Adam Smith, Pre-Disciplinary Liberalism, and Legitimacy of Trade Governance
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MARKO JUUTINEN Adam Smith, Pre-Disciplinary Liberalism, and Legitimacy of Trade Governance Tampere University Dissertations 304 Tampere University Dissertations 304 MARKO JUUTINEN Adam Smith, Pre-Disciplinary Liberalism, and Legitimacy of Trade Governance ACADEMIC DISSERTATION To be presented, with the permission of the Faculty of Management and Business of Tampere University, for public discussion in the auditorium K104 of the Linna building, address: Kalevantie 5, Tampere on 9 October 2020, at 12 o’clock. ACADEMIC DISSERTATION Tampere University, Faculty of Management and Business Finland Responsible University Lecturer Mikko supervisor Lahtinen and Custos Tampere University Finland Supervisor University Lecturer Eero Palmujoki Tampere University Finland Pre-examiners Assistant Professor Petri Professor Francesco Duina Koikkalainen Bates College University of Lapland United States of America Finland Opponent(s) Assistant Professor Petri Koikkalainen University of Lapland Finland The originality of this thesis has been checked using the Turnitin OriginalityCheck service. Copyright ©2020 Marko Juutinen Cover design: Roihu Inc. ISBN 978-952-03-1688-4 (print) ISBN 978-952-03-1689-1 (pdf) ISSN 2489-9860 (print) ISSN 2490-0028 (pdf) http://urn.fi/URN:ISBN:978-952-03-1689-1 PunaMusta Oy – Yliopistopaino Vantaa 2020 Dedication To Sanni, Elena and Efraim iii iv ACKNOWLEDGEMENTS Researchers may be seen as a particular species of troublemakers. This is by the virtue of our perpetual search for new problems where others do not. Our particular feature is that we also provide solutions. Being a researcher is about being able to find and articulate problems, and to provide doable solutions for them. This work has two major stages. In the first stage one must identify a problem, find a solution, make others realize it must be solved - and sell the proposed solution. This also goes by the name of writing research funding plans. In my attempt to become a scientific trouble-and-solution-maker, I was instructed by Olli Herranen and Vesa Koskimaa. Thank you. I wish to thank Palkansaajasäätiö, Faculty of Management and Business, and the Kone Foundation, for their belief in my problems. I also wish to thank Hannu Laurila, who gave me my first job in academia. The second stage is to conduct the actual research. This further divides to the study of the nature and origins of the problem, finding out how it best can be solved and the solution. My original research problem was about the contested legitimacy of EU-Canada and EU-US trade deals. I was quite unable to find satisfying solutions for how to define its contestations, because most of the contenders had equally valid arguments for their views. Simply put, markets and trade can be legitimate economically, but they may be short of democratic acceptability. Similarly, if markets were to be fully governed by politicians, they would lack economic legitimacy. Elections are a means to strike a balance between freedom and interference and thus to provide an inter-electoral solution for the dilemma. On the transnational level, however, there are no electoral institutions. Thus, I realized, the problem of contested legitimacy of trade governance was in fact primarily a theoretical problem about legitimacy and only secondarily a problem about trade. Making this realization took time. I flirted with different theoretical perspectives, and on different official and unofficial occasions, presented some potential solutions. Often, I received harsh critiques and constructive suggestions. For this, I am thankful to my supervisors, Mikko Lahtinen and Eero Palmujoki, and my fellow political scientists at the Tampere University, Sami Borg, Maria Bäck, Aino Hakovirta, Michael Herman, Elina Kestilä-Kekkonen, Vesa Koskimaa, Johannes Lehtinen, Aki Luoto, Risto Niemikari, Johanna Peltoniemi, Mikko Poutanen, v Corentin Poyet, Tapio Raunio, Ilkka Ruostetsaari, Hyeon Su Seo, Josefina Sipinen, Aino Tiihonen, Tapani Turkka, and Mikko Värttö. Special thanks to Eero for all those consultations by your office threshold. Faculty has been a nice place to work at, thanks to the fellowship of UTA lunches, Julia Bethwaite, Anni Kangas, Yohannes Mehari, Sirke Mäkinen, Carl Muth, Pallavi Pal, Hannes Peltonen, Mikko Räkköläinen, Rune Saugman and Tarja Seppä. Special thanks to Michael for your many advice and suggestions about work, funding applications, and for editing this dissertation. While examining different solutions to the problem of legitimacy, I also spent time in empirical work researching the international relations dimension to trade governance and the ongoing global transformations affecting it. In this, Jyrki Käkönen, has been my mentor. Working with Käkönen has always been intellectually stimulating, productive and fun. Thank you for this, Jyrki. For three years I had the opportunity to work in Élise Ferón’s Kone Foundation project on Regional Challenges to Multilateralism, where we all shared an interest in the profound theoretical question of how to make the world governable and governance acceptable in spite of ongoing competitive fragmentation and disintegration. In this context, I wish to thank Élise Ferón and Jyrki Käkönen for their leadership and guidance, Karstein Volle for his cool artistic interpretations of our nerdy ideas, my colleagues Giovanni Barbieri, Karim Maïche, Terry McDonald, and Gabriel Rached, for their friendship, and Tuomo Melasuo for his candid wisdom. It was finally in 2019 when I had come to some form of solution to the problem, and either for this reason, or for the fact that funding was coming to an end and my second child was soon to be born, started putting the dissertation together. Autumn of 2019 and the early 2020 may well have been the busiest time in my life. Yet, on the eve of the COVID19 lockdown in Finland, the text was more or less complete. I am particularly thankful to the pre-examiners Petri Koikkalainen and Francesco Duina for pointing out how to improve the manuscript and the arguments made. Finally, thank you Sanni, Elena and Efraim for your love and support. Elena, isän värityskirja on nyt valmis. Väritettävää on sivulla 195. For any mistakes and shortcomings, I naturally bear the sole responsibility. Tampere, 4.9.2020 vi 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’ vii 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