It's no exaggeration to say that the effort to take control of our lives is a dominant theme of world history, with a crescendo in the last several centuries of dramatic changes in human relations and world order. The topic is far too large to try to discuss here. I'll have to cut it down sharply. First I'll keep only to current manifestations and some of the roots with an eye toward what might lie ahead. Also, I'll keep to the global arena, which is by no means the only domain in which these issues arise.

In the past year, the global issues have been framed largely in terms of the notion of sovereignty, that is, the right of political entities to follow their own course, which may be benign or may be ugly, and to do so free from external interference. In the real world, that means interference by highly concentrated power, with its major center in the United States. This concentrated global power is called by various terms, depending on which aspect of sovereignty and freedom one has in mind. So sometimes it's called the Washington consensus, or the Wall Streeet/Treasury complex, or NATO, or the international economic bureaucracy (the World Trade Organization, World Bank, and IMF), or G-7 (the rich, Western, industrial countries) or G-3 or, more accurately, usually, G-1. From a more fundamental perspective, though it takes longer to say, we could describe it as an array of megacorporations, often linked to one another by strategic alliances, administering a global economy which is, in fact, a kind of corporate mercantilism tending toward oligopoly in most sectors, heavily reliant on state power to socialize risk and cost and to subdue recalcitrant elements.

In the past year, the issues of sovereignty have risen in two domains. One has to do with the sovereign right to be secure from military intervention. Here the questions arise in a world order based on sovereign states. Secondly, in the matter of sovereign rights in the face of socio-economic intervention. Here the questions arise in a world that's dominated by multinational corporations, especially financial institutions in recent years and the whole framework that's been constructed to serve their interests--for example, the issues that arose dramatically in Seattle last November.

The first category, military intervention, was a very lively topic last year. Two cases gained particular significance, attention, prominence--East Timor and Kosovo, in the opposite order, which is an interesting fact because that reverses both the timing and the significance. There's a lot to say about these matters and a lot of new information about them that I would like to discuss but, reluctantly, I'm going to drop that topic. If you'd like to bring it up later in questions, fine. I'll be happy to talk about it. It's a big, important and instructive topic, but time is short. So let me turn to the second topic, and that's the one I'll keep to (still cutting things down)--the question of sovereignty, freedom, human rights, the kind of questions that arise in the socio-economic arena. That's the subpart of this whole topic I want to keep to.

First a general comment--sovereignty is no value in itself. It's only a value insofar as it relates to freedom and rights, either enhancing them or diminishing them. I want to take for granted something that may seem obvious, but is actually controversial--namely that, in speaking of freedom and rights, we have in mind human beings; that is, persons of flesh and blood, not abstract political and legal constructions like corporations, or states, or capital. If these entities have any rights at all, which is questionable, they should be derivative from the rights of people. That's the core classical liberal doctrine. Its also the guiding principle for popular struggles for centuries, but its very strongly opposed. Its opposed by official doctrine. Its opposed by sectors of wealth and privilege, and that's true both in the political and the socio-economic realms. Ill ask you to keep that question on the shelf for a few minutes and say a couple of words of background.

In the political realm, the familiar slogan is "popular sovereignty in a government of, by, and for the people," but the operative framework is quite different. The operative framework is that the people are considered a dangerous enemy. They have to be controlled for their own good. These issues go back centuries, back to the earliest modern democratic revolutions in 17^th century England and in the North American colonies a century later. In both cases, the democrats were defeated--not completely and certainly not permanently, by any means. In 17^th century England, much of the population did not want to be ruled by either king or parliament. Recall that those were the two contestants in the standard version of the civil war but, like most civil wars, a good part of the population wanted neither of them. As their pamphlets put it, they wanted to be governed "by countrymen like ourselves, that know our wants," not by "knights and gentlemen [that] make us laws, that are chosen for fear and do but oppress us, and do not know the people's sores."

These same ideas animated the rebellious farmers of the colonies a century later, but the constitutional system was designed quite differently. It was designed to block that heresy. The goal was ?to protect the minority of the opulent from the majority" and to ensure that "the country is governed by those who own it." Those are the words of the leading framer, James Madison, and the president of the Continental Congress and first chief justice of the Supreme Court, John Jay. Their conception prevailed, but the conflicts continued. They continually take new forms; they're alive right now. However, elite doctrine remains essentially unchanged.

Fast forwarding to the 20^th century, (Ill keep here to the sort of liberal, progressive side of the spectrum--it?s harsher on the other side) the population are regarded as "ignorant and meddlesome outsiders" whose role is to be "spectators," not "participants," apart from periodic opportunities to choose among the representatives of private power. These are what are called elections. In elections, public opinion is considered essentially irrelevant, if it conflicts with the demands of the minority of the opulent who own the country. We're seeing that right now, in fact.

One striking example (there are many) has to do with the international economic order--what are called trade agreements. The general population, as polls make very clear, is strongly opposed to most of what's going on, but the issues don't arise in the election. It's not an issue in the elections because the centers of power, the minority of the opulent, are unified in support of instituting a particular kind of socio-economic order. So therefore the issue doesn't arise. The things that are discussed are things that they don't much care about, like questions of character or questions of reform, which they know aren't going to be implemented. So that's what's discussed, not what people care about. And that's pretty typical, and it makes sense on the assumption that the role of the public, as the ignorant and meddlesome outsiders, is just to be spectators. If the general public, as it often does, seeks to organize and enter the political arena, to participate, to press its own concerns, that's a problem. It's not democracy; it's what's "a crisis of democracy" that has to be overcome.

Again, I'm quoting. These are all quotes from the liberal, progressive side of the modern spectrum, but the principles are quite widely held, and the past 25 years have been one of those regular periods when a major campaign has been conducted to try to overcome the perceived crisis of democracy and to reduce the public to their proper role of apathetic and passive and obedient spectators. That's the political realm.

In the socio-economic realm there's something similar. There have been parallel, closely related conflicts for a long, long time. In the early days of the industrial revolution in the United States, in New England 150 years ago, there was a very lively, independent labor press run by young women from the farms or artisans in the towns. They condemned the "degradation and subordination" of the newly emerging industrial system which compelled people to rent themselves to survive. It's worth remembering, and hard to remember, perhaps, that wage labor was considered not very different from chattel slavery at that time, not only by the workers in the mills, but right through much of the mainstream for example, Abraham Lincoln, or the Republican Party, even editorials in the New York Times (that they might like to forget). Working people opposed the return to what they called ?monarchical principles? in the industrial system, and they demanded that those who work in the mills should own them the spirit of republicanism. They denounced what they called the 'new spirit of the age--gain wealth forgetting all but self,' a demeaning and degrading vision of human life that has to be driven into people's minds by immense effort which, in fact, has been going on over centuries.

In the 20^th century, the literature of the public relations industry provides a very rich and instructive store of instruction on how to instill the ?new spirit of the age? by creating artificial wants, or by (I'm quoting) "regimenting the public mind just as an army regiments the bodies of its soldiers," and inducing a "philosophy of futility" and lack of purpose in life, by concentrating human attention on "the more superficial things that comprise much of fashionable consumption.? If that can be done, then people will accept the meaningless and subordinate lives that are appropriate for them and they'll forget subversive ideas about taking control of their own lives.

This is a major social engineering project. It's been going on for centuries, but it became intense and enormous in the last century. There are a lot of ways of doing it. Some are the kind I just indicated, which are too familiar to illustrate. Others are to undermine security, and here, too, there are a number of ways. One way of undermining security is the threat of job transfer. One of the major consequences and, assuming rationality, one has to assume one of the major purposes of the mislabeled 'trade agreements' (stress 'mislabeled,' because they're not about free trade; they have strong anti market elements of a variety of kinds, and they're certainly not agreements, at least if people matter, since people are mostly opposed), one consequence of these arrangements is to facilitate the threat--it doesn't have to be reality, sometimes it is, but just the threat--of job transfer, which is a good way of inducing discipline by undermining security.

Another device, pardon the technical jargon, is to promote what's called 'labor market flexibility.' Let me quote the World Bank, who put the matter pretty plainly. They said,"Increasing labor market flexibility -- despite the bad name it has acquired as a euphemism for pushing wages down and workers out"(which is just what it is) "is essential in all the regions of the world. The most important reforms involve lifting constraints on labor mobility and wage flexibility, as well as breaking the ties between social services and labor contracts." That means cutting the benefits and the rights that have been won in generations of bitter struggle.

When they talk about lifting constraints on wage flexibility, they mean flexibility down, not flexibility up. The talk about labor mobility doesn't mean the right of people to move anywhere they want, as has been required by free market theory ever since Adam Smith, but rather the right to fire employees at will. And, under the current investor based version of globalization, capital and corporations must be free to move, but not people, because their rights are secondary, incidental.

These "essential reforms," as the World Bank calls them, are imposed on much of the world as conditionalities for ratification by the World Bank and the IMF. They're introduced into the rich, industrial countries by other means, and they've been effective. Alan Greenspan testified before Congress that ?greater worker insecurity? was an important factor in what's called the "fairy tale economy." It keeps inflation down because workers are afraid to ask for wages and benefits. They're insecure. And that shows up pretty clearly in the statistical record. In the past 25 years, this period of roll-back, of the crisis of democracy, wages have stagnated or declined for the majority of the workforce, for non supervisory workers, and working hours have increased very sharply--they've become the highest in the industrial world--and this is noticed, of course, by the business press, which describes it as ?a welcome development of transcendent importance," with working people compelled to abandon their 'luxurious lifestyles," while corporate profits are "dazzling" and "stupendous? (Wall Street Journal, Business Week, and Fortune).

In the dependencies, less delicate measures are available. One of them is the so-called "debt crisis," which is largely traceable to World Bank/IMF policy programs of the 1970s, and to the fact that the third world rich are, for the most part, exempt from social obligations. That's dramatically true in Latin America, and one of its major problems. The 'debt crisis' is something, but we should be careful to notice what it is. Its not a simple economic fact, by any means. It's, to a large extent, an ideological construct. What's called the 'debt' could be largely overcome in a number of very elementary ways.

One way to overcome it would be by resorting to the capitalist principle that borrowers have to pay and lenders take the risk. So, for example, if you lend me money and I send it to my bank in Zurich and buy a Mercedes, and you come back and ask me for the money, I'm not supposed to be allowed to say, 'I'm sorry. I don't have it. Take it from my neighbor.' And if you don't want to take the risk of the loan, you're not supposed to be able to say "my neighbor will have to pay for it."

That's the way it works in the international arena, however. That's what the ?debt crisis? is. The debt is not to be paid by the people who borrowed it--military dictators, their cronies, the rich and privileged in highly authoritarian societies that we've supported they don't have to pay. So, take Indonesia, where the current debt is about 140% of Gross Domestic Product (GDP). The money was taken by the military dictatorship and their friends and probably held by maybe a couple hundred people at the outside, but it has to be paid by the population under harsh austerity measures. And the lenders are mostly protected from risk. They get what amounts to free risk insurance by various devices of socializing costs, transferring them to Northern taxpayers. It's one of the functions of the IMF.

Similarly in Latin America, the huge Latin American debt is not all that much different from capital flight from Latin America, which suggests a simple way to deal with the debt (or a large part of it), if anyone were to believe in the capitalist principle, which is, of course, unacceptable. It puts the burden on the wrong people, on the minority of the opulent.

There are other ways, also, of eliminating the debt, and they're recognized, and they also reveal the extent to which it is an ideological construct. One other method, apart from the capitalist principle, is the principle of international law that was introduced by the United States when it, what's called in the history books, liberated Cuba, meaning conquered Cuba to prevent it from liberating itself from Spain in 1898. Having done that, the United States cancelled Cuba's debt to Spain on the perfectly reasonable grounds that the debt was imposed without the consent of the population. It was imposed under coercive conditions. That principle then entered international law, largely at U. S. initiative. It's called the principle of odious debt. An odious debt is invalid; it doesn't have to be paid. It's been recognized, for example, by the U. S. executive director of the IMF, that if that principle were available to the victims, not just to the rich, the third world debt would mostly dissolve, because it's invalid. It's odious debt.

But that's not to be. The odious debt is a very powerful weapon of control and it cant be abandoned. For about half of the world's population right now, thanks to this method, national economic policy is effectively run by bureaucrats in Washington. Also, half of the population of the world (not the same half, but overlapping) is subject to unilateral sanctions by the United States, which is a form of economic coercion that, again, undermines sovereignty severely and has been condemned repeatedly, just recently again, by the United Nations as unacceptable, but it makes no difference.

Within the rich countries there are other means of achieving similar results. Ill come back to that but, before doing so, just a word about what we should never allow ourselves to forget, and that is that the devices that are used in the dependencies can be very brutal. There was a Jesuit organized conference in San Salvador a couple of years ago, which considered the state terrorist project of the 1980s and its continuation since, by the socio-economic policies imposed by the victors. The conference took special note of what it called the residual ?culture of terror,? which lasts after the actual terror declines and has the effect of"domesticating the expectations of the majority," who abandon any thought of"alternatives to the demands of the powerful." They've learned the lesson that There Is No Alternative--TINA, as it's called, Maggie Thatcher?s cruel phrase. The idea is that there is no alternative--that?s now the familiar slogan of the corporate version of globalization. In the dependencies, the great achievement of the terrorist operations has been to destroy the hopes that had been raised in Latin America and Central America in the 1970s, inspired by popular organizing throughout the region and the "preferential option for the poor" of the Church, which was severely punished for that deviation from good behavior.

the traditional structures of power within the United States had long been allied,' and that's accurate.

He himself, Carrothers, is dissatisfied with the outcome, but he describes what he calls the 'liberal critique' as fundamentally flawed. This critique leaves the old debates "unresolved," he says, because of "its perennial weak spot." The perennial weak spot is that it offers no alternative to the policy of restoring the traditional structures of power, in this case by murderous terror that left a couple hundred thousand corpses in the 1980s and millions of refugees and maimed and orphaned in the devastated societies. So, again, TINA--There Is No Alternative.

The same dilemma was recognized at the other end, the opposite end of the political spectrum, by President Carter's main Latin American specialist, Robert Pastor, who's quite far to the dove-ish, progressive end of the admissible spectrum. He explains in an interesting book why the Carter administration had to support the murderous and corrupt Somoza regime right to the bitter end, and then, when even the traditional structures of power turned against the dictator, the U. S. (Carter administration) had to try to maintain the national guard that it had established and trained and that was then attacking the population with a brutality a nation usually reserves for its enemy, as he puts it. This was all done with benign intent under the TINA principle--no alternative. Here's the reason. The United States did not want to control Nicaragua or the other nations of the region, but it also did not want developments to get out of control. It wanted Nicaraguans to act independently, except (his emphasis) when doing so would affect U.S. interests adversely. So, in other words, Latin Americans should be free, free to act in accord with our wishes. We want them to be able to choose their own course freely, unless they make choices that we don't want, in which case we have to restore the traditional structures of power--by violence, if necessary. That's the more liberal and progressive side of the spectrum.

There are voices that are outside the spectrum--I don't want to deny that. For example, there's the idea that people should have the right "to share in the decisions, which often profoundly modify their way of life," not have their hopes "cruelly dashed" in a global order in which "political and financial power is concentrated" while financial markets "fluctuate erratically" with devastating consequences for the poor, "elections can be manipulated," and "the negative aspects on others are considered completely irrelevant" by the powerful. Those are quotes from the radical extremist in the Vatican whose annual New Year's message could scarcely be mentioned in the national press and it's certainly an alternative that's not on the agenda.

Why is there such broad agreement that Latin Americans, in fact, the world, cannot be allowed to exercise sovereignty, that is, to take control of their lives? It's the global analog to the fear of democracy within. Actually that question has been frequently addressed in very instructive ways, primarily in the internal record, which we have (quite a free country--we have a rich record of declassified documents, and they're very interesting). The theme that runs through them is strikingly illustrated in one of the most influential cases, a hemispheric conference that the United States called in February 1945 in order to impose what was called the Economic Charter for the Americas that was one of the cornerstones of the postwar world still firmly in place. The Charter called for an end to "economic nationalism (meaning sovereignty) in all its forms." Latin Americans would have to avoid what was called 'excessive' industrial development that would compete with U. S. interests, though they could have "complementary development." So Brazil could produce low-cost steel that the U. S. corporations weren't interested in. Crucially it was necessary "to protect our resources,? as George Kennan put it, even if that required "police states."

But Washington faced a problem in imposing the Charter. That was clearly explained internally in the State Department at the time in this way:Latin Americans were making the wrong choices. They were calling for "policies designed to bring about a broader distribution of wealth and to raise the standard of living of the masses, and they were "convinced that the first beneficiaries of the development of a country?s resources should be the people of that country," not U.S. investors. That's unacceptable, so sovereignty cannot be allowed. They can have freedom, but freedom to make the right choices.

That message has been regularly and forcefully reaffirmed in case after case up to the present. I?ll mention a couple of examples. Guatemala had a brief interlude of democracy. It was ended, as you know, by a U. S. military coup. For the public, this was presented as defense against the Russians. A little bit exotic, but that was the story. Internally the thrust was different and the threat was seen more realistically. Here's the way it was seen:

"The social and economic programs of the elected government met the aspirations" of labor and the peasantry, and "inspired the loyalty and conformed to the self-interest of most politically conscious Guatemalans.? Worse still, the government of Guatemala had "become an increasing threat to the stability of Honduras and El Salvador. Its agrarian reform is a powerful propaganda weapon; its broad social program of aiding the workers and peasants in a victorious struggle against the upper classes and large foreign enterprises has a strong appeal to the populations of Central American neighbors where similar conditions prevail.? So therefore a military solution was necessary. It went on for 40 years, and it's left the same culture of terror as in Central American neighbors.

The same was true in Cuba, another currently live case. When the United States made the decision (secretly) to overthrow the government of Cuba in 1960, the reasoning was very similar. It was explained by historian Arthur Schlesinger, who summarized to President Kennedy the study of a Latin American mission in a secret report to the incoming president. The Cuban threat, according to the mission, was "the spread of the Castro idea of taking matters into one's own hands. That's a disease that might infect the rest of Latin America, Schlesinger explained, where "the poor and underprivileged,"which means almost everyone, stimulated by the example of the Cuban revolution, are now demanding opportunities for a decent living.So something has to be done, and you know what was done. What about "the Soviet connection"? That was mentioned in the report in this way: Meanwhile, the Soviet Union hovers in the wings, flourishing large development loans, and presenting itself as the model for achieving modernization in a single generation.

Well, that's the threat--the threat of taking their lives into their own hands, and it had to be destroyed by terrorism and economic strangulation, which is still continuing. All of that is totally independent of the cold war, as surely is obvious by now, even without the secret record. The same concerns in the postcold-war period led to the quick undermining of Haiti?s brief experiment in democracy by Presidents Bush and Clinton, continuing an earlier record.

The same concerns lie in the background of the trade agreements-NAFTA, for example. At the time of NAFTA, you will recall, the propaganda was that it was going to be a wonderful boon to working people in all three countries--Canada, the United States, and Mexico. Well, that was quietly abandoned shortly after, when the facts were in. And what was obvious all along, was in fact finally publicly conceded. The goal was to "lock Mexico into the reforms" of the 1980s, the reforms which had sharply reduced wages, and enriched a small sector and foreign investors. The background concerns were articulated at a Latin American strategy development conference in Washington, a workshop in 1990. It warned that "a `democracy opening' in Mexico could test the special relationship by bringing into office a government more interested in challenging the US on economic and nationalist grounds. Notice that's the same threat as in 1945 and since, overcome, in this case, by locking Mexico into treaty obligations. These same reasons consistently lie behind a half a century of torture and terror, not only in the western hemisphere. And they're also at the core of the investor rights agreements that are being imposed under the specific form of globalization that's designed by state corporate power nexus.

Let's go back to what I asked you to put on the shelf, the point of departure: the contested issue of freedom and rights, hence sovereignty insofar as it's to be valued. Do they inhere in persons of flesh and blood, or only in small sectors of wealth and privilege? Or even in abstract constructions like corporations, or capital, or states? In the past century the idea that such entities have special rights, over and above persons, has been very strongly advocated. The most prominent examples are Bolshevism, fascism, and private corporatism, which is a form of privatized tyranny. Two of these systems have collapsed. The third is alive and flourishing under the banner, TINA--There Is No Alternative to the emerging system of state corporate mercantilism disguised with various mantras like globalization and free trade.

A century ago during the early stages of the corporatization of America, discussion about these matters was quite frank. Conservatives a century ago denounced the procedure, describing corporatization as a "return to feudalism" and "a form of communism," which is not an entirely inappropriate analogy. There were similar intellectual origins in neo-Hegelian ideas about the rights of organic entities, along with the belief in the need to have a centralized administration of chaotic systems--like the markets, which were totally out of control. It's worth bearing in mind that in today's so-called 'free-trade economy' a very large component of cross-border transactions (which are called trade, misleadingly), probably about 70% of them, are actually within centrally managed institutions, within corporations and corporate alliances, if we include outsourcing and other devices of administration. That's quite apart from all kinds of other radical market distortions.

The conservative critique --notice that I am using the term "conservative" in a traditional sense; such conservatives scarcely exist any more -- the conservative critique was echoed at the liberal/progressive end of the spectrum early in the twentieth century, most notably perhaps by John Dewey, America's leading social philosopher, whose work focused largely on democracy. He argued that democratic forms have little substance when "the life of the country" --production, commerce, media -- is ruled by private tyrannies in a system that he called "industrial feudalism" in which working people are subordinated to managerial control, and politics becomes "the shadow cast by big business over society.

Notice that he was articulating ideas that were common coin among working people many years earlier, as I mentioned. And the same was true of his call for the elimination of, the replacement of, industrial feudalism by self-managed industrial democracy.

Interestingly, progressive intellectuals who favored the process of corporatization agreed more or less with this description. So Woodrow Wilson, for example, wrote that "most men are servants of corporations," which now account for the "greater part of the business of the country" in a "very different America from the old, . . . no longer a scene of individual enterprise,individual opportunity and individual achievement," but a new America in which "small groups of men in control of great corporations wield a power and control over the wealth and business opportunities of the country," becoming 'rivals of the government itself," and undermining popular sovereignty, exercised through the democratic political system.

Notice this was written in support of the process. He described the process as maybe unfortunate, but necessary, agreeing with the business world, particularly, after the destructive market failures of the preceding years had convinced the business world and progressive intellectuals that markets simply had to be administered and that financial transactions had to be regulated.

Similar questions, very similar ones are very much alive in the international arena today, talk about reforming financial architecture and that sort of thing. A century ago, right about that time, corporations were granted the rights of persons by radical judicial activism, an extreme violation of classical liberal principles. They were also freed from earlier obligations to keep to specific activities for which they were chartered. Furthermore, in an important move, the courts shifted power upward from the stockholders in a partnership to the central management, which was identified with the immortal corporate person. Those of you who are familiar with the history of communism will recognize that this is very similar to the process that was taking place at the time, very quickly predicted, in fact, by left critics, left-Marxist and anarchist critics of Bolshevism, people like Rosa Luxembourg, who warned, early on, that the centralizing ideology would shift power from working people to the party, to the central committee, and then to the maximal leader, as happened very quickly after the conquest of state power in 1917, which at once destroyed every residue of socialist forms and principles. The propagandists on both sides prefer a different story for self-serving reasons, but I think that's the accurate one.

In recent years, corporations have been granted rights that go far beyond those of persons. Under the World Trade Organization rules, corporations can demand what?s called the right of "national treatment." That means that General Motors, if it's operating in Mexico, can demand to be treated like a Mexican firm. Now that's only a right of immortal persons; it's not a right of flesh-and-blood persons. A Mexican cant come to New York and demand national treatment and do very well, but corporations can.

Other rules require that the rights of investors, lenders, and speculators must prevail over the rights of mere flesh-and-blood people generally, undermining popular sovereignty and diminishing democratic rights. Corporations, I'm sure you know, are able in various ways to bring suits, bring actions, against sovereign states, and there are interesting cases. For example, Guatemala, a couple of years ago, sought to reduce infant mortality by regulating the marketing of infant formula by multinationals. The measures that Guatemala proposed were in conformity with World Health Organization guidelines and they kept to international codes, but the Gerber Corporation claimed expropriation and the threat of a World Trade Organization complaint sufficed for Guatemala to withdraw, fearing retaliatory sanctions by the United States.

The first such complaint under the new World Trade Organization rules was brought against the United States by Venezuela and Brazil who complained that EPA regulations on petroleum violated their rights as petroleum exporters. Washington backed down that time, also allegedly in fear of sanctions, but I'm skeptical about that interpretation. I don't think the U. S. fears trade sanctions from Venezuela and Brazil. More likely the Clinton administration simply saw no compelling reason to defend the environment and protect health. These issues are arising very dramatically and, in fact, obscenely right now. Tens of millions of people around the world are dying from treatable diseases because of the protectionist elements written into the World Trade Organization rules that grant private megacorporations monopoly pricing rights. So Thailand and South Africa, for example, which have pharmaceutical industries, can produce lifesaving drugs at a fraction of the cost of the monopolistic pricing, but they?re afraid to do so under threat of trade sanctions. In fact, in 1998 the United States even threatened the World Health Organization that it would withdraw funding if the World Health Organization even monitored the effects of trade conditions on health. These are very real threats. I'm talking about today, like this week's international press. All of this is called "trade rights." It has nothing to do with trade. It has to do with monopolistic pricing practices enforced by protectionist measures that are introduced into what are called free trade agreements. The measures are designed to ensure corporate rights. They also have the effect of reducing growth and innovation, naturally. And they are only part of the array of regulations introduced into these agreements which prevent development and growth. What is at stake is investor rights, not trade. And trade, of course, has no value in itself. It's a value if it increases human welfare, otherwise not.

In general the principle of the World Trade Organization, the primary principle, and related treaties, is that sovereignty and democratic rights have to be subordinated to the rights of investors. In practice that means the rights of the huge immortal persons, the private tyrannies to which people must be subordinated. These are among the issues that led to the remarkable events in Seattle. But in some ways, a lot of ways, the conflict between popular sovereignty and private power was illuminated more sharply a couple of months after Seattle, just a few weeks ago in Montreal, where an ambiguous settlement was reached on the so-called "biosafety protocol." There the issue was very clearly drawn. Quoting the New York Times, "A compromise was reached after intense negotiations that often pitted the United States against almost everyone else" over what's called "the precautionary principle.? What's that? Well the chief negotiator for the European Union described it this way: "Countries must have the freedom, the sovereign right, to take precautionary measures with regard to genetically altered seed, microbes, animals, crops that they fear might be harmful." The United States, however, insisted on World Trade Organization rules. Those rules are that an import can be banned only on the basis of scientific evidence.

Notice what's at stake here. The question that's at stake is whether people have the right to refuse to be experimental subjects. So, to personalize it, suppose the biology department at the university were to walk in and tell you, ?You folks have to be experimental subjects in an experiment we're carrying out, where we?re going to, I don't know what, stick electrodes in your brain and see what happens. You can refuse, but only if you provide scientific evidence that it's going to harm you.? Usually you cant provide scientific evidence. The question is, do you have a right to refuse? Under World Trade Organization rules, you don't. You have to be experimental subjects. It's a form of what Edward Herman, a co-author of mine who's an economist, has called ?producer sovereignty. The producer reigns; consumers have to somehow defend themselves. That works domestically, too, as he pointed out. It's not the responsibility, say, of chemical and pesticide industries to demonstrate, to prove that what they're putting into the environment is safe. It's the responsibility of the public to prove scientifically that it's unsafe, and they have to do this through under funded public agencies that are susceptible to industry influence through lobbying and other pressures.

That was the issue at Montreal, and a kind of ambiguous settlement was reached. Notice, to be clear, there was no issue of principle. You can see that by just looking at the lineup. The United States was on one side, and it was joined, in fact, by some other countries with a stake in biotechnology and hi-tech agro-export, and on the other side was everybody else--those who didn't expect to profit by the experiment. That was the lineup, and that tells you exactly how much principle was involved. For similar reasons, the European Union favors high tariffs on agricultural products, just as the United States did 40 years ago, but no longer--and not because the principles have changed; just because power has changed. There is an overriding principle. The principle is that the powerful and the privileged have to be able to do what they want (of course, pleading high motives). The corollary is that sovereignty and democratic rights of people must go, in this case--and that's what makes it so dramatic--their reluctance to be experimental subjects when U.S. -based corporations can profit by the experiment. The U.S. appeal to the World Trade Organization rules is very natural, since they codified that principle; that's the point.

These issues, although they're very real and affecting a huge number of people in the world, are actually secondary to other modalities to reduce sovereignty in favor of private power. Most important, I think, surely, was the dismantling of the Bretton Woods system in the early 1970s by the United States, Britain, and others. That system was designed by the U.S. and Britain in the 1940s. It was a time of overwhelming popular support for social welfare programs and radical democratic measures. In part for those reasons the Bretton Woods system of the mid-'40s regulated exchange rates and allowed controls on capital flow. The idea was to cut down wasteful and harmful speculation, and to restrict capital flight. The reasons were well-understood and clearly articulated--free capital flow creates what?s sometimes called a 'virtual parliament' of global capital, which can exercise veto power over government policies that it considers irrational. That means things like labor rights, or educational programs, or health, or efforts to stimulate the economy or, in fact, anything that might help people and not profits (and therefore is irrational in the technical sense).

The Bretton Woods system more or less functioned for about 25 years. That's what many economists call the 'golden age' of modern capitalism (modern state capitalism, more accurately). That was a period, roughly up until about 1970, a period of quite historically unprecedented rapid growth of the economy, of trade, of productivity, of capital investment, extension of welfare state measures, a golden age. That was reversed in the early '70s. The Bretton Woods system was dismantled, with liberalization of financial markets and floating exchange rates.

The period since has often been described as a "leaden age," accurately. There was a huge explosion of very short-term, speculative capital, completely overwhelming the productive economy. There was quite marked deterioration in just about every respect--considerably slower economic growth, slower growth of productivity, of capital investment, much higher interest rates (which slow down growth), greater market volatility, and financial crises. All of these things have very severe human effects, even in the rich countries: stagnating or declining wages, much longer working hours, particularly striking in the United States, cutback of services. Just to give you one example in today's great economy that everyone's talking about, the median income (half above, half below) for families has gotten back now to what it was in 1989, which is well below what it was in the 1970s. It also has been a period of the dismantling of social democratic measures that had considerably improved human welfare. And in general, the newly-imposed international order provided much greater veto power for the "virtual parliament" of private capital of investors leading to significant decline of democracy and sovereign rights (as intended), and a significant deterioration in social health.

While those effects are felt in the rich societies, they're a catastrophe in the poorer societies. These issues cut across societies, so it's not a matter of this society got richer and that one got poorer. The more significant measures are sectors of the global population. So, for example, using recent World Bank analyses, if you take the top 5% of the world's population and compare their income and wealth to the bottom 5%, that ratio was 78:1 in 1988 and 114:1 in 1993 (that's the last period for which figures are available), and undoubtedly higher now. The same figures show the top 1% of the world's population has the same income as the bottom 57%--2-1/2 billion people.

For the rich countries, the point was made very clearly, to quote a well-known economist, by Barry Eichengreen, in his highly regarded history of the international monetary system. Like others, he pointed out, many people have pointed this out, that the current phase of globalization is rather similar to the pre-World War I period, by rough measures. However, there are differences. One primary difference, he explains, is that at that time, government policy had not yet been "politicized" by "universal male suffrage and the rise of trade unionism and parliamentary labor parties. Therefore, the severe human costs of financial rectitude that are imposed by the virtual parliament could be transferred to the general population. But that luxury was no longer available in the more democratic Bretton Woods era in 1945, so that "limits on capital mobility substituted for limits on democracy as a source of insulation from market pressures.

There's a corollary to that. It's quite natural that dismantling of the postwar economic order should be accompanied by a significant attack on substantive democracy--freedom, popular sovereignty, and human rights--under the slogan TINA (There Is No Alternative). It's kind of a farcical mimicry of vulgar Marxism. The slogan, needless to say, is self-serving fraud. The particular socio-economic order that's being imposed is the result of human decisions in human institutions. The decisions can be modified; the institutions can be changed. If necessary, they can be dismantled and replaced, just as honest and courageous people have been doing throughout the course of history.