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Progressive Globalism

Challenging the Audacity of Capital

William K Tabb is professor of Economics at Queens College and of Political Science at the Graduate Center of the City University of New York. His book, Reconstructing Political Economy: The Great Divide in Economic Thought, will be published by Routledge in late Spring of 1999. This talk was prepared for the November 20, 1998 Monthly Labor Leadership Breakfast, sponsored by the Queens College Labor Studies Center. It was then revised for the Seminar on Labor and Popular Struggles in the Global Political Economy at the School of International and Public Affairs at Columbia University on February 15, 1999, and for publication here.

I will address some aspects of globalization in our time and what they mean for working people. I will start with some general definitions and suggest that the most significant features of what is called globalization have always been part of capitalist development, even if the forms are different in different periods (including our own). I will then discuss the arrogance of capital as it tries to remake our world in its preferred image. In this regard, I will contrast U.S. initiatives in the area of labor standards with worker demands for labor rights. I will then consider the institutions of an internationalized capitalist regime, which seeks to impose itself using vehicles such as the International Monetary Fund and the proposed Multilateral Agreement on Investment. Finally, I will talk about resistance.

Globalization refers to the process of reducing barriers between countries and encouraging closer economic, political, and social interaction. Globalization could vastly increase the ability of people everywhere to improve their living standards by sharing knowledge and the fruits of human labor across those barriers. This, of course, does not happen. The point, and it is one too easily glided over and too often ignored, is that, as Richard Walker has written, “Accumulation is the main driving force of the world economy, along with its correlates, capital-capital competition and capital-labor exploitation. This is why it makes sense to speak of ‘the capitalist system’ rather than ‘the global market.’ The greatest economic myth of all is that the market has as its principal purpose the service of human needs rather than the aggrandizement of capitalists and their corporations.”

So when we hear that “Nothing can be done, the global market is just too powerful, and governments are helpless,” it is important to ask whose government we are talking about. The state in a capitalist society is the capitalist state. The government is not a neutral arbitrator with weak powers against market forces, but a structural part of the capitalist system in which we live. Globalization is not a steamroller against which the U.S. government is helpless; the state is an active participant in the structuring of globalization. If the United States has lost power to the international market, the loss has been largely self-inflicted. As British political scientist Susan Strange argues, “In order to make the rest of the world safe and welcoming to American capitalism, successive U.S. governments have broken down barriers to foreign investment and promoted capital mobility.” These changes may be increasing the asymmetries of power between states to the advantage of the more market-oriented. Opting out of the world market economy is no longer an option. That, as Strange argues, “is what dependency means today.” The state is forced to become, as the Canadian theorist Robert Cox writes, “a transmission belt from the global to the national economy, where hithertofore it had acted as the bulwark defending the domestic welfare from external disturbances.” Since opting out is not possible, the questions are about what kind of relationship state formations will have to global capital, and how they will use the power they have, individually and collectively, to shape their own and global institutions. The present is threatened by the strength of hyper-liberal globalization. The assertion of social control and pursuance of a leveling-up and, in sum, a more balanced and positive development, could change the nature of the globalization process. Surely it is our task to push things in that direction as much as we can. The idea that this is impossible, the sense of inevitability, is an ideological construct and the product of political forces acting through powerful mechanisms in the realms of government and media.

Globalization is not simply a technologically driven force. The spin put on globalization and the politics of the period combine to misrepresent much of what has happened and why it has been able to take place. For example, the relationship between globalization and jobs and income in the United States is not a simple one. Most U.S. trade is with countries that pay higher wages than we do. Traditionally imports from low-wage countries have been in products we cannot produce here, easily or at all—bananas, coffee, bauxite. The recent rise of the East Asian manufacturing exporters and NAFTA raise questions about whether this is changing. Because of innovations in transportation and communication, many industrial goods are being produced outside the core. As a result, there has been much talk about unfair competition and the need to protect workers’ rights. I would like to discuss some aspects of the way these issues are being presented.

Capital’s Reformism

Whatever else Soviet communism was or was not, it supported national liberation struggles and could protect Marxist governments from the full force of American imperialism (as in the case of Cuba and others). With the end of the Cold War and the demise of the Soviet Union, transnational capital has revised its state theory and practice. In the new climate, the brutal dictatorships that characterized the free world regimes of the periphery, with their naked repression, mass murders, torture, and extortionist attitudes toward business activity within their territories, are no longer required. They are costly, inefficient from a business point of view, and tend to crystallize mass opposition. Such opposition can be repressed only at significant cost and at the risk of promoting mass movements which adopt anticapitalist ideologies, because repression and foreign capitalist control are widely understood as linked. Better to have democratic governments, managed by local elites who are committed to transnational capital’s globalist vision. In this way, well-meaning, democratically elected governments enforce IMF austerity, arguing that there is no alternative to market-oriented globalism. Once the threat of revolution recedes, a local business class is a better partner for transnational capital than a rent-seeking military regime.

Interestingly, the major industrial countries, and especially the United States, want to write international labor standards into the World Trade Organization’s mandate. They would include rights already recognized by the International Labor Organization: freedom of association, the right to organize and bargain collectively, non-discrimination, minimum age requirements, and a ban on compulsory labor. There are proposals in Congress and the European Parliament to restrict imports which do not meet stipulated labor standards. Such an approach is part of a larger agenda that stresses democracy and elections and is critical of the old-style dictatorial regimes which the United States did so much to encourage in the Cold War years.

The classical liberalism of Bill Clinton and Tony Blair is ready to intervene and tell third-world governments what is good for their people: free trade, free competition, open economies which do not discriminate among market participants, and free elections (in which the power of money holds sway). This is not to say that, in countries where popular movements threaten the power of elites favored by the imperial powers, force is not a necessary remedy. Rather, formal freedom with strong markets is favored over rule by officials who seek to shake down not only their own businessmen but foreign capitalists as well. They are no longer a necessary evil in a period where few, if any, local elites would prefer to opt out rather than compete to attract foreign investment.

So we can advocate for better labor standards and formal democracy, provided that elections are consistently won by friends of free market policies. By breaking the connection between non-democratic governance and economic repression, such democratization, with its formally free elections won by bourgeois and free market parties, changes the political balance and makes it harder for popular movements to organize against neoliberalism. Granting even abstract and formal labor rights, and ending autocratic and military rule, are important steps forward and make a big difference in the lives of working people. But the condition of this development is the restriction on working-class power in the economic arena, just as the condition of regularly scheduled elections and freedom of speech is that control of the state remains in the hands of neoliberalism, however unpopular its policies may be.

Labor Standards/Labor Rights

To help us understand what is going on, consider the distinction between labor standards and labor rights. Labor standards are externally determined yardsticks which are used to exclude the products of particular countries from other markets. Labor rights are about the responsibilities of employers and governments to respect workers and their organizations, and above all, about the power of the working class to organize itself.

It is also important that the working class has the power to redefine the rules governing the relations between capital and labor. Labor standards are granted. Labor rights are won. Labor’s friends are important contributors to the achievement of both, but the emphasis is different. Even where labor standards are formally accepted, terrible practices are left untouched in sectors where production is not for export but for domestic consumption, which in some economies is the largest sector. There are no international sanctions proposed to help these workers. They can only be helped by winning labor rights. Labor standards are typically enforced by governments or self-policing trade groups and not by independent union monitoring. External agencies focus on symbolic standards. What is crucial is the ability of the workers to organize themselves and strengthen their independent organizations.

The United Nations Declaration of Human Rights recognized the universal rights of people as workers as framed in the ILO conventions, which banned child labor and asserted the right of association and the right to organize. But the ILO depends on voluntary compliance. It has no enforcement powers. The World Trade Organization does. It could compel and enforce labor standards as it does intellectual property rights. But it chooses not to because…well, because these issues fall within the jurisdiction of the ILO! It is useful to remember that the ILO was formed in 1919 to prevent the spread of Bolshevik influence among the workers of the world, especially those of Europe, where the appeal of the Revolution at that time threatened to become more than substantial.

The WTO Secretariat Report on Trade and Investment argues “that a lack of rule, policy and coherence [poses a] danger to security and stability, which are basic goals of trade and investment agreements.” While such coherence extends to a very broad variety of investment-related policies, from trademark enforcement to protecting the rights of foreign producers in a host of specific ways, the protection of workers’ property in their ability to determine the conditions under which they labor is not trade-related. This is not the business of the WTO, which could do something about it, but of the ILO, which has been able to accomplish very little since it was created, by capital, as a cooling-out device during the Bolshevik scare.

The advanced countries are already in compliance with the ILO labor standards. Some, most prominently the British and the Americans, have been most effectively (but of course legally) undercutting labor rights, however. In fact, labor standards can be a stick with which the advanced countries can threaten and discipline East Asian and other newly-industrializing economies. But the developing countries that strongly object to labor standards by no means do so because they are concerned with labor rights. They share with the advanced economies’ governments the goal of maximizing capital accumulation, but for their own capitalists. Among the official voices of developing market economies, one will not find advocates of livable wages and better working conditions, or indeed any rights for workers.

The basic problem for workers in both the developed and the developing countries is not foreign competition but the power of capital. Jobs need protection because capital creates and maintains coercive pressure on labor, and uses state power and the so-called freedom of the marketplace to escape social control, to the maximum degree possible. Capital keeps workers competing as best it can and attempts to erode class consciousness and working-class power.

If concern for the social conditions of workers were driving goverment policies, we would be seeing something very different from the subsidies that favor capital, tax write-offs for machinery, and favorable tax treatment for industry when plants are closed (but nothing for the stranded workers), and the reduction of already inadequate spending on job creation, health and education for working-class families. A socially conscious government would focus on the taxation and regulation of capital, not immigration and allegedly unfair labor advantages of other countries.

These remarks are not made to suggest that the struggle for labor standards cannot be an important way to place some limits on capital in industrializing countries, and to raise consciousness concerning the extent of exploitation and oppression, but to underline that the struggle must be for working-class power. This requires workers’ rights achieved in struggle by workers themselves, with as much support as possible from other progressive movements, and not simply the adoption of standards rendered ineffectual by the absence of enforcement mechanisms.

Progressive forces recently pulled out of negotiations with producers over a code of conduct that would address problems in third-world sweatshops. They did so precisely because industry-dominated and carefully limited inspection was being crafted not as a tool for advancing labor rights, but as a public relations vehicle for large transnationals, embarrassed by unflattering publicity, who wished to escape more meaningful scrutiny. I shall return to this issue, but first it is necessary to underscore the following point.

We do not and cannot expect the needs of working people to be uppermost in the minds of governments that serve capital, and will continue to permit and encourage systematic violation of worker rights in the name of competitiveness. Trade unionists, perhaps more than others, grasp the distinction between the interests of the state and the interests of the exploited millions around the world. Additionally, the ILO now has a new director who seems committed to more activism, and there is some hope that perhaps the ILO can become a more powerful vehicle for the pursuance of working-class interests. But its structure —unlike the World Trade Organization, which has power to enforce the demands of transnational capital and excludes labor from decision-making—is tripartite. Capital is an equal partner along with labor and governments. Decision-making is consensual, and compliance is voluntary. The real action is elsewhere, in the same way that the United Nations General Assembly is allowed to debate while economic issues are decided in other fora, such as the World Bank and the IMF, where it is not one nation, one vote, but one dollar, one vote, and the United States alone has sufficient votes for veto power.

Globalization from the Top/Resistance from the Bottom

There is no great interest, on the part of those international organizations that have real power, to struggle for the emancipation of labor and protection of the environment. At the same time, some agencies of corporate globalism are very much involved in pursuing the emancipation of capital from popular control. The Multilateral Agreement on Investment (MAI) was negotiated in secret for years and, earlier this year, Business Week called it “The Explosive Trade Deal You’ve Never Heard Of,” noting that until Public Citizen Global Trade Watch put a draft of the agreement on the Web, few lawmakers in Washington had ever heard of it. Renato Ruggiero, the Director General of the WTO, describes the MAI proposal as the constitution for a single global economy. It takes the principles enshrined in the North American Free Trade Agreement and the World Trade Organization to a higher level, and prohibits governments from making new laws which interfere with the right of capital to free investment where and when it likes, and rolls back existing restrictions on capital. The rules also require a five year period before any country can withdraw from the agreement, and no protections and privileges for corporations can be undone for another fifteen years. Nations would lose control over their economies and could be sued for interfering with transnationals. Penalties would have to be paid if national policies caused the companies to forego profit.

Today the MAI is off the immediate agenda, not least because the left was able to expose its aims and act as part of a broader movement of opposition (with national capitals and cultural nationalists). But it is important to realize how many of its provisions are already enshrined in the World Trade Organization, and are being imposed in the proposed charter revision that would further the IMF’s effort to transform nation-state level practices.

It is surely clear that capital is attempting to create an international regime with powers unaccountable to elected governments. This regime would obey only the rule of the marketplace, as defined by transnational capital and its bureaucratic allies, and be empowered by the political elites of states which, having attempted to carry out such policies, would dread facing re-election. By saying “It is out of our hands, and globalization is beyond what we can do anything about,” they surrender sovereignty to capital. Only organized opposition by a working class aware of what is at stake can reverse these developments.

It will be a long and hard fight. But awareness of the real issues is spreading fairly rapidly. The high tide of neoliberalism has probably passed in the core advanced countries. The problem now is not Thatcher-Reagan attacks on the working class and its organizations. The appeal of harsh anti-working-class governments has passed, as the cost of their policies has become widely experienced and understood. The Blair-Clinton approach is to feel worker’s pain, to preach democracy, and to convince us that there is no choice but neo-liberalism with a smiley face. The problem is not that we are part of a globalized society, but a capitalist society. This is increasingly clear to popular movements mobilizing to challenge the world’s most powerful corporations.

Popular Resistance and Progressive Globalism

Opinion polls show that four out of five Americans would avoid shopping in a store that sells garments made with sweatshop labor, and would pay a dollar more on a $20 item for a guarantee that the product came from a worker-friendly supplier. Companies know that their exploitative policies are unpopular and that they are vulnerable when capitalism’s business-as-usual can be dramatized in the mind of the public. The in-their-face militancy of grassroots labor, environmental, and human rights groups has been able to do just this: dramatically and powerfully putting forth evidence that companies like Wal-Mart and Disney are greedy exploiters, and urging people to stand up for workers’ rights.

The fact that Disney pays six cents in Haiti for garments it sells for $19.99 in the United States, and other similar statistics, are being made widely known by groups like the National Labor Committee and the People of Faith Network. Militant marches, demonstrations, leaflets, press conferences, and other consciousness-spreading tools have begun to produce widespread awareness of how capitalism operates in our time. The Global Sweatshop Coalition of solidarity, justice groups, and trade unions has informed many who were previously unaware, by bringing workers from El Salvador, Haiti and Nicaragua to U.S. audiences. A People’s Right to Know Campaign is calling for corporate disclosure about who makes products, where, and under what living and working conditions. Often, companies refuse to release such detailed information to consumers.

A number of developments suggest that a powerful movement is emerging. Schools are being challenged to be sweatshop-free in their purchasing. As big corporations themselves, many schools are resisting such pressures. Jim Keady, former soccer star, assistant coach at St. John’s University, and theology student, was forced to resign for protesting the unethical relationship his school had entered into with Nike, in which the company gave the school money and equipment, turning the coaches and players into moving billboards for products made in sweatshops. Keady continues to speak out and challenge the morality of his school’s deal with Nike. Nike has similar arrangements with over 200 schools. Leo Johnson, a youth worker at the Edenwald-Gunhill Neighborhood Center in the Bronx, has inspired kids to refuse Nike sneakers (and to return their old pairs to the company) in protest, until Nike starts to pay all of its workers a living wage. A growing coalition of settlement houses and youth organizations is asking young people to face not only what Nike has done to its workers abroad but what Nike is doing to them, through advertising that mercilessly pushes $150 shoes without which some refuse to go to school (and for which others steal). This advertising is, in Johnson’s words, “sucking the brains out of their heads.”

At a gut level, people understand that the fetishism of commodities is powerfully destructive to human potential. The anti-sweatshop coalition holding candlelight marches on New York’s Fifth Avenue, from Niketown to the Disney store, makes the connections as well. Disney’s relentless, upbeat, tirelessly promoted image of harmless consumerist family values does not sit well with the reality of a greedy, exploitative company, whose abuses range from employing sweatshops in Haiti to busting a technical workers’ union at its ABC-TV network.

Companies like Nike are scrambling for cover. They are negotiating with church and labor groups, human rights and workers’ rights coalitions. But these meetings have not produced much substance. They have recently broken down because the companies insist on a code of conduct that, for example, allows them to employ 14-year-old children for up to sixty hours a week at the local “legal” minimum wage, a less-than-living wage set by repressive governments to meet the requirements of these same corporations. The industry’s offer of independent monitors (auditors in fact beholden to the companies, with no role for the movement groups) and of inspections (limited to five percent of a company’s contractors in any given year) seemed so obviously a whitewash that all groups agreed it was better to have no agreement than to let these companies use a “No Sweat” label in their garments and deceive consumers into thinking that they were treating workers fairly.

Campaigns like the ones mentioned here are, of course, only a beginning. Capitalism will not be overcome or transformed by consumer boycotts. But these consumer rebellions may indicate a change in the wind. Together with popular struggles in some third-world countries, where people have taken to the streets to oppose exploitation by globalized capital, these movements suggest that people are beginning to challenge the idea that there is no alternative.

The conditions that have made globalization possible are the very conditions that now threaten it. The communication breakthroughs that enable global sweatshop production for core markets can also expose its horrors. The tools that make possible overnight wealth for a handful of global speculators also make possible overnight global financial panic. Even tightly controlled media and the alternation of competing neoliberal parties, which seemed to offer free elections without risk to the rich or transnational corporations, did not prevent the great majority of Venezuelans from seeking to reject the whole system this past December. In France, the MAI, negotiated in extreme secrecy, has nevertheless been exposed and rejected under severe popular pressure. The same technology that is supposed to be the cause of neoliberalism is making it clearer every day throughout the world that neoliberal globalization is not the inevitable product of technological progress, but the result of a political struggle that is far from over.