the Guardian that he was seeking to put right the “great injustices” of the world’s trading system . . . However, attempts by trade diplomats to produce an agreed text in advance have foundered and the WTO has come under attack from non-governmental organisations for being undemocratic, indifferent to the environment and dominated by multinational companies. Guardian, 25 November.

The death trade 

Britain last year continued to sell weapons to countries with poor human rights records despite the government’s pledge to bring an “ethical dimension” to foreign policy, the annual report on arms sales published yesterday shows. The government approved export licences for a wide range of military equipment to Indonesia, Turkey, China, Bahrain, and Algeria, as well as Saudi Arabia, Britain’s main arms customer. The report shows nearly £2bn worth of weapons were exported by Britain last year, including 38 armoured combat vehicles to Indonesia, 18 Tornado aircraft, 100 air-to-ground missiles to Saudi Arabia, and over 400 air-launched missiles to the United Arab Emirates. Guardian, 4 November.

Saving lives or profits 

The Boeing Corp. failed to disclose key findings from a 1980 report about fuel-tank problems in its jumbo jets that could have assisted federal safety investigators probing the crash off Long Island in 1996 . . . Sen. Charles Grassley (R-Iowa), chairman of the subcommittee that oversees airline-disaster probes, told the Post that Flight 800’s crash could have been prevented had Boeing disclosed the report earlier. In 1990, a fuel-tank explosion on a different model jet, a Philippines Airline 737, killed eight people. New York Post, 29 October.

Couldn’t care less 

Old people are dying after operations because of hospital staff shortages and poor training, according to an independent investigation. Delays and dangerous negligence lay at the heart of a “poor” standard of care for the elderly after surgery, the enquiry concluded. Times, 18 November.

Define “professional”, please 

Headhunters are “unprofessional, unethical, money-mad, short-term chancers who would shaft anyone for a quick buck”. It’s official. A headhunter says so. The recruitment industry has been shaken by an e-mail sent by one of its oldest members to staff at a number of rivals in an attempt to poach them. Yes, really. Is there no honour among thieves? Claiming to be “the truth about recruitment agencies”, the message included the above description and suggested that, since they are treated so badly, staff owe their employers no loyalty and might as well switch sides. It came from a director of Lorien, a quoted company specialising in IT staff, and found its way to Computer Weekly.

Free market madness 

Free coal, the traditional perk for retired miners, may soon be shipped from China. The pensioners are being urged by the government to take the cheaper, subsidised Oriental fuel to cut the cost to the taxpayer. Financial Mail on Sunday, 28 November.

Not ethnic conflict—plunder 

The war in the Congo perpetuates a conflict that affects nearly every country in Africa; Congo, located in the centre of the continent, has borders with nine other countries . . . It is, in reality, one giant war against all of Africa, as a detailed analysis of any one of these wars readily shows. The real belligerents were not even at the peace talk in Lusaka: the British Commonwealth and allied French interests who, operating with complicity channels in the United States, are seeking to destroy the nation states of Africa in a domino chain of wars, and to ensure the full domination of Africa’s vast resources for themselves. The People Newspaper, Uganda, 4-18 August.

How helpful! 

“REMAIN WEALTHY. Money is fickle. And self-centred. It couldn’t care less about you and the people who depend on you. Protecting your wealth is up to you. For over 80 years we’ve helped manage the assets of some of America’s wealthiest families. Growing and protecting their money. Giving them the financial security to enjoy life to the fullest. Over the years our customers have come to expect the unprecedented level of attention and service we provide. We can do the same for you and your family. For more information, call or stop by our office at 520 Madison Avenue, 33rd floor. And find out how you can keep your money yours. WILMINGTON TRUST.” Stagebill, October.

Free Trade, Fair Trade or No Trade? (2006)

From the February 2006 issue of the Socialist Standard

The World Trade Organisation negotiations in Hong Kong in December didn’t get very far. There had been talk of a deal to further “liberalise” world trade, under which the developed capitalist countries would drop restrictions on agricultural products from the “developing” countries in return for these reducing their tariffs on industrial imports. The most that emerged was a promise by the EU to stop subsidising agricultural exports by 2013 – provided that in the meantime there was an agreement on the other points. Not enough, said EU Trade Commissioner Peter Mandelson, to make the meeting a true success, but enough to save it from failure.

Maybe in time – April is the next deadline – some agreement, even along the lines envisaged, will be reached. But, given the nature of capitalism, it is not surprising that agreement is proving difficult. The WTO has 149 member states – 149 capitalist states, each with its own economic interests to defend and promote.

Under capitalism goods are produced for sale with a view to profit. Profits originate from the surplus value created by the workers who actually produce the goods that are put on sale, but are realised – i.e., converted into money – only when the goods are sold. Built in to capitalism, therefore, is an intense and relentless competition between capitalist firms to sell their goods, not only between firms in the same country but on the world market between firms from different countries. The role of states in this competition is to defend and promote the economic interests of the capitalist firms within their frontiers, by, for instance, protecting them from foreign competition on the home market or helping them to conquer foreign markets, which are of course the home markets of other countries.

A range of measures are open to states to do this. They can impose tariffs and quotas on imports (protectionism) and they can offer insurance and other financial aid for exports. They can pay subsidies on exports (dumping), but this is politically controversial since these subsidies have to come from taxes on non-exporting capitalist firms within the state.

If these policies – protectionism and dumping – get out of hand, they turn into “beggar-my-neighbour” and no state gains. This can lead to wars, and was in fact one of the causes of the Second World War when Germany and Japan felt they had no alternative to go to war to break through the restrictions on their trade resulting from the policies pursued by Britain, France and America. So there is room for promoting capitalist interests all round  by negotiations such as those at Hong Kong aimed at what is in effect tariff disarmament.

The jockeying for competitive position that went on in Hong Kong wasn’t just between the industrially developed “West” (including Japan and Australia) on the one hand and the poor states of Africa, Asia, Latin America and the Caribbean on the other. There were also arguments among the developed capitalist states themselves. The US wanted access to EU markets for its agricultural products, while the EU accused the US of hidden dumping since its “food aid” involved giving food (for which US farmers are paid) rather than money. Then there were the “emerging” capitalist states – China, India, Brazil, Russia – which also want access to EU (and US) markets, but are precisely the countries to which the West wants easier access for its industrial goods. The really poor states – the so-called “Least Developed Countries” – have no clout at all, and are only defended by Non-Governmental Organisations such as Oxfam and the World Development Movement (which also have no clout). In fact, they are not likely to gain anything out of any deal, which will be a carve-up between the developed and the emerging capitalist states.

Free Trade v Fair Trade

Alongside the clash of economic interests there was an ideological battle between the partisans of “free trade” and those of “fair trade”.

The ideology of “free trade” (no restrictions on imports or exports) has been part of conventional economics since David Ricardo propounded his theory of “comparative advantage” in 1817. Ricardo took as an example Portugal as a producer of wine and England as a producer of “cloth and hardware”. While Portugal could produce cloth and hardware and England wine, neither could do so as cheaply as the other; if they did this there would be a waste of resources compared with what would happen if Portugal specialised in wine and England in cloth and hardware. This was because, said Ricardo, the cheaper wine produced in Portugal and the cheaper cloth and hardware produced in England could then be exchanged for more of each other. Both sides would be better off.

This is the theory, but it doesn’t allow for change. It was obviously attractive to English capitalists as it meant that they would have a world monopoly in manufactured goods. But it was not so attractive to the up-and-coming capitalists of other countries who wanted to produce industrial goods too, nor to the rulers of these countries who wanted to built up their industrial and military strength to better compete for a place in the sun. So they, the US and Germany in particular, embraced protective tariffs for “infant industries”, as propounded by the German economist Friedrich List.

By the end of the 19th century the manufacturing industries of these two countries were strong enough to compete with British industry and even to outcompete British products. A section of the British capitalist class began to have second thoughts about free trade; they demanded protection for British industry through tariffs imposed on foreign imports. They called this “fair trade”. An hundred years ago “free trade” versus “protection” was in fact the main bone of contention between the free-trade Liberals and the protectionist Tories.

Today, the main ideological defenders of “fair trade” (protectionism) are the “development NGOs”. Thus, Benedict Southworth, Director of the World Development Movement issued a press release on 13 December declaring:

“More free trade is not the answer to Africa’s problems. Trade Justice means poor countries getting access to our markets to sell their goods without being forced to open their own economies to our multinationals and losing their ability to protect poor farmers, infant industries and basic services.”

While Barbara Stocking, Director of Oxfam, wrote to the Times (19 December):

“South Korea and Tokyo industrialised using state intervention such as high tariffs to protect infant industries and credit for strategic sectors. The EU and US are pressing to force developing countries to lower their industrial tariffs even though these policies helped South Korea, Taiwan and others to trade their way out of poverty. If Korea had stuck to its supposed ‘comparative advantage’, it would still be exporting rice and wigs instead of cars and computers”.

In an article in the Times (14 December) journalist Carl Mortished admitted that free trade wouldn’t benefit the poorest states, but rather the emerging capitalist states:

“Free trade is fair and just, contrary to what Oxfam will tell you. However, because it is just, it cannot be kind. Trade works in favour of those with comparative commercial advantages and the poorest nations have few. If an agriculture deal is done in Hong Kong, the winners will be powerful developing nations with agribusiness potential, such as Brazil and India. The farmers of Mozambique will gain little. The reason emerges in a report by the UN’s Food and Agriculture Organisation. The State of Food and Agriculture 2005 concludes that liberalising farm trade would benefit consumers in protected markets, such as the EU, with lower-priced food. It will also benefit efficient producers, such as Brazil, but the poorest countries will suffer.”

So was he, then, in favour of “fair trade” for the poorest states? Not at all, as the title of his article “Why ‘fair trade’ is bad for poor nations it seeks to help” proclaimed. Preaching being cruel to be kind, he argued that farmers in these countries “don’t need favours, but fertiliser and equipment. In short, they need investment, and that means more open markets … Poor countries must reform if they are to compete. If we stopped throwing favours at them, the reforms might begin”.

He’s right about one thing: “they are to compete”. They have to. All states have to. And that’s the problem. Built in to capitalism is competition, and where there is competition there are losers as well as winners. Oxfam, the WDM and the others are on completely the wrong track in imaging that there can be no losers or that the winners will help the losers out to their own disadvantage.

One World

We are living in a world that has the productive potential to turn out enough to adequately feed, clothe, house, educate and care for the health of every single person on the planet, irrespective of where they live. That this isn’t done today is due to the fact that the production and distribution of wealth is organised on the basis of buying and selling, of trade.

The Earth’s natural resources and separate parts of the world-wide industrial network are owned separately, by corporations, states or rich individuals. These owners compete amongst each other to sell what those they employ produce and so realise as profit the surplus value contained in them. This has a number of effects. Production stops, not when enough to satisfy people’s needs has been produced, but well before this, when what people can afford (the market) has been catered for. At the same time there is a huge waste of resources on the process of selling itself, on things that have nothing to do with production as such, but only with the buying and selling of the products that constitutes trade (on fixing prices, making and receiving payments, transferring money, changing currencies, etc.) And there is also a huge waste in the armed forces and arms that all states are forced to equip themselves with in order to be in a position to protect and promote the interests of the capitalist groups within them.

So inherent to capitalism – the world trading system – is both artificial scarcity and organised waste. And as long as the system is allowed to continue there’s nothing that can be done to prevent this. But “another world is possible”, and it has to be another world, since there are no national solutions to world problems like world poverty, hunger and disease.

The alternative is a world in which all the Earth’s natural and industrial resources become the common heritage of all humanity. This means that the production and distribution of the things that people need can be organised on the basis of the world being a single unit. The oil resources won’t belong to filthy rich sheiks in the Middle East – or even just to the people living in the Middle East – but to all humanity, to be used for their benefit. The same goes for all the world’s other natural resources. They won’t be traded. They will simply be transferred from one part of the world to another as required to meet needs. This wouldn’t be trade since there would be no question of payment or of any transfer of something of equal value from the part of the world where they went to the part they came from.

Under these circumstances, if people in one part of the word needed food – as is undoubtedly the case at the moment – it would be transferred there, as for instance from the wheatlands of North America. This wouldn’t affect local agriculture since there would be no competition between the two; there’d be no local markets to undermine since local production wouldn’t be for a market either. In fact, local agriculture could be given the fertilizer and equipment that they need – without demanding any counterpart – so that it can contribute increasingly to satisfying local food needs.

This – no trade, but production for use – is the alternative to both the free trade favoured by capitalist corporations and their agency, the WTO, and the fair trade favoured by the equally capitalism-accepting development NGOs.

Adam Buick

The Yes Men (2005)

Film Review from the May 2005 issue of the Socialist Standard

The Yes Men, Cornerhouse, Manchester, (now available on DVD)

Less overtly manipulative than Fahrenheit 451 but in a similarly subversive vein, The Yes Men is an attempt to wake up the public to all the corporate crap that is going on around the world in the name of the WTO. The film shows Andy and Mike, The Yes Men, impersonating or “correcting” the identity of their targets, turning up the volume’ on the aims of the WTO by exaggerating them to ludicrous extents. This is illustrated perfectly by their brief rundown of the rise of the textile industry in 19th century America thanks to “involuntarily imported labour” in the South, or by their proposal that the poor eat their own shit via recycled burgers.

The publicity blurb is promising enough, and the stunts are well represented but a lot of coverage is given to redundant talking-through, lengthening the introduction and giving more background detail on the preparation for the corporate leisure suit with huge phallic appendage than was strictly necessary. The first half of the film is taken up by the Yesmen’s talk at a textile conference in Tampere, leaving the camera to trail unevenly along to two other events which are less well covered in the second half.

This unevenness of treatment is a shame, because the idea behind the Yesmen is a good one, and could be an effective way of breaking through the hard capitalist coat of unthinking obedience to The Market. Of course, it is vastly entertaining to follow Andy and Mike as they prepare to take on a textile conference in Finland, stopping off in Paris to pick up little extras like the finishing touch for the manager’s leisure suit, and as they meet up with fellow activists around the States for other stints.

The underlying idea that subterfuge in the form of chameleon-like parodies will challenge those in power in the economic arena, or at least wake up a few conference goers, is laudable but hard work; in the capitalist world too many of these expensive conferences’ are attended by too many real yesmen’ and, unsurprisingly, there are few hostile reactions to the outrageous proposals that Andy and Mike make. Even the appearance of Andy on CNBC masquerading as GATT representative Granwyth Hulatberi,’ spouting about the might of the rich compared to the poor who are wrong “because they are poor”, fails to ring any alarm bells with the producer, even after the broadcast has gone out.

The one moment of hope comes when the Yesmen go to Sydney to address a meeting of the Certified Practicing Accountants Association of Australia. Andy, speaking again as a WTO representative, has gone for the serious approach, telling it its wrongs by helping people, not business. The accountants lap it up and seem genuinely excited by this prospect and eager to do their bit. Although this interest from such a normally conservative crowd could be explained by the uncritical reaction that the Yesmen’s parodic interventions usually get, it could also be more proof that humanity would embrace a more humane society, given half the chance.

LF

Who are the anti-capitalists? (2005)

From the July 2005 issue of the Socialist Standard

Does the anti-capitalist movement really want "another world" as it claims, or just another form of capitalism?

In December 1999 a meeting of the World Trade Organisation took place in America, in Seattle. Delegates were met by a large demonstration which ended in a riot both by some of the demonstrators and by the police. So was born an international protest movement that has come to be known as the “anti-capitalist” or “anti-globalisation” movement.

“Anti-globalisation” was not a very good choice of name since you can’t be against globalisation. Well you can, but it doesn’t make sense. Globalisation – in the sense of the world becoming more integrated, of the emergence of “one world” – is basically a good thing, part of the preparation of the material basis for a world socialist society. In the end, most in the movement itself came to realise this and adopted the slogan “Another World is Possible”, i.e. another sort of globalisation is possible. It is actually quite a good slogan, which we socialists can endorse – and use – too.

But what do they envisage by “another world”? We know what we mean: a world without frontiers in which all the resources of the planet, both natural and industrial, have become the common heritage of all humanity and are used, under democratic control, to turn out what is needed by people to live and to enjoy life. As far as we are concerned, that is the only framework within which can be solved the problems facing humanity, not only obviously world problems such as global warming, wars and the threat of war, but also more “local” problems such as in the fields of healthcare, education, transport and the like but which are basically the same in all countries.

That’s what we mean by “another world” but what do they mean by it? Some (a handful) may agree with us. But most don’t. Most would, however, be prepared to accept being described as “anti-capitalist”.

But what is capitalism? To most people, capitalism is associated, rightly or wrongly, with three things: private ownership, production for profit, and laissez-faire economics.

Corporate capitalism

Private ownership originally meant the ownership of industry by private individuals. But, while this may have been the case in the days of Adam Smith (in the 1770s), this hasn’t been the predominant form of ownership since the introduction and rapid spread in the second half of the 19th century of what in England was called a “limited company” and in America a “corporation”. A limited company is a separate legal entity in its own right. It is the company, the corporation, that owns the assets, the shareholders owning as a collective group not as individuals. This means that they are only personally liable, if the company goes bankrupt, for the amount of their shareholding, not their total wealth. Hence the name “limited liability company”.

So, as well as private ownership it would be more accurate to speak of capitalism as nowadays involving company or corporate ownership. And, indeed, some in the anti-capitalist movement take this into account by talking of “corporate capitalism”. Which is OK as far as it goes. Only it doesn’t go far enough – because it doesn’t take into account state ownership.  State ownership is still a form of “private” ownership in the broader sense in that it is still a form of ownership (by those who benefit from it) that excludes  – deprives – other people; it is not at all the same as common ownership, which is ownership by everybody – or nobody, since with common ownership no individual or group of individuals can say “this is my property, you can’t use it”. With state ownership, those who control the state can, and do, say this.

So, we would say that capitalism is based on the individual, corporative or state ownership of the means of production whereas, for most in the anti-capitalist movement, it means only individual or corporative ownership. Which makes a difference of course,  as to what you are going to regard as “anti” or “non” capitalism.

Production for profit

But there is no dispute, not even with avowed supporters of capitalism, that one of the key features of capitalism is production for profit. The motive for producing things under capitalism is to make a profit, as the difference in money terms between the cost of producing them and the money received when they’re sold. Differences arise of course over the origin and justification of profits, but all are agreed that seeking to make a monetary profit is what motivates production under capitalism. In fact, the “Profit System” is another – very good – name for capitalism, which we often use ourselves.

From another angle, capitalism could also be called the Wages System since most people under it get a living by working for a wage or salary. But employers are not philanthropists. They don’t employ people simply to provide them with an income to buy what they need to live. They only employ people when they calculate that they can get something out of it – profit, which is the difference between the value of what employees produce compared with what they are paid as wages and salaries. But profits are not all used up in riotous living by employers and their hangers-on. Some is of course but any employer or company that consumed all its profits in this way wouldn’t last too long. Under the pressure of competition on the market, firms are compelled to re-invest most of the profits they make in keeping the productive apparatus they control as up-to-date as possible, so that they can produce as cheaply as possible and sell their products at a price equal to or below that of their rivals. Failure to do this will lead to falling sales and lower profits and eventually either to bankruptcy or to being taken over by some rival.

So, capitalism is an economic system where, under pressure from the market, profits are accumulated as further capital, i.e. as money invested in production with a view to making further profits. This is not a matter of the individual choice of those in control of capitalist production – it’s not due to their personal greed or inhumanity – it’s something forced on them by the operation of the system. And which operates irrespective of whether a particular economic unit is the property of an individual, a limited company, the state or even of a workers’ cooperative.

Neo-liberalism

The third popular idea of capitalism – laissez-faire economics – is more controversial as a defining feature of capitalism. Laissez-faire – from the French for “let it take place” or “leave it alone” – is basically a call for governments not to interfere in the operation of the market, to let market forces operate unhindered. It was first coined by some 18th century French economists opposed to the restrictions on trade and industry inherited from feudal times that then still existed. And was taken up by Adam Smith and in the 19th century by the mill-owners of Lancashire – hence its one-time other name of “Manchesterism”. It has also been called “liberalism”, associated as it was with the policy of Free Trade advocated and defended by the British Liberal Party in its hey-day. But it has never really existed in anything like a pure form.

For as long as capitalism has existed (and Marx and others date the beginning of capitalism to the middle of the 16th century) state “interference”, or to use a neutral word state “intervention”, in the economy has always existed. So laissez-faire is more a policy, advocated by certain interest groups within capitalism at certain times and in certain places. As such it can’t be said to be a defining feature of capitalism.

With the Great Slump of the 1930s, state intervention grew continuously. Economic teachings were changed to take this into account and to justify it – the so-called Keynesian Revolution. In fact state intervention was growing to such an extent that, in the 1940s, many thought that the trend was towards a completely statized economy. Witness books such as James Burnham’s The Managerial Revolution and George Orwell’s 1984. There were also optimists who thought that the gradual extension of nationalisation and the Welfare State would eventually end in socialism. But this was not to be: neither full state capitalism nor socialism resulted. Except in places like Russia (and later China) and its satellites where there already existed more or less full state capitalism, this process stopped at a so-called mixed economy of individual, corporate and state enterprises.

Then came the crisis that broke out in the early 1970s, from which the world economy has still not fully recovered (growth rates are nothing like they were in the 40s, 50s and 60s). But the political reaction to this prolonged period of relative stagnation was the opposite to what it had been in the 1930s. Unproductive state spending had to be cut back in order for a country’s industries to remain competitive on world markets. It resulted in a retreat, not an extension of state intervention. In the 80s under Reagan in America and Thatcher in Britain and others in other countries, privatisation, deregulation, cuts in the Welfare State, were the order of the day. Keynesian economics was dethroned and replaced by Monetarism. Opponents called these policies “neo-liberalism”, by which they mean a return to the laissez-faire policies advocated by Adam Smith, the Manchester cotton-lords and the 19th century British Liberal Party.

In the literature of the anti-capitalist movement this word “neo-liberalism” occurs again and again. In fact, so often that it gives a very strong hint that this is what the movement is really opposed to, that this is what it means by “anti-capitalism”. Not opposition to capitalism as such (as we would understand it: the economic mechanism of production for sale with a view to profit) but opposition only to the policies currently pursued by nearly every country in the world and imposed by the IMF and the WTO on those who might be tempted not to.

Another policy

The alternative they offer to neo-liberalism is not anti-capitalism, at least only insofar as capitalism is identified with liberalism (which as we saw is wrong). It is basically a return to the State interventionism of the 1950s and 1960s. The argument is that the State could, if it so chose (or if enough popular pressure was brought to bear on it), abandon neo-liberal, laissez-faire policies and again adopt interventionist ones (import controls, currency controls, restore and extend the Welfare State, regulate corporations, even re-nationalise industries). More that “Another Policy” than “Another World” is possible. But there’s nothing anti-capitalist about import controls, currency controls, etc. In fact they were practised before the 1980s by openly pro-capitalist governments just as much as by pseudo-socialist Labour governments.

There is some parallel between the old Labour movement and the new anti-capitalist movement. For the old Labour movement too, capitalism was essentially private capitalism. In its declarations it was “private profit” and “profiteering” (i.e. making too much profit) rather than profit as such that was denounced; the alternative promised was state capitalism (nationalisation and state control). It, too, set out to tame and humanise capitalism – and failed utterly, so utterly in fact that Labour and similar parties now openly embrace the market, competition and profit-making, the whole “enterprise culture” package. Instead of them changing capitalism, capitalism has changed them into a mere alternative team of managers of the capitalist system. The anti-capitalist movement is not likely to be any more successful in taming capitalism. In fact, following this road, it is doomed to failure.

The economic mechanism that is capitalism is just too strong and can’t be overcome either by government action or by lobbying or by political pressure in the streets. Capitalism just cannot be reformed to work in any other way than it does and always has done. An effective anti-capitalist movement will have to be one that works for ending the impersonal economic mechanism that is capitalism by restoring control of production to society; which can only be done on the basis of the Earth’s natural and industrial resources having become the common heritage of all Humanity.

Adam Buick

Free Trade Claptrap (1997)

From the July 1997 issue of the Socialist Standard

In February of this year, a World Bank press release on Africa boldly declared: “Economic performance has improved considerably with over 24 countries posting growth figures of over 4 percent—above the rate of inflation . . . this success has given ground for cautious optimism" (New African, May 1997). "Cautious" indeed.

What the Bank failed to point out is that when you are on the bottom, the only way you can go is up. As always, World Bank reports continue to confirm they suffer what critics have termed the bikini syndrome—what is revealed is interesting; what is concealed is more so.

We are not told, for instance, that of the 174 countries listed on the United Nations Human Development Index, 25 of the poorest 30 are in Africa, and that 44 African countries are ranked below the 100 figure. Neither will you hear of Zambia spending 35 times more servicing multilateral debt between 1990 and 1993 than on primary education.

Again, we are no more likely to hear of the 47 percent of sub-Sahara African children not attending school than we are to hear them report their share of the £400 million in interest and capital repayments transferred from the "Third World” to the West every day between 1982 and 1990. Such revelations will only ever portray the big financial policemen of the World Bank and the IMF as the corrupt and self-serving profit-mongers that they are.

The World Bank and the IMF can often be heard saying that the cause of Africa’s mis-development are its leaders and the failure of its economic policies, neglecting to mention that it is they who make the Mobutus wealthy and that it is their structural adjustment programmes that makes economic stability preclusive. Thanks to the assistance of these multilateral organisations. Mozambique debt in 1994, as a percentage of its GNP, was 450 percent.

Mozambique, still suffering from a devastating civil war and a GNP per capita of £60, the lowest in the world, hardly needed the IMF-imposed privatisation measures which are aimed at reducing inflation of 15 and which the country was advised to adhere to if it wanted further loans.

It is understandable that the IMF and the World Bank have every reason for wanting others to believe their propaganda. The 1980s are painful times to remember. It was then, that having loaned so much, they were faced with a growing unwillingness to repay. When Mexico and Peru threatened to renege on repayments, they were only cowed back into line by having their repayments rescheduled. Today, there are undoubtedly concealed but real fears that many countries might come to the conclusion that being so poor they’d be no worse off for withholding cash earmarked for the IMF and World Bank.

It was perhaps this realisation that brought the IMF, World Bank, various commercial banks and governments together last September to hammer out a new initiative to reduce the debt burden on the HIPCs (heavily indebted poor countries). This might have sounded promising but for the fact that this new venture has been put on hold for a few years. And of course, there are the usual preconditions. Countries wishing to qualify must be "well behaved" and prepared to commit themselves to further structural adjustment programmes. The hair-of-the-dog remedy indeed.

Though they will try to deny it, the power of the World Bank and the IMF is increasing. Like the colonial regimes of old, they have power to influence which government is elected, what is produced and the size of a country’s health service. In short they have power to decide who lives and dies.

In fairness, the World Bank is the lesser evil of late, going so far as to insist that public expenditure cuts should not hit health and education, prepared to accept criticism and supposedly taking heed of voluntary agencies and the UN. Of course, there is method in their madness, so to speak. They are all too aware that in the longer term a healthy and educated workforce means increased profits and an increased chance of debt repayment.

Conversely, the more powerful IMF couldn’t give a damn. It preaches a pay-up-or-else creed, is less accountable and has erected a higher temple to the god Mammon, even going so far as to oppose, in recent months, World Bank plans for the building of schools in Mozambique.

There is a third pillar supporting the global economic order—the World Trade Organisation. As the enforcer of the GATT "free trade" agreement, it is likely that many African countries will be dragged into the mis-named "free trade global economy” by the WTO and in Darwinian fashion only the fittest will survive.

The supposed logic behind this "free trade" clap-trap is that with barriers removed, the world economy functions at the height of efficiency and to the benefit of all. We can immediately ask. however, how African countries are supposed to compete with the 500 mainly western companies who control over 70 percent of world trade, or the likes of Cargill, the giant grain conglomerate whose income is higher than that of the poorest 10 African countries. Already, of the 47 countries deemed to be “too slowly" integrating into the world economy, 21 are African.

It goes without saying that the only real benefactors of free trade are the multinationals.Their power is such that they can control not only the fate of national currencies, but also force governments to tailor their economic policies to their own interest. In addition, they face little host government opposition when they destroy a country’s environment. Witness Shell in Nigeria. Like sharks scenting blood they are drawn to countries where there will be tax concessions and where they will be exempt from local labour laws. And it is not uncommon for them to have non-union policies and to take advantage of low-cost economies with poor health and safety standards.

This then is the reality of the "free trade" Africa will benefit from. This is the reality of the "new dynamism" the World Bank claims is taking hold in sub-Saharan African.

From the Red Sea to the Atlantic Ocean coup and conflict are commonplace. From Mali to Mozambique, homelessness and hunger exist alongside illiteracy and unemployment. This on a continent potentially the richest on Earth. And all of this in the name of profit.

We can at least offer a little consolation to the pessimistic. In the last year the seeds of socialism have been scattered around Africa and are already taking root. Workers in Uganda. Gambia and Sierra Leone have already joined us in our struggle to rid the world of capitalism and to replace it with a world of free access. Others await in Zambia and Namibia. At last something of real world significance is germinating on the fertile land of the poorest continent on Earth.

John Bissett

No Deal Brexit: Parasitical Fisticuffs (2019)

From the October 2019 issue of the Socialist Standard

Who would benefit from a no deal Brexit?

The British state risks subordination like never before to the interests of global capitalism. If the UK were to have a ‘no-deal’ or ‘hard’ Brexit, it would change the face of British capitalism.

But the question does remain an ‘if’. As we go to press attempts are still being made to leave with a deal, especially after the opposition parties got together, just before Boris Johnson’s suspension of parliament/, to pass a law to block no-deal. Even so Michael Gove, the minister in charge of Brexit arrangements, has made it clear that the British government is operating under the assumption that a deal will not be struck.

It is worth asking, then, who actually wants no-deal?

Corbyn, in an article for the Independent (26 August), described no-deal as a ‘bankers’ Brexit’, serving the interests of this powerful group primarily. This isn’t to say that no-deal would benefit the capitalist class as such – no-deal is more likely to be driven by nationalism than simple economic gain. The Daily Telegraph and other mainstream media outlets condemned this as just left-wing ideology, noting that bankers were originally in favour of remaining in the EU. However, other publications, such as the Financial Times, have reported some recent shift of bankers’ views to favour a no-deal Brexit, and more so since Johnson’s premiership.

The potential effects on the economy are worth considering.

No-deal would, if Bank of England reports are to be believed, risk recession. This might, in a way, favour some sections of the capitalist class – regulations could be dismantled and business take the helm more firmly, as is the inevitable to-ing and fro-ing in a capitalist economy.

On the other hand, some businesses have already started asking for handouts from the government, such as the food and finance industries. The food industries are going further, demanding exemption from competition laws so that they may collude. In all likelihood, the capitalist principle of ‘privatise profits, socialise losses’ will prevail.

There are also numerous other consequences to no-deal, leaving aside the domestic affairs. America has been the most forthcoming in stating its willingness to make a deal with the UK: President Trump has repeatedly expressed his enthusiasm about the current government. He has maintained that the UK may have to leave without a deal, saying ‘the European Union is very tough to make a deal with – just ask Theresa May.’ Johnson has said that he looks to make a ‘comprehensive deal with the US’. Other potential trade partners include Brazil, currently the site of major ecological damage. The British government is still, however, vying for the EU’s favour. British-European trade may carry on despite tariffs (most likely dictated by the EU, not the UK).

In this case, the UK would be jumping from the frying pan into the fire. All its trade deals would no longer be made through the EU, but based on World Trade Organisation rules. No-deal is also sometimes called ‘leaving on WTO rules.’. This would mean drawing up individual ‘schedules’ (lists of quotas, tariffs, and concessions for goods and services) for every WTO member the UK trades with. Britain would have to negotiate any trade deals on its own. As Britain would not have the bargaining power of the EU, British capitalism, under these circumstances, would most likely take on a much more American face. The interests of star-spangled industry would be catered to by British government more attentively.

No-deal has, however, been criticised by both right and left. The former Chancellor of the Exchequer, Philip Hammond, has said that there was no mandate for leaving the European Union without a deal. The previous Prime Minister, Theresa May, attempted to get a deal approved three times, each attempt ending in failure. Some people argue that leaving the EU without a deal is an expression of the democratic will expressed in 2016. Often, these people are supporters of the party which has stymied parliament.

Global capitalism is strengthening its hold on British society, seemingly subverting systems of democracy to do so. The government will probably drift further into right-wing populism. It is unclear what the precise effects on the electorate will be, but disillusionment with the liberal order is more likely than ever.

Economic and political strife can be the spur to consciousness, if the moment is seized. Marx’s old mole of revolution burrows close to the surface once more. The opportunity to make the case for the socialist alternative is clear.

M. P. Shah

Letter: Do ‘we’ trade? (2019)

Letter to the Editors from the May 2019 issue of the Socialist Standard

Dear Editors

I can’t see what’s so bad about a No Deal and the UK making its own trade deals with whoever it wants under WTO rules (Cooking the Books, April Socialist Standard). A focus on domestic production would be healthy. Why should we desire the import of products we can produce in the UK anyway? Cheapness has always been a Trojan Horse. It may be advantageous in the short-term to import cheap meat or cheap milk, for example, but in the long-term we will pay through the teeth for these items. If the UK loses its farming industry or its farming industry is drastically shrunk by cheap imports and we lose our ability to meet the UK demand for farming produce and we then become dependent on the importation of farming produce, we will see that produce spiral upwards in price. We only need to import what we can’t produce in the UK. So maybe we need to trade less with the world and promote domestic production. However, the profit imperative in the economy disallows for this focus on domestic production. If only we could analyse the nature of global economics as we have with Brexit then we might realise there are better alternatives to globalisation and the insane pursuit of profit rather than production for human need.

Louis Shawcross, 

Hillsborough, Northern Ireland.

Reply:

Who do you mean by ‘we’?  You write as if everyone living in Britain is part of a community sharing a common interest. It’s not just you of course. This is how most people at the moment see things, referring to Britain as ‘we’. ‘We export this’, ‘We import that’. ‘We spend too much on defence’, ‘We let in too many immigrants’ and such like are frequently heard in political conversation. But we, the many, the majority class of wage and salary workers, don’t do any of these things. It’s ‘they’, the few, who own and control productive resources, who do. Everywhere, and not just in Britain, society is divided into this few and the rest of us whose interests are antagonistic to each other. It’s them and us, and them versus us and vice versa. There is no common ‘we’.

So, it wouldn’t be us, the many, who would be trading on WTO terms. We are not part of the EU customs union or its single market. They are, and they’ve got into a huge mess since a referendum vote to leave the EU as their political representatives in parliament can’t agree on what this means.

The leading advocates of ‘leaving on WTO terms’ wouldn’t agree with the trading arrangements you are proposing that Britain outside the EU should adopt. They are ‘free traders’ who want more not less globalisation. The more dogmatic of them want to remove all tariffs on imported goods, i.e. abolish all protection for home industries including agriculture, even though this is not practical politics. But what you propose isn’t either, precisely because, as you hint at, this would be incompatible with what was most profitable for British capitalism as a whole. It would divert investment away from industries that could make higher profits from producing goods for export. It would raise the cost of living for workers and so mean that employers would have to pay higher wages, so undermining the competitiveness of both exports and home-produced goods.

There are no national solutions to the problems capitalism causes as capitalism is a single world-wide system. No one country can cut itself off from this or escape from the pressures of the world market. People may think up ideal trade policies and governments may try to implement them but capitalism has its own relentless logic of ‘profits first, otherwise economic downturn’ to which governments must ultimately submit.

In socialism, which too will be a world-wide system, materials and finished products will of course still be moved from one part of the world to another but this won’t be on the basis of trade, where what is moved to one part has to be in exchange for something of equal monetary value from that part. It will simply be a question of goods being moved from where they are produced to where they are needed. Logistics will replace buying and selling and profits won’t come into it. It is only on this basis that production can be freed, as you want, from the insane pursuit of profit and be geared instead to meeting human need–Editors.

Cooking the Books: WTO rules, ok? (2019)

The Cooking the Books column from the April 2019 issue of the Socialist Standard

The World Trade Organisation, of which nearly all states are members, regulates trade between them. Its basic rule is the ‘Most Favoured Nation’ clause which lays down that, if a state grants favourable terms to another state, say, by reducing tariffs on imports from it, it has to apply the same terms to all other WTO member-states. This applies to customs unions as well as states.

Tariffs are a tax on imports which increase the price of the imported product. This ‘protects’ the home industry producing the same product from competition from cheaper imports. The EU, as a customs union, has to follow WTO rules when it imposes tariffs, as it does to protect agriculture, the car industry and much more. If Britain leaves the EU trading bloc it would have to ‘trade on WTO terms’ but this is merely stating the obvious; it says nothing about what the trade and tariff policy conforming to these terms is going to be.

Some Brexiteers think Britain should abolish all tariffs. ‘Liam Fox, the international trade secretary, wants a move to zero tariffs in as many areas as possible’, while for Jacob Rees-Mogg ‘cutting import tariffs would lead to cheaper food, clothes and shoes’ (Times, 18 February). Tim Martin, owner of the Wetherspoon pub chain, wants to ‘abolish all the taxes (tariffs) on non-EU imports, like oranges, rice, coffee, Aussie wines and a total 12,651 products. This will reduce prices in the shops, making for a better-off public’ (Wetherspoon News, Winter 2018/19).

But would workers be better off if the prices of everyday products fell? This is a claim made by free-traders since the time of Richard Cobden who campaigned successfully to get the Corn Laws repealed in 1846. These had been introduced after the Napoleonic Wars to maintain the high war-time prices of wheat, barley and rye and so protect the rents of landlords whose tenants grew these. Industrial capitalists resented this as the artificially high food prices meant they had to pay more as wages.

Cobden’s Anti-Corn Law League sought working class support by claiming that cheaper bread would make them better off. Engels, who had been working in his father’s factory in Manchester at the time of the repeal campaign, recalled that its aim had been ‘to reduce the price of bread and thereby the money rate of wages’ which ‘would enable British manufacturers to defy all and every competition with which wicked or ignorant foreigners threatened them’ (Labour Standard, 18 June 1881).  Challenged by a Cobdenite, he explained why the League’s theory that ‘dear bread meant low wages and cheap bread high wages’ was wrong:

  The average price of a commodity is equal to its cost of production; the action of supply and demand consists in bringing it back to that standard around which it oscillates. If this be true of all commodities, it is true also of the commodity Labour (or more strictly speaking, Labour-force). Then the rate of wages is determined by the price of those commodities which enter into the habitual and necessary consumption of the labourer. In other words, all other things remaining unchanged, wages rise and fall with the price of the necessaries of life.

So, insofar as abolishing or reducing tariffs on items of popular consumption reduced the cost of living this would exert a downward pressure on wages. Fox, Rees-Mogg, Tim Martin and other modern-day Cobdenites are wrong when they claim that the end result of cheaper food, clothes, shoes, oranges, rice, coffee and Aussie wine would be that we would have more to spend.

Cooking the Books: The Onward March of Globalisation (2015)

The Cooking the Books column from the February 2015 issue of the Socialist Standard

For years the World Trade Organisation has been trying to change the rules of global trade in the interests of global investors. The US in particular wants to ease the out-sourcing and off-shoring of jobs, permitting employers to seek the lowest wages and weakest government oversight protections around the world; and to incorporate patent and intellectual ownership rules that will further restrict access to medicines for millions and could be expanded to include even surgical procedures and not just drug treatments.

Overall, it is a bid to implement a globalisation policy of trade harmony at the lowest common denominator that will further the interests of global investors by relaxing various standards to weaker levels of consumer and public protection. It would represent a further reduction in the ‘sovereignty’ of national governments and their already weak power to resist the dictates of the world market. But these negotiations have not yet reached a conclusion because some countries do not want to open their doors too much to multinational corporations.

At the same time the EU and the US are negotiating a ‘Transatlantic Trade and Investment Partnership’. One of the points under discussion is a mechanism known as ‘Investor-State Dispute Settlement’ (ISDS), which would give corporations the right to challenge a country’s laws. Clearly, this is something more than a mere ‘free-trade’ deal.

Even if a new reform or policy applies equally to domestic and foreign investors, ISDS proposes to allow corporations to receive compensation for the absence of a ‘predictable regulatory environment.’  Already under existing WTO ‘free-trade’ rules this type of argument has been used to attack clean energy, mining, land use, health, labour, and other policies. More than $14 billion in the 16 claims are now under litigation in the US; all relate to environmental, energy, financial regulation, public health, land use and transportation policies, which are not traditional trade issues. EU investors have attacked Egypt’s minimum-wage increase, and a US corporation has attacked the Peruvian government’s decision to regulate toxic waste and close a dangerously polluting smelter. In one of the most notorious cases, US tobacco giant Philip Morris launched investor-state cases challenging anti-smoking laws in Uruguay and Australia after failing to undermine the health laws in domestic courts.

Another proposal in TTIP is for ‘regulatory cooperation’ which would give big business lobby groups wide opportunities to influence decision-making, outside the normal democratic decision-making processes on both sides of the Atlantic. The clear intention is to allow business to in effect ‘co-write’ international regulations, as already happens at national level.

All new relevant US or EU proposals for legislation or regulation would have to be screened first for their impacts on trade. A report has to be made to that effect, to make sure legislators don’t adopt anything that would be detrimental to business. Even before a proposal is launched, say by the European Commission, the US has to be notified, and vice versa. This opens the door to intense lobbying and also to all sorts of pre-emptive pressure – for example a threat of litigation under the ISDS mechanism.

The socialist attitude is that, at the end of it all, the arguments within the WTO which have so far prevented agreement are a dispute between vying capitalist factions, free-trader versus protectionist, foreign versus native capitalist – competitors, fighting to defend or create conditions that offer them the best return. Even so, among the casualties are working people the world over, who will end up as collateral damage, more powerless and more vulnerable than ever in the face of global capitalism.

ALJO

Whatever happened to Free Trade? (2003)

From the January 2003 issue of the Socialist Standard

One of the illusions that modern capitalist governments like to foster is that they are in favour of “free trade”. Mr Bush, Mr Blair and just about every political leader in Western European countries, thunder on about its wondrous benefits. They pose as champions of liberalisation, of tariff busting and global freedom of trade. The reality is somewhat different.

“The past year has been lousy for free trade. The Americans have ratcheted up farm subsidies and slapped new import duties on foreign steel. A European summit made little progress towards reform of the common agricultural policy (CAP); indeed, the French managed to secure agreement to preserve CAP spending at present levels. Poor countries are despairing over the outlook for the Doha round of trade negotiations, which was intended to benefit them. Just this week, negotiations between rich and poor countries over access to patented drugs through “compulsory licensing”, a big aim of poor countries, stalled” Economist, 30 November.

So how do we explain this apparent contradiction? The politicians are all for anti-protectionism and yet at the same time we get more and more trade barriers, more trade quotas and more restrictions on imports According to Mr Bush's trade representative Robert Zoellick all this can be changed. He is a man with a plan and he states his plan in a very concrete fashion.

By 2010, WTO members would reduce all tariffs to below 8 per cent, and scrap altogether those that are now less than 5 per cent. By 2015, all tariffs on manufactured goods would be reduced to zero. Splendid free trade rhetoric you may think; but of course it is all about manufactured goods. Mr Bush's trade representative remains strangely silent about the farming industry. For a very good reason.

“Sadly absent from the plan is any more discussion of farm goods, which form the basis of the poorest countries economics. Admittedly in July Mr Zoellick put forward a proposal to scrap many farm subsidies, but there is little sign that American farmers will support this. Rich countries' tariffs on factory goods are already low – typically less than 5 per cent – while their subsidies and tariffs on farm goods are in general far higher.”

So let us get this quite clear. Some members of the owning class, whose wealth is dependent on the exploitation of a highly skilled industrial work force, are in favour of free trade in such goods that they can sell cheaper than their competitors, but opposed to free trade when they fear that their competitors may undersell them. Politicians are just so many hired hands, hired to be in favour of free trade one minute and opposed to “dumpimg” the next, depending on their master's whim.

As a member of the only useful class in society – the working class, don't you think it is time to get rid of your exploiters and their apologists?

Richard Donnelly

Seattle - Five Years On (2004)

From the October 2004 issue of the Socialist Standard

It is almost five years since unprecedented public protest and a demonstration of some 100,000 people disrupted the meeting of the World Trade Organisation (WTO) in Seattle. Today, the protest is mainly remembered for the violent exchanges between a minority of protesters and the Seattle police and National Guard that provided the media with exactly the sensational spectacle it was seeking. For a day or so at the end of November 1999 images of the more violent aspects of the protest were flashed across our television screens while the newspapers carried vivid descriptions of the mayhem caused by this major public demonstration. With only minor exceptions the event was resoundingly condemned by the media as irresponsible, while the underlying issues were dismissed without further consideration. Within a day or so the media circus had moved on to find its sensationalism elsewhere and the demonstration was quietly forgotten.

The main purpose of the demonstration was to highlight 'unfairness' in WTO rules, perceived as defending the domination of the industrialised countries over the undeveloped countries. The protesters represented a broad spectrum of opinion however; ranging from human rights and pro-democracy groups to environmental, religious and labour activists each having their own agenda and motives for demonstrating. Some decried the inhuman conditions imposed on undeveloped countries by 'structural adjustment packages', others the composition of the WTO with its unelected officials. Certain groups condemned the savage exploitation of child labour while others opposed the dumping of toxic waste in undeveloped countries. Other sections opposed 'free trade' although interestingly it was claimed the majority of protesters were in favour of international trade but critical of the 'unfairness' of the current model of 'free trade'; believing that free trade is beneficial to all if only it can be made 'fair'. Existing trade agreements, they argued, were seriously skewed because only the 'developed' nations have benefited while poverty and social inequality have grown rapidly in developing countries.

With perhaps the exception of the 'anti-capitalist' group, who supposedly advocated the abolition of the capitalist system altogether – but failed to specify what should replace it and how this change should come about – the protesters seem to have been united by a single common belief. They all broadly believed that international trade could be reformed to work in the interests of ordinary working people and with 'fairer' trade and a little less exploitation of the undeveloped countries and their people, the world could live in harmony.

Cause and effect

The Seattle demonstration was bound to fail in exactly the same way as anti-war protests fail to achieve an end to war. It is a question of cause and effect; we can demonstrate against all kinds of things that we consider 'unfair' but unless we recognise and tackle their cause the problem will only remain.

We cannot hope to understand world events unless we view these from a class, rather than national, perspective. We live in a world where the dominant world economic system is capitalism, a system that has organised all people into two opposing classes with conflicting interests. The owning or capitalist class lives on profits by virtue of its ownership of the means of producing and distribution wealth. It is their class interest to depress wages and benefits to increase profits. The working class everywhere has nothing and therefore is forced to sell its labour power for a wage or salary in order to live. But the source of all wealth is the product of labour applied to nature, and the very people who produce this wealth are denied access to it by laws and ultimately the state. Government's function is to protect the capitalist class and its legal 'right' to accumulate the wealth created by ordinary working people. The two classes thus have opposing and conflicting interests.

The central imperative of capitalism is to expand and to seek new ways of extracting more profit from ordinary working people by seeking out raw material and markets and imposing itself on the people of other countries; transforming indigenous self-supporting people into wage and salary workers. People everywhere are compelled to join the ranks of the world's working class to face the same class struggles as their fellow workers in the industrialised countries. We share a common interest.

It cannot be denied that capitalism has entered a particularly pernicious phase in its development – euphemistically called 'globalisation' – in undeveloped countries as large corporations viciously compete globally to secure markets and relentlessly exploit labour in countries where they reputedly earn 75 percent of their profits. But exploitation is not just confined to undeveloped countries. Working people everywhere are on the defensive against the class whose imperative is to maximise its profits and perpetuate their mastery over all working people. There can be little doubt that the wages and salaries of the majority of people in industrialised countries have stagnated or declined, working hours and job insecurity have increased and conditions of life have deteriorated. The correlation between economic growth and improving social welfare has been cut as corporations seek to introduce 'Third World' standards into the established industrialised countries. We share a common interest.

The Seattle protesters did not share this view of the world. The real enemy is class society engendering the domination of ordinary working people by the class who live by making profits. Countries don't dominate or exploit other countries; the capitalist class who own the companies and corporations assisted by their respective governments exploit the working class everywhere, regardless of their geographical location. Working people don't benefit from the ruthless exploitation of undeveloped countries; companies and corporations benefit by maximising their profits for their shareholders. Ordinary workers don't import or export commodities; companies and corporations owned by the capitalist class export commodities in order to release the profit generated for them by the world's working class. Ordinary workers don't make trade rules; governments working to further the interests of companies and corporations draft these rules. Ordinary workers don't invest in other countries or claim 'free trade' is an impetus for global prosperity; companies and corporations invest in order to generate 'super-profits' and it is they as a class who prosper, not ordinary working people. Ordinary working people don't live on profits; instead, they struggle on a wage or salary. We have a conflict of interests.

Workers don't benefit
When the Seattle protesters demanded less corporate investment and exploitation of undeveloped countries they were intimating that the indigenous population would be better placed if left to its own devices. This is a delusion; less interference from 'foreign' capital would simply allow the indigenous capitalist class or even the state to take over the exploitation of the indigenous working people. The same is true of struggles against colonialism, demands for national liberation, independence and the right of national self-determination. These movements are no more than the struggles of an indigenous capitalist class, striving to gain the right to exploit ordinary workers in their own country. Worker support for such movements is based on the misapprehension that it is somehow less painful to be exploited by someone born in the same country than by a foreign corporation. Workers have no country, just a place where we struggle to live, work for a wage or salary and make profits for the owning class. We have a common interest; we are all wage slaves.

The demands of the Seattle demonstrators were misguided. Demonstrators can at best hope to alleviate a problem, but the respite is only temporary. The world cannot be made 'fair' by rewriting trade rules, electing WTO officials or even abolishing the WTO altogether. The WTO together with the IMF and the World Bank and all the other institutions exist only to serve the needs of the companies and corporations owned by the world's capitalist class in their pursuit of profit. Their abolition would not alter the underlying conflict of interests between ordinary working people and their capitalist masters.

It is only with the abolition of capitalism and the establishment of socialist society that worker servitude everywhere will end. This is achievable not by demonstrating for reforms to institutions of capitalist society but by a majority of the world's workers understanding the need for socialism and working together to capture political power to abolish capitalism and build a socialist society.

Socialism is a classless society based on common ownership of the means of producing and distributing wealth, where production will be used to overcome needs, not to create profit. It will be a society without money and free from conflicting class interests, democratically controlled by ordinary people for and in the interest of all people everywhere. This is our common interest.

Steve Trott