Monday, November 05, 2007

The Left's narrative on globalisation

There is a deep perversity to the Left's criticism of global multi-national capitalism that is terribly frustrating.

First, they hold companies operating in the Third World to an unrealistically high standard.

If anything happens in a developed country, from Colombia to Chad, that would look out of place in Crawley they cry foul. I once spoke against a motion at the LSE Student's Union that was going to condemn the entire Coca Cola company because some of its staff in Colombia had murdered trade unionists. While I'm no fan of murdering trade unionists I had to point out that with the sky-high murder rate in Colombia and the sheer scale and breadth of Coca-Cola's global operation this event didn't necessarily signify a systemic problem.

What the lefties miss is what it means to ensure, in the developing world, that factories are as safe, company's dealings are as above board and working conditions are as pleasant as in the West:

It is more difficult, as local staff will be used to the working standards of their own country - often corrupt or unsafe, that's a major reason why the country is poor in the first place. Local staff are essential in most industries and it is utterly unrealistic to expect multi-nationals to maintain perfect control over them. Multi-nationals can change that over time but it can't happen all at once.

It is also fundamentally less sensible. There's no reason why workers in these factories should not accept working conditions worse than those in the West (but still usually better than work outside the multi-nationals) in return for an ability to compete with more productive workers.

I'm not saying that firms should do as they wish and never face criticism for shabby behaviour in poor countries. We should ensure they do what they can. The problem is that more often than not the criticism completely loses perspective and makes investing in poor countries a fools game. If firms take a PR hammering every time anything goes wrong in a Third World factory or if they are forced to provide standards of pay and working conditions that the poor country's productivity cannot afford then they will simply invest elsewhere. While wages in poor countries are low with weak protection of property rights they are often a risky place to invest anyway. The anti-globalisation movement can succeed in stopping multi-nationals investing in poor countries.

When they do that three things happen.

1) Without the capital, technology and exposure to Western business methods that the multi-nationals bring the poor countries stay poorer, longer. With the divide in international incomes closing more slowly the Left complains ever more fiercely about exploitation and inequality.

2) Poor countries have to work still harder to attract international capital that will invest far less in the developing world once the Left has made investing there almost a guarantee of a PR disaster. Working harder to attract that capital means both making investment a better deal and more reliable by going further than rich countries to establish their capital-friendly credentials. This looks, to the Left, like an unfair inequality so they write fierce denunciations of the unfairness of making poor countries adopt more radical pro-capital policies than ourselves. Actually that is just the only way poor and unstable countries can now attract vital capital whether they decide to do it themselves or are forced to by international institutions charged with not wasting donor countries' money.

3) Western capitalism gets criticised for not engaging with Africa. As if they'd get any credit if they did.

It's deeply ridiculous.

1 comment:

Giles Robertson said...

It's ridiculous on another level too. Coca-Cola in Columbia are expected to stop their staff doing anything LSE students might find wrong.

But Coca-Cola is also bad because it indoctrinates western values. Condemning Coca-Cola for not preventing murders in Columbia is condemning it for not being culturally imperialist enough: but at the same time, it's condemned for being culturally imperialist at all.