Globalization or slavery?

Capitalism is about choice, we’re told. The prevailing wisdom is that regulation of the market is a discredited idea, fallen with the old communist regimes. People have the opportunity to benefit from their hard work and innovation, so they have the incentive to be more productive. At the same time the Darwinian process of market capitalism weeds out the weak and inefficient, producing wealth for all. As production increases the owners of capital benefit the most, but as they do so they use their wealth to bid in an increasingly competitive labour market, paying higher salaries and doing good for all. Meanwhile, the rising wages mean rising taxes, so the small and efficient government has plenty with which to care for the old, the sick, and the deserving poor.

It’s the new American dream. Add a farsighted, strong, and interventionist foreign policy and you have the neo-con paradise. Undemocratic regimes throughout the world will be brought into line – by means of the WTO and trade sanctions if possible, but by direct military intervention if necessary. “Undemocratic” means those madmen who don’t share this dream of a prosperous corporate future, it’s got nothing to do with elections. After all, no free and well-informed population would truly vote to keep the chains of socialism. Like all cults, the adherents to economic liberalism realise that after breaking through the initial resistance, new acolytes will bask in the same sunny certainty that shines on the true believers. The opposition are either misled by evil men or prisoners of the brainwashing they endured under the old system.

Like Party Members in the Soviet, the high priests of the neo-con religion don’t easily allow themselves to see the real lives of the masses they believe they’re helping, let alone the prisoners in the Gulags. Dissenters are either traitors or unfortunate victims of mental instability, after all. To consider other possibilities would be to look too closely at the failings of the system, and constitute a lapse of faith. In fact the neo-cons are so blinded by their smug certainty that they step over their victims every day, on the way to their temples of glass and steel. The homelessness, the violence of the poor neighbourhoods, the victims of Katrina like a suddenly blocked sewer spewing up the truth of underclass America. Most people work longer hours and earn less, even as war and enormous debt is used to stimulate the economy.

But this is in the heart of the empire, where the crumbs or wealth and power keep much of the population either sated or hopeful of a place at the trough. The cost is borne elsewhere, in the sweatshops of Asia and the mines of Africa.

The choices available in the West obscure the meaning of globalisation in the developing world, where the only choice is between starvation or slavery. Here’s an example:

Workers in Bangladesh are regularly working 80 hours a week for just 5p (US 10c) an hour, in potential death trap factories, to produce cheap clothes for British consumers of Primark, Tesco and Asda’s ‘George’ range. The charity War on Want today issued these findings in a new report, Fashion Victims, based on research among employees at six Bangladeshi factories in the capital Dhaka which employ over 5,000 workers, mainly women, making clothes for the three bargain retailers. Meera Syal, star of the television series The Kumars at No 42, is supporting moves for regulation to bring these companies to account.

Primark, Tesco and Asda have all made public commitments to the payment of a living wage to suppliers – commonly calculated to be a minimum £22 a month in Bangladesh. Yet starting wages in the factories researched for War on Want’s report were as little as £8 a month, barely a third of the living wage. Even better paid sewing machine operators receive only £16 a month, which equates to 5p an hour for the 80 hours they regularly have to work each week. The minimum wage for garment workers in Bangladesh halved in real terms during the 1990s, and many complain their pay is too low to cover food, housing and health costs.

Primark, Tesco and Asda have also pledged that their suppliers must not be required to work more than 48 hours a week on a regular basis, and should have at least one day off in seven on average. But workers interviewed for War on Want’s report can toil up to 96 hours a week – double the supposed maximum – and often lose their day off. Factory owners have forced staff to work up to 140 hours a month overtime, often unpaid, or face dismissal.

You can tell a great deal about the true face of capitalism and globalisation from this – no one works for 10c an hour if they have any choice.

Bangladesh is a flood plain. Population pressure has led to erosion and deforestation, and forced people to farm marginal land. Floods destroy crops and livelihoods, and push people into the hands of moneylenders and a cycle of debt and poverty. In desperation they move to the city, and take the only work they can get. In other countries illegal logging, GMO crops which cause dependence on fertilizers and pesticides, war, and drought have forced small farmers off the land. In any case first world subsidies and big agribusiness conspire to keep small farm incomes so low that people have no margin of safety.

Globalization and economic liberalism take advantage of poverty by paying 5 or 10 cents per hour wages for clothes which are sold for thousands of times their labour cost. It’s true that working in the sweatshops and being paid a starvation wage is better than starving, if only just, and it’s worth looking at the wider consequences of this system.

1. Tesco’s sells cheap clothes, but even so their bottom line wouldn’t be badly hurt by paying $1 per hour to a garment worker rather than 10 cents per hour. If you imagine that a single worker makes 10 garments per hour, the labour cost per garment has risen from 1 cent to 10 cents per garment. Every other cost in the supply chain is far more significant.
2. The money just about keeps the workers alive, but does no more. It doesn’t send kids to school, it doesn’t pay taxes to build schools, and it doesn’t provide for the future.
3. But is there room for a “compassionate capitalism” in the Darwinian world of the market? A manufacturer who insists on fair trade can be competitive only if their customers are willing to vote with their money. Shareholders meanwhile shirk responsibility for their company’s actions because they individually have little influence, but directors claim they have no choice because they are employed to maintain share value.

It’s been said that the difference between [unregulated] capitalism and slavery is that it was in the slave owners’ interest to care for their property. Of course slavery is closely linked with the history of capitalism, but the official story is that progress has taken the world beyond that. Take another look. Just as the peasant farmers were kicked off the land in the 18th Century to be replaced by itinerant seasonal labour, to the financial benefit of the feudal lords, slaves were replaced a destitute immigrant and colonial workforce.

The proponents of globalisation and economic liberalism are prepared to take credit for every improvement in human living conditions, and at the same time blame every problem either on regulation, corruption, or some other kind of “imperfect” market. India and China have been the poster boys of progress, but much of this is peace, medicine, land reform, and economic autonomy. Some is the temporary benefit of green revolution practises, bought at the cost of high dependency on petrochemical farm inputs and soil damage. Pinochêt’s free market Chile is a victory for spin, but a classic globalisation failure.

The choice is not between capitalism and socialism – that’s the classic neo-con straw man. The choice is between regulating capitalism or leaving it unregulated. Capitalism as a tool to create the society we want or capitalism as a savage master, preying on the downtrodden.

The landowners of the antebellum south argued that slavery was the economic backbone of the country. Fortunately the sense of our shared humanity triumphed over a fictional economic imperative – but it took the courage and sacrifice of women and men of principle to achieve this. One hundred and fifty years later a new form of slavery requires us to have the courage to stand on principle and honour against the cruelty of the rich men who continue to put profits before people.

…….Notes:

Tesco’s and the other clothing retailers benefit from a vertical market position – they own the garments from immediately after the point of manufacture right through to the customer’s hands. They contract the manufacture to the sweatshops, however. They clearly have the influence necessary to insist on reasonable pay and conditions, and they’ve made promises (and broken them) on this basis.

Tesco’s in particular is famous for selling jeans for as low as US$7 a pair. It seems unlikely that this would be greatly affected by paying 9 cents more per garment in wages. Tesco’s does use sweatshops in other countries where the labour costs are higher.

The photo is from a BBC story in 2003, concerning violent police supression of a demonstration by thousands of mostly female Bangladeshi garment workers. They were asking for the right to unionise their workplaces.

Walmart is a major clothes buyer from Bangladesh.