The goal of global free trade is to create a global market for goods, services, capital and labour. The principle is that anything can be manufactured anywhere in the world and sold anywhere else. The global free trade has become a sacrosanct principle of modern economic theory, a universal dogma, true religion that it is forbidden to question the premise.
Almost all economists and politicians are totally dominated, and to tell the truth / indeed enchanted by this doctrine. This doctrine is sustained daily by all the medias that control more or less openly multinational beneficiaries of global free trade. Advocates of the new doctrine confuse the profitability of multinationals with a healthy global economy. They come to the conclusion that the profits of big multinationals and their level of stock prices are a reliable indicator of a healthy economy and society.
In fact, what we see is that international trade is dominated by the interests of multinationals and not by the interests of nations as a whole. What we see is that the global economy is organised for the benefit of multinationals, not to satisfy the basic / fundamental needs of national communities.
Today there are two distinct economies: that of large corporations and the one of the nations. Their interests are not only different. They are antagonistic. As multinationals relocate their production to regions with lower wages in exchange, they destroy jobs in their own national economy. In this system, the losers are not only those who lose their jobs because of offshoring, but also all those who lose their jobs because their employer has not outsourced, ends up ruined. They are also all those whose wages are reduced by competition from low wage countries.
The winners are those who can obtain huge profits using virtually inexhaustible sources of very cheap laboor. These are the companies that relocate that can pay lower wages, and those with capital to invest where labour is cheaper and they can ensure a better return. It is the leaders of multinational corporations and their shareholders who are in favor of global free trade. They are the ones who actually get richer. In reality we must distinguish between the interest of groups that dominate politics, administration, public affairs and from the interests of the people. The real needs of each country are by de facto subordinated to the interests of multinationals, and indeed the interests of executives of multinational companies.
This insane system is maintained only through the complicity of political leaders. It is them, ultimately, and them alone, who are responsible for the consequences of global free trade because it is them by their function who are responsible for defining the institutional framework of economies.
In France the supporters of global free trade point out that thanks to cheap imports from low wage countries prices in supermarkets have been considerably lowered. This is indeed what we see, but, like Frederic Bastiat once said, what is not seen is the corresponding increase in the number of unemployed who have to be supported and whose benefits are financed by increased taxes. What is not seen, it is also the progressive destruction of the industry.
- Maurice Allais