Normally as say with ag subsidies, the discussion is focused on (self-described) free trade versus protectionism. But generally I think that discussion is (or at least should be) secondary to the question of the controls of capital flows, a topic that used to get you labeled a dangerous radical faster than you can say Bretton Woods.
With the breakdown of a worldwide regulated monetary regime with the US going off the gold standard in 1971, the US is the reserve currency of choice in the world. Which has allowed the US to print money to pay off debts to other countries while developing nations have to export in order to gain US Treasury bonds or denominations in order to pay back their loans. This drives many of the developing countries to monoculture food growth for export, leaving their populace severely prone to drought, market fluctuations, and the like. Or pulls them towards commodities (copper, diamonds, oil, natural gas) which historically is connected with authoritarian governments and wrecks major environmental damage.
Meanwhile the game is rigged as the US “pays off” its debts by printing more money, running up mass debts, exporting “free” money around the world causing asset bubbles–Japan in real estate during the 90s, The Asian Crisis ’97, etc.
This lack of a capital flow regime moved many countries under IMF/World Bank pressure to go against the traditional form of Western economic growth at a comparable level of development–namely what we now call protectionism. As an important sidenote: David Ricardo’s theory of comparative advantage, the fountain of all free trade theory, assumes capital flows are controlled by individual states.
Recalling (before I get accused of it) that Marxist socialism is control of the means of production not the control of the creation & flow of money, I think the notion of the commons comes back into view. In this sense, post the initial level of development–the protectionist or today called Beijing Consensus practiced by the US since Alexander Hamilton through the 19th century and into the early 20th centuries–then protectionism is really a reaction to the lack of a capital flow regulation regime (and not something I support for post-industrialized countries).
Citing Karl Polyani, Ann Pettifor writes:
Protectionism is the natural reaction of the people to the imposition by the finance sector of a ’self-regulating market society’. In other words a society that hollows out democratic decision-making and relies entirely on the market to determine whether we have food, jobs, wages, care for the elderly and the sick or security from threats like global warming. When the ‘market society’ fails to protect the interests of the people – then the people naturally resort to protectionism or worse.
I agree with her that I think it is a bad reaction, but it is a natural one and one that could be avoided only if the trans-national “free” flow of capital is regulated.
In Pettifor’s book The Coming First World Debt Crisis***, which I’m currently reading and in which she predicted in 2005/2006 the current economic meltdown, she has a very arresting idea that credit, as a form of social trust is created by the community not the banking industry.
When Thatcher said there was no society, she was saying (whether she realized it or not) that there was no nation. There is still a state function but it is now what Philip Bobbitt calls a “market state” not a nation-state. I’ve never understood why the Anglo-American right so totally aligned themselves with this economic fundamentalism putting countries at the mercy of international finance. Or at least why the mythology of economic Reaganism became so dominant from the Gringrich Revolution Republicans on (the actual practice of Reagan was far less philosophically pure).
In other words, we need to get back to some sanity and avoid the rise of nationalisms–which in the absence of capital regulation while become violence/ethnic/war based–and hurtful forms of trade protectionism. To do so I believe requires a new intra and inter-nation capital flow regime.
I think it would be best served by the Commons vision I’ve outlined before. Namely since the ability to make loans comes from the social trust, then the banks would pay a renting fee from The Commons dispersed to the citizenry, just as the notion that the sky is leegal commons property which a private entity must pay an access fee to use.
***For anyone interested, I highly recommend her book. She’s more Keynesian than I am, but I think she is fundamentally correct that this current crisis will require a Global Jubilee and forgiving of even the debts of first world countries–otherwise we may see the US going through it’s own version of an IMF restructuring program. She was a major player in the Jubilee 2000 campaign to forgive the debts of developing countries. Given her research into the First World Debt Crisis (now upon us), The Jubilee will have to be Global in nature.