From A World to Win

Free Trade: Engine of Growth or Plunder

Part 2: Global Trade, the Rich Get Richer

Revolutionary Worker #1096, March 25, 2001, posted at

For 50 years, the multilateral institutions that have monitored and regulated the functioning of the post-World War II international capitalist economy worked discreetly in the shadows. The international Monetary Fund (IMF), the World Bank and the recently created World Trade Organization (WTO) met in comfort and quiet, yet their decisions regularly sent shock waves around the world. Even a slight movement in interest rates or exchange rates could set in motion gigantic forces that jolted whole economies and shattered the lives of millions. Yet all this took place out of the sight of the people whose lives were so dramatically affected.

In the last year this situation has changed. The increasingly rapacious attacks of the imperialist countries on the economies of the oppressed nations and peoples, along with serious crises, such as in Russia and East Asia, have awakened a cry of resistance, including from a new generation of youth in the imperialist citadels themselves. Mass protests have rocked recent meetings of the lords of finance capital and cast a spotlight on their criminal deeds.

The counter-attack has been rapid and loud. Globalization is good for you, lectures U.S. President Bill Clinton. However bitter-tasting it may be, it is, as he proclaims in his 2000 "State of the Union" address, "the central reality of our time"; taking the medicine of free trade and the free market is said to be the only way to growth and prosperity.

In fact, whether globalization and the promotion of increased trade is "good for you" depends very much on who "you" are; while it has been excellent for a few wealthy owners, for the masses everywhere, particularly in the poorest countries, the last decade of imperialist globalization has been one long nightmare. This article will examine the argument that the promotion of "free trade" brings growth and prosperity, in particular the idea that the only way the oppressed nations can achieve growth is by hooking on to the "locomotive" of the imperialist economies, and it will look at the role of the World Trade Organization in the process.

The following is the second part of an article that appeared in A World To Win #26, a journal inspired by the Revolutionary Internationalist Movement. See RW#1095 for Part 1.

Global Trade--The Rich Get Richer

Who actually benefits from expanded trade? While a full examination of this issue is beyond the scope of this article, a few facts are telling:

Global inequality has widened since the dawn of capitalism, along with the general rise in trade: the average standard of living in the richest countries was only about three times higher than in the poorest countries in 1800; in 1900 it was about six times higher; and by 2000 it was about 20 times higher.

57 percent of the world's population receive only 6 percent of the world's income, living on less than U.S.$2 per day.

In the period of 1980 to 1996, as trade expanded at an unusually brisk pace, 59 countries experienced an actual decline in GDP per capita.7

Within the imperialist countries, polarization is also increasing. In 1995, four out of five male employees in the U.S. earned 11 percent less per hour in real terms than they did in 1973, and for the poorest third of the working population the fall was 25 percent. During that same period, per capita GDP rose by a full third in real terms and the richest one percent doubled their wealth. Worldwide, wages as a share of national wealth have fallen, while the portion going to interest and corporate profits has risen.8

This correlation of trade expansion with the rise in polarization globally and within countries is no mere coincidence. Over 150 years ago, Marx pointed out that the working of capital tends to produce the accumulation of impoverishment and misery at one pole and great wealth at the other. Bourgeois trade experts even expected this trend. The Organization for Economic Co-operation and Development (OECD) estimated that Europe, the U.S. and Japan would be the "big winners" from the new trade system, receiving two-thirds of the benefits, while The Economist Intelligence Unit (April 1995) agreed that sub-Saharan Africa would be "worse off." The Wall Street Journal (15 August 1994) acknowledged that the African countries would be driven "further into the trench" of starvation, debt and poverty.9

The WTO--"Fix or Nix It"

The popular slogan of "Fix it or Nix it" refers to the thinking that the WTO should either be reformed or dumped. Many WTO critics argue that whatever happens, trade will continue to expand, so the only real choice is to make sure that this takes place under conditions that are as "fair" as possible for the world's poor. Many of their arguments focus on the way the WTO is organized, exposing how it is "rigged" against the poor countries, enabling the richer countries to more easily bully them into submission. While the U.S. trade delegation in Seattle, for instance, consisted of hundreds of corporate and legal experts, many of the poorer countries had trouble fielding any delegation at all, and 30 countries cannot even afford to maintain a representative at the WTO's Geneva headquarters.

It is also undoubtedly the case that despite all the WTO's talk of a "level playing field," the imperialist countries use their dominance to maintain double standards. While presenting themselves as fighters for free trade against national protectionism, they are the biggest practitioners of protectionism when it comes to sectors they consider vital to their economies. In 1996, combined U.S. and EU domestic support for their farmers, who constitute less than 3 percent of their total population, amounted to U.S.$110 billion (about U.S.$29,000 per farmer in the developed countries). In contrast, India's domestic support to its hundreds of million of farmers worked out to a negative $23.7 billion. In other words, India, through levies of various kinds on its agricultural products, taxes its farmers rather than subsidizes them. The list of features characteristic of an uneven playing field, structurally biased in favor of the imperialist countries, could go on and on.

The point is that a serious look at the organizational structure of the WTO shows that it is indeed dominated by the imperialist countries--"the game is rigged." But is it true that if somehow the structure and policies of the WTO could be "unrigged," if the heavy hand of the imperialists could be lifted and trade regulations made more equal, trade could be made to function more fairly?

It is crucial to understand that even the most egalitarian trade rules under imperialism will inevitably work to the ultimate advantage of the imperialist countries and the giant monopoly corporations. Insofar as there is any equality under bourgeois law, it treats unequal things equally, as Anatole France, the French radical, sardonically pointed out over a century ago, when he quipped that the law, in its majestic equality, forbids the poor man and the rich man alike from sleeping under the bridges at night. Just so, even the most egalitarian liberalization in the area of investment, for example, would only mean that U.S. corporations and Bangladeshi, Ecuadoran, Algerian and other oppressed country corporations would all have the right to purchase and exploit land, banks, hospitals, and the like in each other's countries--and just who is going to be dining on whom is only too apparent.

What else could it mean to treat even-handedly a world that has been so sharply divided for generations into imperialist and oppressed countries? At the very core of the WTO's functioning is the principle, common to every capitalist society, that all commodities are exchanged at their "equal value" (for instance, grain increasingly trades at one "global price"), thus covering over the fundamentally unequal position of the producers themselves (a grain farmer in the U.S. produces up to 1000 times as much as their counterpart in the Third World). This inevitably allows bigger, more powerful capital--imperialist capital--to gobble up smaller capitals and further expand its sphere of operations.

One example of the way that this principle is applied by the WTO is its basic enforcement arm, the dispute settlement system. As the ultimate sanction, WTO rules allow for retaliatory tariffs in the case of unfair trade practices by one country against another. So to punish an unfair trade practice, large imperialist countries like the U.S. and small neo-colonial regimes like Peru or Sri Lanka each have the right to use retaliatory tariffs against the others products! The oppressed country will of course find it nearly impossible to make even the tiniest impact on U.S. exports.

"Nix" the Whole System

The imperialist countries and their ruling classes have, through decades of global domination, accumulated vastly greater forces of production in their own lands, they control the purse strings of global finance and, ultimately, they control far superior military forces to ensure that any basic challenges to their mastery will be suppressed. Under these conditions, further trade liberalization under the WTO baton will lead to the intensification of global competition, the growth of the multinational corporations and the heightened dependence of the oppressed nations. In every nation, the global monopolies will pit the proletarians in their enterprises against each other, using intensified exploitation in one area to batter down wages and working conditions in others, in their never-ending pursuit of profit.

In such a situation, it is important to cast away illusions that one or another adjustment in the WTO could make for "fair trade," to go beyond trying to pressure the WTO and the other multilateral institutions and to target them squarely as representatives of a global imperialist system that itself must be fought and defeated. Capitalist trade Is no more eternal than capitalism itself, and like all empires, it will pass into the pages of history. Arguing that the only "realistic" option is to try to reform imperialist institutions, like the WTO, is no more "realistic" than arguing that under the Roman Empire the slaves should have focused their struggle on getting the Roman Senate to improve the laws governing slavery. Slave Rome was overthrown, and so too will be the wage-slave U.S. and the other imperialist powers. What is needed is not calls to reform the unreformable institutions, but to stand with the revolts of the modern slaves and work to put an end to the system of wage-slavery itself.

This revolutionary perspective is far more grounded in reality than the notion that the imperialist countries and their multinational corporations, which have for over a century now plundered the Third World nations and exploited their own proletarians, will suddenly have a change of heart and develop a soft spot for their victims. The oppressed nations are not poor because their economies are insufficiently linked to the imperialist "engines of growth"; they are poor because they are tightly bound to the imperialist engines of plunder. Breaking free of this network of dependency and oppression requires breaking free of imperialism and the embrace of the global market. And the way to do this has already been forged.

Mao Tsetung and the Chinese people showed how this could be done by making revolution, ripping the lifelines of the economy out of the hands of the imperialists and their comprador agents. Agriculture was collectivized and made the central focus of the economy--"take grain as the key link," Mao declared. Instead of "doing more of what they did best" within the existing imperialist division of labor, the Chinese revolutionaries did what was best for the masses--they rejected the conventional wisdom of the specialization and development of a few sectors for export to the global market and pursued all-round development, emphasizing planned proportional growth between different sectors, so as to build a self-reliant economy that could stand up against imperialist invasion or blackmail and serve world revolution. The uneven, distorted character of the Chinese economy, a heritage of semi-colonial development, was reorganized to put people's needs first, in particular the needs of the peasants who formed the bulk of China's population. There were no enclaves like those in today's Guangzhou region of China, where a handful of capitalists benefit from the enslavement of hundreds of thousands of workers, mainly women, in modern sweatshops controlled directly by the imperialists. What was built instead was an economic system where the living conditions of the basic masses steadily improved. Revolution could do this only because it put political power in the hands of the masses.

As people's wars advance and more countries break free of imperialism, a new kind of trade will develop, in a way never before seen in history. Trade amongst countries where the masses hold power will reflect the planned, coordinated efforts of the people to use the products of their labor to advance revolution and "put right" a world that has been disfigured and scarred by the workings of imperialism. Instead of forging chains of dependence and subordinating some sections of the world to others, as now, trade will instead be used as a tool to help break down dependence, to serve the self-reliant efforts of the people and to strengthen the bonds of mutual solidarity between the laborers of every country. Instead of enshrining and expanding "free trade"--i.e. the law of the jungle--as the WTO does, in order to hide and reinforce the continuing plunder of the oppressed nations by the imperialist powers, trade will be organized in order to prioritize all-round development in those areas of the world that have been hit hardest by imperialism, as part of the effort of the proletariat in power to consciously combat the unequal and distorting legacy of imperialism and hasten the advance to world communism.

Those who hate WTO-sponsored globalization and everything it stands for need to ask the question: what is in truth the "central reality of our time"? Is it, as Clinton imperiously proclaimed, globalization and free trade, or is it the power of the masses when they rise up in revolution?


7. Martin Khor, Rethinking Liberalisation and Reforming the WTO, The Third World Network Internet site, 28 January 2000.

8. The Global Trap, pp. 117-118.

9. Percy Barnevick, head of Asea Brown Boveri (ABB), the Swedish mechanical engineering giant, voiced his fear that: "If companies do not rise to the challenge of poverty and unemployment, the tensions between the haves and have-nots will lead to a marked rise in violence and terrorism." The Global Trap, p. 231.

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