International Trade

When there are significant differences in true opportunity costs of producing different goods and services between regions, there are also potential efficiency gains from participating in specialisation and trade, even though the advantages sometimes are overestimated. How will separate regional units – different participatory economies – organise trade between themselves? In a situation where participatory economics is fully implemented worldwide the terms of trade will not be decided by commercial principles or bargaining power as today, but instead be negotiated and decided in ways that are in accordance with the guiding values of the participatory economics model; economic justice and self-management, solidarity, diversity, efficiency and long term sustainability. Of course, long before participatory economics is fully implemented worldwide, it will be beneficial for a single participatory economy to engage in trade with its surrounding capitalistic economies. So, how will trade be handled in this situation? Is it possible for a country practicing participatory economics to function in and benefit from a global economy that is still largely capitalist without betraying its core principles?

In a situation where two equally developed participatory economies trade with each other, any efficiency gain should be shared as equally as possible between the trading partners. If a participatory economy is trading with a wealthier economy, its principles of justice do not prevent it from aiming for the best bargain it can attain. A moral problem only appears when a participatory economy trades with a poorer economy. In this case, a participatory economy should agree to terms of trade that give the poorer trading partner more than half of the efficiency gain. If efficiency gains from international economic interaction are shared in accordance to this “greater than 50 percent rule” the benefits will be shared in a way that reduces the gap between wealthier and poorer trading partners.

Citizens of poorer countries receive less economic reward for their efforts, on average, than citizens of wealthier economies. By using the “greater than 50 percent rule” when trading, a participatory economy acknowledges that justice means that equal effort or sacrifice should be equally rewarded. Note that the principle of economic justice in a participatory economy requires effective measures to eliminate differences in the reward people receive for equal sacrifices, regardless of how they arose. A participatory economy cannot argue that since citizens of poorer capitalist economies are not committed to the same principle of economic justice, the citizens of a participatory economy are not obliged to applying the principle to them. The point is that participatory economics principles preclude a participatory economy from interacting with other economies on terms they themselves believe to be unfair.

The road to complete international justice will presumably be slow, but if one accepts that international economic justice cannot be built in a day, a greater than 50 percent rule can be expanded to 60 percent, 70 percent and so on through democratic deliberation between international economic partners, and may not seem so unsatisfactory.