This post is Part 2 of the special series on TTIP that we’ll be running in the coming weeks.
TTIP is a complicated issue – but the fact that there is so much public debate about it shows that we have, after all, learned something from the Great Financial Crisis, or so I will argue. Before this crisis, many debates about economic policy took the form of “more market, please” (usually coming from the right) versus “more state, please” (usually coming from the left). But this way of carving up the terrain overlooks the essential preconditions of markets that are themselves political. In addition to questions about “more market” versus “more state”, we need to ask questions about who sets the rules of the economic game.
Economic policy was, for quite some time, seen as an issue for experts. Measures were evaluated in terms of efficiency, which was seen not so much as a political value, but more as a technical factor, and as something no one could be against. But we cannot, and in fact do not, evaluate markets only in terms of efficiency; in fact, what we mean by efficiency crucially depends on how the rules of markets are designed in the first place: whose rights are taken into account, and in what ways? Markets give people extensive rights to act on their own preferences, without having to take into considerations the preferences of others. This is a valuable form of freedom, but one that needs to be carefully circumscribed to make sure it does not cause unjustifiable harm.
Markets can do such harm in different ways: within transaction, to concrete third parties, or to whole societies. Harm can be done within transactions if these are not mutually beneficial to both parties, but one is actually tricked or seduced into a bargain of little value to them. Harm can be done to third parties, such as the neighbors of a factory who have to inhale the fumes it produces. And it can be done to whole societies (and even to humanity as a whole), for example if the damage done to the environment is not local, but global.
This is why markets need rules, and setting these rules is a political task, not a merely technical one. It determines which moves in the game are permitted, which has an impact not only on the question of which forms of harm are seen as acceptable in a society, but also on the distributive outcomes. Companies have long understood how important these rules are for who gets what; hence the huge sums of lobbying money flowing into Washington and Brussels. Many conversations about how the rules should be set took place behind closed doors.
With TTIP, this has changed. The very fact that such an important agreement was negotiated behind closed doors raised suspicions, as did some of the details about who got access to the negotiators (typically, representatives of industry associations rather than employees of NGOs or consumer protection organisations). One may debate the pro’s and con’s of trade agreement in general (and one of the problem of TTIP is, in my view, that potentially beneficial or at least harmless agreements are lumped together with highly problematic ones). But what should be out of question is that the setting of the rules of the economic game is the task of democratic politics, not of bureaucrats in collusion with lobbyists.
(A difficult question, which I here bracket, is whether the democratic right to set the rules of the economic game should sometimes be trumped by considerations of justice, for example when the population of a rich country refuses to open its markets to suppliers from extremely poor countries whose population has claims of justice against them. But this is not the constellation of TTIP as it is currently negotiated, although there are worries that a united US-EU trading zone might make it even harder for third countries to trade with them, which might contradict imperatives of justice).
Before TTIP, there seems to have been an asymmetry: some economic players (typically companies or industry associations) seem to have understood that setting the rules of the game is of paramount importance, and did whatever it took to try to influence the rule-setting process in their own favor. Other economic players (typically the public) understood far less about this, or were less able to do something about it. Part of this asymmetry may have come from a sense of incompetence, of having to leave such “difficult questions” to the “experts”. The relation between voters and experts is a complicated one, and I am certainly not claiming that the current distrust of experts that is propagated by populist movements is the solution. But maybe the debate around TTIP could point the way towards a more constructive form of dealing with this question: public debate, petitions, more balanced access for interest groups, the involvement of parliaments – in short, the whole gamut of democratic politics, some of which indeed had an impact on the negotiations (or so it seems, as of now). This, rather than deals behind closed doors, is how the rules of the economic game should be set.