John Buell

Trading Away Democracy

Conservative pundits are fond of warning us that deficit spending will soon make the US like Greece, a fiscal basket case mired in hyperinflation and scorned by international capital markets. No longer an independent nation in more than name Greece is ruled by a stern troika, the IMF, the ECB, and the European Commission. It cannot even control the disposal and use of its public lands nor manage the priorities of its public spending. So much for democracy in the home of its birthplace.

Is this our fate?  If so that old bogeyman of the right, deficit spending, will not be the cause.  For the typical conservative pundit it makes little difference that their predictions of US hyperinflation around the corner have been proven continually wrong over nearly a decade now. Nor do these doomsayers pay any attention to a fundamental fiscal difference between Greece and the US. Greece is part of the Eurozone and does not print its own currency whereas the US mints dollars. Unless it so chooses the US government cannot default. Yes inflation is a theoretical risk, but with no real possibility of default our currency always has a leg up on bonds issued by Greece.

Here in the US the ability of a democratic government to control its own currency has saved us from disaster. Nonetheless another battle with corporate conservatism poses severe risks to our democracy.

If the battle against deficits and Social Security is currently taking a pause—in part because even a modest recovery has been good for both revenues and expenditures— the war against the welfare state proceeds on another front, those deals misleadingly labeled trade treaties. These are often brought to us by the same coterie of pundits who obsess over the national debt.

Like the jeremiads regarding deficits, hyperinflation, and default, talk of competitiveness and global trade is but a smokescreen for the larger agenda of corporate conservatives today. The aim is to diminish any form of social democracy that might curb corporate initiatives, diminish economic inequality and insecurity, or compensate victims of resource extraction, all of which are endemic to the modern corporate economy.

This agenda represents a radical departure even from classical market theory. The classical economists of the 18th and 19th century, including Adam Smith, David Ricardo, and John Stuart Mill, believed that markets were natural and would evolve spontaneously. Today’s corporate conservatives, known as neo-liberals in current academic discourse, take a less naïve view. Ardent supporters of markets, they believe strong governments are needed to promote markets, to blunt opposition, and to clean up any messes unhindered markets may leave in their wake. Though often employing the rhetoric of the spontaneous, unregulated market and the magic it conveys, they strengthen state capacity to incarcerate populations displaced by the market, expand military presence, spy on dissidents, subsidize or bail out monopolies or oligopolies it has encouraged or enabled.

The Trans Pacific Partnership (TPP) is a perfect illustration of the neoliberal agenda. Sold as “free trade” it is defended in terms of the classical liberal arguments of comparative advantage, whereby each nation specializes in what it does best and trade between them benefits both. Even in it own terms this argument makes highly questionable assumptions about full employment, competitive markets, and perfect information.

That comparative advantage has little to do with this agreement becomes clear when one examines current trade. Paul Krugman points out that defenders claim “the agreement would be hugely significant. But trade among these players is already fairly free, so the TPP wouldn’t make that much difference.”

He then, however, goes on to add: “Meanwhile, opponents portray the TPP as a huge plot, suggesting that it would destroy national sovereignty and transfer all the power to corporations. This, too, is hugely overblown. ...

What the TPP would do, however, is increase the ability of certain corporations to assert control over intellectual property. Again, think drug patents and movie rights.”

Though one may commend Krugman for moving away from his long- standing support for such agreements, he trivializes and caricatures opposition to the agreement. Hardly merely a “plot,” at least since the 1930s, key players in the corporate economy have established think tanks, university professorships, support for selective candidates and media strategies. In the process they have expressed and helped craft a class interest that goes far beyond some backroom plot. They engaged in ideological warfare against those aspects of national sovereignty that would limit the reach of the market and corporate oligarchies. As the number of states where so called right to work laws grow, financial speculation wreaks extraordinary damage, privatization of state facilities and public education continually expand while and municipal pensions and state governments are undermined it would be hard to deny that they have been very successful.

Though (tepidly) opposing this deal, Krugman joins with many supporters in treating the critics as extremist fanatics. Yet given the course of domestic politics in the last few years and the ways in which neoconservatives have undermined much of domestic liberalism why should we not expect more of the same in these so called trade deals? The secrecy of the negotiating process blunts the possibility of political mobilization, and the requirement of an up or down vote, no amendments allowed, neuters the democratic process. And if early reports are correct, the central content is pro corporate at its core. If this deal is no big deal, why so much secrecy surrounding it?

As Joe Firestone, blogging in Naked Capitalism, points out, corporate- oriented dispute resolution panels, which allow corporations to sue governments over regulatory standards, are the heart of what is wrong with this agreement:

“There is nothing in these agreements that places any constraints on the ISDS tribunals [Investor State Dispute Settlement] in relation to what they decide…ISDS tribunals have already shown in relation to NAFTA that they will impose financial obligations on governments for new types of “violations” that have no explicit warrant in that agreement … They are sure to do the same in the new proposed agreements including the TPP.”

Right now, reformist movements acting to strengthen sovereign state’s welfare and regulatory initiatives are one of the few counters to corporate globalization’s ugly residue. Progressives need to press our representatives to reject fast track authority for the president.  Senators Susan Collins and Ron Wyden have introduced parallel legislation to compensate workers for some of the damage these deals inflict, but this bill will not avert the decimation of democracy.

In the long run we cannot count on even vigorous action at the national level to protect our health and safety. Environmental problems cross borders. All sovereign states, albeit to different degrees, are instruments of capital expansion. They must be challenged and limited not only domestically but also via cross border coalitions of minority, working class, and environmental movements. Neoliberal capitalism is already global. Resistance to it must itself be global and democratic.

John Buell lives in Southwest Harbor, Maine, and writes regularly on labor and environmental issues. Email

From The Progressive Populist, June 1, 2015

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