The Enron Stage of Capitalism

The Enron Stage of Capitalism is represented by GATS.

GATS is the General Agreement on Trade in Services, an agreement of the powers launched in Geneva, Switzerland, just a few months after the smoke cleared from the Battle of Seattle (December 1999). The powers first broached GATS in 1994 and hoped to get it into place by the end of 2002 – they are on track.

But what is GATS? Early in the deliberations, the US specified, “The mandate of the negotiations is ambitious: to remove restrictions on trade in services and provide effective market access, subject to specific limitations. Our challenge is to accomplish significant removal of these restrictions across all service sectors.” Or, in English, to open all those areas hitherto protected for the public good to the profit motive.

Enronistas worldwide salivate before the enormous market of services: $1 trillion in water services, $2 trillion in educational services and $3.5 trillion in health services. And then there is power generation and other utilities.

Here is another push by capitalist forces to entrap areas of economic life that had once been outside the sway of the commodity form. During the era of social democracy from the 1930s to the late 1970s, capitalist relations did not overwhelm the realm of water, air, energy, health and education. But for over three decades, especially since the 1990s, during neoliberal times, these protected zones have come under pressure from transnational corporations and international finance institutions arguing that unproductive zones need to be opened to the efficiency of the profit-driven marketplace. Governments, so the argument goes, cannot protect their right to deliver these services to their citizenry at a subsidized rate. To do so “discriminates” against the right of a transnational corporation to underbid the state and offer its own paltry services instead. Government effort and regulation crowds out private enterprise, and must therefore be minimized.

Enronism is here to stay, even as Enron is now gone.

All international bodies prior to the World Trade Organization (WTO) only had an advisory function, with very constrained powers to force sovereign nations to do the will of the planet. Although states can use an adjudication process for disagreements, the WTO is a governmental body with multi-national power to sanction states that do not follow its rules. In the process that produced the WTO, the Uruguay Round of the General Agreement of Trade and Tariffs (GATT), there was a broad discussion of various multi-national agreements such as the Multilateral Agreement on Investments (to formulate “rules” for finance markets, a measure defeated in December 1998 due to strong protests across the world), the Trade Related Intellectual Property Rights or the TRIPS regime, and finally GATS (the General Agreement in Trade in Services) formed in 1994 by one hundred and forty nations as a part of the WTO. The overall framework of GATT was to “liberalize” the traffic in goods, to open markets to transnational corporations and to cutback on the right of states to levy tariffs as a means to manage economic development and equity. It appears that these can be violated by the US, when it suits it, as made clear by its 2002 tariff on imported steel.

GATS sought to “liberalize” the international trade in services, from banking regulations to real estate brokerage services to rules for accountancy. GATS arose to manage the most vibrant growth sector in the international economy: services. This sector, which has outgrown merchandise trade for the past two decades, accounts for twenty percent of all cross-border trade and totals, in 1999, $1.35 trillion. While hotels, travel agencies and others are popularly associated with the service sector economy, this arena also includes those services traditionally provided by the government. One of the biggest ones across the planet is health care. GATS takes aim at this juicy target, attempting to privatize it through the export–and forced import — of the disastrous US model around the planet.

Far from being mere opportunists of a global context created by the fall of the USSR and other changes, these global firms do more than just privatize services by purchasing them or building new facilities. They also supersede the democratic process of many countries by taking over the function of writing the rules.

Both Enron and Arthur Andersen were in the thick of the 1990s GATS discussions, even as anti-globalization protests paid little heed to these deliberations. Andersen formed part of the team that drafted the new rules for GATS on accountancy procedures. There is no indication that its role in the Enron scandal that brought it disgrace and dissolution will provoke any reconsideration of those rules.

The main group that lobbies for “liberalization” in GATS is the US Coalition of Service Industries, all of whose members hoped to gain immeasurably from the privatization of services across the planet. Enron was a member — and a top sponsor — of the 1999 World Services Congress in Atlanta that set in motion the GATS 2000 round of lobbying. Enron has also been a major player in the two umbrella groups that work almost full-time on GATS – US Trade (the strongest proponent of Fast Track, or Trade Promotion Authority, for the President) and USTR Industry Consultation Program – Industry Sector Advisory Committee on Energy. Enron is on the board of the National Foreign Trade Council and a member of the US Council for International Business – both major forces within US Trade. As a mark of how seriously Enron takes these issues, for USTR, Enron deputized its Executive Vice President Terry Thorn to be its representative. In addition, Enron was part of the US Energy Service Coalition whose mandate is to ensure that oil and gas drilling is seen as a service within GATS.

These instruments of globalization are filled with Enron/Andersen staff, and it is likely that many of the things they wanted prior to their bankruptcy phase will continue to form the agenda of the overdeveloped world through GATS and GATT. These policies will be an important part of Enron’s legacy. Policies that enable the second enclosure movement. A movement of money dealers addicting the world to dollars and nonsense, just as they snatch their livelihood from it.

Enron has collapsed. We won that battle. Let the war against this “reckless terrorism” continue.

VIJAY PRASHAD is an Associate Professor and Director of the International Studies at Trinity College, Hartford, CT. This article is an excerpt from his new book: Fat Cats and Running Dogs: The Enron Stage of Capitalism. Prashad can be reached at: Vijay.Prashad@trincoll.edu


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Vijay Prashad’s most recent book is No Free Left: The Futures of Indian Communism (New Delhi: LeftWord Books, 2015).

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