I wish the trade wars would slow down a bit so I could do more reflective thinking about big picture issues, rather than constantly monitoring twitter for the latest trade emergency. That doesn't look it will happen any time soon, but I was able to fit in a quick read of Quinn Slobodian's "Globalists: The End of Empire and the Birth of Neoliberalism." I will say that I learned a lot and it was kind of a gripping read. At times I was excited to turn the page and find out what happened next! I probably should have known more about things like the Mont Pelerin Society, but I didn't, so the story was fascinating. Slobodian's tracing of the transition of global and regional economic and political integration from past empires to the modern day international economic order is an extremely valuable exercise. The system as it exists today makes more sense when you understand where it came from.
I do have some criticisms of the book, though, and this blog review will highlight those. Nevertheless, I highly recommend the book.
My first concern went away after I understood the history of the book. When I saw the title, I thought Slobodian was trying to capitalize on the political fad of "nationalists" complaining about how "globalists" are ruining the world (or something). In my view, the power of "globalists" is vastly overstated, and the whole debate is kind of silly. Sure, we need to talk about how power should be allocated at the local, national, and global level, and have a discussion of the proper role of global governance and institutions. But the suggestion that too much power has shifted to the global level does not match the reality of the very limited power held there. And, of course, sometimes the accusations about "globalists" seem a bit more nefarious.
But then I learned that Slobodian had written the book before this debate picked up, and his choice of title was either fortunate or unfortunate, depending on how you look at it. It was fortunate in terms of books sales and attention. It was unfortunate in the sense that people might associate the book with Steve Bannon and therefore take it less seriously. A more sober title would have been "Balancing State Power with Economic Interdependence," a phrase he uses on p. 9. But even with "globalists" in the title, we should take it seriously, despite the flaws, which I will now get to.
The first flaw is the emphasis on the term neoliberal without a good explanation of what he means by it. In my view, this term is thrown around so carelessly that it's of virtually no use in the political debate. Slobodian acknowledges this criticism on p. 2, but blows right by it and keeps using the term, with only a vague explanation. It seems to me, however, that when Reagan, Bill Clinton, and Obama are all referred to as neoliberals, the term harms the debate more than it helps. It may be true that each of these presidents presided over, and to some extent supported, a market-oriented system that involves some degree of "privatization, deregulation, and liberalization." But the extent of their support varied greatly, and lumping them together does not make sense. As a historian, Slobodian may not be using the term neoliberal with the current political climate in mind, focusing instead on a group of thinkers from decades ago. But many readers are likely to associate the term with recent political discussions, and Slobodian should clarify a bit more who exactly he is referring to when he talks about neoliberals. There is a lot of space between complete socialism and a pure free market, and the vast majority of people are somewhere in that space. Are they all neoliberals? What level of support for markets justifies the use of that term? There is probably a range of views on this, but I would have liked to hear more about what Slobodian thinks. I took the tone of the book as skeptical about free markets, which is fine. People all have their biases and we should read everything -- including this blog post! -- with an eye for the political views of the author. But given the current political usage, I think it would have been helpful if he had articulated these issues more clearly.
But that's enough about word choices. One of Slobodian's main points in the book (p. 2) seems to be the following: A group of "neoliberals" had a project to design international institutions "not to liberate markets but to encase them, to inoculate capitalism against the threat of democracy, to create a framework to contain often-irrational human behavior ... ." Along the same lines, he talks about a "project of thinking in world orders ... to defend the world economy from a democracy that became global only in the twentieth century ... " (p. 4)
I feel like this argument falls within a broader one I've come across. I see a trend among some people on the left to view constitutions -- domestic ones or the international agreements that have constitution-like features -- as a plot by conservatives or free market-types to undermine majoritarian democracy. "The people" prefer more government intervention in the economy, the argument seems to go, and therefore the right can only get its way on economic policy if it undermines democracy with courts or treaties.
This view puzzles me. Are these folks not aware of how people on the left have used constitutions to thwart the will of the majority in order to promote progressive causes? Certainly we should debate the majoritarian vs. countermajoritarian approach to governing, but this isn't some right wing plot. It can and has been used by both sides.
To illustrate this in the international arena, let's move away from the "economic constitutions" that are the focus of this book. Imagine a treaty under which states agree not to fight wars or produce nuclear weapons. But then the majority of people in a particular country wants to fight a war or have a nuclear weapon. Could you say that an international treaty or institution that was created to prevent war and nuclear weapons was intended to "inoculate international relations against the threat of democracy"? I guess you could, but it would be a strange thing to say.
Now imagine it's not a majority that wants war and nuclear weapons, but just a group of powerful defense contractors. Is the international treaty/institution really threatening democracy? That's the logical implication of Slobodian's suggestion: Because the WTO acts as a check against special interests, it "encases" and constrains democracy. In some very limited sense, I suppose that it does. But putting that fact in its broader context, and noting the limited nature of the constraints, makes it a lot less compelling and an odd way to characterize things. If someone is pro-tariff and pro-protectionism, I can understand why they would use this language as a tool of persuasive political argument. But if you are aiming to be objective about things, pretending to be concerned about democracy in this context seems excessive to me. (Somehow I don't expect a similar book from folks on the left about how international climate change agreements are "encasing" environmental policy "against the threat of democracy" in situations when domestic majorities do not vote for policies to fight climate change.)
And finally on the point about "encasing democracy," it's worth noting that many WTO Members are not democracies in a meaningful sense, and in those circumstances at least democracy is not being encased. (If authoritarianism is being encased, is that a reason for critics coming from Slobodian's perspective to support the WTO?) And even in the most democratic of democracies, sometimes the decision-making process is influenced by interest groups who themselves are trying to thwart the will of the majority. If the WTO can support the majority against those interest groups, isn't that a good thing? (Thanks to Sarah Bauerle Danzman for these last points).
Let me turn now to the GATT/WTO issues. My main criticism of the book is that while it may be very relevant to a number of policy areas, with regard to the WTO it gets many things wrong and undermines its overall persuasiveness. Slobodian tried really hard to fit the WTO into his narrative, and it just doesn't work.
Slobodian focuses on three GATT Secretariat folks and their role in adapting the neoliberal thinking of people such as Hayek and applying it to the creation of the WTO: Jan Tumlir, Frieder Roessler, and Ernst-Ulrich Petersmann. I didn't know Tumlir, but as I was entering the field Roessler and Petersmann were two names that I had heard many times. I idolized both of them, and I can recall being in awe when meeting them for the first time. It was amazing to me that I was able to get to know them and have normal conversations where I was no longer nervous about talking to such eminent people!
In spite of the esteem in which I hold them, I'm pretty sure Roessler and Petersmann would both agree that any discussion of the creation of the WTO should look far beyond them and Tumlir (Roessler and Petersmann reviewed Slobodian's book here and here). Yes, they each played an important role. But as we know, the WTO is a member-driven organization. When thinking about how the system came to be, we need to look first at the governments themselves, and the wide range of people involved. The modern trading system was created through the leadership of people such as Cordell Hull in the 1930s and 1940s, and credit should also be given to the long list of names that show up in the GATT negotiating history documents. Similarly, with the WTO, there are many government officials who deserve credit for drafting the overall framework and specific details of the agreement. Yes, Tumlir, Roessler, and Petersmann played a role, but as I am sure they would agree, elevating those three into a special category that is responsible for the WTO is a wild distortion of how we got here. There are probably hundreds, if not thousands, of important voices who have had input over the years, and the rules of the WTO are an amalgam of all of their efforts.
The result is a WTO that involves a modest amount of liberalization (you can still use tariffs, and governments do so quite a bit!), and perhaps a tiny amount of deregulation and privatization (although mostly indirectly). The best description I've heard of the main purpose of the WTO is "mutually agreed constraints on protectionism." When you put it that way, accusations about "globalists" seem over the top. (Especially when you consider the budget and number of employees at the WTO.)
Slobodian's description of the GATT/WTO is also filled with errors and omissions. For example, Slobodian seems to really want the WTO to be seen as the global equivalent of the EU. He says that the "[t]he template adopted by the GATT reformers was the European model of multilateral governance and the 'economic constitution.'" For "Tumlir, Petersmann, and others," he says, "the goal was to scale up the 'European idea' of neoliberal constitutionalism from the continent to the world economy, making the WTO into a 'trade constitution' in which the Dispute Settlement Body and the Appellate Body would act as equivalents to the European Court of Justice." (pp. 256-257) Was that really their goal? I don't know, but if so, they failed miserably! The DSB, panels, and the Appellate Body have nothing close to the kind of power that the ECJ has.
On this same point, Slobodian appears to misunderstand a key distinction between EU law and WTO law. He says that what makes EU law special is that it is "directly effective" in nation-states. That means, he says, "that individual citizens ... could appeal to European law within their domestic courts." While he acknowledges that the WTO "was not exactly as the reformers envisioned," it achieved some of their goals "by allowing some directly effective rights (in the case of intellectual property) and moving from enforcing the 'at-the-border" issues of GATT to 'beyond-the-border' issues including services, intellectual property rights, and labor, environmental and health standards." (p. 257) Later he says, the EEC and WTO "sought to create legitimacy through offering direct private rights to citizens beyond the nation." (p. 266)
However, as we all know, there is no "direct effect" for WTO rules in general, or intellectual property rules in particular. I suspect what he means is that the TRIPS Agreement has positive rather than negative obligations, but that's a completely different -- and much less significant -- thing. It certainly would be significant if people could make claims based on WTO legal obligations in domestic courts. But they can't (a couple historical anomalies aside).
In addition, he makes the error common among many trade critics of thinking that GATT only dealt with border measures, which obviously is not the case. Even the League of Nations economic discussions and the 1930s-era reciprocal trade agreements spent a fair amount of time sorting out how to deal with internal measures.
Summing up, there is a way to describe how the power of the GATT expanded a bit with the creation of the WTO, but Slobodian's efforts here are misleading and overstate the case considerably.
Let me close with a few other points. In Chapter 3, he makes reference to the views of neoliberals on the prospect of "world government." He suggests that at one point, they were for a "supranational government." (pp. 91, 95) But I think it's important here to distinguish between "government" and "governance." The word "government" sounds like we would be taking domestic political systems and replicating them at the global level (parliament, presidents, etc.). But there aren't many people who would go anywhere near this far. Instead, what most people have in mind is a very loose set of institutions and rules that provide a limited set of constraints on national governments, who will retain most of the governing power.
He also brings up "economic nationalism" as the principle that neoliberals saw as the enemy, explaining that the term "is often aimed by Northern verbal proponents of free trade at Global South countries that are seen, fairly or unfairly, as only recalcitrant participants in the global economy." (p. 93) I suppose the term is used that way on occasion. But I would say that it is more often used -- and this is how I normally use it -- to refer to interest groups and politicians in industrialized countries who mistakenly believe they can make their country wealthier by imposing protectionist trade barriers to give an advantage to domestic industries.
And he almost completely misses what I think is one of the biggest points about the construction of the trading system: The role of business and other lobbyists. At one point he refers vaguely to "[t]he focus of neoliberals and big business." But this distinction needs to be fleshed out. How much of the existing system is just business lobbying as opposed to someone's principled beliefs? Taking intellectual property as an example, it's true that there are people who have tried to play up intellectual property protection as a "right" that needs to be protected. But arguably, that's an after the fact justification. These obligations exist at the WTO because powerful business groups pushed for them. Talking about the value of these protections as "rights" is a way to offer an ostensibly coherent explanation for the existing regime, but it ignores the true reason for their inclusion.
Overall, it seems to me that Slobodian was trying too hard to fit the WTO into the broader narrative. He may well be right about much of his argument as it relates to the EU or to international investment law. (I would like to hear the counter-arguments, though. With regard to international investment law, I'm a skeptic on the whole enterprise, but nevertheless I'm not sure those who set it up were "encasing democracy," as their main target was undemocratic countries whose arbitrary actions undermine investment flows.) But as the book relates to the WTO, it relies on some flimsy and selectively chosen evidence. Slobodian would have benefited greatly from talking to people with greater knowledge of the WTO. (People such as Roessler and Petersmann, for example!)
It is possible that we are at a crossroads with the trading system, although I don't really think so and my guess is that most of the apparent political difficulties of the moment are being overstated. But if there is a choice as to which direction we should be going, I'll be interested to see what left wing critics choose. There is a group on the left that seems to really want to dislike trade liberalization and trade agreements. And there are some issues (e.g., IP, ISDS) where I think they have a point, and I've said so publicly many times. But do they really want to support an anti-"globalist"/economic nationalist alternative? There's a lot of baggage that comes with that. I would have thought that self-proclaimed "progressives" would be looking for ways to promote a different version of international economic integration, rather than completely dismantle the system, and some of them are doing so. As for others who may feel inclined to reject trade liberalization and trade agreements, I would just encourage them to take a more nuanced look at the existing trading system before they decide what they think of it.
