Free Trade and GATT

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The most recent round of GATT is a significant one in which, as the Chairman remarked, a “systematic attempt is being made to force the poor to be free”. The United States has, I believe – I did not read it in the papers, though – announced this morning that if any country falls to respond, the developed nations, especially the United States will blackmail you by the process of trade sanctions, and even resort to unilateral legislation as in the case of Super and Special 301.

I think this is a very significant develop­ment. I like the term “systematic attempt to force the poor to be free”. Although I am not an expert on GATT and have not been following it all that closely for the last year or so, I am in close touch with the Third World Network in Penang, as well as with Martin Khor. They have actually set up an office in Geneva called “SUNS”, that is run by an Indian called Raghavan, which provides a day to day summary of discussions and events, and a whole magazine dealing with the issues. This is an extremely important function as many of the delegates from the smaller Third World countries do not have the means to deal with the fearful bludgeoning they are receiving mainly from the American delegation.

The American delegation actually consists of a whole host of lawyers and experts, and the Third World delegates are having a great deal of difficulty in resisting these treaties. They are all the time being cajoled and even bribed – they are being given all, sorts of small term advantages – to accept these long term arrangements. A year ago we devoted a whole issue of our magazine The Ecologist to this issue of GATT. The most useful thing to do is to look at its implications, its philosophy in the long term, that is, in the general context.

I think the widest context in which it can be understood is in the context of development – economic development – and the whole issue of trade. We all assume that trade is a good thing, and that more trade is going to increase our welfare. That is a basic assumption which no one questions. We also generally accept that development is a good thing, and of course trade plays a very important part in economic development.

This idea that economic development is a panacea to all our problems is of fairly recent origin, usually attributed to Harry Truman, traced to after the war when someone decided that trade would solve all our problems – or rather, that development would solve all our problems. During the colonial period there was no specific effort to develop the colonies, because the colonies would then be seen as competing with the mother country. So colonies were not encouraged to develop. I don’t have to tell you, in India, how it all worked.

Suddenly, all this changed alter the war. We can see the effect of development on traditional societies, that is, tribal, archaic and peasant societies. This aspect is generally ignored in any discussion of economics. We assume that the experience of the last 150 years – the industrial experience – is the only relevant experience. This means that the main body of economists decree in what I take to be the most presumptuous manner possible, that the whole economic experience of man on this planet for hundreds of thousands of years is irrelevant – totally irrelevant – to the understanding and solution of the problems that confront us today.

The person who first questioned this dogma was Karl Polanyi, a bit of a hero of mine – and he has become a hero of a lot of people very recently, I might add. He was a Hungarian who came to Victorian England. He had a look at the so called ‘archaic societies’, peasant societies, and decided that the entire set up of laws that economists had formulated, supposedly of universal application, do not apply to those tribal, peasant and archaic societies in which Homo economicus is conspicuous by his absence. Nothing in these societies was done to maximise the return on factors of production, to increase the availability of material goods. Things were not done to satisfy economic motives. This was the most important thing.

Polanyi noticed this, and since then there has been massive literature on the subject and he has been attacked by some people. I think it is tremendously important to see that man did not always judge his wealth in terms of possession of material goods or money. Traditional money in tribal societies satisfied its social goals – it was basically under social control.

In India you must know this, because in traditional Indian villages the relations between the different castes were established by traditional roles – where the farmer provided food for the barber, the potter, or the smith. He provided food at a rate established by tradition, and obtained goods and services provided by the artisans in return.

Now, it is important to understand what would happen if the potter, say, were a drunk, and made very poor pots, and if there were a potter in the neighbouring village who made good large pots. The farmer would still buy pots from his potter, because to him the maintenance of social bonds within the village was more important than the size or quality of the pots. It did not matter whether the pots were big or small; what mattered was a coherent, cohesive, considerate society that hangs together, a proper society.

In the west we are only beginning to realise the consequence of destroying society. I am quite convinced that within the next ten years, the west will go the way of Russia. The collapse will be just as bad, probably worse, as America is more centralised, more dependant on high technology, and on the working of the market system, all of which are highly precarious and very vulnerable to disruptions.

One of the reasons why America must collapse is because its society is gone, it no longer exists. If you go to New York and the other major cities there is a complete breakdown of community and the family. The same is happening in England, a massive increase in delinquency, crime, drug addiction – society has totally collapsed. I do not think it is possible to govern a society that has collapsed in this way.

We are all going to Rio de Janeiro in June where there is to be this big meeting with 25,000 people. In order for this United Nations Conference on Environment and Development to take place they are going to have to clear the streets of some 7,000 abandoned children of Rio and other big cities. They are going to shoot them to get them out of the way as they interfere with tourism. They are going to have to shoot God knows how many thousands of children just to make this meeting on Environment and Development possible. That is a most horrific thought. You have this situation with 30 million abandoned children on the streets of South American cities – that will probably be 100 million by the turn of the century at current trends. It is a breakdown, a complete, total breakdown.

Here in India, you probably understood the overwhelming importance of maintaining social cohesiveness. Traditional man knew this, and therefore his economic activities were closely subordinated to social imperatives, if you look further back. In tribal societies, as Polanyi points out, goods were not distributed. The markets were something that did not really occur in the village in the sense that we have it – haggling.

The first thing in the market system is a transaction which in itself calls up no long term personal relationship which is therefore to be exploited to as great a degree as possible. In fact the presence of a previous relationship hinders a good market. People do not like to sell to a kinsman as it is bad form to demand as high a price from a kinsman as one might from a stranger. Market behaviour and kinship behaviour are incompatible. Therefore, the market system and the kinship system are totally incompatible within a single relationship, and the individual must give way to one or the other.

So, within a traditional village society, you did not have a market system – there were market activities, but they dealt mainly with villages around, where you could haggle. If you haggled and sold without taking social necessities into account then you dealt mainly in superfluous commodities, not necessities as Polanyi pointed out.

For Polanyi, a great disaster came with the development of the market system in Europe in the 13th century. For him, the worst thing was that suddenly labour and land became commodities. He points out that labour is another word for human life, which means that human life became an article to buy and sell, which clearly it was not designed to be. Land is another word for nature, which means you could buy and sell nature. Thus, human life and nature became commodities to be bought and sold.

So, the way human life and nature were used and developed was determined not by any moral, social or ecological factors, but by purely market factors. This is something of which one must realise the implications – things are done simply because it is economic to do so.

• It is economic, at the moment, to do most of the things that are leading to the destruction of the planet. It is very economical to cut down the world’s forests, which is why they are being cut down, very economical indeed.
• It is economic to force people in the Third World to buy tobacco in very large quantities.
• It is also economic to use all sorts of hormones in beef to produce the devitalising and contaminated food we feed to people in England and America. That is why there is a ten year gap in life expectancy between the working classes and the middle classes in England. It is largely the result of this disgusting diet that we force on people because it is economical to feed them on this diet.

It is economic, in fact, to do just about all the things that are undesirable on social, moral and ecological grounds. It is economic to burn fossil fuels which are slowly changing the climate, and to produce CFC’s which are destroying the ozone layer so rapidly. Du Pont is producing half the world’s CFC’s which are destroying the ozone layer. The World Bank tells us that there are 40 million people alive today who will get skin cancer in the near future because of this, and many more whose immune-system functioning will be destroyed.

Why is this happening? It’s happening because it is economic for us to produce these CFC’s. When governments try to ban and phase out CFC’s quickly, you get this tremendous lobbying by Du Pont, ICI, Hoechst and all the other giants of the chemical industry to move slowly as was decided in the Montreal Protocol. It brings them a profit of about 40 million pounds – a very small amount when you think of the destruction that is being caused.

So when you allow the market to decide our fate, you are actually saying that economic considerations must decide our fate. Then there is nothing to stop us from destroying our planet. It is happening very, very quickly indeed.

In my opinion, the only hope we have if we were going to keep this planet more or less habitable is to do precisely the opposite – to make sure our economic activities are ruthlessly and systematically subordinated to social, ecological and climatic considerations. I do not think we have any alternative to doing this.

I have talked about trade, not about development. What is development? If you look around the world today, at the moment what is it that the Third World has to sell? The pattern for the last 50 years is for them to sell what they have – natural resources. If you suddenly industrialise Papua New Guinea, it is not going to be able to sell computers to compete with IBM, or jets that compete with Boeing. It is going to sell what it has – its forests. You can see that development is simply selling off what you have to sell – turning it into cash.

Take New Zealand, for example. It is not usually thought of as a Third World country, but it only started developing, maybe, a century ago. Its development pattern is interesting because what they did was to simply, systematically, sell off everything they had – cash them in.

• They started by cashing in their whale population, and that went. That is called developing a resource. Once a resource is gone, it is “developed”.
• They then cashed in their seal population, and soon there were no seals left.
• So, they looked around for something else to cash in and they found they had things called Kauri Pines, wonderful trees with beautiful soft yellow wood which makes the best boats. They were cashed in, three million acres of them, and now there is only a small relic forest left.
• Finally, they had nothing left but their bare land, so they put sheep on it. Of course, the erosion in the hills is something unbelievable. Soon there will be no soil left at all.
• Then they found they had cray fish, so they cashed in their cray fish population.

So you cash in everything and sell it off. Eventually you have nothing left – you end up with a desert – that is the outcome of what, in a nutshell, is development – the creation of deserts on a massive scale. This country is becoming a desert too. I am sure you are all familiar with the writings of B. B. Vohra. In 1973 he published his document A Charter for the Land in which he showed the terrible state of your land in this country. 60 percent of your land in this country is being badly eroded and nothing is being done about it. Why has this charter for the land not been implemented? Because it is not in the short-term interests of those who determine our destiny. This is happening everywhere.

Now, development is also another process. It involves removing functions which were fulfilled at a family and community level and transferring them to the level of an institution or a corporation. This must be clear in India, where you still have communities that are almost self-sufficient, where most of the functions are fulfilled at that level.

In a normal tribal society, the society will fulfil all the functions of bringing up the children, looking after the old, and even generating its own religion. It does not need a distant bureaucracy to give it a religion. It governs itself: This is what Mahatma Gandhi saw as being the ideal, a republic of independent villages, organised into looser associations at state and provincial levels. When you develop, you must systematically take away these functions from the village for the very good reason that within the context of the village these functions are not monetised – they do not produce any GNP.

Ten years ago, a friend of mine showed me a slide show of Bhutan. I saw wonderful, huge forests, beautiful rivers, and people enjoying these most massive, colossal feasts you are ever likely to see. My friend asked me to estimate what I thought of Bhutan’s GNP. I said about 2,000 dollars or so, and he replied, “No, Zero. Bhutan has no GNP”. So that is why the country is so prosperous. All the functions are fulfilled better at the level of the family and the community. A mother can look after her baby better than any crèche. She can feed her children much better herself. After all, mother’s milk is healthier than anything Nestle can provide.

But as you develop, these functions are necessarily taken over. Nestlé feeds the children. These functions are monetised. You could double GNP overnight if you passed a new law stating that no woman can look after her own children. She can only look after her neighbour’s children for a fee. Overnight every mother will have a salary, so you could double GNP. But the consequence will be that the children will be undisciplined and extremely badly brought up. There will be a massive increase in delinquency and drug addiction as there is in America.

This systematic removal of functions has become so vast. In England and America we no longer grow our own food. People actually buy readymade food from a delicatessen or eat out at a fast food restaurant. The family, the community, no longer has a function at all, they have become redundant, they atrophy just like unused muscles. What do you do by developing in this manner? You marginalise your society. It has no functions.

If you modernise agriculture then small farmers cease to exist, and it is taken over by a few giant corporations. In America, in Illinois, 500 acre farmers are considered small scale. They cannot survive. They are all going bankrupt. I spoke to some of them, and most of them are either broke or about to go under, and the few who are still producing are going to be taken over by giant corporations farming enormous areas, using all sorts of futuristic devices – lasers, beamers, helicopters, all done by computers. It is madness; folly on a massive scale.

I reckon one of the worst problems we face and one of the worst problems India faces is the massive explosion of slums. The Delhi Planning Authority estimates that 55 percent of the people in Delhi live in slums and that it is likely to be 80 percent by the end of the century. The situation is the same in Bombay and in all the other large cities in India. You are not alone; it is going to be the same everywhere.

Within the next 15 to 20 years, 50 percent of humanity is going to be living in slums. That is reason enough for banning the whole development adventure. These are people who are marginalised, their functions have been removed. They can no longer produce their own food. The dyers, the weavers, spinners and others no longer exist. They have been pushed out by Lancashire and the whole industrialised world, including the mills of Ahmedabad. Natural resources are removed from them by corporations that have taken over their work. The corporations that have taken over do so, on a very big scale. They will use very much more energy and resource intensive methods. They cause much more pollution, need much more resources.

So, the water is taken away from the remaining village people for large water development schemes, or for providing water to the big cities. Their trees are cut down and hence the water table falls, their top soil goes, they have to leave their area which has become uninhabitable, and move to the cities. So this is the general trend, the inevitable consequence of this development process.

For me, GATT is basically a continuation and acceleration of this process. Development, of course, started in 1944 with the Bretton Woods Conference, and, of course, their first aim was to rebuild the shattered economy of Western Europe. The second aim was to expand the western economy into the Third World, to provide a market for western products, show a perpetual expansion, to exploit a source of cheap materials and cheap labour. This is explicitly stated in the GATT document. That is the purpose of the enterprise. For the industrialists behind GATT the Third World is a market and a source of cheap labour and natural resources. In recent years it has become a sink for their surplus capital.

After 1973, when everybody was worried that all the money in the world ended up with the Arabs, the money had to be recycled, quickly. So, private banks, the World Bank and the multinational banks had the task of recycling all this money into the Third World, particularly to Africa. The unbelievable destruction in Africa has largely been caused by these huge developmental schemes financed by this money which had to be pushed.

A friend of mine, Karl Ziegler, a banker, described what they were doing in Africa as “pushing money” – like a drug peddler ‘pushes drugs’. In a sense that is what the World Bank does. Today it has 22 billion dollars to invest and it is going to push it. India is its best customer. India is also one of the few countries that pays its bills. Incidentally, the World Bank does not have bad debts. You cannot NOT repay the money to the World Bank, because then you get retaliated against by absolutely everybody.

So now the World Bank does ‘debt management’, which means it lends money to people to pay their debts so that it can keep its record. This pushing of money is unbelievable. You get a beautiful scheme like the Narmada Valley Project, so the World Bank rubs its hands and is not likely to forego that chance to push their money. All day long they look out for schemes to lend money to people: such schemes are very difficult to find these days. In fact, the World Bank today actually receives more money than it invests.

So, the object of enterprise is to provide a market. You must remember this is an objective of colonialism. It has not changed. To quote the editorial in the GATT issue of The Ecologist, Cecil Rhodes, the founder of Rhodesia, said back in the 19th century:

“We must find new lands from which we can easily obtain raw materials, and at the same time exploit the cheap slave labour that is available from the natives of the colonies. The colonies will also provide a dumping ground for the surplus goods produced in our factories.”

From this point of view, the foundation of a colony is the creation of a market. That is why American businessmen are pushing this whole thing of Free Trade. The President of the United States Business Conference said that American businessmen saw a strengthening of GATT as the single best way to create an environment to expand their international success.

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