USA: The fallacy of the free market (1999)

From the February 1999 issue of the Socialist Standard and how appropriate the theme of the article is today when we are confronted by Donald Trump's Americ First protectionism

The illusion that is peddled by sharp-suited government spokesmen on television about the benefits of the free market system is just that—an illusion. Every government in the world is in favour of free trade when their owning class is in a favourable position to compete and in favour of protectionism when some competitor from another country has the drop on them.

The British toadies of capitalism are bad enough but, in the USA the hypocritical posturing of the worshippers of the market system is truly nauseating. As the foremost industrial and commercial power in the world, the USA is loud in its praise of free trade as the cure-all for social problems. In practice, though, it often favours the strictest protectionism and some recent examples from the Press starkly prove this.

The notion that it is the soundest economic wisdom to “buy in the cheapest market” may be all very well for American academic economists to expound in the ivory towers of university and business schools, but in the USA when they find that their home produced commodities are being undercut in price the capitalists appeal to their government to protect US products from “unfair” competition. They call any competition at which they are losing “dumping”:

“Anti-dumping duties are a frequent recourse of the US government when faced with a trade problem. As the US trade deficit has mounted, pressure for duties has mounted, pressure for duties has increased rapidly and 36 petitions for anti-dumping have been received by the government so far in 1998, compared with 16 for the whole of last year. Most concerned imports of steel products . . . Ominously, William Daly, the US Commerce Secretary, has invited US manufacturers to make his anti-dumping staff ‘the busiest people in town’ . . . .” (Independent on Sunday, 22 November.)

The US exporters of Chiquita bananas, produced in Central America, used their political muscle to combat the European Union’s favourable trade terms for Caribbean bananas, and got the US government to slap 100 percent duties on such products as sheep’s cheese from the EU to the US. The American Financial Group, who own Chiquita, have recently given $1 million to Democratic and Republican politicians to fight the Caribbean preference which the they claim has lost Chiquita $1,000 million in earnings since the EC ruling of 1983 in favour of Caribbean bananas.

Behind the threats and counter-threats of a trade war the US and the EU are playing for higher stakes than are represented by bananas and sheep’s cheese:

“Andrew Hughes Hallett, professor of economics at Strathclyde University, believes we need to peel back the skin on this row to understand it. ‘I suspect it isn’t about bananas at all and it isn’t about protecting poor farmers either in St. Lucia or Honduras. It’s about political pressure in Washington and Brussels . . . In the EU this dispute is tied up with the power of the agricultural lobby. It’s like a bargaining chip. France is prepared to support Britain which is keen to get a favourable deal for its former colonies, so Britain will be more supportive of France on other issues affecting French farmers’.” (The Herald, 24 December.)

All over the world the US government pursues a policy of free trade or protectionism, whichever is most beneficial to US economic interests, but it is from New Zealand that we learn of the naked power of the US being used to force its products down the throats of unsuspecting consumers.

As the world’s biggest producer of genetically modified food, the US does everything in its power to protect the global ambitions of the agri-chemical firm Monsanto. It is increasingly concerned about European reluctance to accept genetically modified foodstuffs without proper labelling and testing.

In reply to criticisms of the British government that it was being pressured to accept US-produced genetically modified foodstuff, Tony Blair hid behind the cloak of secrecy when he replied:

“By convention it is not the practice of governments to make information on such meetings, or their contents, publicly available.”

In New Zealand no such convention applies and it was revealed in cabinet minutes that economic pressure was being applied to the New Zealand government to accept genetically modified food:

“The Cabinet Minutes, dated 19 February 1998, state: ‘The United States, and Canada to a lesser extent, are concerned in principle about the kind of approach advocated by Anzfa [part of the Australia New Zealand Food Standards Council], and the demonstration effect this may have on others, including the European Union. The United States have told us that such an approach could impact negatively on the bilateral trade relationship and potentially end any chance of a New Zealand-United States Free Trade Agreement.'” (Independent on Sunday, 22 November.)

So there you have it. Blatant economic threats, undisguised self-interest, and no recourse to such fine rhetoric, so beloved by US politicians, as the “free world”, or hypocritical cant about “democracy and the freedom of choice”.

Capitalism is a horrible society—let’s get rid of it.

The late Richard Donnelly

Glasgow Branch