Free trade” is the modern form that imperialism takes: It is a system that protects and expands inequalities of power both between and within countries.
“Free trade” empowers global North multinational corporations to continue — with minimal interference and tacit approval from global South governments — the unequal trade they developed with the global South during colonialism. Further, it allows global North multinationals (with their junior partners, global South multinationals) to increase inequality around the world by pitting working class people in the global North and global South against one another.
Another way is possible. In order to build a progressive international political economy that produces material dignity and freedom for all the world’s people, we need to engage three distinct yet interrelated projects. We can build each project, piece by piece, advancing all three at the same time. The vision for what the three projects become can help us continue to build popular support as we advance each of the projects toward creating a transformed and democratic world economy.
First, we need trade agreements that include strong labor, environmental and antitrust regulation in all countries, and agreements that end offshore tax havens for the wealthy and create fair access to markets for global South producers. These agreements can allow us to rapidly address some of the worst multinational corporate abuses. They can also create space for us to continue to build the other two projects, especially the solidarity economy institutions that can become the base for popular progressive power that we will need in order to organize to create a transformed world economy.
Second, we need democratic international institutions that transfer technology and productive wealth from the global North to the global South so that we can begin to undo the ongoing violence of centuries of colonialism and imperialism. We can also use these institutions to coordinate investment in a just transition — led by Indigenous people and the mostly Black and Brown people who are on the front lines of the climate crisis — to a renewable energy economy, a program that can become an international version of a Green New Deal.
Third, we need to build local and democratically controlled solidarity economies, which can become the means for popular democratic control of the economy. National and sub-national democratic solidarity economies can become the building block for creating bottom-up and democratic international institutions. Only by creating democratic control of the economy can we make the economy accountable to democratic governments.
As progressives in the US begin to imagine and to build this kind of international economic system, we can look to movements who are leading the way on building local, democratic economies that prioritize production for human need over profit, including the Zapatistas in Mexico; democratic municipalists in cities like Jackson, Mississippi, and Barcelona, Spain; and the democratic confederalists of the Rojava region in Syria. Through coordination between place-based solidarity economies around the world, we can build a bottom-up democratic international economic system.
Project One: Better Trade Agreements
The first project for building alternatives to free trade is creating better trade agreements. Free trade agreements allow multinationals to invest their capital with very little restriction anywhere in the world. To resist the worst multinational corporate abuses, we need trade agreements through which the people of the world act together to regulate multinational corporate activity. If progressives can take leadership over the Democratic Party, negotiating better such agreements is something we can act on in the short term.
Building on the models for better trade agreements proposed by Public Citizen and the Institute for Policy Studies, we can create agreements that establish an international living wage, safe working and housing conditions, and environmental restrictions that curb (and ideally eliminate completely) environmental pollution and the extraction of unrenewable and finite natural resources from the planet. We can also coordinate taxing multinationals at the international level so that they cannot pit countries against one another to evade taxation.
Improved trade agreements can also include international-level antitrust regulation, so that we can limit the size and power of individual multinationals, and bans on financial derivatives that facilitate currency speculation, which serve no economic purpose and can send national economies into crisis. We can also use trade agreements to provide access to markets for global South producers; as the United Nations Conference on Trade and Development (UNCTAD) acknowledged in the 1960s, global South producers need preferential access to buyers of their manufactured and high-tech goods if they are ever to gain and equitable share of the production of such goods. Further, trade agreements could limit the power of landlords along the lines of the Zapatista’s Urban Land Reform Laws, which cap rent payments at 10 percent of a renter’s income and could be the basis of international rent control, as well as the Zapatista’s Revolutionary Agrarian Law, which could provide people with rights to confiscate land owned by absentee landlords.
Though we can create better trade agreements in the relative short term, trade agreements are a relatively weak tool for transforming the international political economy. Trade agreements regulate multinational corporate activity, yet they leave multinationals in control of the world’s productive capital. Multinationals are accountable for producing profit for their shareholders, a privileged few; they are not accountable to producing for human needs. To create an economy that is accountable for producing for the material dignity and freedom of everyone, we need to displace the corporate economy with solidarity economy institutions that are owned and controlled by everyone.
Project Two: Democratic International Institutions and Global North Reparations
The second project to create alternatives to free trade is to create new democratic international institutions that transfer wealth from global North multinationals to the global South. We can conceive of this as part of global North reparations owed from centuries of colonialism and ongoing free trade imperialism. To create these institutions, we will need to also create local solidarity economies, the third project discussed below.
Today’s international institutions are not democratic in the sense that they don’t provide equal input for all countries, let alone for all people around the world. The United Nations Security Council is controlled by the world’s most powerful countries, which have permanent seats. Voting within the International Monetary Fund and the World Bank is proportional to the money that a country contributed, which, obviously, favors the wealthy countries. Voting to create new World Trade Organization (WTO) policies normally require consensus from each member government, which is why powerful countries bypass the WTO and create free trade agreements with multiple countries at a time that build on already-existing WTO policies.
Nonetheless, to create an international political economy that is accountable to and produces for all people in the world, we need democratic institutions to control the international political economy. We can create these by creating solidarity economy institutions at the national and sub-national level. These institutions can then coordinate to build bottom-up democratic international institutions, an international version of the confederation of decentralized and local democratic institutions that the Kurds are building in the Rojava region of Syria, for instance.
Democratic international political economy institutions that transfer wealth and technology from the global North to the global South can be based on the 1960s UNCTAD vision. These institutions should perform at least five key functions.
- One function can be to provide grants from the global North to global South so that global South producers — preferably solidarity economy institutions — can develop the capacity to make the most profitable advanced goods.
- Another key function can be to transfer technical knowledge from the global North to the global South. Under the status quo, multinationals are allowed to keep private any technological advancements. This new system would facilitate use of technological advancements for the benefit of everyone.
- A third purpose of these democratic international institutions can be to fairly coordinate access to markets. Colonial-era international trade was the first instance in human history in which people entered into mass trade in necessities across vast distances. This means that people started consuming every-day necessities that were produced very far away. Previously, international trade had only involved luxury goods consumed by elites in different parts of the world. Mass trade in necessities is a component of the international political economy developed by and for capital owners; it is a key aspect of the commodification of everything and the basis for the capitalist economic system that capital owners use to render democracy ineffectual. We need an international institution to coordinate production that is far more resource-efficient and ecologically sustainable. Groups of producers throughout the world can use this institution to coordinate where goods will be made and sold in a way that prioritizes the consumption of goods close to their site of production.
- A fourth function that democratic international institutions can serve is to coordinate the huge capital investment required for a just transition to an international renewable energy economy. We can conceive of this kind of coordinated investment as a Green New Deal for the world economy. This investment should be financed primarily, if not exclusively, by global North multinationals and governments, as these global North multinationals are responsible for overwhelming percentages of humanity’s historical carbon emissions. Coordinating this investment should be closely related to the third function of coordinating production of goods and market access across the world.
- A fifth function is to enforce capital controls along the lines of economists John Maynard Keynes and E.F. Schumacher’s vision for an International Clearing Union and economist Yanis Varoufakis’ plan for a New International Clearing Union based on the Keynes- Schumacher vision, both of which I discussed in a previous Truthout article. The key role of this institution would be to set a narrowly allowed range of capital extraction from global South countries, to tax global north countries with the largest trade surpluses, and to then recirculate those taxes to people in the global South. This institution would advance international economic stability more than it would advance international economic equity. It would become less and less important as people throughout the world coordinate production and market access plans that prioritize local production for local consumption.
We can finance these institutions in multiple ways. One way is through an international tax on multinationals, with a higher rate for global North multinationals. Another way is through internationally coordinated public spending. Today’s banks, after all, have privatized the public good of money production. Governments, which possess no limits on the amount of currency they can create, can directly take control of the money production system and use it to support the production of everything that everyone needs. A democratic money creation system could entail public banks at the national and sub-national level coordinate the amount of currency they will produce. Some of this money can be used to finance all of the previously mentioned institutions.
Some, though definitely not all, of the above-discussed functions for democratic international institutions can be created through policy in already existing international institutions.
In certain circumstances, the WTO’s Generalized System of Preferences (GSP) allows global North countries to violate the free trade principle of “non-discrimination” by allowing a limited number of imports from eligible global South countries on preferable terms — lower tariffs or duties than are applied to imports from other countries. The GSP could be significantly expanded to facilitate global South producers attaining more equitable market access.
Next, the WTO free trade framework bans dumping, the practice of a corporation, often benefiting from government subsidies, selling their goods abroad at lower prices than they do in their domestic market. The WTO framework could be reformed to allow for dumping more often by global South producers and to bar global North governments from using anti-dumping measures. This could facilitate global South producers gaining greater access to global North markets, which the unequal terms of trade developed during colonialism have historically denied to them.
The WTO could repeal Trade Related Aspects of Intellectual Property Rights, which would eliminate the international intellectual property rights that global North multinationals enjoy, and facilitate much more equitable sharing of technology around the world.
Lastly, the WTO could reform Trade-Related Investment Measures (TRIMs), to allow governments to favor local producers through their own procurement practices and by creating standards that require foreign corporations producing in their country to use certain levels of locally produced inputs.
Creating new international institutions and reforming existing international institutions will both require enormous amounts of political organizing. Given this, it makes more sense to create new institutions that are intended to perform new functions, as opposed to reforming existing institutions, which were created to facilitate continued global North multinational control of the world economy, with many highly technical changes similar to those described above.
Project Three: Solidarity Economies Around the World
The third project to create alternatives to free trade is to build local and democratic solidarity economies in the US and around the world. By working with solidarity economies throughout the world — including the Zapatistas in Chiapas, Mexico, the municipalists in Spain and the democratic confederalists in the mostly-Kurdish and autonomous region of Rojava in Syria — we can shift wealth and political power to the grassroots masses and away from multinationals, and we can begin to build bottom-up democratic international institutions.
Government policy can help expand cooperatives in many ways. We can pressure governments to shift their purchasing power to cooperatives and away from the small number of large corporations that currently receive most public contracts. Currently, doing so might violate the TRIMs agreement within the WTO free trade framework.
Governments at any level could take more aggressive measures and cease recognizing investor-owned corporations, which are not democratic institutions. Instead, governments could require businesses that want the privileges that come with incorporation — including limited liability protections — to operate as cooperatives with rights for workers, and perhaps surrounding communities, to decision-making and profits.
As explored in more depth in a previous article, we can use land, labor and money solidarity economy institutions to deliberately displace multinational corporate political and economic power and move toward democratic control of the world economy. Locally rooted solidarity economies throughout the world can work together to build the bottom-up democratic international institutions through which we can finance solutions to collective problems and through which we can coordinate the production of all the goods and services that everyone needs to live dignified and free lives.
Negotiating better trade agreements, which we can work on as soon as progressives can gain leadership within the Democratic Party, can help us resist multinational corporate power and create space to build solidarity economy institutions and bottom-up democratic international institutions. Solidarity economy institutions — which are themselves democratic and independent from traditional political institutions, including political parties — can become the base for popular progressive power that we will need in order to organize to create a transformed world economy.