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    The American Prospect Online

    A New Political Power

    December 5, 1999


    Events in Seattle have irrevocably changed the politics of world trade. At last, the real issue - the rules of engagement for global capitalism - has emerged as a legitimate and debatable public question. Though the demonstrations were marred by violent acts committed by a small fringe, the WTO is exactly the right focus of protest, since it both symbolizes and enforces the new, laissez-faire global economic order.

    Until Seattle, the rules of that emerging order looked something like a capitalist wish list circa 1890: the stringent expansion of enforceable property rights - coupled with an end-run around the social rights subsequently achieved in the advanced countries during this century.

    Beyond basic human and civic rights, citizens of the advanced countries have devised measures in this century to save capitalism from its own excesses. These include the regulation of banks and stock exchanges, the use of public investment both for economic development and to temper recessions, and forms of social insurance such as unemployment compensation, Social Security and Medicare.

    These elements of the 20th century mixed economy are being sacrificed on the altar of 21st century ''free trade.'' But if we don't believe in laissez-faire as the principle for organizing a domestic economy, it makes no sense to make laissez-faire our principal ideological export.

    The emerging global regime, under the auspices of the WTO and its sister agency, the International Monetary Fund, has worked to tailor global rules to serve Western investors and to neatly undercut most of the elements of the mixed economy. The sovereignty of nation-states, and the capacity of each to devise its own brand of mixed economy, is undermined by a single, global set of laissez-faire rules.

    Nations that want the IMF seal of approval must open their markets to speculative flows of Western capital. When these flows sometimes prove destabilizing, nations are compelled to undergo austerity policies that cut wages, public investment, and social safety net programs. If the United States had been subject to such global constraints during the Great Depression, most of the New Deal would have been illegal under some provision of either the WTO or the IMF.

    By the same token, many of the instruments of economic development used by the rich countries at earlier stages of their own history are now being denied to Third World nations as ''WTO-illegal.'' These include public investments, state partnerships with infant industries, and explicit favoritism for national, as opposed to foreign-owned, enterprise. This is a classic case of do as I say, not as I did.

    Perhaps the most hypocritical stance of business and political leaders in the advanced countries is the notion that ''imposing'' labor or environmental standards on poor countries is an unfair violation of their sovereignty. The rich countries have had no hesitation whatsoever in trampling the sovereignty of the Third World to demand that poor countries respect Western patent, trademark and copyright protections, allow Western investors free access to local stock markets, banks, and financial service firms, and cut social outlay in order to reassure Western money markets.

    If these violations of sovereignty can be imposed as a condition of membership in the WTO/IMF club for the sake of property rights, surely we can also impose conditions for human, labor, and environmental rights. Moreover, it is not the citizens of the Third World who resist the right to organize unions or have safe workplaces. It is Third World governments, often authoritarian and undemocratic.

    Although the leading Western nations today are governed by center-left parties, most have embraced an agenda for the WTO that serves mainly business interests. The opposition that coalesced in Seattle is far more potent than the fringe violence that attracted the media attention. President Clinton's speech, endorsing in principle labor and environment standards as well as greater WTO democratization suggests the new political power of the opposition view.

    This movement emerged almost by accident. If this trade round, like the previous one, had been launched in an obscure location (Punta del Este, Uruguay), masses of protesters would not have materialized. And if Clinton had not put forth his ill-timed plan to admit authoritarian China to the WTO, labor might have been more docile.

    Be that as it may, something very important has occurred here. For the first time ever, labor unions and environmental organizations around the world are working together for a common project that undergirds everything else they seek. That project is nothing less than the issue of how capitalism is to be tamed for the benefit of a broad majority in the global 21st century.

    Copyright © 1999

    by Robert Kuttner. Readers may redistribute this article to other individuals for noncommercial use, provided that the text and this notice remain intact. This article may not be resold, reprinted, or redistributed for compensation of any kind without prior written permission from the author.


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