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Journal of Business Ethics Volume 16 Issue 7 1997 [Doi 10.1023_a_1017951827011] John McMurtry -- The Contradictions of Free Market Doctrine- Is There a Solution
arguments in favour of an unfettered free market: (1) the freedom to consume; (2) the freedom of the seller; (3) the freedom of the producer; (4) freedom from government interference; (5) lower costs; (6) promo- tion of democracy. It demonstrates that each of these arguments turns out to be incoherent on closer examination. The ground of this incoherence it is shown, is the market doctrines systematic omission of non-business costs and benefits from its analysis, a methodological blindness which can only be overcome by a wider-lensed comprehension of economic value. Parties in the market should be free to buy and sell at any price at which they can find a partner to the transaction free to produce, buy and sell anything that can be produced or sold at all. Friedrich A. Hayek
TheRoad to Serfdom
The essential argument for the free market: Freedom As Hayeks formula emphasizes, the principal argument for the free market is the freedom it grants producers, buyers and sellers: that is, freedom from any external control in the pro- duction and exchange of goods between buyers and sellers who agree to the transaction. Because this freedom applies to the basic spheres of peoples lives what they eat, drink, live in, travel by, read, are entertained by and so on, it is the most important and fundamental realm of freedom there can be. Or so it seems. But let us examine these argu- ments more carefully. As we do so, let us keep a question before us throughout: are any of the fol- lowing problems of the free market ever raised in the mass media, or even in economics courses? If not, why not? Part A: Counterarguments to the argument of freedom 1. Freedomto consume If the consumer does not have the money required to pay for the good s/ he needs or desires (e.g., food or shelter), then the consumer cannot buy it, and thus cannot have it or consume it. In the free market, therefore, those who do not have enough money to pay for what they require to live have no right to food or shelter or any other required means of life which is produced and sold. To call this freedom for such people an increasing number of our society and the world is self-contradictory. That is, freedom cannot exist for those with no means to act freely. We may put this matter another way. Under the rules of the free market, need without effective demand (i.e., the purchasing power of money) is not recognized. It counts for nothing. Need with no money to back it has no reality or value for the market. That is why many soci- eties have introduced government interventions in the free market to provide government assis- BUSI ART NO. 1399 PIPS. NO. 82934 The Contradictions of Free Market Doctrine: Is There a Solution? John McMurtry Journal of Business Ethics 16: 645662, 1997. 1997 Kluwer AcademicPublishers. Printed in theNetherlands. John McMurtry is a Professor of Philosophy at the University of Guelph. His work in social and political philosophy, political scienceand sociology has been inter- nationally published in journals, textbooks and public forums. tance to those who are without the money they need to survive. But such interventions have come under increasing attack as government interferences in the free market. In many places, structural readjustments to reduce or to elim- inate food subsidies and social programs are demanded by lending agencies such as the International Monetary Fund and the World Bank as a condition for loans to governments. Cutting off assistance to those in need is justi- fied as necessary for survival in the tough new international marketplace. The freedom of the consumer in the free market, in other words, is really only the freedom of those who have enough money to demand what they need or want. For all those who do not possess this money, there is no freedom of the consumer, even to eat. It follows that people without the money to purchase the goods they need, about 20% of the worlds population and increasing, do not have under the rules of the free market the right to live. 2. Freedomof theseller People who must work most of their active hours to earn enough money to live must normally sell their work or service to a corporation or other employer in exchange for wages and salaries. The sale of their work is all or almost all of the value they have to sell. The employer, in turn, having paid for their work or service, has the right to give orders to them regarding everything they do, and how they do it on the job. It is company time. But to be told what to do and how to do it during most of your active waking hours cannot be meaningfully called freedom. It is for this reason that Marx called such a situation wage slavery. He meant that ones active life is owned by another. The lot of sellers of their work or service who can find no buyer the unemployed is more externally constrained still. They are left by the free market with no value. It is because one must normally sell oneself to a buyer in the market- place that Henry Thoreau referred to the mar- ketplace as a site of humiliation. One is required to present oneself as an object for sale, and may still find no-one with money who is willing to buy ones work or service. In other words the freedom of the seller in the market applies only to those who are not required to sell themselves or their work to stay alive, a small minority of society. 3. Freedomof theproducer Because those who must sell their work or service to live must normally obey the orders of their employer most of their active hours, they do not have freedom as producers. Who, then, isgenuinely free as a producer in the free market? Artists of all kinds have a special freedom of independence in their work, but they too must create what buyers with enough money will purchase and, therefore, must shape their products so as to attract and not offend wealthy buyers of what they sell. Their freedom as pro- ducers is limited by what those with money to buy artistic goods are willing to pay for. The small minority who have enough capital to employ others rather than work as employees have more freedom than their employees, but in the free market even they are compelled by its laws to invest only in production that will net them money profit at the end of the production and exchange cycle. This means, for example, that they must relate to other people only as a means to make profit for themselves and/ or their shareholders. If they treat them otherwise, they are being unjust according to free market rules. They are not maximizing profits for investors. Those who produce value for others without having to sell what they make or do are inde- pendent as producers. Professionals of various kinds public servants and professors, for example are in this way free or self-governing in their work lives, but only because what they do for others is not for sale on the free market at a profit for private shareholders. We are thus constrained to face the opposite conclusion of what free market advocates claim. People are only free or autonomous in their work when they are not bound by the rules of the free market. 646 John McMurtry BUSI ART NO. 1399 PIPS. NO. 82934 4. Freedomfromgovernment interference Perhaps the strongest conviction of true believers in the free market is that its open competition ensures freedom from government interfer- ence. But let us again examine this argument more carefully. Free market proponents fail to acknowl- edge that the free market continuously requires very expensive government interventions to provide round-the-clock protection and services for its operations and for its owners of private capital. These very costly government assistances to protect and serve private-profit seekers begin with police forces guarding their assets and exchanges, armed-forces to protect their private investments abroad and government diplomatic offices and personnel to promote private business interests in foreign states. The free market further requires continuous government intervention in the free market to provide serviced roads and highways to transport private business goods to production and exchange sites, as well as school training and natural resource agencies to supply private business with the human and resource capital to produce the commodities it sells. All of these protections, services and goods are provided by governments. The idea of the free market being free of government intervention is an extravagant myth. Free market proponents really mean freedom from government intervention that is not neces- sary or profitableto privatebusiness. That is why market advocates never talk about reducing government interventions that benefit corpora- tions (e.g., police, armies, roads, free employee training and public resource giveaways), but only about government interventions that do not directly benefit business (e.g., universal social security and environmental regulations). At the same time as publicly paid-for government services to business are never challenged so long as they benefit the business sector, government tax loop-holes, deferments and subsidies to business and the wealthy are increasingly demanded and received though they rapidly escalate the very government deficits business attacks. So it is not government interventions or costly government programs that free market proponents are in truth arguing against, but only those government interventions and programs that do not directly subsidize private business. Governments have also over the last century come to serve the interests of society as a whole. These functions for societys membership as a whole arewhat private business representatives attack as interferences in the free market. Elected governments in Canada and elsewhere have introduced legislation to limit the hours of the working day and week; to establish safety standards and environmental regulations for factories and businesses; to permit employees to organize in workers unions; to provide unem- ployment insurance and income security for those without jobs; to institute programmes of health care available to all independent of ability to pay; to provide public education for everyone and university education to the qualified at a fraction of cost; and to construct publicly acces- sible transit systems, parks and cultural centres free of cost or at below-cost prices. Go over this list again to check whether even one of these basic social goods can be provided by the market free from government interference. All of these government interferences in the free market have been achieved through public democratic process rather than through private business; none are run for money profit; and all require government enforcement and taxation. All of them have been at one time or another opposed by business, sometimes violently (e.g., killing worker and community organizers). Freedom from government interference in the free market, then, entails loss of all of these public goods. In this light, we need to ask who benefits from the current intense campaign to reduce gov- ernment regulations, privatize public-sector goods and cut social programs. Free market proponents argue that we can no longer afford these high standards and social goods. But if the free market is really so efficient and productive, why must society be increasingly worse off the freer it becomes? Contradictions of FreeMarket 647 BUSI ART NO. 1399 PIPS. NO. 82934 5. Lower costs Another argument for the free market is that it reduces the costs of production and distribution. The argument here is that in the free market, producers and sellers must compete to produce and sell their goods at the lowest price. In this way the market ensures lower costs, and there- fore lower prices, for consumers. The main problem with this argument is that it looks only to lower costs for consumers, not to the way these lower costs are achieved. For example, private business can lower its costs of production by eliminating or evading pollution controls, minimum wages, workers benefits, health and safety standards, and government taxes to pay for the care and support of the sick and unemployed. That is why under new interna- tional free trade agreements private corporations and businesses relocate to places where they do not have to pay these costs of protecting human life and the environment for example, to the Maquiladora Zone on the border between Mexico and the United States where wages are a small fraction of what they are in Canada and the U.S., effective pollution controls are non- existent and taxes for public health and educa- tion have been reduced or abolished. With the right under free trade to sell the low-cost products produced there to consumers in Canadian and U.S. markets, private businesses and corporations are better able to maximize their profits by avoiding the costs of protecting people and the environment. Unemployment in the home country is a further benefit to these businesses and corpora- tions because it lowers the price of labour, and, therefore, the amount private business is required to pay workers. With automated and electronic processes increasingly replacing workers of all kinds, and with the new free-trade right of private investment capital to move production to the lowest-wage areas, the price of labour has no floor. With enough unemployment free trade can, and has, reduced salaries and wages to ever lower levels. What is a disaster for most people, ever more reduction of their real incomes and loss of their jobs, is good for international business under free trade. There is not even a need to worry about workers rebellions or upris- ings as unemployment grows and wages and salaries drop. All that is required is to relocate investment to another region of the world where desperate people will work for under one dollar a day and in disease-causing working conditions. The international free market ensures this liberty of private investment capital. That is why we hear much about how we must adapt to the harsh new reality of the world market, and how shock treatments are necessary for societies who do not accept the new global regime. Low-cost free trade zones across the world, which have no independent unions or human rights protections to raise the cost of labour, provide further comparative advantages to busi- nesses seeking to minimize costs and maximize profits. It is rational under free market princi- ples for business to relocate their operations to such areas, whatever their cost in jobs to the home country. A home country does not exist within the rules of the international free market. Nor does a home. A worker is expected to leave his or her home to wherever he is allowed to go to seek employment. The freedom of private capital to move across boundaries to the most favourable circumstances, however, is denied to the worker who, with the exception of the European Economic Community, is required to seek a better exchange for his work within confined borders. Therefore it is only by government or other intervention in the free market for example, by international minimum standards of rights and environmental protection in trade agreements that societies can prevent their standards of life from falling to the lowest common denominator, which itself can keep falling to ever lower levels of social poverty and pollution. But such stan- dards are not protected in current free trade agreements. On the contrary, they are specifically ruled out from review or dispute under the terms of the North American Free Trade Agreement. There are thousands of pages of rules to protect corporate and business rights, over 20000 pages of them in the most recent General Agreement on Tariffs and Trade (GATT), but no rules protect human rights or the quality of the envi- ronment. 648 John McMurtry BUSI ART NO. 1399 PIPS. NO. 82934 A further major way of reducing costs in the free market is by economies of scale where the greater the investment and purchasing power, the capital infrastructure of labour-saving machinery, the division of labour and specialization, the volume of goods produced, and the international linkages of production and distribution, the cheaper the per-unit costs of the commodities produced and sold normally are. Since multina- tional corporations have the greatest economies of scale, they are best able to reduce their costs of production in these ways. Consequently, small producers and small businesses without these economies of scale may be unable to compete in the price of their goods. It was for this reason, for example, that the small Chiapas producers of corn in southern Mexico began a rebellion against the death sentence of NAFTA on the day of its inception on January 1, 1994. At the same time, economies of large scale make for more and more uniformity of methods and goods from monocultural farming and seeds to mass homogeneity of media products and books. Diversity raises prices. Vandana Shiva has called the outcome of this market imperialism process a monoculture of the mind. With ever fewer multinational media conglomerates in the global free market monopolizing control of the production and distribution of television programs, films, magazines, newspapers and even textbooks and learned journals, this monocul- ture of the mind extends into the control of peoples brain circuits themselves. But are the lower costs which proceed from these competitive advantages and economies of scale really lower costs for societies as a whole? What about increased poverty, pollution, unem- ployment, illiteracy, ill-health, environmental degradation and destruction of natural resources by large-scale exploitation which follow from such cost reduction methods? What of the loss of cultural diversity and autonomy of thought which the central control of media conglomer- ates increasingly imposes on human societies and peoples? What of the increasingly inescapable pervasion of the globe by ever more motor noise, traffic, commercial interruptions and junk? These negative consequences of the free market are conceived in free-market ideology as externalities. That is, they are not factored into the costs of doing business, and so are not recognized as business costs. But it is difficult to think of more important and drastic costs to the great majority of societys membership. Consumer goods for sale in the market may carry a lower price for those who can afford to buy them, but even they must suffer the social costs of increasingly polluted air and water, social squalor, insecurity of income and employment, depredated environments and mass media violence, to name a few externalities. So the argument for lower costs of the free market applies very narrowly. While consumer goods may become less expensive, though this is by no means assured by the current oligopoly condi- tions of competition, the shared goods of life such as our air and water, social conditions, mutual security and cultural diversity deteriorate, with no limit in free market doctrine to their decline. 6. Thefreemarket as democracy Another standard argument for the free market is that the economic competition of the free market rules out monopoly of social decision- making by an all-powerful state. This argument is valid, but is typically confused with a much stronger, further claim that the democratic rights of a society increase as the rule of the free market increases. This claim is a non-sequitur. It ignores the fact that the exercise of individual democ- ratic rights in a free market the right to a free press, for example requires that he or she who exercises this right has the means to do so. If I do not own a press, how can I exercise my right to freedom of it? How can any of us? If we lack the means to exercise our freedom, this freedom exists as a slogan for free market ideology, but not as a fact. An individual may of course submit what s/ he writes to a corporately owned press, but then it is not really s/ he who is free to publish, but the corporations employee-editors who operate under the owners policy and control. If what is written exposes or criticizes the owner of the press, or the corporate structure for which the Contradictions of FreeMarket 649 BUSI ART NO. 1399 PIPS. NO. 82934 press is a vehicle of advertising messages (to quote the former publisher of the Globe and Mail), then the article will not be published. If by exception it is, its exposure will not be reproduced. Are there any counter-examples to this rule of press censorship? If there are not, then the free press is in truth not free. It does not permit criticism of the powers that own and control it. Thus, the right to freedom of the press in the free market comes to be a paradoxical claim asserting as a fact a democratic freedom which does not in fact exist. We can formulate the law-like principle of this unfreedom of the press in a general way: Nothing which contradicts thevalueor thenecessity of thefree market systemor its aimof money profit for private corporations will bere-produced in themass media. Test this hypothesis against fact. Follow the mass media in all their pervasive circuits of dissemi- nation to see if this principle of their censorship is anywhere disproved. Other claimed democratic rights in a free market society can be similarly illusory and con- tradictory to fact. The democratic right of the eligible adult population to elect a government of their choice to govern them is clearly not democratic when very few members of that population are in the position to pay very costly election expenses (often in the millions of dollars for one office), to own or influence the mass media whose favorable exposure is necessary to win mass elections, or to pay full-time lobbyists to continuously pressure politicians to their viewpoint. As with other freedoms asserted by advocates of the free market, these democratic freedoms in the free market can turn out to be very undemocratic. In the worlds most populated free market societies in East Asia, democratic rights do not include freedom of personal speech or the right to oppose the party in power. These are very important freedoms which have developed in some Western free market societies, but do not follow from the existence of a free market. A free market is, in fact, compatible with a murderous political dictatorship in Chile, Indonesia and China, for example. The free market may also be imposed by force on societies. Where people oppose the reduction of social life to exchanges for private owners money profit, systematic violence may be the only way to impose it, as we have seen occur to indigenous peoples across the world over five centuries. In light of these facts, ever more deregula- tion, privatization and public sector cutbacks to develop the free market cannot be truthfully called a move towards more democracy. The more that public goods and regulations are accountable to electorates and open to public criticism and transferred to the private sector, the more democratic account- ability is abolished, and the more control is transferred to those with responsibility to no goal but the money profits of private investors. According to United States Congressional statis- tics, the top 1% of the population controls more private wealth than the bottom 90% in the U.S. So this transfer of responsibility to the private sector is essentially a transfer of power to a very small minority with the most power already, the wealthiest 1% of the population. The free market, therefore, reduces democratic process and control the more it takes over resources and regulation from an electorally responsible and accountable public sector and transfers them to the rule of the private sector. But what of the more cost-effective and diverse choices for consumers which can be spurred by privatization of inefficient govern- ment sectors? This may be an overdone argument given that, for example, health care in the U.S. private health-care system is $1000 per capita more expensive than the Canadian government- funded system, and fails to provide any health care to 38 million Americans. Suppose, however, it is granted that the free market provides con- sumers with superior goods in areas involving the manufacture and delivery of material commodi- ties for personal consumption. Even then, it remains true that the social system will be less democratic the more that universal access to public goods like health-care, education, clean air and water, environmental resources, cultural sites and transportation is reduced by the privatization of these goods and their sale to only those who can afford to pay for them. 650 John McMurtry BUSI ART NO. 1399 PIPS. NO. 82934 Part B: Freedoms have limits: Internalizing externalities 1. Traditional limits on thefreemarket All freedoms have limits. Freedom of speech does not include the right to bear false witness against or slander ones neighbour, to shout Fire! in a crowded theatre, or to pre-empt everyone elses right to speech by monopolizing the opportuni- ties to speak. In the same way, the free market needs to have limits on its operations. As shown above, the free markets operations left to them- selves tend to weaken or destroy the resources of life and freedom for the majority, to benefit most the small minority of society whose wealth provides them with far more to buy and to sell for their private money profit than they need; and to leave most people with little but their own work to live by and increasing tens of millions without even that. The more unequal the pos- session of wealth is in a free market, the more people there are without the money to buy what they need for a decent life, the less freedom that free market assures for the society in question. How, then, are we to set the moral limits and responsibilities for the free market which are not entailed by freedom to produce, buy and sell anything at any price one can get? Most of this centurys history in Scandinavia, Western Europe, Canada, Australia and New Zealand has given us one answer a democrat- ically controlled and openly criticizable public sector. Until recently it has more or less ensured universal access to clean water and air, education, income security in unemployment, old age pensions, health care, public broadcasting, libraries and culture centres, parks and some environmental preservation, and civil rights to free speech, association, assembly and protection of law from violence to person or property. None of these more or less universally accessible public goods is ensured by a society in which the freedom to produce, buy and sell anything at any price is left to function without any public or government intervention. But this sort of society is the one towards which we are being increas- ingly driven. The historically developed mixed society in which the free market is comple- mented by a public sector guaranteeing what the free market cannot, is now being rapidly dismantled in Canada and across the world by proponents of a true free market. 2. Thenew freetradeas theageof disposable humanity In recent years, globe-girding information tech- nologies and international free trade agreements have increasingly allowed corporations and investment capital to serve their connection with any given community or nation or culture. Industrial and service workers of all kinds can now be displaced not only by workers elsewhere willing to work more cheaply, but the other blade of the pincers by new labour-replacing, computer-driven systems of production and communication. With no democratic input or accountability required for any step of this process of mass worker displacement and disem- ployment corporations and investment capital can cancel or move their operations across the world with the speed of an electronic signal. The vast majority of the planets people have in this way been radically disempowered as a political and economic force: increasingly transformed into an international pool of part-time employees who can be hired and dismissed at will, with ever more people in the labour market competing for ever more replaceable jobs. Globalized free trade has brought us, we might say, to the age of dis- posable humanity. It is perhaps for this reason that ethnocentric conflicts and upheavals are on the rise across the world desperate reactions to an increasingly rootless infrastructure of global economic power. The free market cannot in principle solve such problems because its logic of profit for private investors as the ruling absolute of global life excludes all other considerations of existence as secondary or external. In this situation of rising social strife, the free market in fact flour- ishes by the dynamic new outlets for investment which social crises provide: producing and selling arms to the combatants (the largest single item of international trade); selling ever more narcotic stimulants and violence-entertainment to all; Contradictions of FreeMarket 651 BUSI ART NO. 1399 PIPS. NO. 82934 producing and selling costly new pharmaceuti- cals to the environmentally diseased who can afford them; mass-marketing security devices and substitutes in countless different forms; and generally making the rich richer, the poor poorer and the environment more uniform and more degraded. Which of these patterns, we need to ask, is not furthered and deepened by the unfettered operations of the free market? Under these circumstances and in proportion to the movement in this direction, the free market ceases to be morally defensible. Themore a social formation increases/ decreases its members access to thegoods they need, thebetter/ worseit is as a social formation. Under this criterion, theglobal free market has becomean increasingly immoral system. 3. Internalizingexternalities: Towards a solution One solution to the increasing immorality and destruction of a socially lawless international economy is a world-wide workers revolution against it, and the restructuring of societys economic and political power so that it is democratically owned and controlled. That was Karl Marxs solution. A more modest solution has been proposed by an increasing number of concerned experts, now even including GATT Director Peter Sutherland. This is to institute a rule-based international economy where the rules do not, as now, merely protect business interests and trade, but include minimum standards to protect workers wages, health and safety, to safeguard the environment against pollution and degradation, and to provide a social safety net for the old, the unemployed, the young, the infirm and others left out of the current wage-and-capital international economy. Most of the serious problems of the anarchic free-trade economy identified in the analysis above would be significantly reduced by such a global rule-base, assuming that the worlds most dominant businesses and corporations would allow such a balancing to include other rights than their own. Unfortunately, the historical record of public health-care, unemployment insurance, old-age pensions and social security support-systems has been one in which business lobbies and representatives have adamantly attacked such reforms over a century as too costly, unworkable, against private initia- tive, communist, and so on. But these reforms nevertheless came to pass in many jurisdictions through the mass support of social populations. The difference now is that corporations are now tied to no community of people, and can leave any society in which effective laws to protect human rights or the environment increase business costs above competing regions of investment elsewhere in which no such laws exist or are enforced. Under current free-trade regimes where business has secured the right to invest or to disinvest at will across national boundaries with no social obligations, rules protecting human and environmental life have to be inter- national to be obeyed. If they are not, business investment will move to the lowest-cost, lowest- standard areas to maximize profits. Effective international rules protecting humans and the environment must then be included in transna- tional trade agreements to bind corporations to wider interest than their own profits. Once international trade agreements include such life- protective standards, not as now by side-agree- ments without legal force, but by specific and enforceable regulations, corporations and busi- nesses would be obliged to comply with these minimum standards to continue having free access to the national markets covered by these agreements. Very elaborate and precise mecha- nisms of enforcement are now spelled out over thousands of pages by the NAFTA and GATT Agreements to protect corporate ownership, market and profit rights across national bound- aries. There is no reason why regulative mecha- nisms cannot be incorporated to protect human life and environments across national boundaries. If such a moral and social balancing of inter- national trade agreements were to be instituted, these agreements would not merely be bills of rights to private corporations to override all other life interests but their own competitive maximization of ownership and capital wealth. They would provide for a genuine level playing field or common framework of environmental and human-rights rules within which all private corporations would be required to play to 652 John McMurtry BUSI ART NO. 1399 PIPS. NO. 82934 continue having free access to others markets. The current comparative advantage of avoiding, violating or rejecting all standards which protect the lives of people and the environment would no longer be available. Instead of contriving the rules as now to maximize the social and moral irresponsibility of international business seeking to reduce its costs to the lowest possible level at the expense of human and environmental survival and well-being, there would be limits set on this life-destructive process by trade-agreement standards reducing free access to markets to corporations not abiding by these common standards. Two benefits would flow from such a regula- tory balancing. First of all the current corporate agenda of reducing or eliminating the achieved social standards of civilization to compete in the tough new international marketplace would be diminished in its capacity to extort social sacri- fices for lower business costs. Secondly, the standard appeal to national sovereignty by various dictatorships and oligarchies abroad to resist international pressure for the development of human rights and environmental standards governing business within their borders would cease to be a viable defence. Equal market access of such nations and their corporate producers to the wealth and infrastructures of other societies would be conditional on their compliance with international social and environmental standards. The level playing field proclaimed by free- trade advocates would in such a situation become more than an Orwellian slogan. A rule-based international economy could in this way achieve a minimum, progressive common framework of protection of human and environmental life in places where there has so far been no effective protection by trade agree- ments of either. A rule-based international economy, that is, could introduce an historically unprecedented lever of actual global development by rules of civilized behaviour which private corporations have so far been permitted to roll back or avoid. Access to other countries markets would no longer be granted as an absolute right to international corporations to exploit in only their own interests, playing societies against one another to cut back their social fabrics for the benefit of lower costs to business. It would not be a question here, as the currently fashionable propaganda would have it, of government inter- ference in the marketplace, but an issue of making a socially lawless situation lawful. The normal human obligation to comply with laws protecting life against destruction by unlimitedly self-seeking behaviour would simply be applied to private business interests as well as to individual citizens. The dogma of free trade, however, has yet to rise to this level of concep- tion we know as civilization. 4. Is a rule-based international economy enough? Unfortunately, it is not easy to be serene about the chances of educating adherents to the free- trade dogma to the most elementary require- ments of social existence. Private corporations and governments have so far imposed against majority will a series of undebated, secretly negotiated business-only trade agreements which have disemployed millions, ruined communities and cut back social legislation across the devel- oped world without a noticeable dissenting voice from a single party to the process. A world coup dtat, one might say, has already occurred. Self- maximizing owners of international capital have been accorded well-defined transnational rights to rule the worlds production and distribution, uncontrolled by a single effective human right or environmental limit to their private profit- seeking for themselves. In such circumstances, pessimism might incline us to acquiesce in a growing sense that this regime will destroy the world by its socially lawless behaviour. Indeed, a critic of a rule-based international economy might argue, even if international standards of human and environ- mental life protection were to be instituted into these trade agreements now, the long-term effects of anarchic world capitalism have advanced too far to correct. Such a critic could point to: (1) an exploding world consumer population loading the already over-stressed resources and eco-fabric of the globe; (2) an ever growing gap between job-seekers and jobs; Contradictions of FreeMarket 653 BUSI ART NO. 1399 PIPS. NO. 82934 (3) the irreversible destruction of alternative ways of life, first peoples and environ- ments by the unlimited demands of industrial and commercial development; (4) the escalating reduction of the worlds diversity of life to ever more homogenous monocultures of human and non-human functions in a globe-girding system of capital-circuits; and (5) an increasing majority of people who have no meaningfully productive life and who are ever more pervasively conditioned by commercial propaganda, toxic effluents, motor noise and trash. There is much to our current world economic condition, such a critic could argue, that goes beyond the capacity of even a rule-based interna- tional economy to improve. Does this mean that only a revolutionary trans- formation of our world economic structure can possibly solve the deepening problems of what is called globalization? Is Marx right after all, for more reasons than he imagined, that we are faced with a choice between world capitalism and world survival? On the basis of what evidence or structural tendency can his prognosis now be falsified? But both Marx and others since have fallen short in designing or implementing a viable historical alternative, even if one takes into account that capitalist states have waged more or less total military and ideological war on any social alternative that has emerged, typically in violation of international law (e.g., by armed invasions). A rule-based international economy seems in these circumstances to be the only option available to us. Considered in the light of its possibilities, the rule-based option is not so narrow or fore- closing as it may appear in the context of these deepening problems. Conscious rules or agree- ments can, in principle, be constructed and implemented to protect all values, even those values which seem irreversibly forfeited by the out-of-control operations of the current inter- national economy. It is true that job seekers increasingly out-number jobs available, due to both labour-replacing technologies and world population growth. And it seems true that the current international economy both engenders and promotes this problem. But rule-governed agreements can lead to population restraints (e.g., by voluntary birth-control), job-sharing (e.g., by work contracts) and laws limiting corporate rights to ruin lives by mass disemployment. The value of each individual having work which provides her or him with an independent livelihood and occasion to realize some human capacities for the benefit of others need not necessarily be abandoned in an international capitalist economy. Similarly, the reduction of ever more of the world to corporate waste products seems inevitable under the current global economy. For no effective environmental controls on produc- tion processes or sales are specified in such international trade agreements as NAFTA. Yet conscious regulation of environmentally damaging practices has at the same time become a more viable international possibility by the increasing requirement of corporate producers to sell their products in international markets. Selling a product in other nations markets is not, as producing it is, a job-creating enterprise or a valuable investment in those markets. On the contrary, its production elsewhere deprives those markets of those jobs and that investment which are located in a foreign country. So it is not costly in either jobs or investment for a home country to impose tariffs on environmentally destructive products produced elsewhere which do not comply with specified environmental standards. No blackmailing of societies with threats of loss of jobs or loss of investment would be plau- sible in such a situation because the environ- mental standards would be applied at the market end where jobs and investment are not at risk. At the same time, market-end tariffs on environmentally damaging products would put those corporations and businesses producing and selling these products at a competitive disadvan- tage instead of at a competitive advantage. Under present free-trade regimes, environmental irre- sponsibility pays because the costs saved on not having to reduce pollution or to limit resource destruction allows the producers and the vendors of such products to sell at a lower price. 654 John McMurtry BUSI ART NO. 1399 PIPS. NO. 82934 Environmental accountability by tariffs on environmentally damaging products reverses this destructive pattern. Rather than polluters being rewarded by a competitive advantage of lower costs, environmental tariffs would put their non-polluting competitors at a cost-competitive advantage, thereby encouraging pollution-free production by market means. Requiring corporate producers to confront the external costs of their production by increased prices for their goods in international markets is a generalizable strategy. It is not only applicable to destruction of the environment which is currently cost-free and a competitive advantage under current trade agreements, but it can be made applicable to other socially destructive practices by private corporations. The dollar costs, for example, of supporting workers who have lost long-term jobs by corporate plant- closures to invest in low-standard economies elsewhere are immense in developed societies not only in social assistance payments, but in increased health-care and other social expendi- tures, not to mention personal damages. But these vast costs are now loaded wholly on other economic agents than the private businesses which have caused them. Tariffs on the incoming products of such job-eliminating exporters by the society suffering unfair losses from their dislocations could be defined and assessed in international trade agreements just as unfair trade practices protecting private profits are defined and assessed by these trade agreements now. Again it is a question of these agreements protecting interests beyond those of private cor- porations. In the present international economy, however, corporations are permitted to degrade environments, to pollute and to damage others with no limit, while victimized local populations are required to pay the price for these damages inflicted upon them by this unaccountable regime. 5. Theincoherent assumptions of thecurrent free tradedogma There are three logically incoherent assumptions upon which the destructive absolutism of the current corporate agenda is based which need to be clearly recognized. (i) The first is that the right of access to markets across regional and national boundaries is assumed to belong to private corporations cost- free with no obligation to pay any of the direct or indirect costs of this market entry into other societies. All that is required is that corporate agents agree among themselves through mecha- nisms of government co-ordination to a system of self-protective rules not infringing each others rights to this access. Yet market access to what is owned and exchanged in another society has in fact enormous costs for that society which are borne by its citizens past, present and future taxes and government deficits. The benefits of these tax- supported goods are under present trade agree- ments now received cost-free by foreign corporations who buy and sell in other societies markets without having to contribute to the many costs of their ownership and trade in these societies. Their goods are produced else- where, and provide no jobs in the markets to which they sell. The home society provides armed-force and police protection across its ter- ritory, developed laws to protect its agents and goods, publicly paid-for roads, subsidized utili- ties, sewage systems, water supplies, and many other domestically financed and highly expensive protections and infrastructures. To these expenses have been added still further major public costs of protecting foreign-owned corporations patents (e.g., in medicines) and enforcing intel- lectual property rights (e.g., over farmers seeds and authors texts, even against their own growers and writers). Foreign corporations or domestic corporations paying no taxes for the protection and utiliza- tion of these publicly financed supports and services are, thus, free-riders on public expendi- tures which increasingly disemployed populations are required to pay for. Current trade agreements grant this free-rider status to all non-domestic corporations within the international territories covered by them, and increasingly to domestic corporations as well by reductions, exemptions and subsidies to keep them from investing else- where. (Corporate taxes in Canada, for example, Contradictions of FreeMarket 655 BUSI ART NO. 1399 PIPS. NO. 82934 have shrunk from nearly 50% of federal revenues in 1950 to under 10% today.) All private corporations are nicely served by this free-rider status in other societies, and by competitively falling tax-rates in their own. This is why there has been the extraordinary una- nimity of private corporations supporting these trade agreements. As free-riders on public purses and deficits, it is in their self-interest to institute free trade regimes which grant them this ever more extended right to free-riding. Under this system societies must compete against one another in granting private corporations ever lower domestic tax-rates and favorable treatment to keep them from taking capital produced in home societies and investing it elsewhere. To pay for this competitive subsidization of corporations, societies must reduce more and more of their social spending for public needs. In this way a spiral of bankrupting public sectors to subsidize private corporations has been set in motion with no apparent limit to its special-interest demands and to government concessions. Since private corporations are the first to insist that there is no free lunch for others, their assumption of the right to ever more public subsidization of their own operations including the public funding of negotiation and imple- mentation of these trade agreements themselves is self-contradictory. But this self-contradictory assumption of a right to cost-free access to very costly market infrastructures and services in other societies markets, and increasingly domestic markets as well, is a basic premise of international free trade agreements which has so far been repressed from public view. (ii) The second logically incoherent premise of current international trade agreements is that damages and losses by corporations and corpo- rate trade sectors are to be recognized and regulated by international trade agreements, but damages and losses to workers, governments, publicly owned resources, environments, com- munities and any other economic sectors are not to be recognized or effectively regulated at all. There are three main levels of incoherence at work here. The first is that private corporate economic interests are to be protected in fine detail by government agreements, but no other economic interest is to be so protected. The second is less obvious. It is that the public interest which governments are supposed to represent is abandoned as too costly, while the private interests governments are intended to regulate are one-sidedly protected. This contra- diction is further deepened by the fact that the private economic interests being protected by these inter-government trade agreements are very narrow in base (the interests of transnational corporations and wealthy investors in private profits for themselves), and are also already institutionally more powerful than the wider social interests which public governments are assisting them to override. (iii) The third and perhaps most pernicious level of incoherence here is that the damages and losses inflicted by private corporate interests on other economic interests by free trade agreements are never to be borne or paid for by the corpo- rations who inflict them, but only by their victims or by taxpayers who had no responsibility for the losses and damages. Trade agreements and their very restricted class of significant benefi- ciaries not only assume that they have a right across boundaries and nations to be free-riders on costly public infrastructures and services paid for by the citizens of these societies, but they further assume that whatever costs and damages they then cause to others by their publicly supported and protected operations across inter- national boundaries are not to be paid for by them at all. They assume, that is, legal immunity from and non-liability for the harms they do to others by the operations of these agreements, and thereby assume in corollary that only those who are not responsible for these costs and damages are to bear and to pay for them. In a normal context, we would call such assumptions psychopathic. Nonetheless their self- serving incoherence and vicious consequences are now assumed as givens by international trade agreements, by their corporate beneficiaries, by major international investors, and by the economic theory that is their propagandist. Environmental resources tens-of-millions of years old may be polluted, degraded and exhausted by private corporate exploitation across the globe 656 John McMurtry BUSI ART NO. 1399 PIPS. NO. 82934 with no requirement at all to pay for the damages or their prevention by the trade agreements permitting this destruction. Working people and whole communities across the globe may be deprived of their livelihoods, security and ances- tral homes by rootless corporations who take over their lives and abandon them at will, but no cost of this destructive process is either recognized or deterred by current trade agreement, least of all paid for by the corporations who inflict these damages by their actions. This second main assumption of current international trade agree- ments that private corporations have no responsibility or liability for any and all of the costs and damages they inflict on human and environmental life by their actions under these agreements is certainly incoherent in its content, but outside the span of consideration of these agreements. Such an assumption is beyond that of the free-rider. It is alike in its structure to the reasoning of the criminally insane. Reflect carefully on this claim. In what respect is it over-arched? The absolute refusal of responsibility for paying for what one receives, or for causing damages to others without limit is most explic- itly prescribed by legislation for the worlds multiplying Free Trade Zones (e.g., the Maquiladora zones on the border of Mexico and the U.S.). Characteristically, such zones grant the private foreign corporations who produce in them the freedom not to pay taxes, not to re- invest capital, not to allow workers unions, not to be subject to national pollution laws, not to pay minimum wages, not to have maximum work days or weeks, not to obey established health and occupational safety laws and not, in general, to be bound by any rule to pay for what they receive in public infrastructure and services or to be held responsible for the environmental, health and social damages their regime imposes on the human and other life ruled by them. NAFTA, for example, not only provides for the indefinite perpetuation of this free trade zone structure in Mexico, but business lobbies have further called for its extension into such places as Halifax and Vancouver. Having assumed that private corporate inter- ests, and only private capital interests, have a right to be free-riders on public infrastructures and services, across national boundaries, and increas- ingly free-riders on domestic public infrastruc- tures and services too, and having further assumed that any cost or damages inflicted on other economic interests in the operation of free-trade agreements do not exist for these agreements protection or regulation, and cannot be charged in any form to those responsible for the damages, a final assumption follows easily in train. It is that there is no way to prevent the harsh consequences of these harms because free trade agreements in this one-sided form are inevitable, and their costs to publics, workers and environments are necessary adjustments to the tough new reality of the global work- place. 6. Freetradeas an absolutist religion The inevitability doctrine of the current market ideology is typical of fundamentalist religious sects. There is an invisible hand that governs human events with an omniscient logic which cannot be interfered with. Followers of the true faith will be rewarded in some certain but never defined realm of future prosperity, while those who deviate from its strict necessity will be consigned to the hell-fires of shock treatment and painful cuts. No amount of human suf- fering or natural destruction exacted by the doctrines implementation can alter its prescrip- tions or prove it false because its truths are eternal and not subject to falsifying evidence. Salvation can only be won by obedience to its iron laws, though life in fact grows only more desperate for the majority under its rule. No fundamentalist theology has ever been so dominant in the world, or so widely diffused by propaganda organs. Its unifying assumption of inevitability to the absolutist program it imposes on the globes peoples is, however, in striking contradiction to its pretenses of repre- senting democracy and freedom in the world. Because it has been everywhere contrived by secret negotiations without or against the expressed majority will of social populations, and because it rules out any social alternative or Contradictions of FreeMarket 657 BUSI ART NO. 1399 PIPS. NO. 82934 public participation in its implementation, it is democratic only in that non-factual realm whichfundamentalist religious ideologyoccupies. Conclusion In the context of the many-levelled incoherence of the free trade dogma, a rule-based interna- tional economy which accords rights and pro- tections to broader human and environmental interests than those of private international capital is compelled by elementary logic as well as requirements of global survival. Resolution of the problems of the absolutist doctrine expressed in current trade agreements admits of ascending levels of understanding and life-responsibility. The more widely human and environmental life- interests are taken into account and safeguarded by rule-based international agreements, the less incoherent and destructive in reasoning and effect these agreements become. There are many degrees of realization possible here, especially since the base-line from which they are required to begin in current trade agreements now accords no effective protection to any other life-interest but self-serving rights in investment capital and profit. But the extent to which broader interests than these are taken into account and effectively protected by the rules of international trade agreements marks the extent to which these agreements become rationally coherent and life- responsible. Appendix 1.2 billion of the planets people remain in absolute poverty. In the last 30 years, the richest fifth of the world has doubled its share of income in comparison with the poorest fifth. Annual Review OxfamCanada, Toronto, 1993. NAFTA (North American Free Trade Agreement) has no minimum labour standards no health and safety regulations no worker rights [for] collective bargaining [or against] child labour and forced labour. NAFTA has no environmental standards, no conservationist standards allows no subsidies for environmental cleansing, conservation or renew- able energy. NAFTA rules punish people in definite ways who deny expected trade profits to corporations, but there are no rules punishing corporations for violating worker rights. The only recognized unfair trade practices are those that destroy expected or real profits, not those that destroy peoples lives, the quality of peoples lives or even whole communities. Alex Michalos, Ph.D., FRSC, unpublished paper, 1994. For Latin America as for other areas of the South, the past two decades have brought declines in living standards, per capita incomes, urban wages, state expenditures on health, mor- bidity rates and food consumption. Frans J. Schuurman, Modernity, Post-Modernity and the New Social Movements in Schuurman (ed.), Beyond the Impasse: New Directions in Development Theory. London: 2ed., 1993, Chapter 9. [The Latin American state] has become the executor and debt collector of a bankrupt economy on behalf of transnational creditors. In fact, its central role has manifestly changed from that of promoting development and at least in theory protecting political and economic sovereignty, to that of facilitating surplus extrac- tion and international subordination. Jorge Nef and Remonda Bensabat, Governability and the Receiver State in Latin America: Analysis and Prospects in A. R .M. Ritter, M. A. Cameron and D. H. Pollock, Latin America to the Year 2000: Reactivating Growth, Improving Equity, SustainingDemocracy. New York: Praeger, 1992, p. 168. After 10 years of market reforms and restructurings in New Zealand the results have been: In the two years after cuts were introduced (199092), the Department of Statistics reported a 40% increase in poverty. The youth suicide rate has doubled it is now the highest in the world. The child poverty rate has reached 26%. Almost crime-free a decade ago, New Zealand has the highest overall crime rate of twelve industrial countries. Violence 658 John McMurtry BUSI ART NO. 1399 PIPS. NO. 82934 against women has increased by 50% in the past year, against children by 39.6% and infant murders have tripled. By every standard of measurement except inflation the reforms have been a com- plete failure. Deep cuts to social programs were supposed to lower New Zealands debt, but it more than doubled from $22 billion to $46 billion and thats after the government used $16 billion from the sale of crown corporations to fight the debt. The unemployment rate, 4% in 1984, hovered around 10% throughout most of the decade. Taxes on corporations and the wealthy were cut by 50%. From 198593, whole other developed countries grew by 25%, the OECD recorded New Zealands growth rate at 3.9% Murray Dobbin, Canadian Perspectives Winter: 1995, p. 7. In the American experience [from 1989 to 1992] the combined total income of the top 1% of all earners increased sensationally, and the combined total of the bottom 80% declined sharply. Edward N. Luttwak, Director of the Institute for Policy Studies Washington in Why Fascism is the Wave of the Future, London Review of Books April 7, 1994, pp. 35. In the May 1992 issue of the American EconomicReview, there was A Plea for Pluralistic and Rigorous Economics signed by 44 leading economists from North America, the U.K. and Western Europe in which they signal their profound concern with the drift toward ideo- logical conformity in economics as demonstrated by a near monopoly of one viewpoint in the academic journals. Bernice Shrank, Blind reviewing the other way round, Canadian Association of University Teachers Bulletin, March 1994, p. 11. Between 1978 and 1991, there was a sixfold increase in the number of households [in the U.S.] which declared incomes of $1 million or more in constant dollars [cash] and an absolute decline in income for most families. Edward N. Luttwak, The poor get poorer, Times Literary Supplement, June 10, 1994, p. 17. [Canada is] clearly in the transitional business of reapportioning national income so that a larger share goes to corporations and less to wage earners this is a fundamentally necessary process. Peter Cook, Globeand Mail Report on Business, August 19/ 94, p. B2. Popular organizations in Nicaragua are struggling to find solutions to their worsening economic and social situation [since the intro- duction of market-driven policies]. Poverty has increased dramatically, and now affects over 70% of the population. Unemployment stands at 60%, while 80% of children do not finish primary school, and deaths from malnutrition have skyrocketed. Hunger, practically unknown throughout the 1980s, is widespread. Tools for Peace, Toronto, June 27, 1994. Total less developed country debt has doubled from approximately U.S. $819 billion in 1982 to U.S. $1712 billion in 1993 despite their having repaid over U.S. $14 trillion in debt service. Ecumenical Coalition for Economic Justice, Economic Justice Report Volume 5: Number 2 (1994), p. 7. In the first three years of the U.S.-Canada Free Trade Agreement, Canada lost 1.4 million jobs, including 500000 manufacturing jobs, over 25% of the entire manufacturing sector. In Mexico, the [current] average hourly wage paid by U.S. corporations is 63 cents. In the last ten years, as American and other foreign corpora- tions moved into Mexico [and into Free Trade Zones], Mexican wages have been driven down by 60%. Citizens Concerned About Free Trade, Saskatoon, Summer 1994. Throughout history, the 18th century econ- omist Adam Smith observed, we find the workings of the vile maxim of the masters of mankind. All for ourselves and nothing for other people. The invisible hand of the market, he wrote, will destroy the possibility of a decent human existence unless government takes pains to prevent this outcome as must be assured in every improved and civilized society. It will destroy community, the environment and human values generally. Noam Chomsky, TheNation and TheToronto Star, April 13, 1993, p. A15. Researchers are faced with a new reality. Contradictions of FreeMarket 659 BUSI ART NO. 1399 PIPS. NO. 82934 They cant expect to receive funds to do their research just because it is good research. . . . We have to accept that the new reality is everywhere. We have to relate research to [the demands] of the marketplace. Keith Bezanson, President of the International Development Research Centre (IDRC), International Researchers Must Face New Realities, At Guelph, November 30, 1994, p. 5. Despite rising productivity, real U.S. wages for non-supervisory, private-sector employees peaked in 1972 and have dropped ever since 20 per cent in 20 years. Walker Russell Mead Essay, Harpers Magazine, September 1992, p. 41. [We see today] the new totalitarianism of consumption, commerce and money. Nobel Prize winner and former President of Czechoslovakia, Vaclav Havel, The Velvet Hangover, Harpers Magazine, 1993. The strategy of economic competition which subjects itself to this narrow standard measurement [of per capita income increase] is the most fundamental madness of our epoch. Rudolf Bahro, The decline of the world, The New Left Review, 1978, p. 263. The Guatemalans had been organizing co- operatives and protesting their terrible poverty. When their ancestral lands were turned into huge coffee and sugar plantations [for international export and trade], they could no longer grow enough food to survive. The army responded to their resistance by killing hundreds of thousands in the 1980s, and a struggle for land grew into genocide. Ted Hyland, Jesuit Centre for Social Faith and Justice, Sept. 30, 1993. In the World Competitiveness Report prepared by the Swiss-based World Economic Forum . . . there were no measures of environ- mental degradation, resource depletion, occupa- tional health and safety or human rights protection. Alex Michalos, Action Canada Dossier #32, July/ August 1991, p. 15. NAFTA was negotiated in great secrecy. Its 2000 pages long. In addition theres the imple- menting legislation: more than 4000 pages, which shows how many laws will have to change because of NAFTA. You now have to pay $150 plus GST for this public document. How will NAFTA affect democracy? Agreements like NAFTA have begun to create what the Financial Times of London called a de facto world government in place of those silly old elected ones. Their backers say these deals will lock in countries so theyll never be able to back out or try other policies. Rick Salutin, Whats it got to do with democracy? Globeand Mail, April 9, 1993, p. D1. The North American Commission for Environmental Protection (NACEC) which was established by the NAFTAs Environmental Side Agreement [provides a] review process [which is] complicated, lengthy and secretive permits only NAFTA Parties (not provincial governments or citizens or environmental groups) to participate. It is to be conducted in the absence of proper legal procedures and without adequate opportu- nities to collect evidence or call expert witnesses. The evidentiary requirements which must be met in order to penalize a government [not private corporations who inflict the damage] for not enforcing its environmental laws appear to be insurmountable. The resource exclusion [in the Agreement] embraces an untenable definition of environmental law. The environmental side deal will not redress NAFTAs erosion of environ- mental standards and resource conservation. In many ways, it represents a significant step back- wards. The Development GAP, Nafta thoughts, Volume 4, pp. 34. The majority of the nation is invited to lower its standard of living so that we can become more efficient. But who is we, and efficient at what? True efficiency lies in the protection of these hard-won community standards [regarding wages, welfare, population control, environmental protection and conservation] from the degenerative competition of individualistic free trade which comes only to rest at the lowest common denominator. Population and Environment: A Journal of Interdisciplinary Studies, Vol. 11: No. 3 (Spring 1980), pp. 190191. Today an estimated U.S. $900 billion worth of currencies are traded every day. Only one of every seventy dollars that changes hands on world currency markets actually pays for trade in goods or services. Ecumenical Coalition for Economic Justice, Cooling hot money Economic Justice 660 John McMurtry BUSI ART NO. 1399 PIPS. NO. 82934 Report Volume 5: Number 2 (1994), p. 2. In 1994, for example, the dollar value trading on the Chicago Mercantile Exchange will exceed U.S. $200 trillion . . . six times the aggregate of all the worlds gross national products. Ted Fishman, Our Currency in Cyberspace, Harpers Magazine, December 1994, p. 54. A 1991 study by Statistics Canada revealed the following components of the federal debt: 50% due to compounding interest, 44% due to tax breaks to corporations and wealthy Canadians, less than 3% due to government spending on social programs. National Party of Canada on basis of H. Mimoto and P. Cross, The Growth of the Federal Debt, Canadian EconomicObserver, June 1991. The U.S. Congress estimates that the U.S. would save $44 billion a year if it moved like Canada to a single-payer [government] health- care system. The New Statesman, February 7, 1993, p. 13. As would be expected from international economic restructuring, Britain, France and the U.S.A. have undergone similar changes in employment and income structures. More jobs became more insecure . . . organized labour declined in membership . . . unemploy- ment, income inequality and poverty all rose. Hilary Silver, National Conceptions of the New Urban Poverty, Free Trade and Global Trends, Oxford: Basil Blackwell, 1993, p. 339. Since the Maquiladora free-trade zones were introduced along Mexican-U.S. border in 1980, Mexicans have experienced a net job loss . . . a 50% reduction in wages . . . a rise of unem- ployment from 8.5 to 17.9 percent of the work force . . . The American Medical Association has characterized the health situation there as a virtual cesspot and breeding ground for infec- tious diseases. Citizens Concerned About Free Trade, op. cit. and Globeand Mail, July 16, 1993, B13. Establishing holidays, work-day limits and overtime pay is passing laws making low pro- ductivity compulsory. Asia Week, April 14, 1993, p. 23. Since he became CEO in 1981, G. E. has shed over 200000 employees while its net income nearly tripled and its market value increased by $67.6 billion. John F. Welch, A Master Class in Radical Change, Fortune Magazine, December 13, 1993, p. 82. [The European Communitys] constitution the Treaty of Rome is the only one in the world that is committed to capitalism. . . . It is entirely undemocratic. It is run largely by commissioners who are not elected and cannot be removed. Its Council of Ministers is the only legislative body in whats called the free world that meets in secret. Former British Minister of Technology and Trade, Tony Benn, Europes Democratic Deficit. World Policy Journal, Vol. VIII: No. 4 (Fall 1991), p. 741. The characteristics of the stateless corpora- tion [are] . . . very mobile across international borders . . . no allegiance to country or region . . . will locate anywhere where profits can be maximized . . . seeks areas with minimum environmental legislation and minimum social legislation . . . overall behaviour is amoral. Kimon Valaskakis, A prescription for Canada Inc,, Globeand Mail, October 31, 1992, p. D4. In 1989, the richest 1 percent of families [in the U.S.] owned 36.2 percent of Americas private wealth. . . . The remaining 89.9 percent of families owned . . . less than the richest 1 percent alone. Geoffrey Hawthorn, Capitalism without Capital, London Review of Books, 26 May, 1994, p. 12. In Chile, the much touted success of the neo-liberal model, approximately 30% of the population lives (apparently permanently) on the margin of the miracle. In Perus capital, Lima, it is estimated that only 18% of the economi- cally active population has adequate employ- ment. Jos Burneo, Americas Update, May/ June, 1994, p. 8. Kerala, which has one of the lower gross national products of the country (India), has high literacy rates for both sexes. Despite extreme poverty, public commitment to education and health as well as to improving the status of women has in general made the population of Kerala literate and long-lived. That fact illustrates that certain measures of economic success, such as GNP, can be incomplete. Amartya Sen, The Economics of Life and Death, ScientificAmerican, May 1993, p. 40. The [new NAFTA] Commission for Contradictions of FreeMarket 661 BUSI ART NO. 1399 PIPS. NO. 82934 Environmental Co-operation will be able to act on environmental complaints from Canada over alleged violations of Mexican or U.S. environ- mental laws only if the laws in question fall under federal jurisdiction in Canada. [But] most Canadian industries are regulated provincially. Giles Gherson, Shame may be Watchdogs weapon, Globe and Mail, July 23, 1994, p. A4. 60 percent of international trade is intra- company, and the great organizers of this global vertical integration of production are stateless corporations . . . with no attachment to any one country. The intensification of international competition and the high mobility of capital leads then to what some have called a frenetic race for the bottom. Those countries that offer the most lax environmental conditions, the lowest wages and the least generous social safety- nets attract international investment. Kimon Valaskakis, Wanted: a GATT agreement that covers workers, Globeand Mail, April 22, 1994, A11. Every country and every industry will have to learn that the first question is not Is this measure desirable? but what will be the impact on the countrys, or the industrys competitive position in the world economy? Peter F. Drucker, The Age of Social Transformation, AtlanticMonthly, September 1994, p. 77. Four years ago, when the Berlin Wall came tumbling down, we were promised a bright new future [under free-market rule]. But far from prosperity, we see even more people plunged into poverty and despair and a quarter of the world starving. One in nine people live as refugees. . . . In every region of the world, it seems that human rights are being rolled back . . . fuelled by economic policies which make the rich richer and the poor poorer. Secretary-General of Amnesty International, Pierre San, Amnestys report card from hell, Globeand Mail, Dec. 10, 1993, p. A21. University of Guelph, Department of Philosophy, N1G 2W1 Guelph, Ontario 401, Canada 662 John McMurtry BUSI ART NO. 1399 PIPS. NO. 82934
The Principle of Increasing Marginal Utility Costs States That After A Certain Point, Each Additional Item The Seller Produces Costs Him More To Produce Than Earlier Items, Discuss Briefly