The recent APEC meeting in Malaysia was notable for its failure to push free trade in the face of the so-called Asian crisis. Instead it got into a spat about "Asian values" and "human rights". NZ’s Jenny Shipley joined with the US vice president Al Gore to attack Dr Mahathir’s jailing and prosecution of his former deputy Anwar Ibrahim. Since the US is the world’s worst offender on human rights, what really motivates Gore’s attack is Dr Mahathir’s retreat to economic nationalism to protect the Malaysian economy from the harmful effects of economic liberalisation. Yet neither free trade nor economic nationalism in any combination can end human rights abuses. Both are against the interests of workers. We explain why.
APEC (Asian Pacific Economic Council) is widely seen to be a threat to workers everywhere. This is because APEC is designed to extend 'free trade' among the Asia Pacific states. Free trade is seen to be in the interest of the major powers and against the interests of the 'developing' states because it will drive down prices and wages in these states. It is also feared that APEC will reinforce regulations like the MAI that put severe limits on the ability of weaker states to protect and benefit from their own resources.
The alternative is posed as economic nationalism – i.e. to reject ‘free trade’ and to regulate trade and capital flows for the national benefit. This means breaking from the model of APEC and following the example of China in tightly regulating Direct Foreign Investment (DFI). Malaysia is today seen as opting for this alternative after having its economy destabilised by volatile capital flows. Japan too has turned its back on demands to free up trade in timber and fish. In a recent article in the New Left Review #231, Robert Wade and Frank Veneroso argue that the Chinese model is now seen as the solution to the so-called "Asian Crisis" by insulating the region from the worst ravages of chaotic world capitalism. The Asian economies provide half of the world's savings so they don't need to agree to the destructive free trade policies of the IMF or World Bank in order to get funds.
Like the Korean students we call for the IMF to get out! We are against IMF austerity and debt for equity measures as the means by which US capital gains control of semi-colonial and weaker imperialist economies. However, we do not see a retreat to economic nationalism as the real answer because it does not change the root cause of the problem - capitalism. We argue here that both free trade and protection are merely different ways of managing capitalism and that neither of these 'alternatives' is in the interests of workers. What we want is workers control and a planned economy that is integrated into an international socialist economy where production is for need and not profits.
What's wrong with free trade?
The fear of free trade is well founded. The large protests that have met APEC meetings since its start, sure to continue in New Zealand in 1999 testify to this real fear. (See article on 'APEC Security threatens democratic rights'). 'Globalisation' is the swear word that expresses this fear. Under the capitalist world economy, NAFTA, the WTO, MAI and APEC, are all designed to regulate super-exploitation and unequal exchange between the imperialist powers and the poor colonies and semi-colonies. Free trade under these rules disadvantages the poorer commodity producers who have almost no control over prices of exports or imports.
What is produced is determined by competitive advantage under the ownership and control of MNCs. If costs are competitive DFI will flow in and super-profits will flow out. While this arrangement has the advantage of cutting costs of production, it also depresses living standards and expands the surplus population of unemployed or under-employed. Any attempt to deregulate or interfere with these arrangements will lead to punitive law suits for breach of contract, and/or economic sanctions, and ultimately political and military intervention. The fate of Iraq during and after the Gulf War is a good example.
Is Economic Nationalism any better?
Most of the left, especially the eco-left and the Maoist left, advocates national economic controls against free trade. That is, instead of the free reign of MNCs, nation states must impose social constraints on DFI and the extraction of profits. Usually this means some form of tax on DFI that can fund a social dividend to subsidise the social downside of globalisation.
Despite its apparent progressive thrust, there are some clearly reactionary political aspects to this. Any attempt to appeal to nationalism against globalisation runs the risk of subordinating the working class to the national bourgeoisie. That is, it isolates workers in each country, separates and alienates them from their working class brothers and sisters in other countries, and gives priority to an alliance between workers and bosses in which bosses are dominant.
Logically the downside of globalisation cannot be defeated by national solutions without reimposing trade and capital barriers that lead to trade wars and ultimately military confrontations in which workers kill workers.
Second, this 'solution', unless it breaks free of the capitalist world economy, can be easily sucked back into the 'new' state form widely promoted as the 'new middle' (see ‘Who Runs the German Economy? Economist, November 21), the 'third way' or the 'radical centre' (See article on the 'Smart, Wired, Zero Sum State’ in Class Struggle #24).
Under this model the local state becomes a direct agent of globalisation, as the manager of investment, and of social control. Yet because the social fund available to correct the social downside cannot be more than a token contribution without raising taxes and driving out DFI, there is no real counter to the harmful effects of globalisation upon society.
So it seems that neither alternative can escape the effects of globalisation upon the masses of workers and peasants in the 'less developed countries' or those impoverished sections of society in the 'developed' world. The answer then must be to transform those progressive struggles to limit the negative impact of globalisation on local populations, into a successful transition to socialism.
How to do this? First, we have to recognise that free trade is contradictory. It has both progressive and destructive aspects. The trick is to neutralise the destructive aspects by advancing the progressive aspects. Under the free reign of the MNCs, ownership and control is rapidly concentrated into the hands of a few powerful MNCs and their imperialist states. This amounts to a progressive 'socialising' of the means of production as the world economy becomes increasingly interdependent.
In that sense the world economy becomes internationalised, and along with it, the working class. So while on the one hand MNCs that span a number of countries can attempt to evade attempts at nationalisation in any one country by capital flight, on the other, MNCs cannot evade a potentially powerful international labour movement if it is organised and united.
Therefore instead of trying to break up MNCs by nationalising them in any one country, which can only lead to isolated struggles and defeats at the hands of sanctions and military offensives, it is important for the international labour movement to 'socialise' them further. This means giving up on the reformist idea that the capitalist state can be used in the transition to socialism, and taking up the idea that workers integrated into the global division of labour unite internationally to progressively 'socialise' these massive combines. By this we mean imposing the interests of labour onto the owners by extending workers control over production and planning. The solidarity that has emerged around the recent struggles of Korean workers and the Australian 'wharfies' is a sign of what could be possible once workers recognise that their strength in unity is must be turned into international solidarity.
This does not mean that some of the more progressive demands of economic nationalism should be junked. Privatised assets should be re-nationalised without compensation, and all state assets put under workers control. Similarly, progressive taxes on profits and speculation should be increased to fund social spending. Taxes on profitable industry rather than subsidies to unprofitable industry should be the basis for funding social spending. Where these social costs drive capital out of the country, capitalist property should be socialised and put under workers control.
Such demands upon the capitalist nation state would meet with rejection by the capitalists on the grounds that they would destabilise the economy by threatening the rights of private property. That’s why to be successful these measures would require a much higher level of political organisation of workers capable of supporting a Workers' Government based on workers militia. Moreover, the success of a Workers' Government in any given country to resist attempts by imperialist states to smash it would depend upon the strength of the international workers movement and the capacity of workers in the imperialist countries to put a halt to such armed interventions.
So whichever way you look at it, there can be no successful transition to socialism without overcoming the reactionary nationalisms that divide and rule the international working class, and putting the development of the progressive socialisation of the world economy that is rapidly occurring under globalisation, under workers' control.
NZ out of APEC!For Workers Internationalism!
From Class Struggle, No 25, Dec 1998-Feb 1999