REVISIT THE TRADING SYSTEM FDR ENVISIONED.

• Author: Baltzan, Beth

AMERICA'S 32ND PRESIDENT WANTED ECONOMIC DEALS THAT LED TO BROADLY SHARED GROWTH. WE CAN MAKE THAT HAPPEN.

For years, advocates of globalization have argued that spreading capitalism, by itself, breeds stability. As the German sociologist Erich Weede declared in 2004, "capitalism and economic freedom promote peace," and globalization is "the universalization of capitalism." But as the rise of populists makes clear, this isn't the case. Without regulation, spreading capitalism leads to the arrogation of power and money to the few at the expense of the many. It results in an authoritarian backlash, as citizens endorse nationalists who promise to restore past glory, channeling xenophobia as needed.

The founders of the multilateral trading system, including Franklin Delano Roosevelt and John Maynard Keynes, saw these risks. That's why they attempted to craft an order that would not just provide for tariff cuts--as the General Agreement on Tariffs and Trade does--but also hem in the excesses of capitalism through a broader agreement negotiated in Cuba and called the Havana Charter. These rules included worker rights, anti-monopoly provisions, and protections against abusive foreign-investor behavior. Fifty-three countries signed the Havana Charter, including the United States, much of Europe, and independent countries from the Global South.

But the charter didn't survive. American industrialists rejected constraints on their behavior, and by early December 1950, they persuaded Congress to snub the agreement. Instead, we ended up with the trading system we have now: one that lowers tariffs without providing any disciplines on capital. It is therefore no surprise that we see widening income inequality within countries. The surge in nationalism, and the resentment of globalization, is logical.

It is also frightening. But it creates an opportunity for the European Union and the United States. We can seize on it to reconceive the way trade agreements are done. We can bring much of the Havana Charter back.

The charter's rules are well suited for today. The visionaries behind the agreement, working in the aftermath of the Great Depression and World War II, confronted the same issues of inequality and nationalism. They have provided us with a road map to create a more balanced global economic system. It will help us fight against modern-day robber barons and disperse the benefits of trade to the many rather than the few.

But the charter will need...