Posted 6 months ago on Aug. 19, 2013, 3:35 p.m. EST by LeoYo
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NAFTA on Steroids: The TransPacific Partnership and Global Neoliberalism
Monday, 19 August 2013 09:23 By Cliff DuRand, Truthout | News Analysis
A world without democracy, ruled by a technocratic elite serving the interests of US and global capital - protecting "investor rights" against national laws and regulations - is now being created in secret negotiations over free-trade treaties, one of which, the TransPacific Parnership (TPP), may be sewn up this fall. Can popular will stop it? For four decades now, we have seen corporate-led neoliberal globalization transforming nation-states into globalized states that serve the interests of transnational capital above the interests of national populations. This tendency has been strong in states both of the global North and of the global South. Everywhere sovereignty is being compromised. The ideal political system most suitable for such globalized states is polyarchy, since it legitimates relatively autonomous elite rule. However, even in such a managed "democracy," there are moments when elites can be made accountable to national populations through the struggles of social movements. Occupy Wall Street was the beginning of such a social movement.
As philosopher Milton Fisk has argued in The State and Justice: An Essay in Political Theory, in the class-divided societies of capitalist countries, the function of the state is to maintain the social order. This means the political elite promotes the interests of the economically dominant class. This is due to what István Mészáros calls "the metabolic reproductive process" of capitalist society. However, to maintain governability, it is sometimes necessary to limit the benefits going to capital and to increase the benefits going to the popular classes. How far the elite moves in the direction of social justice depends on the level of the subject classes' political activity. The elite's default position is to favor the interests of capital, if only because the interests of the dominated classes depend on them. A state is a democratic nation-state insofar as it represents the interests of the peoples it governs. That nation includes both the dominant class of capitalists and the dependent popular classes. The constellation of class forces within the nation at any given time directs the nation-state. The state mediates class relations, as, for instance, in constructing the class compromise of the capital-labor accord represented in the Fordist regime of production, a model of economic expansion named after Henry Ford.
Popular Sovereignty Gone with Globalization
However, with globalization, transnational corporate capital has leaped over the territorial and legal boundaries of the nation, and the state is following it. In so doing, the nation-state is morphing into a globalized state that serves the interests of transnational capital rather than any "own" national population. Contrary to what some have claimed, globalization has not weakened the state. In some respects, it has even strengthened it, particularly the executive branch. But globalization has weakened the state's connection with its own citizens as the state follows capital into a new global economic system.
Following William I. Robinson's seminal critique of US "democracy promotion" programs, Promoting Polyarchy: Globalization, US Intervention and Hegemony, we argue that polyarchy is the ideal political form for globalized states. Contested elections are an effective way to periodically renew the perceived legitimacy of elite rule. That is the genius of the US political system that has made it so stable. However, in times of extreme systemic crisis, as in the Great Depression of the 1930s, electoral politics was supplemented by the more genuine democracy of social movements. It was this popular pressure from outside the formal established political process that saved capitalism from itself by forcing the elite to accept changes otherwise resisted by capital. It was democracy that saved capitalism. Normally, the state is able to function as a kind of Central Committee for the capitalist class, attending to the systemic needs of the capitalist system as a whole. This at least was the case during the era of national capitalism. The unrestrained individual interests of capitalists could destroy the system. States regulate and moderate in the interests of capital as a whole. Popular pressures often pushed states in this direction. Each capitalist, for example, seeks to pay low wages so as to increase profits and wishes his competitors will pay high wages so there will be consumers to buy his commodities. Popular pressure and state action are needed to sustain capitalism. Karl Polanyi pointed out in his classic 1944 work, The Great Transformation, that "capitalism would be an unsustainable and chaotic social order if the state played the minimalist role specified in the libertarian fantasy." According to Eric Olin Wright in, Envisioning Real Utopias (p.124), it is just such a minimalist role that neoliberalism demands. Neoliberalism is the default position of capitalism in the absence of countervailing pressure on capital from popular forces pressing for greater social justice. That pressure usually acts through the instrumentality of the state as the rule-making body for society. As we have said, the function of the state is to maintain the social order, which means the capitalist relations, but it must sometimes modify these in the face of popular pressure to maintain governability. In those circumstances, a liberal sector of the political elite may modify neoliberalism in the direction of a social liberalism of the sort seen in the New Deal. Absent that, the state reverts to neoliberal policies that support the supremacy of capital. The contradictions of unbridled neoliberalism are the contradictions of unrestrained capitalism. It is a system that tends toward self-destruction. Capitalism IS crisis, says David Harvey, The Enigma of Capital: and the Crises of Capitalism. To survive, it needs the restraining hand of the state, frequently brought into play by demands of the popular classes.
Capital Escapes Regulatory Reach of Nation-States
With the globalization of capital in its corporate form, capital is escaping the regulatory reach of nation-states. Transnational capital is constructing its own governance structure (World Trade Organization and multilateral free trade agreements) with the assistance of globalized states. Just as neoliberal structural adjustment programs required what the World Bank called "macroeconomic management by an insulated technocratic elite" for their implementation (World Development Report 1997: The State in a Changing World, p. 152.), now a global governance structure is being built on the same political principle, a corporate elite insulated from popular pressures, beholden to transnational corporations only. What is emerging is an unbridled neoliberal regime in which states are only the administrative agents that protect capital against the popular classes. As Renato Ruggiero, director-general of the WTO put it in 1995, "We are no longer writing the rules of interaction among separate national economies. We are writing the constitution of a single global economy."
This is what has been institutionalized in trade dispute adjudication panels established under the WTO and through free-trade treaties like NAFTA and the pending TransPacific Partnership (TPP). These are secret panels that protect "investor rights" against national laws and regulations that adversely affect corporate profits, no matter how democratically those laws and regulations may have been established. The rationale for investor rights is protection of capital against nationalization. This rationale has been extended to so-called "regulatory takings" as well, which are considered as tantamount to out and out expropriation even though what is usually "taken" is a hypothetical opportunity. Consequently, state actions that protect public health and the environment, such as the Quebec moratorium on fracking in the St. Lawrence River valley, are seen as a "taking" of profits due to the US-chartered corporation that holds a permit for this mining activity that has undetermined adverse effects on the environment. So the corporation is now suing the state for compensation. A NAFTA panel is now considering whether to award the corporation $250 million of taxpayer money to keep them from endangering the health of the people of Quebec.