Trade agreements are not really about trade.
It was a realization that made me rethink the role that we, as consumers, play in the game of international trade. They are a tool with which developed countries create a position of superiority on the world economic stage. This position is disguised as overall efficiency.
Neoclassical economists suggest that valuable trade deals maximize utility and minimize opportunity cost. This is the principle of comparative advantage. Thus, overall efficiency is synonymous with maximalism in terms of quantity of output. Simply put, the value equals plus.
Yanis Varoufakis said that “We produce value collectively, but the smart privateers tax it and become the oligarchs”. Only a few players are reaping the rewards despite their trust in us, the consumers, to make their product useful. However, Varoufakis failed to mention how the intricacies of trade deals, backed by monopoly capitalism, influence the behavior of everyday Australians.
Capitalism is no longer about meeting needs or improving competition; it is about conditioning society to consider material things as synonymous with success, well-being and identity. The capitalists need us to defend their idea of ââglobal efficiency; they want us to need and want their products.
This level of dependence is a two-way street, with modern international trade trapping developing countries in export-led growth. They get lost in a specialized system of low-value-added manufacturing and importing high-value-added goods such as petroleum and fossil fuels for electricity.
Maximalism is part of who we are, which makes sense given that our opinions are rooted in the stories that surround us since we were born. We have formed competitive markets the same way we compete individually for value.
Value has many meanings, but a common definition is the flow of wealth, a cynical yet straightforward explanation. This definition is not contemporary but serves me well to illustrate the next point and how it relates to trade agreements. I believe we try to reflect our worth in the world and develop a sense of personal worth by creating the illusion of wealth compared to that of our neighbors.
A simple example of this is fashion. Clothing reflects the way we want to be perceived and is a tool with which we explore our own individuality by experiencing different personalities. It sounds pure enough, but it forms the basis of a green and ethical mining industry that we conveniently import to our doorstep.
Fast fashion is rooted in neoclassical trade theory, with retailers in developed countries producing clothing in developing countries where it is cheaper to do so. Economists argue that developing countries have a comparative advantage in their abundance of low-wage labor. Developed economies have an abundance of capital-intensive resources such as technology and will therefore trade higher value-added goods for clothing made in low-wage countries to maximize economic efficiency.
Fast fashion has exacerbated the economic and operational demands of suppliers and increased competition among manufacturers for orders. Companies are absorbing these pressures by cutting costs and wages.
At the same time, we are used to cheap and trendy clothes and have an insatiable appetite for trendy products that abuses a system that was put in place to maximize efficiency but now exploits changing trade regimes. This makes sense given that fashion trends are a reflection of the economic climate.
Take the rise and fall of clothing brand Juicy Couture, for example. The brand opened in 1995 as the economy recovered from the 1990-91 recession. Consumers were hungry for luxury that reflected their buying behavior.
Juicy Couture’s iconic 2000s velor tracksuits were heavily branded and with a price tag of $ 155, they perfectly bridged the gap between affordability and luxury. Fast forward to the 2008 Global Financial Crisis (GFC), the garish brand of Juicy Couture no longer resonated with customers as the recession inspired a movement toward minimalism.
Capitalism is not just a master manipulator; we, as consumers, are chameleons, favoring clothing styles that reflect our surroundings. The economy is driven by growth and maximizing resources by cutting corners and making selfish trade deals, and so are we. We reflect personal growth in our changing wardrobe and maximize the value of our dollar by investing in fast fashion, prioritizing what the garment can represent over the garment itself.
The solution requires significant structural change, with the aim of enabling economic and monetary sovereignty in developing countries. In her TEDx 2017 presentation, Haley Edwards, editor at Time magazine suggested that commerce is all about setting the standards we would like to live by.
The way forward is to move away from temporary debt repayment solutions such as the privatization of state-owned enterprises, debt restructuring and labor market flexibility. Instead, it focuses on creating a standard of global prosperity through food and energy sovereignty and the transition of the workforce from fast fashion to value-driven industrial policies. It’s about taking what developing countries already have and making it more efficient.
A move towards eco-sustainability would influence how the everyday consumer understands value. By reducing the amount of outsourced fashion, the price of clothing would increase, causing demand to drop. The Global North would produce clothes at home and face the environmental / ethical impacts of fast fashion or implement a sustainable production framework.
Trade agreements will not be considered valid if they exclusively promote maximalism, they must demand eco-maximalism that considers people and the planet rather than quantity and price.
If we continue to be trade tyrants, the economic possibilities for the future are quite bleak. Visualize The Hunger games with the Global North as the capital and the Global South as the poor neighborhoods.
Or watch the movie The Lorax. The Global North is the Ozealer who let his greed for want dominate his respect for nature. His destruction of the environment and his thirst for power ultimately created a mythical utopia called Thneedville, built on artificial vegetation and the privatization of the air. It may no longer be a work of fiction if we continue on the path to global efficiency.
After all, fiction is just a version of reality deemed too far-fetched for the norm. However, it still resides in our consciousness and manifests itself in a palatable art like cinema. Seems like everyone already knows what’s going on, we’re just too material to see the value if it’s not in our hands or for sale.
Molly Richardson is a student at the University of Adelaide.
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