Cheap labour is us
September 12th 2006 15:25
A "third world" country puts up red flags. "We need money. We will supply cheap labour. Bring your investments to us. Come rescue us."
They want to supply it, and corporations want to buy it. Just like prostitution. So what's the problem with injecting capitalism?
Well, here's some of what people have said:
1. The money will go to the minority (the power elites, the people who own the means of production). Aside from not alleviating a country's problems, this will sometimes exacerbate them, reinforcing inequities, and rewarding bad executive decisions. One shouldn't assume a trickle-down effect.
This style argument seems to be the main reason proffered why foreign aid has been unsuccessful or has done more harm than good.
2. It's not the best development model. For instance, instead of growing food, etc., under the pressures of corporate seduction the country develops industries, infrastructure, institutions, laws that are out of balance with its actual needs and that are potentially useless when the corporation decamps to find cheaper labour elsewhere. Why should one trust the invisible hand to produce the best result?
3. It is a surrender of autonomy. It's corporate colonisation. Once you let capitalism in, your country starts to be run by foreign companies.
4. Capitalism brings other destructive elements, like environmental damage, like resource plundering, like social and cultural value-change.
What is it like, for instance, to introduce the desire-creation of advertising to a struggling nation?
6. Capitalism doesn't take -- so, as a development model, it shouldn't be attempted -- perhaps in the same way that democracy can't be exported if the country isn't ready for it. There might be any number of reasons why -- historical, social, cultural, religious.
7. Wages will be permanently low. If you raise your wages, the corporation will simply move to another country. Your wages will be forced down to lure the corporation back again.
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There is a sense in which a degree of capitalism is inevitable -- for instance, for reasons of ideological pressure, or the pressure of foreign governments. But this needn't foreclose the story: drugs are inevitable, but does that mean one should give up the war against them?
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Some of the replies:
1. Alternative development models (for instance foreign aid, and central planning and state socialism) have been tried, and have failed. Often they have reinforced corruption or dependence, etc.
2. Concepts of sustainability or subsistence agriculture are patronising and retrograde -- anti-technology, anti-development, anti-progress. They consign the country to a permanent hell of poverty and death.
3. When provided with the correct ingredients, capitalism works. These ingredients might include: the correct structure of property rights; a system of laws that turn dead into liquid capital (Hernando de Soto); an efficient legal system; inducements to save; and inducements for indigenous corporations to reinvest.
4. "Mafia economies" are inevitable, but only temporary. Capitalism, from a bigger picture view, tends to break down monopolies, not enforce them.
5. Capitalism is the best long-term model (recall: John Stuart Mill put long-term faith in the free market of ideas). Capitalism will eventually raise wages. In fact, so it is said, history has shown that free trade, property rights and industrialization are the only viable and sustainable model of development.
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This article uses material from this website for the rich and poor divide, this website for the IMF banner, this website for Nike, this website for McDonald's, and this website for Coke.
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Comment by Cinico
Small Business Scope
I realise it's probably idealistic (and I'm not very educated in these things), but the most successful countries in the world have their own 'niche' in the export market.
Wouldn't it be better for these countries to find their own 'niche'?
Comment by Adrian
Philosophy Blog
I don't know anything about any of these issues actually. I'm sure my post above is very naive.
I think it's certainly true that a monopoly or a strong speciality is one path to economic success (although I also think that successful countries have lots of things, not just one thing, going for them).
But unless the speciality/monopoly is one of resources, I suspect there might be considerable problems in building the niche in the first place.
I think of it this way. You can say to someone, "For a successful business, you just need a market niche"; but that word "just" covers over a multitude of questions.