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Tuesday, April 21, 2015

Lambert Strether: Toward Absolutist Capitalism: "TPP elevates capitalization — the expectation of profit — as a principle to the principles of, say, the Bill of Rights, or the Declaration of the Rights of Man."

The TPP's “Investor-state dispute settlement” (ISDS) provision elevates foreign corporations doing business in host countries to the same status as sovereign governments. It would allow foreign corporations to bring frivolous lawsuits for profit against host governments, simply by claiming an environmental protection or public safety law may affect expected profit. Judgments would be rendered by secret arbitration panels composed of corporate attorneys who may represent arbitrating parties. 

The process would be unaccountable to and entirely outside of the legal structure of the respective host countries.  This raises concerns about conflict of interest, corruption at multiple levels, national sovereignty, and checks and balances.

The controversial mechanism was  introduced in a 1959 trade agreement between Germany and Pakistan, and has since been duplicated in numerous international corporate trade and investment treaties, most notoriously, the North Atlantic Free Trade Agreement (NAFTA) of 1994. Government-chasing lawyers who designed the mechanism also developed a new industry to take advantage of the easy pickings from the deep pockets of taxpayers in affected nations.  A litany of arbitrary, abusive, parasitic judgments in favor of foreign corporations against host governments have followed.

This clear analysis, which contextualizes the ISDS within the TPP's absolutist capitalist ideology, by Lambert Strether of Corrente, reposted at Naked Capitalism, is a must-read:
There are many excellent arguments against the Trans-Pacific Partnership (TPP), two of which — local zoning over-rides, and loss of national sovereignty — I’ll briefly review as stepping stones to the main topic of the post: Absolutist Capitalism, for which I make two claims:

1) The TPP implies a form of absolute rule, a tyranny as James Madison would have understood the term, and

2) The TPP enshrines capitalization as a principle of jurisprudence.

Zoning over-rides and lost of national sovereignty may seem controversial to the political class, but these two last points may seem controversial even to NC readers. However, I hope to show both points follow easily from the arguments with which we are already familiar. Both flow from the Investor-State Dispute Settlement (ISDS) mechanism, of which I will now give two examples.

TPP’s ISDS and Local Zoning

I’m starting with local zoning because I think it’s an issue where “strange bedfellows” [Ralph Nader's Public Citizen & Cato, a think tank individual liberty, limited government, free markets and peace.  on left and right can work together (and so letter writing campaigns and visits to Congressional offices can be organized accordingly). I think it will be very hard to find find a constituency for a foreign corporation determining local land use, and easy to find constituencies against it.

TPP’s ISDS and State Sovereignty

Even though sovereignty, as an issue, seems absurdly large put beside zoning, I choose it because it too is an issue where the grassroots on left and right can unite. After all, whether you are a big government liberal who admires FDR, or a small government conservative who admires Coolidge, you don’t want the government of your country to be under the sway of an unelected, trans-national entity like Agenda 21 New World Order the ISDS putative courts.

[T]he investment chapter for the TPP was leaked, and the excellent Public Citizen[2] published it (link to the PDF). Their summary in relevant part describes the investor-state dispute settlement (ISDS) provisions:
...Yet in a manner that would enrage right and left alike, the private “investor-state” enforcement system included in the leaked TPP text would empower foreign investors and corporations to skirt domestic courts and laws and sue governments in foreign tribunals. There, they can demand cash compensation from domestic treasuries over domestic policies that they claim undermine their new investor rights and expected future profits. This establishes an alarming two-track system of justice that privileges foreign corporations in myriad ways relative to governments or domestic businesses. It also exposes signatory countries to vast liabilities, as foreign firms use foreign tribunals to raid public treasuries.
...The TPP Implies a Form of Absolute Rule, a Tyranny as James Madison Would Have Understood the Term. First, the ISDS tribunals, putatively courts, are completely unaccountable...

Second, the ISDS tribunals are riddled with conflicts of interest and open invitations to corruption...

Third, there is no appeal from the judgements of these putative courts...

Fourth and finally, the discretion of the ISDS tribunals is so great that they can write the rules, as well as interpret them. Public Citizen:

There are no new safeguards that limit ISDS tribunals’ discretion to create ever-expanding interpretations of governments’ obligations to foreign investors and order compensation on that basis.The leaked text reveals the same “safeguard” terms that have been included in U.S. pacts since the 2005 Central America Free Trade Agreement (CAFTA). CAFTA tribunals have simply ignored the “safeguard” provisions that the leaked text replicates for the TPP, and have continued to rule against governments based on concocted obligations to which governments never agreed.

In  the first three points, the ISDS tribunals are acting as putative courts, albeit conflicted, potentially corrupt, and anti-democratic and unaccountable courts...

The TPP Enshrines Capitalization as a Principle of Jurisprudence...

I’ll use the definition from Capital as Power (hat tip alert reader Sibiriak), by Jonathan Nitzan and Shimshon Bichler, which I’m reading with great interest. Page 153 and following:
... capitalization represents the present value of a future stream of earnings: it tells us how much a capitalist would be prepared to pay now to receive a flow of money later.

By the 1950s, capitalization was finally established as the heart of the capitalist nomos...

And, so, finally the floodgates were open. Nowadays, every expected income stream is a fair candidate for capitalization. And since income streams are generated by social entities, processes, organizations and institutions, we end up with the ‘capitalization of every thing’. Capitalists routinely discount human life, including its genetic code and social habits; they discount organized institutions from education and entertainment to religion and the law; they discount voluntary social networks; they discount urban violence, civil war and international conflict; they even discount the environmental future of humanity. Nothing seems to escape the piercing eye of capitalization: if it generates earning expectations it must have a price, and the algorithm that gives future earnings a price is capitalization...
Of course, government — at least hitherto — has re-ordered prices, income steams, claims on future income streams, and capitalization generally since forever; one might even say that’s the purpose of government, its raison d’etre, at least in a capitalist society.[4] However, TPP’s jurisprudential innovation is to reframe such re-ordering as “expropriation,” and to set up the ISDS to compensate the capitalists for it...

TPP elevates capitalization — the expectation of profit — as a principle to the principles of, say, the Bill of Rights, or the Declaration of the Rights of Man. And then, government, when it provides concrete material benefits to its citizens, must “compensate” capitalists whenever their calculated, immaterial expectations — capitalization — have been “expropriated.” What a racket! TPP is the biggest enclosure in the history of the world!

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