The World Trade Organization:
A Theological Critique  

John B. Cobb, Jr.  
From Earth Letter, September 1999

World Government At Last?

Do you favor world government? If so, you should look closely at the World Trade Organization (WTO). It is the only institution that has the power to overturn the laws of governments all over the world. It is the closest thing we now have to a world government.

As a nation we are very resistant to allowing any outsider to have power over us. Many Americans view the United Nations as a threat to our sovereignty even though, in fact, it has functioned more as an instrument of United States' foreign policy than as a challenge to our power. We thumb our nose at the World Court when it tries to exert some authority in relation to us. Yet very quietly, with little protest, we have given authority over our laws to the WTO.

This remarkable phenomenon reflects the global dominance of economic thinking as well as the dominance of the global market. The global market is a function of free trade among nations. Our leaders view this free trade as so desirable and so important that for its sake they are willing to sacrifice national sovereignty.

The Case for Free Trade

Clearly such a level of commitment to free trade calls us to reflection. Is free trade so desirable and important that it warrants our sacrifice of sovereignty for its sake? Do we as Christians have anything to say about this?

Free trade is trade with which governments do not interfere. That is, governments do not tax or restrict the importation of goods or control exports. All the decisions are made by economic actors.

The opposite of free trade is usually depicted as protectionism. It is pointed out that governments sometimes protect particular businesses from international competition. Often, the question of whom is to be protected expresses the political power of particular industries. Their protection keeps the prices of their products higher than they would otherwise be and thus adds to the costs to consumers, including other businesses. Economists point out that protection always hurts consumers and, when it favors some businesses over others, distorts the working of a free market.

Traditional economic theory gives strong support to free trade. This theory systematically shows that the market, when left to itself, provides the best signals to manufacturers as to what to produce. The market leads to the lowest prices at which these goods can be sold with a sufficient return to the manufacturer to warrant continued manufacturing. The competition the market engenders constantly improves products. The free market is seen to increase the quality and availability of desired goods and thus to raise the general standard of living.

Economic theory also shows that a larger market allows for greater economies of scale without reducing competition. Hence, a national market leads to faster economic growth than do local markets. By the same logic, a global market leads to the most rapid growth. In a world in which so many needs remain unmet, an organization of the economy that stimulates the greatest possible growth would seem to deserve strong support.

The logic of this argument favors the claim that free trade is so desirable and so important that national policies should support it. They do so most effectively when they renounce the right of the national government to interfere with trade. Each nation benefits from such renunciation only as other nations also do so. An agency is needed to enforce this renunciation of sovereignty. The WTO is that agency.

As Christians, we agree that there are many urgent unmet needs for goods and services in our world. At least a billion people live in dire poverty. Many others live in degrading conditions that call for collective effort to improve the general standard of living. We Christians have never supported the idea of absolute national sovereignty. If some sacrifice of such sovereignty is needed for the promotion of free trade, and if free trade is the means of meeting the genuine and critical needs of the poor, then we might readily celebrate the WTO as its promoter and enforcer.

A Christian Critique

There are many Christians who have accepted the argument for free trade and celebrate the new globalism. It seems to fit with the vision of interdependence among all people that some have long upheld and to replace the narrow goal of national good with the inclusive human good. If one points out the costs to Americans of this new globalism, other Christians respond that we should be willing to pay this price so that the whole world may prosper.

Other Christians who observe the actual consequences of the global economy are much less enthusiastic about free trade and the global economy. They notice that the benefits of the global economy do not often reach the poor. Richer nations are becoming richer, and within each nation richer people are becoming richer. But on the whole, the poor in each nation are barely holding their own, and in many cases they are becoming poorer.  The gap between rich and poor is growing rapidly.

Supporters of free trade cannot deny these facts. But they regard them as less important than they seem to us. I will explain two lines of argument and note my objections.

  1. In economics there is a principle called Pareto Optimality. According to this principle, the goal of policy is to improve the lot of some without harming others. This principle does not support worsening the lot of the poor, but as long as their condition remains unchanged as measured by average income, believers in this principle will celebrate global economic growth, since some people are, without question, growing richer.

This principle expresses the desire of economists not to be swayed by values other than the quantitative increase of economic production. They label arguments based on other values "theology." They are correct in doing so. Concerns for justice and especially for the poor and oppressed are deeply Biblical and thus, also, theological.

  1. As Christians we value the health of communities, including national communities. One measure of health is the extent to which the whole community is concerned that the basic needs of all are met. Another measure is the lack of extreme difference in economic condition between richer and poorer people. Economic theory does not interest itself in such matters, but Christian theology must. If free trade makes the rich richer while not benefiting the poor, economic theory may continue to support it, but Christian theology cannot.

Many supporters of free trade do care about the poor. They argue that the widening gap between rich and poor is a phase of economic growth that does not last. In time, the greater wealth of the society as a whole trickles down to the poor.

This is an important argument. It depicts the present suffering of the world's poor as temporary. It asks for patience, so that the market can work its magic and there can be a great future for humanity as a whole. It appeals especially to the poor to tighten their belts so that their children and grandchildren will enjoy a prosperity that is far beyond their present reach. The question is, will this method of dealing with the problem of poverty work?

The strength of the argument comes from the histories of the now industrialized nations. Most of them went through a period in which the conditions of the poor in general and workers in particular were miserable. Today they are far better off, taking for granted such luxuries as motor transportation, refrigerators, and television sets, unimaginable to their ancestors. If the global economy will deliver to all the benefits it has provided in the First World, billions of people in the Third World (the so-called developing countries) should be willing to make sacrifices now so that this dream will come true.

However, the proposition that increased prosperity will reach the world’s poor is a matter of faith, not evidence. Since faith here is not placed in God but in the market, Christians may suspect that idolatry is at work. Is this perhaps a call for the world to serve Mammon or wealth rather than God? In any case, there are several reasons for being skeptical. In all the nations in which workers eventually shared in the benefits of economic growth, labor unions and governments played a strong hand. Yet, the global economy drastically weakens labor unions and greatly reduces the role of governments. The only agency that has global power with regard to the economy is the WTO, whose mission is to promote free trade, not to seek the well-being of the poor.

In the free market the only other force that can raise wages is a labor shortage. Currently, it is very difficult to foresee the time when labor will be short globally. This is not only because of the enormous unemployment and underemployment around the world but also because technology reduces the need for workers. It seems likely that for several generations, indeed, for the foreseeable future, the global economy will continue the current "race to the bottom," moving production to those places where labor is cheapest and most docile. International competition for capital investment does not support sharing the benefits of increased production with workers. Thus, the evidence of what is now happening does not support the faith that the poor will benefit.

  1. We must ask, furthermore, about the Earth. Free trade and the resultant global economy are celebrated because they speed the growth of production. But is that growth itself to be celebrated? Growth of production means the more rapid use of fossil fuels, the more rapid exploitation of forests, soils, and oceans, the greater pollution of the atmosphere. If, as many of us believe, the present pressure on our natural environment is unsustainable, does it make sense to undertake to solve our problems by increasing production manyfold?

The answer of those who call for this vast increase of economic activity is technology. Technology will enable us to produce more with less and in ways that are less polluting. Faith in the market must be combined with faith in technology.

The argument must be taken seriously. Vast reductions in waste are possible for us with current technology. It is difficult to place a limit on what future technological developments may accomplish. Perhaps in some abstractly possible world there could be almost unlimited economic growth without further damage to the environment.

But in our real world the actual forms of economic growth that are taking place continue to be destructive. Fisheries are crashing, deforestation causes a whole complex of problems, the weather is less favorable because of global warming, fresh water is becoming scarce, many species have become extinct or are threatened with extinction, arable land deteriorates. The litany goes on and on. Until technology and political will have reversed these trends, we should be suspicious of policies designed simply to speed growth. We reduce the power of governments to deal with environmental issues if we give the WTO the power to overrule environmental legislation thought to restrain free trade. This hardly seems to be an expression of rationality.

The Role of Power

Christians are called to be realists about power. What has occurred, especially since 1980, is a massive transfer of power from the political order to the economic one. We may ask why governments have systematically disempowered themselves. The answer is in part that they are impressed by the cogency of economic arguments and are genuinely concerned for the well-being of all people. But the answer is also that decision makers are beholden to those who finance their political campaigns. The political moves made in the past two decades have been prompted by the interests of transnational corporations (TNCs) and those who profit from their gains. TNCs have systematically increased their power at the expense of governments.

Actually, this is what free trade is all about. It is the freedom of TNCs to move capital and goods freely around the world. As trade has become freer, these corporations have become larger and larger. They have sought systematically to reduce the possible danger that governments, which now come to them, hat in hand, seeking their investments, might later apply to them laws unfavorable to their operations. Present arrangements, including the WTO, make legal restrictions of TNCs much less likely.

Through the governments they so largely control, TNCs are pressing for the Multilateral Agreement on Investments. This will guarantee that the laws of a nation cannot be enforced on an outside corporate investor against its will. Although there has been considerable resistance to this agreement in First World countries, its provisions are likely to be forced on Third World countries through Structural Adjustment Policies. For the sake of free trade, neocolonialism will become complete. TNCs will have fully replaced imperial powers as the colonial controllers and exploiters.

On the basic issue of where power is to be located, Christians should be able to speak clearly. The economic order should be subordinated to the political one. The present reversal is unacceptable. The economic order, for all its importance, aims at a narrow goal, that of producing and improving goods and services. The political order includes this value, but it adds others, such as the general well-being of the body politic, fairness, and also the well-being of the environment in which human life is lived. When pursuit of narrowly economic goals conflicts with the realization of broader human ones, the political order should subordinate the former to the latter.

One may object that governments are so corrupt that they do not in fact pursue the wider goals for which they are intended. This certainly can happen. But even when corporations function with no corruption at all, they serve a much smaller constituency, namely, their stockholders. Despite all the problems, governments are more subject to influence by the real needs of ordinary citizens than are corporations. The task is not only to restore power over corporations to political agencies but also to make those agencies work for the common good.

If government is to be primary, there are two directions in which change might go. The best system would probably combine elements of both. One direction is to place national economies under the control of national governments. The economies would, of course, trade with one another as they always have. But this trade would be restricted and promoted by governments for the common good of their people.

The second possibility is to accept the global market and to seek a global government to direct it to the common good of all. The United Nations could become such a government. In principle, and to some extent in fact, it represents the peoples of the world in terms of their multiple interests and values.

The WTO is exactly the wrong kind of organization to function as a global government. It is designed to be insulated from public opinion so as to single-mindedly pursue the narrow goal of free trade, which in effect means increasing the power of transnational corporations. Christian responsibility includes awareness of the facts and failures of global economic realities.

John B. Cobb, Jr. is at the Center for Process Studies at Claremont. He is a well-known Christian theologian and a Contributing Editor for Earth Letter. His For the Common Good: Redirecting the Economy Toward Community, the Environment, and a Sustainable Future (with Herman E. Daly, 1989) is a groundbreaking analysis of "mainstream" economics, which offers a new paradigm for economics, public policy, and social ethics.. In Sustainability: Economics, Ecology, and Justice (1992) Cobb explores Christian theology, ethics, and social justice as these bear on ecological issues. Sustaining the Common Good: A Christian Perspective on the Global Economy (1994) shows how sustainable development rather than mainstream economic growth best represents Christian values.

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