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Full download Free Traders: Elites, Democracy, And The Rise Of Globalization In North America Malcolm Fairbrother file pdf all chapter on 2024
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Free Traders
Free Traders
Elites, Democracy, and the Rise of Globalization
M A L C O L M FA I R B R O T H E R
1
1
Oxford University Press is a department of the University of Oxford. It furthers
the University’s objective of excellence in research, scholarship, and education
by publishing worldwide. Oxford is a registered trade mark of Oxford University
Press in the UK and certain other countries.
1 3 5 7 9 8 6 4 2
List of Figures vii
Preface ix
Acknowledgments xi
Chronology xv
8. Conclusions 163
v
FIGURES
vii
P R E FA C E
Politics is not just about interests; it’s also about ideas. This book is about the
peculiar ideas that gave us the global economy we have today.
These ideas helped hold together coalitions of elites who pushed through the
policies and international agreements that made globalization happen. Without
these coalitions, free traders would have struggled to get their way, given the
public’s doubts and the frequent civil society opposition to globalization. The
ideas motivating free traders bear striking similarities to the mercantilist ide-
ology that dominated economic thinking in early modern Europe. Surprisingly,
then, ideas that economists rejected long ago remain central to international ec-
onomic policymaking today. Maybe even more surprisingly, scholars have not
noticed the contradiction; instead, many have exaggerated globalization’s legiti-
macy by saying its rise since the 1980s has been based on mainstream academic
economics.
The book tells the story of globalization from the perspective of North America
in the late twentieth century. It uses case studies of how Canada, Mexico, and
the United States proposed, negotiated, and ratified two free trade agreements
that substantially opened and integrated their economies. On the basis of more
than a hundred interviews and analyses of materials from archives in all three
countries, the book provides a new history of the political origins of the bilateral
Canada-US and the trilateral North American Free Trade Agreements (CUFTA
and NAFTA). Building on prior work in sociology, political science, economics,
and history, this comparative-historical analysis examines the rise of globali-
zation in the sense of growing international trade and investment, plus states’
adoption of new commitments in a range of other areas addressed by recent
trade agreements. These include most notably, and controversially, investor and
intellectual property rights.
The book shows that these agreements have had little to do with the
preferences of the median voter, or the incentives of democracy. There have
ix
x Preface
My work on this book began an embarrassingly long time ago, in a grad school
far, far away. The project took me to Mexico City, Ottawa, and Washington, DC,
and to archives across North America. It followed me, on and off, as I moved
to England and then on to Sweden. During many years of work, I accumulated
many debts.
First, I have above all been the beneficiary of lots of love and support from
my family—my parents, siblings, their partners, and many nieces and nephews.
I feel fortunate to have them all in my life. I was also lucky to get as much time as
I did with my English grandparents, and my uncle.
Next, I would like to thank my advisers at the University of California,
Berkeley: Peter Evans, Michael Burawoy, Marion Fourcade, and Richard Walker.
I thank them all for their input and patience. I should also mention that Fred
Block generously served as a kind of bonus committee member, from his van-
tage point at UC Davis.
Also in my years at Berkeley, and during fieldwork back and forth across
North America, I was supported by a great many friends—too many for me to
name them all. Among those to whom I am particularly grateful, I should men-
tion Ofer Sharone, Ana Villalobos, Manuel Vallee, Simone Pulver, Basak Kus,
Isaac Martin, Keyvan Kashkooli, and Eréndira Rueda. Away from the university,
the friendship of Eric Greene and Vanessa Ramirez, and the support and inspi-
ration of the BZC and CZM communities made a big difference. Tom Medvetz
stands apart, not only as a good friend (and flatmate on two separate occasions),
but also someone who shaped my thinking a great deal over the years.
My fieldwork would not have been possible without the warm welcome I re-
ceived at a number of academic institutions: the Centro de Investigaciones sobre
América del Norte at the Universidad Nacional Autónoma de México; the Centre
on North American Politics and Society at Carleton University in Ottawa;, and
the Center for Latin American Studies at Georgetown University in Washington,
xi
xii Acknowledgments
In 2017 I moved to Sweden, and since then I have benefited from the sup-
port of many new colleagues. Stefan Svallfors, Gustaf Arrhenius, and Sverker
Jagers are all exemplary scholars who have given me valuable advice and new
opportunities. Jan Mewes and Mo and Erin Eger were big reasons I moved
to Umeå in the first place. Maureen also provided helpful feedback on some
chapters at a late stage, as did Per Wisselgren and Anna Baranowska-R ataj on
Chapter 1 long before. Umeå University and the Institute for Futures Studies
have given me time to think and write; I do not take that for granted.
Finally, thanks above all to my wife Ava for coming into my life at just the right
time (bringing the rest of the remarkable Hassens, plus a small dog, along for the
ride). Since then she has not let me take myself too seriously, and without her
good-humored support I doubt I would have been able to finish this book. One
day in 2018 when I was moaning about how the “new NAFTA” keeps changing
and so how can I stop writing about the old, she started singing the chorus of
the music to “The NeverEnding Story.” That’s the kind of thing she does to keep
me going.
CHRONOLOGY
1973 Canada and Mexico both introduce restrictive foreign investment laws.
1980 Canada and Mexico reject the idea of North American integration.
Mexico decides not to join GATT, after negotiating an accession
protocol.
1982 Severe international recession.
Mexico briefly defaults on its foreign debt.
1984 Progressive Conservative government of Brian Mulroney elected in
Canada.
1985 Canada formally requests to negotiate free trade with the United
States.
1986 CUFTA negotiations begin.
Mexico joins GATT.
1987 CUFTA negotiations end.
1988 Mulroney Tories re-elected in Canada, on a platform to enact CUFTA.
Carlos Salinas de Gortari becomes president of Mexico.
George H. W. Bush elected US president.
1989 CUFTA goes into effect.
1990 Mexico approaches the United States about negotiating a free trade
agreement.
Canada requests to participate, and the United States and
Mexico agree.
1991 Start of NAFTA negotiations.
1992 End of NAFTA negotiations.
Bill Clinton elected US president.
1993 Negotiations on labor and environmental side-agreements.
Each country ratifies NAFTA.
Liberal government of Jean Chrétien elected in Canada.
1994 NAFTA goes into effect.
xv
1
Democracy legitimates.
Everything else being equal, in today’s world it is harder to criticize or to ques-
tion something that is democratic. In almost all the world’s nations, democracy is
now such a powerful ideal commanding such widespread loyalty that even most
dictators say their countries are democracies; it would be awkward to admit oth-
erwise, if not self-destructive. It matters whether or not a government and its
actions are perceived as democratic. And that is true even though the meaning
of democracy is highly malleable. If asked to define it, many people would say
something about abstract principles like freedom, accountability, inclusion, rule
by the people, the popular will. A lot of social science takes a narrower, more
practical view and defines countries as democracies as long as they hold free and
fair elections on a regular basis. Other scholars say the only real proof of democ-
racy is when competitive elections actually change the government.
Whatever the definition, there are certainly a lot of social scientists working
to identify democracy’s causes and consequences. And given the legitimacy at-
tached to democracy, anything they identify as a cause or a consequence im-
mediately itself becomes more legitimate. This book is about one of the most
significant global trends of the last thirty years, and something whose relation-
ship with democracy—and therefore whose legitimacy—has been debated
during all of that time: globalization, in the sense of expanding international
trade and foreign direct investment.
Globalization, in this sense, may feel a little abstract; but some comparisons
with the past can make it more concrete. It used to be that consumers who
wanted to buy something made in another country had to pay a hefty premium
to do so—when they could get goods and services from abroad at all. Firms that
wanted to invest in a foreign country and establish some kind of operation there
were often turned away, or allowed access only to specific economic sectors. In
the late 1980s, though, this sort of national segmentation in economic life started
to fall away. And governments chose to make it happen. Before that, they had
been skeptical about the merits of allowing most cross-border flows of goods,
1
2 Free Traders
services, and capital; suddenly they changed their minds and decided that these
were actually good things. In some cases, they even decided to negotiate interna-
tional agreements limiting their own freedom to restrict international trade and
investment. This book asks why the priorities of so many policymakers around
the world changed so much compared to before—and what, if anything, that
change of priorities had to do with democracy.
One of the reasons for thinking there might be a relationship is that just
when many countries were opening up their economies—in the late 1980s
and through the 1990s—many were also transitioning to democracy. Statistical
analyses, discussed further below, find the two variables are correlated: coun-
tries that transitioned to democracy have opened their economies more than
countries that did not. There is little debate that the correlation is real, but what
is more contentious is that those scholars who emphasize the correlation tend
to go further and claim the statistical relationship is causal. Their argument is
that democracy makes governments accountable to voters, and the majority of
voters stand to benefit from freer trade and investment.1 Under authoritarian
regimes, on the other hand, this school of thought holds that powerful social
elites—business owners, executives, and professionals—stand to lose out from
globalization, and so they use their privileged access to politicians to override
the will and interests of the majority. If this theory, which I will call “liberal,” is
correct, the rising democracy of many nations in recent decades may well have
been the most important factor behind the ascent of globalization.
Does this theory matter? It is certainly an influential perspective in the litera-
ture on globalization. But outside of academia, it is also consistent with informal
suggestions by many advocates and commentators that globalization possesses
the legitimacy of democracy—maybe even that political and economic liberal-
ization are mutually reinforcing freedoms.2 If in some sense globalization rests
on democratic political foundations, and/or reflects the will of ordinary people
rather than a narrow elite, then its legitimacy is harder to question.
And yet one of the striking qualities of the academic literature on globaliza-
tion is its encompassing studies at complete variance with each other. While the
liberal scholars take globalization’s benefits for the many as a given, others see
them as a fiction. This second group of scholars—whom I call “critics”—argue
that instead of encouraging the rise of globalization, democracy was if anything
an impediment to it. In defending this view, critics argue that trade negotiators
meet behind closed doors and only disclose the outcomes of their work when
they present agreements for final ratification, by which time few opportunities
1
Eichengreen and Leblang 2008; Liu and Ornelas 2014; Mansfield and Milner 2012; Mukherjee
2016; Pandya 2014.
2
Friedman 1999; Micklethwait and Wooldridge 2000; Moore 1999.
Ex plaining the R is e o f Gl obali z ati on 3
for amendments remain. Only select parties, therefore, get their voices heard in
such negotiations. Once international agreements are enacted, moreover, critics
point out that they tie governments’ hands. For these reasons, the critics say
that globalization rests on undemocratic foundations.3 They argue that the real
force behind the rise of globalization in the last thirty years has been the rich and
powerful: business executives, owners, and corporate professionals.4 Amazingly,
these kinds of economic elites are just the people that the liberal perspective says
were opposed to globalization.
In short, contradictory views of the relationship between democracy and
globalization map onto similarly contradictory assumptions about globalization’s
effects. Some scholars believe in its benevolence and attribute its political suc-
cess to the will of the majority; others believe in its malignance and point to
the preferences of a privileged minority. Some see the displacement of elites,
others their dominance. Globalization’s foundations, then, are as contested as
its consequences.
The stark divide between the liberal and critical literatures reflects that they
barely talk to or even acknowledge each other, much less try to reconcile their
differences. This mutual ignorance, if not disdain, is unfortunate. The prolifer-
ation of parallel research programs engaging separately with many of the same
topics and problems is not efficient or intellectually productive. My objective
in this book is to bring the diverse literatures on globalization together, espe-
cially since, I will argue, each community of scholars possesses insights the other
needs to hear. Above all, the two literatures disagree about the role of business.
From the democracy-based, liberal perspective, there is little chance of a nation’s
businesspeople uniting in support of free trade. International integration in-
evitably represents more of a threat than an opportunity to many firms and
industries, such that their owners and managers should not want it. If this is cor-
rect, economic elites cannot cohere enough to support globalization, as a group.
Still, by the logic of the economic model underlying the democracy-based
arguments, if the private sector were to lobby for globalization, it would be more
likely to do so in developed rather than developing countries. And, for the most
part, that is what this book shows to be the case. Economic elites have provided
strong, often proactive support for globalization initiatives in richer countries;
in poorer ones they have tended to be more lukewarm, passive, and divided. In
these latter contexts, instead of private sector preferences, states’ decisions to
pursue globalization have reflected the changing worldviews of political elites
themselves. Since the 1980s, there has been a marked increase in the number
3
See, e.g., Bermingham 2014; Mirowski 2013; Scholte 2005; Polanyi-Levitt 2012.
4
E.g., Duménil and Lévy 2004; Dreiling and Darves 2011, 2016; Harvey 2005; Kotz 2015;
Panitch and Gindin 2012; Sklair 2002; Robinson 2014.
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CHAPTER XVI.
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