Three Narratives on Trade and Globalisation
I just read Nicolas Lamp's new research paper on trade and globalisation. It is interesting stuff and I recommend downloading it here. As a little taster (and for those who might not have the time to read it), I summarised the paper below.
In short, it identifies three prevailing narratives surrounding trade in the US and outlines how they may affect the future shape of international trade agreements. It looks at the content of the narratives, who they identify as winners/losers of globalisation and their solutions.
What are the narratives?
The Trump Narrative
- Faults “cheating” countries for the US’s losses, treats trade as a zero-sum game.
- Thinks international trade agreements abet this situation.
- Losers: blue collar workers.
- Winners: rising Asian middle class.
Trump solution: Abandoning agreements or renegotiating them in a way that will redirect investment to high-wage countries.
The Establishment Narrative
- Rejects zero-sum, holds trade is beneficial in the aggregate.
- Lays blame for failure of losers at feet of domestic policy and failure to design adjustment policies.
- Losers: low skill workers in developed countries temporarily.
- Winners: high skill workers, in the long run everyone – low skill workers in the developing world.
Establishment solution: Further liberalisation flanked by improved domestic policies to encourage labour mobility and ease adjustment. Some see international agreements as a way to prod domestic policy makers to adopt such policies or even fund them.
The Critical Narrative
- Looks beyond confines of national economies, focuses on distributive effects (income gains/losses) of international agreements on global factors of production (land, labour, capital, etc.).
- Argues that there is an over-protection for capital in agreements – e.g. intellectual property rights, far reaching investment protection – and that they increase bargaining capacity of capital over relatively immobile factors of production.
- Losers: Labour, through increased burden of taxation and reduced bargaining power due to immobility.
- Winners: Investors.
Critical solution: Argues for a wholesale reassessment of the distributive consequences of international agreements on the different factors of production. Advocates inclusion of provisions to address those consequences.
Points of Contention Between Narratives
Within each of these narratives here are fundamental departure points, where the narratives are more or less irreconcilable.
Jobs
- Trump narrative defines jobs as property. Prizes jobs held by Americans over jobs held by foreigners. There are nationalistic/gendered overtones to this definition. There is a deep emotional element in “jobs as property” as a concept – many link it to family history/identity/community.
- Establishment narrative defines jobs as no more than a value-creating activity. Individuals should be expected to move to new jobs for efficiency’s sake. Unlike Trump, proponents do not feel the need to justify how some might hold certain jobs instead of others (or why some jobs should be more valuable for cultural/gendered/other reasons). Sees jobs as easily transferable/replaced. Does not account for non-monetary dimensions of economic life from which Trump narrative draws much of its appeal.
- Critical narrative defines jobs with a focus on power relations and the conditions in which people work. This is especially true in relation to wages (and ultimately the distribution of gains between capital and labour).
Legitimacy of forces that govern international trade
- Trump narrative assesses the legitimacy of trading arrangements by outcomes. The mere fact that a country has a comparative advantage in a line of work cannot justify a trade balance in their favour.
- Establishment narrative embraces the idea of workers being “mobile” to adjust to trade. It is justified by greater aggregate wealth. Sees workers who owe jobs to trade barriers as collecting unjustified gains at the expense of others.
- Critical narrative accepts the establishment narrative’s case for open trade, but calls for critical examination of how provisions in trade agreements distribute wealth between corporations and workers. Says that these distributive effects may outweigh gains from liberalisation.