Socialist Worker

No fairness in free trade

by Kevin Ovenden
Issue No. 1673

DOES FREE trade benefit rich and poor alike? A few thousand rich and powerful individuals will be pumping out the message that it does as they meet in Seattle for the World Trade Organisation talks this month.

The bosses of the small number of giant multinational corporations that dominate the globe, and the leaders of the most powerful states, want to shred controls on big business. They claim that abolishing trade restrictions will lead to greater prosperity the world over, pulling up the poorest countries to the level of the richest. The argument is a smokescreen. The real aim of the super-rich is to cement their own power.

Take the example of computer industry boss Bill Gates - the richest man in the world. He will be welcoming the heads of multinationals and governments to Seattle in the name of free trade. But his Microsoft company has just been found guilty of rigging the market in computer programs. US president Bill Clinton rails against barriers in other countries, like China, to US exports. But the US has removed only 1 percent of the 650 restrictions it has on textile imports from the poorest countries in the world. The three biggest economies, the US, Japan and the European Union, set the terms of world trade to suit themselves.

The same story has been repeated throughout the history of capitalism. Industry grew in Britain in the 18th century behind a wall of measures to keep out foreign competition. Germany and the US followed the example in the 19th century. Britain was by far the world's biggest economic and military power in the mid-19th century. Its rulers at that time campaigned for free trade across the globe because they knew they would out-compete rivals in other countries. The US was the strongest economic power at the end of the Second World War. It pushed for the abolition of trade restrictions in weaker economies (which by then included Britain) so its firms could penetrate the world's markets.

Even when trade barriers are eased on all sides the result is far from fair exchange. Free trade benefits the strong. World trade has increased at over twice the rate of world economic output over the past four decades. Every country has been drawn into the world market, where more and more goods and services are exchanged across borders.

Defenders of capitalism say this should lead to each economy being able to specialise in producing particular goods, finding a niche in the world market, and sharing in greater wealth. The International Monetary Fund, the World Bank and other institutions dominated by Western capitalists encouraged poor countries to abandon food production in the 1970s and grow crops like cotton, coffee and tobacco for export. But that left them prey to wild swings in the prices of these commodities. The gap between rich and poor has widened grotesquely. The developing countries' share of global trade has halved over the last two decades.

There is no such thing as fair trade under capitalism. Every capitalist enterprise is forced to compete to survive. Each must try to undercut their competitors. This process always involves unfair means. Large companies can temporarily sell their products at a loss to drive out smaller rivals. Multinationals can blackmail small distributors into stocking only their products (a speciality of Coca-Cola down the years).

Supermarket chains can make small farmers utterly dependent on them and then threaten to dump them overnight unless they drop their prices. Ultimately, giant firms use their links with powerful states to threaten sanctions or even military action to defend their interests. Even when capitalists do follow the idealised rules of the market and trade 'fairly' with one another, working people and the poor do not benefit.

A few countries, like South Korea, have developed industry which can compete with more established Western based multinationals. But they, like their Western counterparts, have done so by squeezing more and more out of their workers through longer hours, pay cuts and attacks on living standards.

It should make perfect sense to exchange goods from one part of the world for those which are produced more logically in another. But that can only be done in any sort of rational way by replacing the destructive exploitation and competition of capitalism with a democratically planned economy.

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Sat 20 Nov 1999, 00:00 GMT
Issue No. 1673
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