Adam Smith, Pre-Disciplinary Liberalism, and Legitimacy of Trade Governance

Marko Juutinen

Research output: Book/ReportDoctoral thesisMonograph

Abstract

This dissertation is about liberalism, legitimacy and trade governance. The heart of its research problem concerns the dilemma between democratic and market-based legitimacy, particularly prevalent in transnational trade governance. As a solution to this dilemma, the dissertation develops and applies a Smithian pre-disciplinary liberalism. This theory is centred on the notion of symmetric interdependence as a precondition for socially approvable human agency. It maintains that the problem of legitimacy in transnational governance can be defined as lack of symmetric interdependences. This results in immorality and the distortion of self-interest. Consequently, for being legitimate, it is argued, markets should depend on and sustain symmetric interdependences. The key proposition is that economic and political liberalism require the presence and guidance of morality which is construed by the spontaneous constrains that form part of our psychological DNA and through institutions of symmetric interdependences.

The primary focus of this normatively bound dissertation is theoretical and conceptual. It also has a strong empirical dimension. While dealing with the history of ideas, this dissertation is not one of intellectual history. Instead, it is driven by the objectives of political theory to provide solutions for contemporary problems. The research problem concerns the contested legitimacy of trade governance and in particular, regulatory cooperation and investment protection. These are informed and legitimized by economic liberalism but fail to fully satisfy democratic legitimacy. Due to their strong non-economic implications, this equals a legitimacy deficit. Finding solutions to this contemporary problem is the objective of this research. The dissertation proceeds in three stages: First, it defines the problem; second, it proposes a design for the solution; third, the solution is tested. The introductory section defines the problem, Chapter 2 designs a solution, and Chapter 3 applies the solution to practice. I argue that the interpretation of economic liberalism through the disciplinary lenses of modern homo economicus, or disciplinary liberalism, is the major source of the problem. Furthermore, through revising Adam Smith work, I propose a theory of pre-disciplinary liberalism as a solution.

While the primary objective in this dissertation is theoretical, it is nonetheless the contemporary contestations about trade governance that provide the ‘raison d'etat’
for its theoretical interest. Indeed, the problem of legitimacy in the contemporary trade governance is simultaneously the a priori motivation to engage with theorizations about liberalism, legitimacy and governance, as well as the end point and target of those theorizations. Moreover, the problem of legitimacy in trade governance does not apply equally on all forms of bilateral, regional, and multilateral forms of governance. Instead, contestations between democratic and economic legitimacy are most prevalent in the so-called new generation trade deals. Previous literature has established that EU trade deals are strongest concerning aspects of contentious market regulation. The EU-Canada Comprehensive Economic and Trade Agreement (CETA) is the crown-jewel among them. The justification for using CETA as a test case is the prevalence of the legitimacy problem within it.

The other test case is the World Trade Organization (WTO) and the standard Bilateral Investment Treaties (BITs). They provide the international regulatory framework for trade governance. They can be seen as the baseline or standard from which CETA deviates. Indeed, contestations about CETA and the hypothesis of ‘contentious market regulation’ can be viewed as competing interpretations of this deviation. Yet, the expanse of regulatory issues (presented already in the 1990s in the Singapore agenda at the WTO) has also defined the evolution of trade multilateralism (and a cause of inter-state contestations). Contestation overriding governance is not just about CETA. Contestation has become a general phenomenon of contemporary trade politics. To seek solutions for its contested legitimacy, it is necessary to understand, examine and assess both the steepest form of the problem as much as the most general and globally influential manifestation of it.

The contestation of trade governance shares a profound theoretical importance with huge societal relevance. Several scholars (e.g., Krajewski, 2003; Rodrik, 2018) argue that trade governance may threaten public interest regulation for objectives like social justice, public health or environmental protectionism. Some critical political economists (e.g., Gill and Cutler, 2014) go so far as to argue that market regulation replaces democratic constitutionalism as the institutional setting for decision making. These interpretations about the implications of trade governance form the ‘contentious market regulation’ hypothesis.
Through a theoretical assessment of a comparative analysis of trade governance in the WTO, in the international investment agreements and the CETA, this dissertation takes both an empiric and theoretical hold on the problem of legitimacy of trade governance. While it argues that the ‘contentious market regulation’ - hypothesis cannot be rejected unconditionally, it provides a conditional rejection of it. CETA does not build on technocratic rules in favour of economistic regulation. Instead, CETA trade governance seems to build on open-ended processes where it is possible to see potential for broad participation of diverse societal and regulatory interests. Thus, CETA provides an institutional setting of trade governance that is responsive to the criteria of pre-disciplinary liberalism. These criteria can be employed to enhance the legitimacy of trade governance. Consequently, this dissertation proposes the theory of pre-disciplinary liberalism as a solution to the legitimacy dilemma both in theory and practice.
Original languageEnglish
Place of PublicationTampere
PublisherTampere University
ISBN (Electronic)978-952-03-1689-1
ISBN (Print)978-952-03-1688-4
Publication statusPublished - 2020
Publication typeG4 Doctoral dissertation (monograph)

Publication series

NameTampere University Dissertations - Tampereen yliopiston väitöskirjat
Volume304
ISSN (Print)2489-9860
ISSN (Electronic)2490-0028

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