The perils of a one-superpower world: what does “fair trade” mean to me?

Just reading Salman Rushdie’s “Fury” at the moment (a brilliant, funny take on the significance of America, and particularly the synecdoche of New York, to the rest of the word) and I hit this sentence, that struck a real chord:

"Even anti-Americanism was Americanism in disguise, conceding, as it did, that America was the only game in town …"

Not only is America the only superpower, it is the architect of the only remaining international ideology - Von Hayek/Chicago School/economically dry “free trade”.

I’ve been having “it’s the only game in town” thoughts recently about development/trade law and the WTO system, particularly given the excellent SBS documentary series, “Commanding Heights” on the development of the international economic order. My only beef with the series is, despite interviewing dialled-in WTO protesters and Naomi Klein and talking about Russian “crony capitalism”, it tends to be a Whig history: the present state of affairs comes across as inevitable in the onward march of progress. (And before the rest of this Blog has me labelled a reactionary Tory, I’m just a change the system - not smash it - kinda guy thinking out loud.)

Anyway, I think the series has reinforced a couple of key points for me. First off, it is important that we criticise national and international institutions and try and hold them to their promise; but by protesting the power of the WTO we acknowledge that it is, indeed, the only game in town. The answer, whatever it may be, is not dismantling it. Second, free-market capitalism has won the war of ideas. Communism, and for the moment, post-War British Keynesian socialism have been exiled to what Rushdie in “Fury” calls “the Elba of ideas”. The reason the free market has won is the same reason Thatcher got re-elected the first time: popularity with workers.

In the prologue to his incredible “From Hell” (made into the apparently sucky Johnny Depp film), Alan Moore gives Inspector Abbeline this dialogue:

“I mean MOST socialists are middle class … Now meself, I come from a working family. We vote Tory, always have done. The Working class don’t WANT a revolution, Mr Lees; they just want more money.”

This is essentially the theme of Peru’s newest pop-icon, and author of Peru’s biggest selling book of all time. It’s called "The Mystery of Capital", by economist Hernando De Soto. (Seriously, this guy goes to remote townships and is greeted like the second coming of John Lennon.) His essential argument is that humans, as individuals, are inherently capitalist. Put simply, the poorest people in the world want to get richer, and want to run their own businesses to do it. In his view the biggest obstacle to development in poor countries is not multinationals, but the lack of an efficient Anglo-European property-law system. In most parts of the world people cannot prove their ownership of land, they have no paper title, and therefore cannot borrow against the value of their land to get business capital. Staggeringly simple thought, really. In the same vein, the fiercest arguments for real free trade come from poorer nations: it’s artificial barriers like the US quota system for textile imports that holds some economies back.

Third, why have our politicians given up talking anything other than free market economics? Because, largely it seems to work. Collapsing Russia ended food shortages overnight by declaring a free market. The US was Keynesian into the 1970s, but heavy government regulation brought the unthinkable: shrinking employment and rising inflation. Also, “free trade” is a simple, sellable idea. It has a seductive intellectual cohesiveness. People understand the basics of user-pays, earning your own money, running your own business. By contrast, “fair trade” at the moment is mostly rhetoric, and can be painted as first-world unions protecting their own in the guise of supporting workers’ rights abroad. I don't get what it is meant to mean, and no-one is explaining it to me.

Okay, time for my middle-class socialist scepticism. The triumph of “dry” economics is as historically contingent as the triumph of Keynesian or communist planned economies. There may be no going back to a post-war British socialist golden age, but this new order too may be dust in fifty years. “Shock therapy” economics did not save Argentina, and the jury is out on Russia. Against villages in China that have their first paved roads, electricity and local schools, weigh spiralling gangsterism – a market that is more like 1930s Chicago than Wall Street, the new Wild West of capitalism. Also, unless I missed it, “Commanding Heights” did not address poverty traps. The best example has to be remote aboriginal Australia or Nauru: give people just enough money to abandon traditional lifestyles and buy canned foods, but without real economic opportunity, and you get massive public health problems in the form of diabetes, excessive weight, etc. The developing world doesn’t need to be lifted up just enough to get stuck as “separate but equal” client states.

Ultimately, trade has to be the answer. You won’t get less poor without money, and you won’t get money without trade. At the moment, it is the only game in town. I want it to be fairer in outcomes, but I need someone to explain how that might work.

Suggested reading, anyone?


Links (paste these into your browser, yes I am incompetent):

“Commanding Heights”: http://www.pbs.org/wgbh/commandingheights/

Page 2 of the prologue to “From Hell”: http://www.eddiecampbellcomics.com/fromhell/prologue/2.html

Thoughts on development in China from someone who apparently knows: http://www.naplesnews.com/02/12/perspective/d856952a.htm

Doug as a dictator: http://www.nationstates.net/cgi-bin/index.cgi/target=display_nation/nation=rupert