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The World Trade Organization: A Theological Critique

by John B. Cobb, Jr.

John B. Cobb, Jr., Ph.D. is Professor of Theology Emeritus at the Claremont School of Theology, Claremont, California, and Co-Director of the Center for Process Studies there. His many books currently in print include: Reclaiming the Church (1997); with Herman Daly, For the Common Good; Becoming a Thinking Christian (1993); Sustainability (1992); Can Christ Become Good News Again? (1991); ed. with Christopher Ives, The Emptying God: a Buddhist-Jewish-Christian Conversation (1990); with Charles Birch, The Liberation of Life; and with David Griffin, Process Theology: An Introductory Exposition (1977). He is a retired minister in the United Methodist Church. His email address is cobbj@cgu.edu.. This was written shortly before the Seattle Conference of the World Trade Organization, 2,000. Published by permission of the author


I. World Government At Last?

Do you favor world government? If so, you should look closely at the World Trade Organization. It is the only institution that has the power to overturn the laws of governments all over the world. It is the closest thing we now have to a world government.

As a nation we are very resistant to allowing any outsider to have power over us. Many Americans view the United Nations as a threat to our sovereignty even though, in fact, it has functioned more as an instrument of United States' foreign policy than as a challenge to our power. We thumb our nose at the World Court when it tries to exert some authority in relation to us. Yet very quietly, with little protest, we have given authority over our laws to the WTO.

This remarkable phenomenon reflects the global dominance of economic thinking and the dominance of the global market. The global market is a function of free trade among nations. Our leaders view this free trade as so desirable and so important that for its sake they are willing to sacrifice national sovereignty.

II. The Case for Free Trade

Clearly such a level of commitment to free trade calls us to reflect about what this is. Is it so desirable and important that it warrants our sacrifice of sovereignty for its sake? Do we as Christians have anything to say about this?

Free trade is trade with which governments do not interfere. That is, governments do not tax or restrict the importation of goods or control exports. All the decisions are made by economic actors.

The opposite of free trade is usually depicted as protectionism. It is pointed out that governments sometimes protect particular businesses from international competition. Often the question of who is to be protected expresses the political power of particular industries. Their protection keeps the prices of their products higher than they would otherwise be and thus adds to the costs of consumers, including other businesses. Economists point out that protection always hurts consumers and, when it favors some businesses over others, distorts the working of a free market.

Economic theory gives strong support to free trade. This theory systematically shows that the market, when left to itself, provides the best signals to manufacturers as to what to produce. It leads to the lowest prices at which these goods can be sold with a sufficient return to the manufacturer to warrant continued manufacturing. The competition it engenders constantly improves the products. The free market thus increases the quality and availability of desired goods and thus raises the general standard of living.

Economic theory also shows that a larger market allows for greater economies of scale without reducing competition. Hence, a national market leads to faster economic growth than local markets. By the same logic, a global market leads to the most rapid growth. In a world in which so many needs remain unmet, an organization of the economy that stimulates the greatest possible growth should receive strong support.

The logic of this argument favors the claim that free trade is so desirable and so important that national policies should support it. They do so most effectively when they renounce the right of national governments to interfere with trade. Each nation benefits from such renunciation only as other nations also do so. Some agency is needed to enforce this renunciation of sovereignty. The WTO is that agency.

As Christians we agree that there are many urgent unmet needs for goods and services in our world. At least a billion people live in dire poverty. Many others live in degrading conditions that call for collective effort to improve the general standard of living. We Christians have never supported the idea of absolute national sovereignty. If some sacrifice of such sovereignty is needed for the promotion free trade, and if free trae is the means of meeting the genuine and critical needs of the poor, then we should certainly celebrate the WTO as its promoter and enforcer.

III. A Christian Critique

There are many Christians who have accepted the argument for free trade and celebrate the new globalism. It seems to fit with the vision of interdependence among all people that some have long upheld. It seems to replace the narrow goal of national good with the inclusive human good. If one points out the costs to Americans of this new globalism, other Christians respond that we should be willing to pay this price so that the whole world may prosper.

Other Christians who observe the actual consequences of the global economy are much less enthusiastic. They notice that the economic growth that the global economy achieves does not go to the poor. Richer nations are becoming richer, and within each nation richer people are becoming richer. But on the whole, the poor in each nation are barely holding their own, and in many cases they are becoming poorer. The gap between rich and poor is growing rapidly.

Supporters of free trade cannot deny these facts. But they regard them as less important than they seem to us. I will explain two lines of argument and note my objections.

l. In economics there is a principle called Pareto Optimality. According to this principle, the goal of policy is to improve the lot of some without harming others. This principle does not support worsening the lot of the poor, but as long as their condition remains unchanged as measured by average income, believers in this principle will celebrate the global economic growth, since some are, without question, growing richer.

This principle expresses the desire of economists not to be swayed by values other than the quantitive increase of economic production. Arguments based on such values they call "theology." They are correct. Concerns for justice and especially for the poor and oppressed are deeply Biblical and thus, also, theological.

As Christians we value the health of communities, including national communities. One measure of health is the extent to which the whole community is concerned that the basic needs of all are met. Another measure is the lack of extreme difference in economic condition between the richer and the poorer. Economic theory does not interest itself in such matters, but Christian theology must. If free trade makes the rich richer while not benefiting the poor, economic theory may continue to support it, but Christian theology cannot.

2. Many supporters of free trade do care about the poor. They argue that the widening gap between rich and poor is a phase of economic growth that does not last. In time, the greater wealth of the society as a whole trickles down to the poor.

This is an important argument. It depicts the present suffering of the world's poor as temporary. It asks for patience, so that the market can work its magic and there can be a great future for humanity as a whole. It appeals especially to the poor to tighten their belts so that their children and grandchildren will enjoy a prosperity that is far beyond their present reach. The question is, will this method of dealing with the problem of poverty work?

The strength of the argument comes from the histories of the now industrialized nations. Most of them went through a period in which the conditions of the poor in general and workers in particular were miserable. Today they are far better off, taking for granted such luxuries as motor transportation, refrigerators, and television sets, unimaginable to their ancestors. If the global economy will deliver to all the benefits it has provided in the First World, billions of people in the Third World are willing to make sacrifices now so that this dream will come true.

That this will work on a global basis is a matter of faith, not evidence. That does not make it alien to Christians. But since faith here is not placed in God but in the market, Christians may suspect that idolatry is at work. Is this perhaps a call for the world to serve Mammon or wealth rather than God?

In any case, there are several reasons for being skeptical. In all the nations in which workers eventually shared in the benefits of economic growth, labor unions and governments played a strong hand. The global economy drastically weakens labor unions and greatly reduces the role of governments. The only agency that has global power with regard to the economy is the WTO, whose mission is to promote free trade, not to seek the well-being of the poor.

In the free market the only other force that can raise wages is a shortage of labor. Currently it is very difficult to foresee the time when labor will be short globally. This is not only because of the enormous unemployment and underemployment around the world but also because technology works for the reduction of the need for workers. It seems likely that for several generations, indeed, for the foreseeable future, the global economy will continue the current "race to the bottom," moving production to those places where labor is cheapest and most docile. International competition for capital investment does not support sharing the benefits of increased production with workers. The evidence of what is now happening does not support the faith that the poor will benefit.

We must ask, furthermore, about the Earth. Free trade and the resultant global economy are celebrated because they speed the growth of production. But is that growth itself to be celebrated? It means the more rapid use of fossil fuels, the more rapid exploitation of forests, soils, and oceans, the greater pollution of the atmosphere. If as many of us believe, the present pressure on our natural environment is unsustainable, does it make sense to undertake to solve our problems by increasing production manyfold?

The answer of those who call for this vast increase of economic activity is technology. Technology will enable us to produce more with less and in ways that are less polluting. Faith in the market must be combined with faith in technology.

The argument must be taken seriously. Vast reductions in waste are possible for us with current technology. It is difficult to place a limit on what future technological developments may accomplish. Perhaps in some abstractly possible world there could be almost unlimited economic growth without further damage to the environment.

But in our real world the actual forms of economic growth that are taking place continue to be destructive. Fisheries are crashing, deforestation is causing a whole complex of problems, the weather is becoming less favorable because of global warming, fresh water is becoming scarce, species are disappering, arable land is deteriorating. The litany goes on and on. Until technology and political will have reversed these trends, we should be suspicious of policies designed simply to speed growth. Reducing the power of governments to deal with environmental issues by giving the WTO the power to overrule environmental legislation thought to restrain free trade hardly seems to be an expression of rationality.

IV. The Role of Power

Christians are called to be realists about power. The discussion above has abstracted from this. I have tried to present the arguments for the present system fairly and then my arguments against it. But in the real world, rational arguments by themselves are rarely decisive.

What has been occurring, especially since 1980, is a massive transfer of power from the political order to the economic one. We may ask why governments have systematically disempowered themselves. The answer is in part that they are impressed by the cogency of economic arguments and are genuinely concerned for the well being of all people. But the answer is also that decision-makers are beholden to those who finance their campaigns. The political moves made in the past two decades have been prompted by the interests of transnational corporations and those who profit from their gains. TNCs have systematically increased their power at the expense of governments.

Actually, this is what free trade is all about. It is the freedom of TNCs to move capital and goods freely around the world. As trade has become freer, these corporations have become larger and larger. They have sought systematically to reduce the danger that governments, which now come to them, hat in hand, seeking their investments, might later apply to them laws that are unfavorable to their operations. Present arrangements, including the WTO, make this much less likely.

Through the governments they so largely control TNCs are pressing for the Multilateral Agreement on Investments that will guarantee that the laws of a nation cannot be enforced on an outside investor against its will. Although there has been condiderable resistance to this agreement in first world countries, its provisions are likely to be forced on Third World countries through Structural Adjustment Policies. For the sake of free trade, neo-colonialism will become complete. TNCs will have fully replaced imperial powers as the colonial controllers and exploiters.

On the basic issue of where power is to be located, Christians should be able to speak clearly. The economic order should be subordinated to the political one. The present reversal is unacceptable. The economic order, for all its importance, aims at a narrow goal, that of increasing and improving goods and services. The political order includes this value, but it adds others such as the general well-being of the body politic, fairness, and the well-being also of the environmnent in which human life is lived. When pursuit of narrowly econmic goals conflicts with the realization of broader human ones, the political order needs to be able to subordinate the former to the latter.

One may object that governments are so corrupt that they do not in fact pursue the wider goals for which they are intended. This certainly can happen. But even when corporations function with no corruption at all, they serve a much smaller constituency, namely, their stockholders. Despite all the problems, governments are more subject to influence by the real needs of ordinary citizens than are corporations. The task is not only to restore power over corportions to political agencies but also to make those agencies work for the common good.

If government is to be primary, there are two directions in which change might go. The best system would probably to combine elements of both. One direction is the restoration of national economies under the control of national governments. These would, of course, trade with one another as they always have. But this trade would be restricted and promoted as governments feel is for the common good of their people.

The second possibility would be to accept the global market and seek a global government to direct it to the common good of all. The United Nations could become such a government since, in principle and to some extent in fact, it represents the peoples of the world in terms of their multiple interests and values. The WTO is exactly the wrong kind of organization to play such a role, since it is designed to be insulated from public opinion so as to single-mindedly pursue the single goal of free trade.

 

 

 

THEOLOGY AND ECONOMICS

John B. Cobb, Jr.

That Christians are concerned about the poor is taken for granted. Anyone influenced by the Bible must share the concern. Today we can bring together evangelical and liberal Protestants along with Roman Catholics on issues dealing with poverty. As long as the focus is on matters of food and clothing and shelter, no serious differences arise among us.

It is another matter when we consider the causes of poverty. Here analyses differ along with proposals for reform. Some Christians have strongly favored reducing the role of government and putting pressure on the recipients of aid to take more responsibility for themselves. Other Christians have favored more generous government support for the poor. Still others want to change the system that generates poverty.

In the recent past the major proposal for such change was to shift from capitalism to socialism, from the free market to bureaucratic control. After long decades of experimentation with the latter, today it has few supporters. Unfortunately, the lack of interest in this alternative to the present system has led to a general silence about alternatives in general. The present system is defended chiefly through the rejection of socialism.

Christians know that at times the best that is possible is the lesser of two evils. But we should come to this conclusion only after we consider all the options. In this instance it may not be the case that the acceptance of the free market as the means of pricing goods and services entails all the other features of global capitalism. Indeed, it is not, and the failure of Christians to think seriously about the options is an abrogation of our responsibility to the poor.

A parallel point can be made with respect to ecological issues. Today virtually all branches of Christianity recognize that we have some responsibility to maintain "the integrity of creation." When confronted with dying lakes and rivers, smog, eroding soils, disappearing forests, global warming, and acid rain, one can usually get a consensus that as Christians we should support actions that would restore the environment.

The problem arises when we ask about how to make these changes. Do we want government to spend billions of our tax dollars to clear up the mess? Do we want more stringent government controls on industry? Do we want more pollution taxes? Or do we need to ask more fundamental questions about an economic system that, despite improvements here and there, continues to degrade the planet? Are there changes that can be made in the system that are in keeping with a market economy?

We generally avoid discussing such economic issues in the church because we know that they are divisive. Experts in the field do not agree, we say, and we are in no position to enter the technical discussion. We express our concerns and leave it to them to find the way to meet them.

It may not be necessary to stay at such a distance from these important decisions. It may be that many Christians can agree on some very basic principles. If we take these principles seriously, they would direct us to call for significant changes in our actual economy. I propose that we as Christians have the responsibility to think these matters through and do what we can to effect these changes in our society.

First, society should be organized to promote the creaturely good, inclusively conceived, rather than the increase of wealth. Some such increase may contribute to the human good without harming other creatures, but every policy designed to increase wealth should be tested against wider criteria. We cannot serve both God and wealth, and as Christians we must choose God.

Second, the wider criteria to be considered should include measuring economic policies by their benefit to the poor and to the other creatures with which we share the Earth. It cannot be taken for granted that the increase of total wealth works in this direction. On the contrary, the strong evidence against this assumption must be taken seriously.

Third, this means that economic institutions should operate within the boundaries, and hence the control, of political ones. This was assumed by most people until quite recent times, but around 1980 a series of policies were put in place on a global basis, the purpose of which was to reduce the capacity of political bodies to control economic actors. The chief function of governments today is understood to be the promotion of the global market. This third principle, therefore, calls for reversal of some recent directions.

Fourth, governments should be responsive to the wider public rather than chiefly to those who control wealth and aim to increase their wealth. This means that the role of money in the political process must be reduced. Currently, something like 95% of elections are won by the candidate who spends the most money. Commitments required to secure this money play a large role in the voting beghavior of those who are supposed to represent the people. Reducing the ability of the wealthy to control political policies is a goal on which Christians should be able to agree.

These principles imply that economic theory should play a role subordinate to political theory. The latter in principle aims at wider values than economic theory. How such theory is formulated is important to Christians, but this essay is focused on economic theory and the consequences of our having transferred our allegiance from political theory to economic theory.

First, we must ask why we have done so. Why are economists now considered the major experts to be followed in the formation of policy? One part of the answer is that in a pluralistic society we do not have many shared values by which to shape the body politic, whereas we are able to agree that economic improvements are desirable. We assume that economists are those who know how to effect such improvements. Hence we reverse the proper relation of the political to the economic spheres, regarding the function of government to promote policies advocated by economists without bringing wider values into view.

This transfer of authority is not to be blamed on economists. It is an act of the body politic.

A second part of the answer ties back to the fourth point above. It is a corrupted body politic that now abdicates its responsbility to bring broader political values such as justice into play. When wealth determines the outcome of elections, elected officials will do the bidding of the wealthy.

Much of the corruption by money leads to favoring the interests of particular businesses. This is opposed by economists, who want a level playing field for all economic actors. But in general the policies advocated by economists are beneficial for the rich as a class. This is because economics is, to a large extent, the science of increasing market activity, and increased market activity is favorable to those who are best positioned to operate in the market. In the market money makes money much more rapidly than does labor.

Because economic thinking dominates policy today, it is important to view it critically. It is directed, of course, to economic ends, and no economist will assert that economic ends are the only ones important to humanity. Some will assert, however, that other values are better attained when economic resources are larger, so that the pursuit of economic goals can only support the attainment of others. Since society as a whole has allowed this view to dominate, we must examine more carefully what the economic goals are.

They are often formulated in terms of increasing Gross Domestic Product. The assumption is that when this rises, people in general are economically better off. When they are better off, they can pursue all their values more effectively. Hence, policies geared to increasing GDP are desirable.

That the GDP is not a measure of economic wellbeing is acknowledged by all economists. Much better, if still very imperfect, measures can be devised. I have contributed to the development of an Index of Sustainable Economic Welfare that is one such improved measure. Unfortunately, economists on the whole show little interest in any such project. They continue to advocate policies that increase GDP even when they do not increase economic welfare as measured by the ISEW.

These policies include reducing governmental restrictions on the market within its political boundaries and also reducing the role of such boundaries. They move us, therefore, toward the global capitalism that is now the dominant force in the world. Insisting on good wages for workers or pollution reduction or workplace safety inhibits market growth. Global competition destroys industries in places that restrict economic actors in these ways. In this system, the rich grow richer while the poor grow poorer.

Defenders of global capitalism argue that in time the impoverishment of the poor will end and the great abundance generated by the system will benefit all. Attempts to restrict the freedom of capital today will postpone this happy outcome. In any case, they argue, globalism is a reality that cannot be undone, so we must make the best of it.

What is a Christian response? The most obvious is concern for the suffering of the poor which grows ever more massive. Certainly, Christians must do what we can to alleviate this misery on a peson-by-person basis. The more diffcult question is whether we can critique the theory that supports the actions that generate this misery. The answer is that we can.

Economic theory developed at the height of the Enlightenment and reflects both the best and the worst of that fateful movement. The best was a freedom to see things and name things as they are, unfettered by traditional expectations. The worst was a tendency to abstraction and reductionism.

What freedom from tradition enabled economists to see was that narrow self-interest can have positive results in the market place. When people act "rationally" in the exchange of goods and services, that is, when they try to get the most they can for the least payment in money or service, market activity increases and society as a whole benefits from the increased availability of desired goods and services.

From this astute observation, economists derived the notion of Homo economicus, that is, human beings in their economic role, as self-interested, self-contained, individuals. This is a fundamental starting point for economic theory and for all the practice that is informed by that theory. From this it follows that, for economic thought, human relations and the community constituted by them are of no importance.

This ignoring of community did not apply to the total thought of the early economists. Adam Smith believed that the community ethos would insure that people would not cheat one another in the market place. Ricardo supposed that national feeling would insure that capitalists invested in their own countries. But these judgments did not enter into the developing theory, and they are rarely found among contemporary economists.

For Christians the understanding of the human being is a theological matter. Of course, theology is to be informed by common sense and by empirical study. Of course, also, theology has changed from time to time.

When Adam Smith wrote his classical treatise in Scotland, Scotch Calivinists also viewed human beings quite individualistically. God's election was of individuals. Also individuals are much inclined to act in narrowly self-interested ways. This expressed our sinfulness. Only by grace could we be otherwise.

But these theological tendencies in Enlightenment Protestantism are a very one-sided expression of Christian anthropology. For the Bible and most of the tradition, this individual personhood is important, but it is understood in the context of community. We are members one of another. This Christian anthropology is often formulated as person-in-community.

Furthermore, Christian anthropology does not support the abstraction of one aspect of our being from the whole. In every aspect of our lives our actions should be those of persons-in-community. Even in our business dealings we violate our true natures if we subordinate everything else to profit-seeking. It is wrong to structure the eonomic order so as to encourage, almost require, this subordination.

This may seem a minor, technical matter, but it is not. Whereas all traditional societies have given central place to the community, both capitalism and communism have been systematically destructive of community. In the United States, the thousands of deserted rural towns resulting from the replacement of family farming by agribusiness are one witness to this destruction. The collapse of urban communities caused by factory-closings is another.

It may well be argued that traditional societies gave far too little room for the development of individual personality and its free expression. But that does not justify the destruction of community. As Tillich noted, individuality and community require each other. A rich community is composed of persons with considerable individuality. Such individuality cannot develop except through a pattern of relationships in community.

The economic theory based on Homo economicus has no place in for any notion of fairness or justice. So far as this theory is concerned the good society is the one with the largest exchange of goods and services. It does not matter how income and wealth are distributed. It is just as good for the rich to get richer as for the desparately poor to receive more of what they urgently need. Any policy is good which increases the wealth of some as long as it does not impoverish others. Since policies designed to give greater freedom to the market have this effect, they are favored. The beneficiaries are primarily the rich.

A model based on person-in-community would support different policies. Community suffers when the gap between rich and poor widens. Within community a primary concern is to meet the basic needs of all. This is far more important for community than the quantity of gross product.

In the eighteenth century economic theory recognized three factors of production: labor, capital, and land. Land referred primarily farmland, but it was the only way in which the physical world came into view. Gradually it disappeared. Land became a commodity or a form of capital. Its distinctive character as an aspect of nature ceased to function in economic theory.

Protestant theology in the nineteenth century similarly gave little or no attention to the natural world. It focused on human history in contrast to nature, or on the individual person in relation to God. Protestants are in poor position criticize economists for their neglect of nature.

But in recent decades, confronted by the degradation of our natural environment, Protestants have repented. We have recognized that the natural world is God's creation and deserves our respect. We deeply regret that our neglect has led to our unsustainable exploitation of God's world. From this new perspective, which is a recovery of the Biblical one, we are in position to challenge economists to engage in a similar repentance. Thus far it has occurred only at the fringes. For the dominant economic theory, the contributions of nature can be replaced by capital. Unfortunately, as long as economic theory views the natural world only in terms of its contribution to the market, Christian repentance will do little to end policies that are systematically destructive.

Christians can work to curb the anti-community, anti-nature effects of current economic activity at two levels. First, we can criticize the theory that supports it, encouraging those economists who are trying to reform it. Second, we can seek to restore the dominance of the political order over the economic one, so that other community values besides overall wealth can set the ground-rules for economic activity. These are large tasks. They are not impossible ones.


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