What If Trade Agreements Helped People, Not Corporations

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What If Trade Agreements Helped People, Not Corporations

(Photo: michaeljung / iStock)

Opposition to the Trans-Pacific Partnership trade agreement has become so widespread that no U.S. presidential candidate currently dares to favor it. European citizens likewise oppose the Transatlantic Trade and Investment Partnership agreement. This opposition presents an opportunity to propose international economic agreements that support efforts to meet the livelihood needs of all people in balanced relationship with a living Earth.

Existing and proposed trade agreements were negotiated in secret by and for transnational corporations. Each changes the rules to increase the ability of transnational corporations to make decisions once reserved for nations. The results of this radical social experiment are now conclusive. Corporate profits and the people who benefit from them are doing very well. Life is in decline.

Life survives and thrives only in healthy, vibrant, living communities, each rooted in its place on Earth and adapted to its distinctive characteristics. We humans have a special stake in the health of “our” place, including the purity of its air and water; the generative capacities of its soils, forests, and fisheries; the quality of its education and health care services; and the availability of good jobs for all who seek them. By this reckoning, a nation state is a self-governing living community.

By contrast, a transnational corporation is a pool of financial assets with no attachment to a particular place. Unless its employees are owners, they are subject to instant dismissal. Captive to the demands of global financial markets to maximize short-term financial return, transnational corporations are prone to exploit every opportunity to shift costs from themselves to the communities in which they do business. They seek to employ the fewest possible workers wherever they can pay the lowest wages, provide the fewest benefits, pay the lowest taxes, and most freely exploit nature

When I received my MBA in 1961 from the Stanford Business School, economies and corporations were largely national and our professors taught actual market theory rather than free market ideology. I learned that markets operate efficiently only under certain conditions.

1. Those who reap the benefits of a decision must also bear its costs. Economists call this cost internalization. It requires an ethical culture supported by rules to protect the health and safety of workers, consumers, and the environment.

2. Markets are competitive and open to entry by new players. Individual firms must be too small to influence market price. Patent protection must last only for the time sufficient for innovators to recoup the costs of their invention plus a modest reward.

3. There is full transparency. All decision-makers, including investors, consumers, and voters, must have the information required to make sound decisions.

4. Economies are national, correspond to political jurisdictions, and are largely self-reliant. Each nation is sovereign and seeks to fulfill the livelihood needs of all its people using its own resources. All who need jobs are fully employed.

5. Exchange between economies is balanced and in goods for which each economy has a natural surplus and from which partner communities can benefit. For example, the United States might exchange apples and pears with Central American countries for coffee and bananas. If the exchange is balanced, all benefit and none becomes indebted to another.

Application of these principles, which are essential to mutually beneficial trade and socially efficient market function, necessarily restricts the freedom of profit-seeking corporations. Free trade agreements strip away these restrictions and the ability of democratically self-governing peoples to secure the health of the living community on which they depend.

Growing public awareness and opposition creates a political opening to replace these agreements with next-generation international agreements that support the internalization of costs, the breakup of concentrations of corporate power, the sharing of beneficial technologies, full transparency, and local ownership.

It won’t be easy. Yet the momentum is now on the side of negotiating such agreements to secure a just and sustainable future for all.

David Korten

Dr. David Korten (livingeconomiesforum.org) is the author of Agenda for a New Economy, The Great Turning: From Empire to Earth Community, and the international best seller When Corporations Rule the World. He is board chair of YES! Magazine, co-chair of the New Economy Working Group, a founding board member of the Business Alliance for Local Living Economies, president of the Living Economies Forum, and a member of the Club of Rome. He holds MBA and PhD degrees from the Stanford University Graduate School of Business and served on the faculty of the Harvard Business School.

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