Trade & Investment Rules Facilitating What, for Whom?

Lynn Fries, TRNN Producer: Welcome back to The Real News. I’m Lynn Fries in Geneva.
In this report, we’re continuing our look into the battle for a new policy framework of trade and investment rules. We’ve covered a lot of ground exploring this in relation to North-South trade negotiations and the operations of multinational corporations. In this final segment, we now probe into what a new growth model and policy agenda might look like as it takes into account the development needs of the South, livelihood needs of peoples North and South, and the planet’s ability to sustain those needs.

The Real News invited historian and author Vijay Prashad to talk to us about all this. Professor Prashad is Edward Said Chair at the American University of Beirut, Lebanon. Among the many books he’s authored are The Poorer Nations: A Possible History of the Global South and Arab Spring, Libyan Winter. He writes regularly for The Hindu, Frontline, CounterPunch. Vijay Prashad was recently keynote speaker at the United Nations Conference on Trade and Development Public Symposium.

We met Vijay here in Geneva at the UNCTAD event.

Vijay Prashad, thank you for joining us.

Vijay Prashad, Prof. International Studies, Trinity College: My pleasure. Thank you so much.
Fries: In part three of our series, our guest noted that the South had begun to enter the negotiating space with a new confidence in creating its own policies. If so, what would a growth model look like that more accurately reflects where we are in the world today? And what are the principles that would anchor it?

Prashad: The first principle which I think is very important is one that has to be rescued from the Millenium Development Goals theory, and that is the principle of access, universal access to certain basic needs. So the Millenium Development Goals when they were framed, you know, by the international community, the understanding was every country has to reach certain targets of health, of literacy, of—. But this idea of meeting targets means the responsibility is with the government to create some mechanism to have the population meet the target.

The actual approach of basic needs was not there. The actual approach was that you must create institutions in every society where people feel that they can claim the right to education, they can claim the right to food. And it’s interesting. In Venezuela, to some extent in Brazil, they’ve created these institutions. So you pass—in your Constitution, you pass a law saying that there is a right to education. And then you create, through—in Venezuela they’re lucky. They have oil wealth. You create through the oil wealth the ability to create missions, these, you know, institutions that go among the people and create, you know, different kinds of educational possibilities for the population. So that is institutionalizing access to basic needs. That has to be a fundamental principle of a new thinking, a new thinking within the—. Otherwise, you’ll never be able to tackle questions of deprivation, poverty, etc. So that’s one.

Fries: Something little reported on—we delve into the collective savings of the working people.

Prashad: Second thing is, there was an old idea that is now long forgotten in development theory, and that’s the idea of the social wage. You know, everybody contributes to building a society. Everybody works in some way, and they pay, you know, taxes or they pay in some way, maybe by not taking wages. You know, if I am a housewife and I’m working to raise a family, my lack of taking wages is actually a tax I’m paying to the government, meaning because I don’t claim money for, you know, monetary recompense for what I’m doing, I’m in a sense doing free work. I am doing corvée labor, you know, like, serfdom for the government, because I am raising citizens for free. That’s a form of taxation. So everybody, whether you get a wage or not, is paying into a social fund. And that social fund is a social wage. It’s deferred compensation. Rather than take compensation, I’m deferring it.

Well, that social wage should not be used to attract one company or another company to fight between two jurisdictions, one city fighting with another city, saying, we will give you tax breaks. You come and make your firm here. Don’t go over there. By using your social wage in that way, you’re squandering the deferred compensation that people have not been paid for the work they’re doing by giving it to companies. You know, in other words, you’re taking from, you know, the poor and paying corporations. You’re taking from workers and paying corporations. Amazingly bizarre way of spending the social wage.
But if you actually understand taxes and deferred, you know, compensation in general as a social wage, then that should be utilized to fulfill the livelihood challenges of people. You know, if you create public transportation, if you create public education, if you create good up to the best modern science, public health care, if you do all these things, then the cost burden on ordinary people is reduced. You know, if an individual is getting a certain salary or wage, they are responsible.
We have privatized so many costs. They are responsible for buying a private car. They have to pay private insurance. They have to pay private tuition, pay this, pay that. You know, by the end of it, their wages disappear, because they are paying for things that actually could be socialized, that could be provided by a wage, a social wage, which they’ve already contributed to.
It’s not that this wage comes from disproportionate taxes being taken from the rich. You know, it’s not necessarily a redistributive mechanism. It’s actually a better way to spend the collective savings of working people. So the social wage has to be a core principle of any new policy agenda put forward. So I would say institutional access to basic needs, a social wage. And these have to be very important.

Fries: It’s hard for ordinary people, both North and South, to secure democratic representation to build their own power against the organized strength of multinational firms whose operations cross continents. The third fundamental principle, the institutionalization of the right to land, the institutionalization of trade unions, points not to a North-South divide but one of economic power.

Prashad: And finally, the most important principle which people don’t generally talk about is economic power, you know, the institutionalization of the right to land, institutionalization of trade unions, you know, importance of people having organized economic power. You know, we say it’s okay, it’s totally legitimate. If I start a business today, I can go and join the Chamber of Commerce. Nobody says to me, well, you are the CEO. You can’t just join the Chamber of—you should have a vote of your, you know, employees to see if you join the Chamber of Commerce. No. One employer, because they own the firm, can join the Chamber of Commerce.

Meanwhile, if workers want to make a union, which is also a form of bargaining, collective bargaining like the Chamber of Commerce, they have to take a vote, the government has to certify it. It’s a big production. So we’ve made it impossible to create economic power for workers.

But we treat—when, you know, owners make, you know, their own combination, like, chambers of commerce, we treat that as if it is a club. It’s a benign thing. It’s not a threatening thing. So that means people who own things have disproportionate economic power in society. You know, they are in fact celebrated for combining, whereas when workers combine, it’s seen as a threat or archaic or whatever. So it’s very important to take in hand, you know, the importance of economic power. And if we come to that and you’re talking about trade, this means you have to a serious conversation about the relationship between trade rules and the operation of multinational corporations. You know, should multinational corporations operate essentially without, absent any rules? Or if you frame rules, how are they going to be held accountable, you know, for the rules that have been framed? Because if there is no real jurisdiction—international jurisdiction, multinational corporations can operate willy-nilly. They can operate in one way in one country, they bribe, get away with murder, literally. They can put themselves in a tax haven and not pay taxes anywhere. You know, because multinational corporations operate across jurisdictions, in different nation states, they are not actually accountable to any one jurisdiction.

And therefore the importance of framing an international, you know, regulatory framework is very important, and that has to do with economic power. Currently, multinationals say, we are corporate citizens. They claim to be citizens of the planet. But if you are a citizen, then it’s important for you to have some constitutional control, where you have, you know, responsibilities as much as advantages. You know, if you are an individual and you become a citizen of a country, you have responsibilities. You have a legal framework that, you know, engages you in certain ways. But firms don’t have any legal engagement. So the idea of economic power is very important. It is sort of an archaic idea. It is essentially a 21st-century idea.

So these are some of the policy kind of principles that are essential, I would say, if there’s to be any kind of new thinking, you know, in trade negotiations. Otherwise, the countries of the South, when they come to the table, simply repeat or mimic the kinds of policies that, you know, they now say suffocate us.

Fries: And so we conclude this report. Our thanks to Vijay Prashad. And thank you for joining us on The Real News Network.