Thursday, 13 August 2015

India, Unilever, the TPP and the emergence of the market state

Interesting video. I almost (almost) got distracted by humming the original song. But I lasted long enough to hear the poorly timed rap too. To be honest, I know what this girl’s trying to say, I just don’t think she said it.

The reason I bring this video up is because I was asked about it recently. The question went mostly like this:

Listening to this, I'm drawn to the potential detrimental effects that could arise in the Trans Pacific Partnership (TPP) countries. Thinking about that post you made a while ago about limited governmental power, as large corporations are increasingly reaching a level of power to challenge sovereignty, how will TPP curb or limit large corporations wishing to move into the member states to exploit their weak infra structures? 
I know I might be going off on a tangent, but watching this video got me thinking about the new SDGs (sustainable development goals) put forward to extend on the MDGs (millennium development goals). The 17 new SDGs are very encompassing of everything governmental organizations and NGOs should be working towards. But in a multi-state trade treaty such as TPP that, for me, appears to predominantly uphold the benefits to capitalists, I'm puzzled at how any state will get around to implementing those SDGs without resistance from multi-national corporations that run the world.  
What do you reckon? I know you're clearly for the TPP, but for me, I'm just not into thinking neo liberalism is gonna solve it all and that's what we should constantly pursue. ... you don't see neo-liberalism cleaning up kodaikanal. .... I'm a bit tired so I realize I might have gone off track

I don’t think this person went off track (I do know the person, but you know, anonymity), those things are intimately connected. The thing is, what’s happening as our beloved nation state transitions into a market state (as I see it) there is a rearrangement of power as people begin to control and change the words and nomenclature of existing structures. As I’ve argued elsewhere, the underlying system doesn’t change, only the words do. What differentiates the transitions is who controls the words for that system.

First off, I totally agree that liberalism (or as I'm calling it, Universalism) is not going to make this world a better place. It is essentially Christianity without supernaturalism and is in all seriousness a cancer to any advanced societies using it and needs to disappear. But it’s currently the dominant power belief, so it’ll take some uprooting. But I’m game if you are!

Second, what happened in India is, I suspect, more complicated than portrayed in the music video (of course). To break it down into manageable bites (so we can think about it), the key points are: the state, the industry and the people. One thing most geopolitical analysts are agreed on is that the Indian state is barely functioning as a coherent entity. There is greater regional than central control, which leads to corruption and self-serving decisions on who invests where. Almost no one involved in Indian regional power listens to New Delhi about anything important.

Then the industries like Unilever come along with investment propositions. Industries have historically taken advantage of the power disparity in India, sure, but the responsibility primarily lies with the government who ultimately let the industries into the country. Once a company has started churning out goods and hired members of a population, it’s difficult to expel the company unilaterally even if waste is building up. The clean-up of industry waste might sound straightforward, but who should take responsibility of this enormous task? Taking a wider view, consider that it’s not just the Unilever mercury waste under scrutiny here. What about the particulates emitted from most factory smoke stacks? What about airline exhaust? What about discarded fishing line in the ocean?

Consider also that the only reason Unilever exists is because people still buy its products. And the only reason people still buy Unilever products is because they’re cheap. Those products are cheap because they were manufactured in India where people want to work for less wages than the US. And they were manufactured in India because there was a connection of interests between Unilever and the Indian government. Finally, the Indian government, broken as it is, is the world’s largest democracy and is a result of the Indian people voting depending on what they all personally want. There’s a disturbing and unspoken connection between the people being harmed and their own decisions at the polls.

This logic would seem to suggest the Indian people are responsible for the poisoning of their own land. That’s true, on one level, but it’s more complicated than that. The reason their land is poisoned is that they collectively decided to prioritise a general lifting of living standards provided by allowing Unilever to operate in India, over the detrimental health effects of incorrectly disposing of Unilever’s waste. Indians might not have made this decision consciously (but who thinks economically anyway…), yet this exact cost/benefit calculation was nevertheless made by every single person in India. In other words, rather than seeing the harmful effects of letting Unilever dispose of waste like this, every person in that country preferred to see only the positive effects of drawing a salary from the company. This logic doesn’t make me feel good, but it is true. The Unilever waste follows a direct line from Indians wishing to live a better standard of life. Individual humans have a universal inability to understand how their actions will affect others. Have we seen this somewhere before?

Certainly have. What’s happening in India today is exactly the decision process every Western nation, including New Zealand, made in its own gradual construction of an advanced society. The difference is only timescale. New Zealand and America made the choice to collectively increase living standards by concentrating on individual living standards about 200 years ago. Now these countries are so rich and well-off they can’t remember the effects of early industrialisation (although there are plenty of books about it).

Put it this way, the effects of coal-fired factories and power plants killed many more people in England and the US than have been killed as a result of Unilever’s product waste. India is making this industrialisation decision very recently, only a decade or two ago, hence why we’re hearing about it now. The problems ailing Indians from industrial waste are different only in type, not effect. The reason this appears so bad to you and I is because most people in the Western world have no idea what’s it’s like to live in an industrialising economy and we incorrectly apply our own standards of morality to their situation. In fact, the logic above suggests that removing Unilever from India might actually be a form of racism (I’ll expand on this later).

So what can we do? We’ve already figured out that stopping Unilever, and other companies, from operating in India would by necessity hurt everyone in that country by causing wages and living standards to drop. But there must be a way to convince Unilever to play more fairly without raising the costs of production higher than the market will accept. Pressure on Unilever to fix its pollution must reach a tipping point which is greater than the company’s incentive to continue those processes. There are two ways this can happen: naturally, through market forces or artificially through dictate.

Since we’ve already discovered the market has created the problem, it surely can’t also be the solution. So the only way this sort of pressure is going to be achieved is by a corporation with greater powers than Unilever. A bigger Unilever, is there such a thing? Glad you asked, it’s called a government. The modern iteration of a government is essentially a corporation in the strict sense of the word, i.e., an organisation with a virtual identity. Which means we’ve found a more powerful corporation than Unilever, leading us to one conclusion: the Indian state needs to be reinforced in some way. The question is how.

Now, bring in the TPP. India isn’t part of the TPP, and right now including India in the negotiations would scuttle the whole deal (precisely because the Indian government is not a centralised power as mentioned before). But the TPP does include some states in Asia with similar histories to Unilever and India. These offer a good way to check to see how a greater corporation power might affect industrial waste output.

Vietnam for instance is one of the world’s largest garment manufacturers. The dies involved in making those garments are highly toxic and kill many Vietnamese every year. International companies operate in Vietnam, but many of those garment manufacturers are owned by the state. Those manufacturers maintain their nasty processes because there is no incentive for them to change, and no need to bend to other people’s rules. At least, that was the case before Vietnam entered the TPP negotiations. Now there’ll be a reason for Vietnamese garment manufacturers to clean up their mess.

The TPP is meant to homogenise rules on investment, environment and international corporate activity for all its members. The whole point of plurilateral trade deals like this is to make it easier for each country’s businesses to operate together or competitively. This means the rules on what a corporation can and cannot do are mirrored by a treaty. If a corporation fails to adhere to the TPP rules, the signatory countries can choose other companies from which to purchase goods and marginalise the offending country. Rules in the TPP essentially strengthen the state while bringing back the power of the market to enforce those rules.

From what I’ve seen in the TPP (without reading the text), the rules don’t actually go as far as I would like. But the nature of the TPP being a “living agreement” is that its members will be able to revisit the deal over time (especially when the hoped-for second round kicks off). Rules can be tightened or relaxed depending on their efficacy once the deal is passed. As far as I can see, there’s room for TPP members to monitor the deal to see how it’s affecting the various countries. The proposed TPP rules are, however, far better than most of the member countries presently have. In many cases the countries will be bound to rules they have never experienced before, forcing international corporations to respect high-standards of conduct or go elsewhere (which they do not want to do because they will lose money).

I think the TPP needs to be kept in this overall context. At the top level we have a systemic transfer of power (sovereignty) away from the nation state structure into the market state. This might sound like it’s a huge change, but it’s not really. Without going into too much detail (because I’ve written about this a lot), the dynamics of a market state are identified by the replacement of descriptions not people. A market state appears to emerge when a sovereign nation state begins to act more like an international corporation. At this point, the differences between a nation state and a corporation become truly indistinguishable (if you want something else to worry about, ask what a nation state’s military might be used for in this situation…think of the East India Trading Company’s ability to use the British armed forces to enforce trade deals and investment overseas.)

Anyway, back on track. If the TPP doesn’t pass, it will probably be replaced by another deal attempting to prepare the same outcomes. This is not a US imperial drive so much as a desire by most developing Asia Pacific countries for a rules-based, more equal, globalised economic region to assist in the accumulation its greater wealth and an overall lift in living standards. It is a way for people to be more selfish, with the effects of becoming more selfless. Bizarre, I know, but that’s why logic is weird. The introduction of a TPP-esque trade charter is simply the next inevitable step in a globalising world.

The problem is, we’ve never been here before. This is a time characterised by the largest concentration of wealth creation, which will occur in only half a century (1995 – 2045). Since the global system has clearly thrown in with a currency-based liberal capitalism as the default system, then this trajectory described above isn’t going to change soon. The best thing we can do will be to recognise the emergence of the market state and build in constraints for it as the old-styles of people government become more difficult. Hopefully we get it right, but if we don’t, hopefully we’re humble enough to adapt as this transition flows on.

Where does this put us? The TPP isn’t a “good” thing, but the construction of morals and ethics in the midst of a fundamental transition of power is always difficult and, to be honest, undesirable. I’m not sure it’s a good or a bad thing. I simply don’t know what it really is, none of us do – even the negotiators – because none of us know how it will nest with the emerging market state. A lot of it is uniformitarianism back-extrapolated hope, but it’s the best we’ve got at the moment. The TPP is a large cog moving somewhat out of sight of most people. The smaller cogs of international business move faster and nearer our vision, so can appear starker.

But I’m just watching how this all fits together as the very large and slow cogs turn in the background behind the curtain. If the TPP was being suggested in a nation state world, I’d be happy to apply some moral judgments to it. But the TPP can really only exist and affect a market state system, and there’s really no decided ethics for that yet (because it isn’t here), let alone a coherent series of names and descriptions. Long story short, we’re going to need to think about this transition to a market state with a lot more detail.

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