Colleen Slebzak

Anthropological Review

The Hidden Costs of Free-Trade

Free trade in the world market was once consistent with the ideals of sovereignty and democracy- an ideally democratic principle. Free trade was intended as a system of international trade and commerce, that would prosper all nations and the citizens of those nations (regardless of race, religion, culture, education, disability, etc.). The system once personified an ideal form of utilitarianism, a principle that holds, “that the correct action to perform is the one that promotes the best consequences for all, that is, the action that produces the greatest amount of happiness for everyone… pleasure in absence of pain,” according to John Stewart Mill, an iconic moral philosopher of the nineteenth century (Utilitarianism, ch. 2). If used democratically, free trade could bring industrialization to the citizens of a nation; which in turn, could be a positive engine for economic growth. Free trade could then provide jobs for citizens, provide household, local, regional and national financial security, and help citizens to achieve food security within that nation (rather than relying on outside food aid that rarely reaches those in need).
Adam Smith was a prominent political economist and moral philosopher who believed that free trade could be a truly democratic principle that could benefit all members of society. Smith had written extensively on the subject of free trade in The Wealth of Nations, where he said “the natural effort of every individual to better his own condition…is so powerful, that it is alone, and without any assistance, not only capable of carrying on the society to wealth and prosperity, but of surmounting a hundred impertinent obstructions with which the folly of human laws too often encumbers its operations” (43). Smith believed in the power of individuals to create real change in their own situation; thus, individuals have the potential to create their own economic growth for their nation if given the opportunity.
Over time, free trade in the world market became regulated by the General Agreements of Tariffs and Trade (GATT of 1947); which, was originally designed to regulate good/fair trading between countries and lower trade barriers. Today, free trade is also regulated by the World Trade Organization (WTO), the primary international body that defines the rules of international trade. “WTO [was] founded in 1995 after the eight year Uruguay round of talks, [and] it succeeded the General Agreement on Tariffs and Trade (GATT) …The scope of the WTO is greater…including services, agriculture, and intellectual property, not just trade in goods”, according to Anup Shah (The WTO and Free Trade). According to Shah, The main principles of the WTO included the following:
Nondiscrimination: national treatment implies both foreign and national companies are treated the same, and it is unfair to favor domestic companies over foreign ones. All nations should be treated equally in terms of trade. Any trade concessions etc. offered to a nation must be offered to others.
Reciprocity: nations try to provide similar concessions for each other.
Transparency: negotiations and processes must be fair and open with rules equal for all.
Special and differential treatment: a recognition that developing countries may require positive discrimination because of the history of equal trade (Shah, The WTO and Free Trade).

Now, free trade is not consistent with the ideals of sovereignty and democracy. Free trade in its current form looks more like the ideals of Act utilitarianism, principles that hold that an action is right if it maximizes utility. This principal usually holds little regard towards human rights (as they are irrelevant in terms of progress according to Karl Marx and Friedrich Engel).# In Anthropological Theory: An Introductory History, by R. Jon McGee and Richard L. Warms, the authors said, “Marx had read Smith’s wealth of Nations in 1843, and was deeply influenced by his work. Smith saw division of labor as leading to the achievement of the greatest good for the greatest number, Marx and Friedrich Engel focused on the conflict and oppression it generates. For them, these conflicts were critical to social development” (62).
The GATT extends beyond other trade agreements now, preventing governments from following their own national development strategies. In the early 1990s, the WTO and the North American Free Trade Agreement (NAFTA), exploded the boundaries of what was normally in the traditional trade agreement. The NAFTA and many ‘agreements’ within the WTO, were written/re-written to prioritize rights for multinational corporations, over policies aimed towards (democratic) individual-civil-rights, and the welfare of the environment. #
Multinational corporations of industrialized nations expect to be treated equally to the domestic corporations in the foreign countries in which they wish to do business in. The notion of equality in these situations only benefit the wealthy; in that, the more advanced multinational corporations would be able to get benefits that allows them to outwit the less advanced domestic corporations, allowing the multinational corporations to dominate the market. This makes it harder for a nation’s industries’ to develop internally- stripping the population of their basic right to produce food/goods for themselves and their families.# This is morally and ethically wrong, and according to the philosophy of Mill, “it is, by universal admission, inconsistent with justice to be partial; to show favour or preference to one person over another…” (Utilitarianism, ch.5). All individuals should have equal consideration when government leaders/policy makers create laws that affect them.
Multinational corporations expect foreign countries/host countries to deregulate many of their national policies; which often includes; the relaxation of environmental policies, disregard for basic civil-human-rights, and can possibly include the privatization of the distribution/allocation of natural resources and energy, all of which have often been deemed as barriers of free trade according to globalization enthusiasts.# Free trade (in its current form), has allowed multinational corporations to find a host country that will deregulate policies, as to turn the most amount of profit.# Corrupt government officials and policy makers in these host countries/nations have much to gain by opening up their economies, even if it is devastating to the environment and the nation’s citizens’ basic human rights.# In Criticisms of Current Forms of Free Trade, Shah made the assertion that “globalization reduces decision-making capabilities from peoples and governments and places more influence on corporations.”# The interests of powerful multinational corporations are shaping the terms of world trade in developing/third world countries. This takes a fundamental right of individuals away; to let them decide what is best for themselves, now and for future generations- a morally wrong concept. In All Animals Are Equal, Peter Singer said “the basic principal of equality does not depend on intelligence, moral capacity, physical strength or similar matters of fact. There is no logically compelling reason for assuming that a factual difference in ability between two people justifies any difference in the amount of consideration we give to their needs and interests.” Multinational corporations and the countries that host them should not gain preference over the average citizen. Somewhere along the way, profit surpassed people.
Indigenous regimes protect the multinational corporations/market dominant minorities’ profits and production, because open markets/free trade directs an enormous magnitude of wealth into the hands of the multinational corporations/market dominant minorities and the corrupt governmental officials/policy makers in their hosting countries. This could also be referred to as Crony Capitalism; corrupt alliances between indigenous leaders/governments/policy makers and multinational corporations/market dominant minorities.
There are no policies protecting the environment on an international level. The Central American Free Trade Agreement (CAFTA- breaks down trade barriers between the U.S. and five nations of the Americas), and the Free Trade Area of the Americas (FTAA- uniting all of the nations in North and South America, excluding Cuba), do not require member countries to adopt internationally recognized sanctions for environmental/social protection when establishing corporations in foreign countries (or in the transporting of goods). According to The Global Exchange, “…governments have worked together through the United Nations (UN), to develop agreements that protect the natural resources of [the]… planet. Unfortunately, so-called free trade agreements threaten to erode many of the advances in global environmental protection, endangering [the]… planet and the natural resources necessary to support life“ (CAFTA and the Environment). According to Deborah James, “rules in the CAFTA and the FTAA would actually prohibit member countries from enacting many new environmental regulations, allowing those regulations to be challenged as barriers to trade” (Free Trade and the Environment). In A Framework for Universal Principles of Ethics, by Larry Colero “A person cannot be truly successful while causing human suffering or environmental damage” (7). Profit is no substitute for equality and sustainability.
Also, no policies exist that make governments/policy makers internalize the penalties for abandoning their existing environmental laws in an effort to attract investment. According to The Global Exchange: CAFTA and the Environment, “free markets unleash powerful forces, because they allow some corporations to become too powerful and influential- beyond their democratic accountability. Big business interests and the threat of profit loss was found to be influencing decisions affecting the planet.” The carbon footprint that multinational corporations are leaving is devastating the planet, and these corporations are not held accountable.
Another issue free trade poses is the increase of oil consumption (and other finite natural resources), for the productivity of industry.
“Increasing trade increases [the]… consumption and dependency on oil; which, has created a massive global crisis of Human-Induced Climate Change” (The Global Exchange: CAFTA and the Environment). The rise of the global average temperature has; accelerated the melting of the ice-sheets in the Antarctic regions and is contributing to the rapid depletion of the glaciers in the Arctic, causing sea temperatures to rise at an alarming rate, killing many underwater species and the flooding/loss of coastal lands forces individuals to relocate (causing overcrowding/accelerated urban sprawl in nearby areas). The change in temperatures has contributed to the increase of the number of seasonal heat-waves, contributed to more severe and prolonged droughts, heavier and more severe rainfall events, and can result in the retiring of agricultural lands completely. With changing weather patterns, a loss of biodiversity is occurring as well. Animals and other species relocate their geographical boundaries; which, can cause extinction of vulnerable plant and animal species, increases pests and allergens, and often results in the spreading/mutating of diseases at a rapid rate.
“Consumption of oil also leads to violations of the human rights of average citizens of oil-producing countries; such as, “Ecuador, Colombia, Indonesia, and Nigeria…who suffer environmental devastation/pollution, corrupt governments, contaminated drinking water, extinction of whole ecosystems/loss of biodiversity, health problems, displacement, and in many cases ethnic/civil-wars” (The Global Exchange: CAFTA and the Environment). The exploitation of the environment and of individuals is wrong in any context. Oil-producing countries’ individuals are often faced with pollution related illnesses, famine and death. Although one would think the profits from the oil-industry would be enough to go around, it never reaches the average citizen or workers that run the oil-rigs. The individuals of the host countries’ inner unrest and resentment continues to grow as a result. Eventually, the situation explodes, and ethnic/civil-wars ravage the country.
Crony Capitalism creates envy and hatred among the poor citizens of a nation. Domestic corporations and local agricultural/craftsmen cannot compete with the market dominant minority that their nation hosts, and starvation and famines become rampant. This is an effortless solution to the competition for corrupt government officials/policy makers. As of now, there is no legal right to food. No international law that states it is a “crime against humanity” to deny access of food to the people of a nation by their government/imperial leaders.# To deny food to citizens is morally wrong. Smith said “no society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable” (Adam Smith Institute, On the Distribution of Wealth…). Human suffering should never be used as a means to an end (especially for a profit).
Increased free trade/dependence on oil, also “contribute[s] to global insecurity by producing further incentive for the wealthy to compete for resources (i.e. war), as the world struggles for control over this most prized/strategic global resource” (The Global Exchange: CAFTA and the Environment).
Multinational corporations/ market dominant minorities may provide very few jobs for citizens of their host nations; however, the workers are poorly paid for the work they perform and are often exploited in the areas of environmental devastation, pollution, corrupt governments, contaminated drinking and ground water, a loss of biodiversity, displacement, and in many cases ethnic/civil-wars. They are denied the technology, industry, education, healthcare, equal rights, etc., that could help them to develop their own nations economies, industries, and overall economic and food security. Workers are treated as less-than-human, and the notion of equality has been long-lost. Mill said “it is mostly considered unjust to deprive any one of his personal liberty, his property, or any other thing which belongs to him by law. Here, therefore, is one instance of the application of the terms just and unjust in a perfectly definite sense, namely, that it is just to respect, unjust to violate, the legal rights of any one” (Utilitarianism, ch.1). President William McKinley said in Henry Carey and William McKinley: The American System Vs. British Free Trade Looting, “under free trade, the trader is the master, and the producer is the slave,” a morally bankrupt concept that is more prevalent now with globalization (Marcia Merry-Baker & Anton Chaitkin).

Several steps could be taken to help alleviate the pressure in developing nations/third world countries, in the face of globalization in its current form.
First, the UN should enforce policies that make governments/policy makers internalize the penalties for abandoning their existing environmental/civil-rights laws in an effort to attract investment.
Second, the World Court, should enforce strict cap systems for countries that use non-renewable recourses in their economic systems (fossil fuels, etc.), and enforce them to the fullest extent of the law.
Third, there should be an international law that prevents political leaders and policy makers from using militant force, starvation, and other inhumane means to turn a profit (by eliminating domestic competition), and those caught doing so should be charged with “crimes against humanity” in the World Court.
Fourth, there should be an international law for the “Right to Food” for a nation’s citizens, recognized by 100% participation from the UN. A law that states it is a “crime against humanity” to deny access of food to the people.
Finally, and most importantly, agriculture’s role in many indigenous and third world societies is essential as a source of foreign currency, an indirect source of jobs, and as a supply of everyday foodstuffs to its citizens. Having a portfolio of diverse food and income sources, from crops, livestock, trees, and cultivated lands can cushion societies from climatic (and other) shocks agriculturally. Once a nation achieves total food security, citizens no longer have to rely on outside aid, they then can contribute to their own food banks and stockpiles of food, and this type of security can also reduce the risk of food emergencies in cases of natural disaster and fluctuations in weather that can limit crop production. In order to ensure sustainability of developing nations, citizens need to be able to raise their own food (to feed their families), profit from their efforts, and ultimately provide for their own food security on a local, regional and nation level.
In order to bring developing nations into a position of security, trade barriers need to be reinstalled (especially in nations where market dominant minorities are creating problems for citizens). The reinstallation of trade barriers for these nations need to prohibit importing/exporting of goods until said nation has achieved total security- environmentally, economically, with food stuffs, and within the context of basic human civil rights.
It is the responsibility of humanity to strive for common goals that benefit humanity as a whole- using no one as a means to their end. The current form of free trade needs to again begin to resemble the ideals personified by Adam Smith over 200 years ago, grounded in the foundations of moral virtue that John Stewart Mill and Peter Singer asserted. Adam Smith said in An Integration of the Wealth of Nations: The Theory of Moral Sentiments, “to feel much for others and little for ourselves; to restrain our selfishness and exercise benevolent affections, constitute the perfection of human nature”, a principal the current form of free trade needs to once again internalize and personify (Jeffery Herbener, 280). Free trade could once again be the positive engine for economic growth within a developing nation, if used in line with principles that personify the ideal form of utilitarianism.


# Act Utilitarian principles hold, that an action is right as long as it maximizes utility (act). This concept suggests that structure in the progression/advancement of civilization is fundamental. No progress can occur if human emotion impedes decision-making process, so an uniformed rule of production is key for the survival of society/the human race- according to this principal.

# Multinational corporations are currently negotiating the expansion of these corporate rights. In an online research survey titled, Success and Failures of the World Trade Organization, the author said, “Negotiations are proceeding within the WTO to expand many of its policies. These new arguments threaten global biodiversity, would accelerate the spread of genetically engineered crops, increase natural resource exploitation, further degrade some of the most critical environmental regions on the planet, and erode the public’s ability to protect our planet or future generations”, an immediate threat to sustainability that concerns humanity as a whole (Tripti).

# When food is imported/exported around the world, people living on less than $1.00 a day can not afford to purchase even enough to sustain themselves, let alone their families. There are Three Levels of Poverty: Subjacent Poor; Living on $1.00 or less per day- 1 billion of the world’s population. Medial Poor; living on $.50 to $.75 per day, and the, Ultra Poor; that live on less than $.50 per day. In sub-Saharan Africa, 162 million people are in the ultra-poor category of less than $.50 per day, and across the globe, 40% of the Population Earns Less Than $2.00 Per Day. Food security for developing nations is the only solution for sustainability.

# Removing government roles in the world market (environmental and social policies as law), allows for the privatization of factories and services and allows for even more concentrated power and wealth to be gained by the governments/policy makers that host the multinational corporations.

# Corporations refrain from investing in factories in the first world because of costly environmentally orientated measures and protections (put in by democratic governments), and move elsewhere where regulations have been reduced or removed.

# Structural Adjustment Policies (SAP), allow industrialized multinational corporations to directly invest in third world countries’ economies; ultimately, owning the host nation (sweatshops, exploited resources and workers, pollution, environmental degradation, etc.).

# “CAFTA and the FTAA would grant extensive powers to corporations; such as, provisions that allow corporations to sue governments for damages if a government policy affects the corporations’ profits” (James).

# This not saying that the food has to be free, it just has to be available. This has been on the UN’s agenda for a long time- to make a legal worldwide right-to-food, but the UN is having trouble gaining 100% participation from all of the countries within the United Nations. The United Nations will not give up trying.

Works Cited

“CAFTA and the Environment.” The Global Exchange. n.d. Web. 22, Jan. 2013.

Herbener, Jeffery. “An Integration of the Wealth of Nations: The Theory of Moral Sentiments.” Journal of Librarian Studies 8.2. Department of Economics and Business Washington and Jefferson College. 1987. Web. 27, Jan. 2013.

James, Deborah. “Free Trade and the Environment.” The Global Exchange. n.d. Web. 22, Jan. 2013.

McGee, R. Jon, and Richard L. Warms. Anthropological Theory: An Introductory History. 5th ed. ch 4, p. 62, ftnt. 13. New York: McGraw-Hill, 2012. Print.

Merry-Baker, Marcia, and Anton Chaitkin. “Henry Carey and William McKinley: The American System Vs. British Free Trade Looting.” The New Federalist Newspaper and The American Almanac. 1995. Web. 21, Jan. 2013.

Mill, John Stewart. “Utilitarianism.” ch. 1. 1893. n.d. Web. 2, Feb. 2013.

Mill, John Stewart. “Utilitarianism.” ch. 2. 1893. n.d. Web. 2, Feb. 2013.

Mill, John Stewart. “Utilitarianism.” ch. 5. 1893. n.d. Web. 2, Feb. 2013.

Shah, Anup. “Criticisms of Current Forms of Free Trade.” 31, Mar. 2006. Web. 29, Jan. 2013.

Shah, Anup. “The WTO and Free Trade.” 2, Jul. 2007. Web. 29, Jan. 2013.

Singer, Peter. “Animal Rights and Human Obligations: All Animals Are Equal.” 2nd ed. 1989. n.d. n.p. Web. 27, Jan. 2013.

Smith, Adam. The Wealth Of Nations. Book 4, Ch. 5, Digression on the Corn Trade, p. 540, para. b 43.

Smith, Adam. “Wealth of Nations.” ed. Adam Smith Institute: On the Distribution of Wealth…. qtd. Book 1, ch.8 p. 96, para.36. n.d. Web. 28, Jan. 2013.

Tripti. “Successes and Failures of the World Trade Organization.” Norwich University Online. 7, Oct. 2012. Web. 2, Feb. 2013.

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