On the Cuba Embargo, and Free Trade — Real and Imagined

The degree to which the US trade embargo on Cuba has affected the economy of that country has been a matter of recent debate. I’m not concerned directly with Cuba here, but with the nature of what neoliberal ideology calls “free trade” more generally — of which an interesting discussion erupted as an offshoot of the debate on Cuba.

On Facebook, my friend Adam Bates observed:

If the economic principles implied by the left’s view of the embargo of Cuba were applied by them to everything else instead of literally just this single situation in the entire universe, we’d have so much more common ground and the world would be so much better off.

This is an argument I’ve encountered fairly frequently in recent days: Opposition to the embargo on the part of the Left implies that they consider trade to be necessary and desirable. To be consistent, therefore, they should support free trade in general. 

But to be accurate, free trade is not even on the table. There is no major force in American life that advocates free trade, and virtually all of the mainstream voices calling for “free trade” — including some or most right-libertarians — want something in practice that is just the opposite.

In the comments, someone objected to Adam’s framing:

I think most leftists would agree that some level of trade is necessary for any country, capitalist or socialist. The sticking point for most of us is that free trade agreements pushed for by liberal powers give capitalists unlimited leeway to crowd out local producers and extract wealth from the country. 

In response, he said:

So then why complain about the Cuba embargo? Why not applaud it as protecting Cuba from economic exploitation?

I think the inability to distinguish between mutually beneficial exchange and “exploitation” is the problem here.

It’s not an either-or situation, though. Saying that there’s some minimal level of utility to the exploited party in a trade (which is obvious), or that it is necessary, does not contradict the fact of exploitation. It does not contradict the fact that a necessary function takes place on onerous terms to one party. It’s analogous to monopoly pricing, where the dominant party with superior economic power is able to target the price to a revenue-maximizing level, such that rather than the price being at an equilibrium value reflecting what’s necessary to bring the good to market with no economic rents, it’s set to provide just enough value to the buyer to get them to buy while still making them pay more than the fair market value of the good. 

If you poison someone and then sell an antidote that cost you $1 to make for $1000, they’re obviously better off than if the exchange were prohibited. But equally obviously, they’re still being exploited because of the power differential involved. And the conditions of international trade are rigged by a system of power that works the same way.

Capitalism is all about allowing just enough freedom and enough utility to exist to suit its purposes, while maximizing the amount rentiers can skim off the top. That’s why what’s called “liberalization,” “free market reform,” and “free trade” in the billionaire-funded libertarian think tanks, by right-wing politicians, and by right-wing pundits in the press, will never amount to fully free markets or trade. The so-called “free market” or “free trade” agendas promoted by capitalist lobbyists and the billionaires’ pet think tanks really consists of getting rid of those forms of state interventionism and protectionism that serve their purposes, while leaving in place those that continue to be useful, or adding new forms of intervention that are necessary to their profit models under today’s conditions. The amount of freedom allowed is that which maximizes the sustainable level of extraction.

Hence “free trade” involves lowering tariff barriers while leaving in place or strengthening all the monopolies that are necessary to the profit of transnational corporations. It means strengthening the intellectual property protectionism that allows those corporations to enclose nominally outsourced production within their walls. It means the use of debt peonage and IMF structural adjustment programs to force the “privatization” and enclosure of every conceivable form of commons. It means forcing the governments of former colonies, via multilateral institutions and the threat of invasion or coup, into functioning as policemen for Western capital, suppressing labor and land reform activism, and enforcing capitalist title to looted and enclosed commons.

The commenter who previously objected to Adam’s original post said:

the problem is that the US&co established liberal hegemony by, for the most part, giving countries two options when it came to free trade: 0 or 100%. Cuba doesn’t want 100, so they’re getting 0 as punishment.

Adam, in response, wrote:

Well trade is either free or it isn’t. Are you suggesting the U.S. should lift the embargo but impose a half-embargo?

What is the right amount of freedom to permit? Heavy tariffs?

* * *

If McDonald’s wants to open up 15 stores in Cuba should they be allowed to? If Nike wants to build a factory there should they be allowed to?

* * *

My sense is without that embargo the Cuban regime would have collapsed or radically reformed decades ago.

HBO, tourism, new cars, and McDonald’s will accomplish in 10 years what 50 years of saber rattling and violence couldn’t.

But in fairness to the commenter, it seems clear to me that by “100%” they mean not actually free trade, but opening up the economy 100% to domination by McDonalds, HBO, et al on the latter’s terms. All these examples of so-called “free trade” Adam listed are, in fact, actually examples of corporations whose entire profit model depends on a wide range of protectionist measures. It’s just called “free trade” in the neoliberal capitalist ideology because they don’t involve tariffs or import restrictions. 

And if Cuba opened up its economy to “free trade” of the sort that is actually meant by most of the capitalist or establishment libertarian commentariat, it would mean falling 100% under the domination of a global corporate order that is protectionist, exploitative, and extractive to its very core. So allowing trade, but not on the terms dictated either by McDonald’s and Nike or by the Washington Consensus, would not be a half-embargo. It’s what the libertarian right calls “free trade” that would be a half-embargo.

Suppose, on the other hand, that Cuba or some other ex-colonial nation implemented 100% genuine free trade entirely on its own terms, and not the sort being promoted by the Washington Consensus. Suppose it eliminated tariffs and allowed unrestricted imports, but also refused to enforce all the other forms of protectionism which are the lifeblood of global capitalism, namely: 

1) ignored all American patent and trademark claims and permitted Cuban manufacturers to produce unlimited knockoffs of Nike sneakers and other American corporate goods for the domestic market — without the Swoosh markup;

2) refused to enforce the franchise laws that let McDonald’s control the conditions under which local restauranteurs could sell Big Macs; 

3) refused to recognize the licensing and copyright laws that enable HBO to extract rent; 

4) repudiated all odious debt to the World Bank and to private lenders; and 

5) turned the sugar plantations into genuine worker-managed cooperatives, rather than giving it back to the gusanos in Miami (of course applying similar principles by, e.g., placing South African mines and Nigerian oil under commons governance, etc.).

That really would be free trade, but I don’t think it would work out very well for HBO, McDonald’s, et al. And I’ll bet that in the face of such genuine free trade the US would return to doing a lot more than just rattling those sabers in about half no time. Joe Biden, Neera Tanden, Dick Cheney, and Mike Pompeo would be screaming “Failed state!” and the WHISC/SOA coup machine would be quietly kicking into overdrive.

The claim that “trade is mutually beneficial” depends on what is meant by “trade.” It will almost certainly be false, in any sense of “free trade” that you’re likely to see used by anyone on a cable news channel or at a right-libertarian think tank. What’s called “free trade” by virtually all mainstream voices is beneficial mostly to those at the top of the food chain. The kind of free trade I described, on the other hand, will improve the lives of everyone involved except the extractors and parasites.

So let’s have a real free trade agenda — the kind that doesn’t hand a country over to McDonald’s, Nike, car manufacturers, HBO, et al. Let it be the countries of the Global South that force it on McDonald’s and HBO, rather than the other way around. And let it be on such a scale that it acts as dynamite at the foundations of the transnational corporate order, and that the CIA and WHISC coup machines throw up their hands in despair of reversing it.

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