This week, I got a media call from one of Canada’s prime time news shows, CTV’s Kevin Newman Live, to talk about the just wikileaked TISA (Trade in Services Agreement) draft. The good thing is that the topic is actually very relevant to our understanding of markets and consumption and CTV was one of the few North American stations covering the subject (kudos to Kevin and his team for broaching this topic). On the flip side, TV interviews have the tendency to break things down to anachronistic rhetorical conventions. So I decided to spend a bit more time writing about TISA and the relationship between the global financial system and financial services consumption. In this post, I will answer five basic questions that shed more light on the TISA initiative and what it does. During the weekend, I will hopefully write another post and go a little more into historical and theoretical depth about what my esteemed colleagues Soren Askegaard and Jeppe Linnet have called “the context of context” – TISA and the contemporary political economy.
What is TISA?
Markets are like the proverbial fire - a useful servant but a terrifying master. That's why they need rules and regulations. During the past thirty years, a lot of these rules have already been curbed in the name of making global services – including the global financial market system - more “efficient” and allowing corporate interests to reap even bigger benefits. This, as we all know, has led to a significant increase in economic crises. TISA is a secret wish list from some of the world's most powerful service corporations and industry associations demanding the removal of even more of these rules, to further deregulate the global flow of capital and services. TISA covers a vast number of services industries. For illustration purposes, I will focus on one particular systemic relationship: that between TISA and the global financial industry.
What does TISA purport to do?
Like all market-liberalizing policy initiatives, TISA claims that greater market freedom reduces "unnecessary" bureaucratic hurdles and, thus, offers positive economic and social consequences. Behind this argument is the long-held belief that markets are the best possible arrangement for the satisfaction of individual needs and the efficient allocation of resources. However, there is overwhelming scientific and historical evidence that deregulation leads to greater financial instability. Economists have warned since the 18th century about the devastating consequences of such policies. Perhaps one of the earliest and the most prominent critics in this debate has been the Hungarian economist and historian Karl Polanyi who concluded, that “to allow the market mechanism to be the sole director of the fate of human beings and their natural environment…would result in the demolition of society.” Polanyi’s key argument was that market society is a fundamentally unsustainable concept as any attempt to establish markets as self-regulating social systems will result in social protectionist countermeasures that lead to massive social dislocation (more on this dilemma and the seeming solution more recent economists have established in part two).
Why is TISA negotiated behind closed doors?
One of the seemingly oddest aspects about the TISA story is that it is not only negotiated in private. As the wikileaked draft states, there will also be a five-year communication ban on the agreement. While part two of this post will outline a larger historical shift from vertical top-down political economy to a horizontal political economy, the short answer is that today more and more problems (poverty, health, financial debt, etc.) are handled not by democratically elected parliaments but through so-called governments of competence and ethics. The underlying rationale is to protect the principle of competition from the egalitarian demands of acting minorities or "lunatic" majorities. It is considered the duty of the elite to teach the masses respect for competition. Because majorities are held to always demand better protection against competition, problem-solving should be a matter of enlightened elites that decide for everyone how things should be dealt with rather than wasting endless time through democratic discussion and compromise. In order for good decisions to prevail, they must be left to “experts” and out the reach of democratic control.
What will TISA actually do?
On the surface level, TISA will make societies more permeable for the global flows of service-level capital. On a deeper structural level, and this is where the real crux lies, TISA will shift the responsibility for the stability of the global economy even further away from governments and corporations towards individual consumers. That’s the contemporary variation of the self-defense mechanism Polanyi mentioned. Governments will no longer protect families against corporate misconduct or the consequences of systemic financial shocks. Instead, they are encouraged to be more resilient and more financially literate. This is a process Ela Veresiu and I call consumer responsibilization. Along these lines, TISA will not only add more pressure on individuals. It will also lead to greater financial instability and increase already devastating social and economic inequalities. In this regard, and to use a much more populist phrase here, TISA is another piece in the economic-regulatory puzzle that enables corporations to privatize their gains and socialize their losses.
How does TISA do this?
Although outside of the General Agreement on Trade in Services and the World Trade Organization framework, TISA is largely compatible with the GATS so that stronger-nation participants will be able to pressure weaker nations into deregulating their economies in exchange for certain (alleged) economic benefits. According to TISA article 17, for instance, all participating governments legally commit that potential emergency measures to counteract or soften the negative impact of an economic crisis should never stand in the ways of its duties to guarantee market freedom. With no measures left for government to intervene into the market on behalf of society, the only other thing government can do to respond to the crisis in question is to intervene into society on behalf of the market. That entails an intervention on the level of individual behavioral conduct such as asking greater sacrifices from individual citizens. This is not only in complete and utter contradiction to the experiences we have made during and after the last financial crisis. It will also put most of the actual burden for the resolution of potential crises on individual citizens, families, homeowners, and pensioners. However, for contemporary politicians, public institutions, and economic elites, this is actually the “natural” thing to be done. In the next post, I will elaborate a bit on why this is the case.