Trading for Good

How Global Trade Can be Made to Serve People Not Money

Christian Felber

• Publisher: Zed Books
• Year: 2019
• Print ISBN: 9781786996022
• eBook ISBN: 9781786996046
• Edition: 1
• Topic: Volkswirtschaftslehre
• Subtopic: Wirtschaftstheorie

Trade is the lifeblood of the global economy, but few would consider it a social good. Instead, our views on trade have polarized between two extremes: 'free trade' ideologues who regard trade as an end in itself, and 'protectionists' who view it as a destructive force to be contained. But there is another way to trade – one with the interests of people, not profit, at its heart. In this visionary work Christian Felber, founder of the Economy for the Common Good movement, offers a dazzling new paradigm for the global trading order. Confronting the 'free trade religion' which has reigned since Adam Smith, Felber champions an alternative approach in which trade serves the wider interests of society, incorporating the key issues of our time: human rights, climate change, and the growing divide richer and poorer countries. He proposes the groundbreaking idea of an 'Ethical Trade Zone', founded on a principled approach to tariffs and trade policies, and built with international cooperation on trade, taxation and labour. Penetrating and passionate, Christian Felber shows how this brave new economic world can be built democratically from the grassroots up, and how trading for good can be made a reality.

III

THE SUBSTANTIVE ALTERNATIVE: ETHICAL WORLD TRADE

1 SIGNIFICANCE OF TRADE

1a) Trade is not an end but a means

Trade can do a lot of good: it helps to divide up work sensibly; it brings specialities to distant places; it brings people into contact and opens up horizons. Trade is also a freedom, a part of economic freedom. But trade is not an end in itself, nor is it a basic right. And economic freedoms are only instrumental, not final, freedoms: they serve higher values, which they must not endanger. The examples of the slave trade, and the trade in women, children or organs, immediately make it clear that at least human dignity and human rights are above commercial freedom. But that is not all. Threatened species or toxic waste, for instance, are not supposed to be traded “freely”, or even at all. Trade is categorically not a goal of economic policy, but a means to achieve overarching policy objectives that are legitimate and commonly agreed. Such objectives are the full observance of human rights, globally sustainable development, social cohesion, just distribution and cultural diversity. Trade is a means that they may either require or impair. And it depends on which is the case whether there should be more or less trade or a different kind of trade. According to whether the means serves the ends or is detrimental to them, trade should and must be made either easier or more difficult, be either promoted or restricted – with a sense of proportion and in consideration of the ends and values that it serves.

“Free trade” would mean that the means no longer has to pay heed to the ends. This is the central flaw in the present trade system: “free trade” turns trade into an end in itself. And that is not what it is. Others see things in the same way: “Trade is a means, not the end”, says the renowned Cologne-based expert in international law Bernhard Kempen.¹ “More open trade is not an end in itself”, declares the UN Development Programme.² “Good health is an end”, Mander and Cavanagh write. “Worker rights, dignified wages, and safe working conditions are ends. A healthy environment is an end. In contrast, international trade and investment are merely means and should be dealt with accordingly.”³

What makes the basically simple point so difficult is a threefold conceptual trick. Part 1: The little word “free” is tacked on to self-interest, and suddenly it is much harder to be against it. For who is against freedom? Free trade sounds good – like free beer, free thought or free love. Anyone who doesn’t give it much thought, or fails to see through it, soon ends up agreeing. The idea is to immunize you against criticism of free trade by suggesting that critics are against freedom. This little ploy works amazingly well: many critics buckle at the first question and assure everyone that they are “not basically against free trade” – without making it clear what they understand by it. Those who are for “free trade” downgrade the environment, health, human rights and democracy. A more sophisticated answer would be: “I’m not basically against trade, I’m only against free trade!”

Part 2: Anyone who is against “free trade” is reflexively pigeonholed under “protectionism” – as if there were not a host of different options between wide open and tightly sealed borders. One popular idea is: “But Germany benefits from open borders.” Most often one hears knee-jerk reflexes such as: “But the solution isn’t to close borders either.”⁴ Critics are readily accused of wanting to break up the EU: “A return to nation-states won’t solve any of the major problems.”⁵ In the worst case, they are sent packing to “North Korea” and that’s the end of the discussion. It’s like saying that people who prefer not to eat meat are “anti-nutrition”, or those who choose to ride a bike are “anti-mobility”, or those who seek to solve conflicts without violence are “anti-security”. This way of imputing the opposite extreme is most familiar from discussion of economic models: anyone who criticizes capitalism is immediately pigeonholed among the communists; no third way is possible. This black-and-white logic serves an interest group that may have good arguments against communism but has no alternative to capitalism – although endless possibilities are conceivable apart from these two extremes. Common good economics is neither the one nor the other; it transcends the extremes by integrating their valid cores – the values of freedom and equality – and sketching something new beyond them. This irritates traditional socialists and capitalists alike, who mirror each other by branding “common good economics” as either capitalism⁶ or communism⁷ in disguise. But the universe harbours endless possibilities; there are not only a third and a fourth but infinite gradations between all poles. Between day and night, between man and woman, between communism and capitalism, and between free trade and isolationism.

Part 3 of the trick is the moulding of (legal) language to the new goal. As in a magnetic field, the whole usage is geared to the new “superbasic right” (Heribert Prantl). In Step 1, the true goals of trade are disparaged as “non-trade concerns” and, if they still prove a nuisance, cast into the political pot of “trade restrictions”. Then legitimate practices that extend protection – of the small against the big, the weak against the strong, the local against the global, the ethical against the unscrupulous – are attacked with the semantic weapon of “non-discrimination”, which previously ensured the equal treatment of equals, but not of unequals. The WTO principles of “equal treatment with nationals” and “most favoured nation” treatment are further patching on the straitjacket, other elements being reciprocity, “necessity tests”, scientific evidence (before regulation is permitted) and regulatory cooperation. New legislative proposals are checked not for their compliance with human rights, ecological limits, distributive justice or financial stability, but for their “conformity to free trade” – which is thereby elevated to the supreme goal.

To be sure, trade is part of the freedom to run a business and is therefore rooted in basic rights, but limits can be set on that freedom (see above), and only natural persons, not juridical persons such as TNCs, have basic rights. Besides, they do not have them in foreign countries! Trade by juridical persons is a business instrument, like investments, loans, money or incorporation itself; none of these is an end in itself. All have to serve the goals of economic activity. The whole economy is not an end in itself but has co-responsibility for achieving, or at least not contravening, the policy objectives of a democratic community. According to various philosophies and legal traditions, the economy is a means to a “good life” (Latin American indigenous peoples), a “just society” (Aristotle), the general good (Germany) or the common good (Bavarian Constitution). The German Bishops’ Conference has adopted the view: “World trade must serve the global common good”.⁸

As early as the fifteenth century, Bernardino of Siena wrote: “Six considerations must be made about the person who makes and uses trade. […] The first is that the person of the merchant has to be considered. Second, the soul of the merchant has to be considered. Third, the way of making trade must be considered. Fourth, the place for making trading needs to be thought out. Fifth, the time for trading needs to be considered. Sixth, the consortium with whom the trade is practised must be looked into. The seventh is by Duns Scotus: ‘trade is carried out for the common good’.”⁹

In recent years, the United Nations has formulated alongside human rights a set of Millennium Development Goals and, building further on these, a set of Sustainable Development Goals (October 2015). If UN member states took seriously these goals of the international community – number one of which is “the elimination of poverty” – they would check their bilateral, plurilateral and multilateral trade policies and investment protection agreements to see how much, if at all, they promote the development goals, and to flesh them out with appropriate sections, concrete measures and verifiable sub-goals. Trade agreements based on mere hopes or vague promises that they will help to reduce poverty, with no actual tasks or targets specifying how this will be achieved, should either be coherently reworked or not concluded in the first place. Examples are TTIP, CETA or the numerous WTO agreements.

The sum total of human rights, development goals and other objectives of the international community – for example, the protection of indigenous cultures or biological diversity – might shape a “global common good”. In a number of existing constitutions, the common good is the explicit goal of economic policy, while in others it sets the limit to economic freedom. “All economic activity serves the common good”, states the Bavarian Constitution (Art. 151), for example. According to the Colombian Constitution, “economic activity and private initiative” are free “within the limits of the common good” (Art. 333). According to the Spanish Constitution, “the country’s entire wealth, in its various forms and to whomsoever it belongs, is subordinate to the general interest” (Art. 128). The Basic Law of the Federal Republic of Germany declares: “Property entails obligations. Its use shall also serve the general good” (Art. 14). Freedom of trade might be subsumed as a sub-freedom of the freedom to own property. And if this higher (property) freedom carries an obligation to the public good, so much the more does the sub-freedom (trade).

We in the Common Good movement propose that the achievement of the common good should be measured at every level of the economy – national (macro), corporate (meso) and investment (micro) – and take precedence over the financial indicators of success (GDP, profit and return on capital). Economic success should be gauged by the contribution to the objectives of the democratic, law-based state and the international community of states. The Common Good Balance Sheet has been in existence since 2011, freely compiled by roughly 400 enterprises. Meanwhile, the Cooperative for the Common Good has developed a series of checks that all projects seeking finance must pass (whether the capital is theirs or belongs to someone else) in order to be considered for a bank loan or direct investment from outside. If the credit screening is positive, the money flows in on conditions that are more favourable the greater the added ethical value of the project.¹⁰ A number of alternative banks already exist which either invest in such areas as progressive education, organic farming and renewable energies or have developed special instruments for the assessment of loans.

In our proposed process for the democratic development of common good products, free and sovereign citizens might gather in their communities and begin by compiling an index with, say, the twenty most important elements affecting the quality of life. Most probably, these would include human rights and development and sustainability goals – and everything that contributes to a good life for all (living creatures). This participatory elaboration of the “common good” corresponds to the formal understanding of the common good, which is different from “substantive” meaning. A substantive definition is one that is clear from the outset: it would have to come from the Good Lord, from “Natural Law” or from a dictator – each of which is a no-go.¹¹ The formal meaning implies that the concrete meaning can be found only through a process of wide participation. All studies and preliminary investigations indicate that the final result will include fundamental aspects of the quality of life, such as health, education, good housing, sound relationships, social cohes...

Table of contents

• Cover
• About the author
• Title
• Copyright
• Contents
• Tables
• I Introduction
• II Origins and critique of the religion of free trade
• III The substantive alternative: ethical world trade
• IV The procedural alternative: sovereign democracy
• Acknowledgements
• Bibliography
• Notes
• Index
• About Zed