Friday, September 02, 2016
HuffPo | The financial calamity of 2008 laid bare ugly problems in the global economic order. The mess has now festered into a political crisis that jeopardizes the link between market-driven economies and representative democracy.
So argues Martin Wolf, the most influential living British economics writer, in a Wednesday column for the Financial Times titled “Capitalism and Democracy: The Strain is Showing.” Fixing the economic norms most English-speaking people refer to as “capitalism,” Wolf argues, will be difficult. But a first step requires rethinking what elites have referred to for three decades as “free trade” or “globalization.”
“Those of us who wish to preserve both liberal democracy and global capitalism must confront serious questions,” Wolf writes. “One is whether it makes sense to promote further international agreements that tightly constrain national regulatory discretion in the interests of existing corporations. My view increasingly echoes that of Prof Lawrence Summers of Harvard, who has argued that ‘international agreements [should] be judged not by how much is harmonised or by how many barriers are torn down but whether citizens are empowered.’ Trade brings gains but cannot be pursued at all costs.”
The global economic order of the past three decades has privileged a few elites ― who have seen their incomes and political power expand ― at the expense of a far greater number of working people ― who have seen their incomes stagnate and their political influence wane. Global economic rules allow jobs to be offshored and capital to be reallocated in ways that do not benefit the vast majority of people who vote in elections. The idea that markets promoting individual choice are compatible with democratic forms of government has become an open question, according to Wolf.
These words are an intellectual assault on the Trans-Pacific Partnership and the Transatlantic Trade and Investment Partnership ― two major international pacts spearheaded by President Barack Obama. Public controversy surrounding TTIP is largely constrained within the European Union at the moment, but the TPP has become one of the most important issues of the 2016 U.S. presidential election ― though it rarely receives coverage on cable news.
The TPP is modeled on the North American Free Trade Agreement and World Trade Organization treaties that preceded it. The deal would grant corporations the right to challenge the laws and regulations of sovereign governments before a secretive international tribunal. Labor unions, environmental activists and other representatives of civil society would not be afforded the same privilege. The agreement is widely viewed as an effort to give multinational corporations greater influence over political decision-making.