At first glance, globalization appears to be an effective means of bringing wealth to developing or underdeveloped countries and introducing those countries into the international market. This is done through several methods, including the actual relocation of foreign corporations into those countries and the purchasing of natural resources to be exported to foreign corporations.
Typically, when a foreign corporation moves into a certain resource-poor country, it is for the purpose of utilizing the human resources of that country. Because those human resources are the only resources available, the people of that country are desperate for any kind of economic boost and will accept whatever terms the corporation offers. The country seemingly receives job availability for its citizens and therefore an opportunity for economic stability. In return, it is expected that, by a corporation paying a lower wage to the citizens of that country, it will make higher profits and provide a less expensive product to its customers.
It could be said that everyone has bought into that concept and are satisfied with those results. However, this contemporary form of globalization has resulted in unintended consequences – the enslavement of the worker as well as other forms of slavery-like practices and human trafficking.
First, the obvious problem is the labor issue, which is a more subtle form of slavery wherein workers are underpaid by the host country’s standards and in addition, that country may or may not have labor standards in place or those standards are not enforced. Related is the more underground form of slavery that has developed at a fast pace over the last 20 years. The globalization wherein corporations purchase natural resources from other countries yet pays little to nothing to the producer. For example, the cocoa farmer on the Ivory Coast is paid approximately one penny per candy bar manufactured by a candy corporation. The farmer, not being able to pay a rate for labor, uses forced labor. Kidnapping people from villages for use in the fields is not uncommon and the farmers use violence and manipulation to maintain its labor force.
Because the industry, in this case cocoa, is not regulated, corporations and their subcontractors are not required to meet any standard of care for their suppliers. Regulation initiated in a region such as the Ivory Coast would do little good mainly because there are many different countries involved and because slavery has become so integrated into their governmental cultures and economies that it is informally overlooked. Cocoa farmers, middlemen, and corporations have too much power in the very poor region of the Ivory Coast for regulation by that region to make a difference. Cocoa is not the only resource that this system occurs; it also occurs in the sugar, cotton and precious metals, in Africa alone. In fact, almost every product that can be purchased in the United States comes from forced labor. See the US Department of Labor’s report, http://www.dol.gov/ilab/programs/ocft/2012TVPRA.pdf.
One Possible Solution
Unfortunately, to change the labor laws and require protection of workers in a particular country would result in corporations relocating to another country where the laws are non-existent or not easily enforced. Perhaps that would not occur with more stringent world-wide labor laws, but this concept brings a whole new set of problems, such as commitment to and enforcement of those laws.
One possible solution would be to enforce labor laws from the country in which the corporation is filed or originates from. For example, Mattel Corporation is a United States corporation (Delaware), but their production is in China. Rather than depend on China to develop labor laws to protect its citizen laborers, or as may be suspected, to discontinue its use of labor camps, it should be the responsibility of the United States to set labor standards for Mattel to follow when manufacturing its product in China. If Mattel does not meet or exceed the standards outlined by the United States and/or Delaware, than Mattel would be in defiance and it would face the same consequences as if it were manufacturing in the United States.
This solution would not greatly affect the corporation’s profit margins unless it chose to defy the standards. It would still be able to manufacture at a lower cost because of the cost of living in each country is lower than its status country. In order to seriously consider this solution, one must take into consideration the possibility that the corporation would file for corporate status in another country. In the case of Mattel, it would not be able to file in China, a Communist country, but it could possibly file in France or some similar country rather than in the United States. This detail would have to be worked out, but it seems to me that there are obvious reasons why a corporation desires its original country’s corporate status, so this may be a minor problem to the overall solution.
While there are many arguments for and against laissez-faire economics, one thing that must be kept in mind is that this form of capitalism should not and does not include freedom for some and no freedom for others. It does not include using people as commodities. That in itself defies the very argument for laissez-faire, which is the ability of free trade and competition for all people, albeit at different levels.
In the World System Theory (WST), Immanuel Wollerstein provided three hierarchal structural positions within the capitalist world. Those are the Core, the Periphery, and the Semiperiphery. The Core Region controls the vast majority of the world’s wealth, produces a highly skilled workforce and is controlled through wage payment. The Periphery Region is exploited for raw materials which are exported to the Core. Historically, the workforce in the Periphery has been controlled through coercion and slavery and this continues through contemporary times. The Semiperiphery Region lies between the Core and Periphery both economically and politically. It is weaker than the Core but stronger than the latter.
The Core Region obviously has the power and resources to control the world’s economies, both the informal and formal ones by supply and by demand. The most effective solution therefore would be, using the old adage, to “hit ‘em in their pocketbook”. Consumer awareness and in turn, consumer demand for a change in globalization practice is what is necessary to effect change in corporate policies. This would not be done by the same methods that are used in Structural Adjustment Programs (SAPs), which introduce policy changes. SAPs use internal changes such as privatization and deregulation and external changes such as removal of trade barriers to effect change. However, there are negative effects in policy change, including the threat to sovereignty, undermining the democratic process and cutting social programs. In addition, there are always ways to “get around” policy changes.
It is in the best interests of a corporation to satisfy its customers or risk going out of business. If consumers pressure corporations to change their business practices by refusing to buy, or at the very least, limiting their purchase of products, corporations will quickly get the point as quarterly sales are tallied. Once consumer pressure is placed, it forces not just corporations but governments as well to begin regulations necessary to ensure that these changes stay in place. This exhibits a true democratic laissez-faire economy and those who oppose this approach based on a pro-laissez-faire stance, as seems to be the argument for keeping the globalization unreformed, would no longer be able to do so.
Been There, Done That, It Worked
In the 19th century, during a globalization period, the Atlantic Slave Trade and subsequently slavery itself was outlawed, not simply because of parliamentary change in Great Britain, but because of the consumer’s decision to stop using sugar from slave farms, particularly in the West Indies. There are many other residual slavery-like practices and human trafficking caused by globalization and many structural factors to consider, but the bottom line is money. If change is needed, change can be and has been accomplished by economic power, which consumers have. Consumers just have to relearn how to use it.