On Talking Past Each Other and World Trade

The League of Ordinary Gentlemen has been hosting a labor roundtable, which has emerged as a combination of spontaneity and directed planning in the way that the blogosphere especially tends to foster.  Participants have included many of my favorite bloggers: E.D. Kain, Jason Kuznicki, Kevin Carson, Mark Thompson, Freddie deBoer, and James Hanley, among others.  At stake is the entire system of American capitalism.  For anyone with a spare afternoon or so, it's worth visiting that London coffee house.

I’ve read through all the articles and comment threads in this labor roundtable thus far, and it seems to me that there are three general issues which have been largely or systematically taken for granted or underserved in the discussion.  I've brought these issues up in comments, but few people seem interested in exploring them, which (being a libertarian) I can't really fault anyone for.  These issues are: (1) libertarianism’s historical relationship to the labor movement; (2) distortions in the ways we usually measure wealth that confuse the debate; and (3) the role of American corporations in globalization.

As for topic (1) - libertarianism’s historical relationship to the labor movement - no one has acknowledged that libertarianism more or less grew out of the union movement in Europe as that faction which proposed a return to the principles of classical liberalism (Adam Smith) in opposition to the coercively entrenched interests of state/capital at the turn of the twentieth century.  Many libertarians shifted focus after the New Deal because the Roosevelt government seemed to represent a greater threat to liberty at that time than corporate regulatory capture; but the base of the movement remains as principally an opposition to the pernicious cartel of that two-headed monster of the wealthy and powerful.

If libertarianism has been effectively subverted to corporate interests in the United States, which is the contention of Noam Chomsky and other anarchist theorists whose intellectual roots lie in the Gilded Age milieu of thoughtful bourgeois discussion, this must be because either: (a) self-described libertarian institutions have been captured by corporate special interests; (b) echoes of the New Deal excesses of central government still seem like a more serious threat to liberty than corporate power; or (c) having strong, collective labor counterbalance strong, unitary capital is no longer considered a necessary evil (due perhaps to the existence of a strong middle class).  

Cause (a) assumes bad faith or widespread indoctrination in the libertarian camp (and this assumption of bad faith has become a surprisingly mainstream position within left-wing circles after the Kochtopus New Yorker issue).  The idea that libertarian institutions are simply corporate echo-chambers strikes me as a crudely reductionist, unserious, and patently false contention.  A cursory glance at even center-right, Koch-funded libertarian institutions like the Reason Foundation shows ribald anti-corporatism. 

Causes (b) - that many libertarians now consider government to be a more serious threat to liberty than corporations - and/or (c) - that libertarians consider encouraging unionization to be relatively unimportant or ineffective given the nature of the American and global economies - make sense for a variety of reasons, such as those repeatedly articulated by libertarians themselves.  In the words of James Hanley:

...And as to free trade, Adam Smith, David Ricardo, and Paul Krugman all disagree with E.D. Kain. Seriously, even that ferociously libertarian-hating Paul Krugman supports free trade. Does E.D. know something that Krugman doesn’t?

"many of the gains for the corporate class in this country are due to artificial scarcities, subsidies, and rents they have captured with the help of the state."

Where have I heard this before? Oh, yeah, it’s precisely what libertarians keep saying! I know damn well I’ve said it repeatedly. I’m pretty sure I’ve seen Jason K. saying it. And I think if you make a habit of perusing Cato policy reports or Reason magazine you’ll see it as a fairly regular theme. It’s precisely one of the reasons we do rail against government–it’s government that makes these subsidies and rents possible! There is no protective regulation for businesses except regulation created by government–should we not then criticize government for that?

On to issue (2) - the structural relationship between American corporations and a globalized workforce: work (of the hammer and sickle variety) is now done disproportionately outside of the United States, under different political jurisdictions and immune from the capacity of strong labor laws to impede the progress of (amoral) American capital interests.  It's unquestionably true that the standard of living for all Americans has been bettered by this arrangement in the form of relatively cheaper consumer products - even if this arrangement unfairly allows only one class of people to engage with global markets at the expense of the domestic manufacturing class.

Nevertheless, the structure of globalization being (disproportionately) American ownership of the means of production plus global labor pools explains away the recent numbers on income inequality reported by Mother Jones.  Income is just one metric we use to measure wealth.  That incomes for the American middle class have been stagnating while incomes for the upper echelon of the upper class have skyrocketed over the last thirty years is uncontestable, but the assumption behind the implication of these numbers as reported - that the upper class is taking a larger piece of zero-sum economic pie - is fundamentally flawed.

Money is fiat, only valuable in what it can be exchanged for.  In the last thirty years, consumer goods across the board have gotten cheaper (There are exceptions of course, such as gasoline, but the long-term price increases of these exceptions are mostly functions of scarcity.), and additional sources of wealth - such as a comprehensive healthcare plan - are usually included now in the standard benefits package that workers receive.  Much of what we would have left to individual choice thirty years ago now forms a welfare base taken for granted by crude measures of wealth-as-income.  This, coupled with considerably cheaper consumer products, makes a middle class lifestyle significantly easier to acheive in the year 2011 than in 1981. 

As for contention (3), the relationship between American corporations and globalization, the irrelevance of income inequality does not mean that inequality isn't a problem.  In the words of E.D. Kain:

Globalization has been little more than a corporate-statist effort using pernicious institutions like the World Bank to plunder the labor and resources of developing nations at the expense of workers everywhere and to the benefit of the powerful.

And in response to my contention (2) above, Kain writes:

We benefit from the cheap consumer goods and relative material comfort. What I’m suggesting is that the middle class is excluded from the real wealth and given bread and circuses to distract them, while the developing world is exploited heavily to the benefit of the capitalist class and, by extension, those of us at the circuses.

I’m all for unions as a counterbalance to corporate power (If management can organize then labor can organize too. Rights of free-association are beyond debate as far as I’m concerned, as a libertarian.); but how are we to positively affect the formation of coffee-growers unions in Ethiopia or tech-support-service unions in India? Most of the people working in jobs that many Americans consider themselves too good for are happy simply to no longer be engaged in the war of all against all, or to finally be able to afford expired AIDS medication for their children.

Since any unfair treatment these workers may receive lies outside of the reach of American policy, unless we suddenly embrace an extremely aggressive standard of ethical consumerism – or at least stop our net-exploitative consumption – we can expect more and more outsourcing of labor followed by more of the American middle class looking the other way while purchasing blood coffee.

What we should be doing, really, is not trying to prop up failing domestic business interests at all (I agree with Messrs. Carson and Thompson that any codification of union procedure will tend to result in regulatory capture.) but crafting legislation that allows all the world's citizens to take advantage of the economies of scale offered by relatively unfettered global markets.  

Instead of government using taxpayer dollars to prop up experienced, fifty-something manufacturers continuing to make mediocre cars that nobody wants to buy, it could be doing next to nothing to manage trade, concentrating on the enforcement of contracts, and allowing people clearer access to the crucial economic information that allows them to make rational decisions.

Perhaps one result of a freer global trade regime would be that more Americans would put their technical knowledge to work teaching people in poorer countries like Ghana or Bangladesh to manufacture high-quality consumer products for less than relatively wealthy American workers would be willing to.  Instead, the Chinese have taken the initiative in consulting to the developing world.  It seems (ironically) that it will be a red tide that lifts all boats after years of developing nations languishing in the exploitation of conglomerates of Western corporate, government, consumer, and institutional cartels.

A lot of what we all desire here – like more empowered workers, workers owning the means of production, a more equitable distribution of income, robust self-determination to gradually come to replace the welfare state, etc., could be accomplished most effectively and non-invasively by (1) at least loosening intellectual property rights laws to correspond with what seems to be an acceleration of technological advance – that way workers can more easily capitalize on their own knowledge; (2) allowing and even encouraging workers with sufficient knowledge capital to engage the new, international economy; and (3) something we can all do: embracing a more robust form of ethical consumerism.