Academic journal article Review of Social Economy

Moral Dilemmas and Factual Claims: Some Comments on Paul Krugman's Defense of Cheap Labor

Academic journal article Review of Social Economy

Moral Dilemmas and Factual Claims: Some Comments on Paul Krugman's Defense of Cheap Labor

Article excerpt

Abstract In 1998, Paul Krugman published a collection of short polemical essays on economic themes under the title The Accidental Theorist And Other Dispatches from the Dismal Science. Among those essays was one entitles "In Praise of Cheap Labor: Bad Jobs at Bad Wages Are Better than No Jobs at All". This brief article is an extended comment on that piece which happened to contain factual claims central to the empirical research program of one of us, and ethical and political issues of concern to us both. Our view is that in his essay on cheap labor, (as indeed in many of the others in the collection), Krugman makes some pungent and telling criticisms of other writers on economic matters and--in this particular case--of some analytically weak and ethically dubious claims which are frequently espoused by contemporary anti-capitalist and anti-globalization radicals conventionally regarded as being on the political left. But at the same time--or so we shall argue--his own polemic is, in important ways, undermin ed by the narrowness of the theoretical framework within which it is constructed, and most especially, by Krugman's almost total lack of an historical perspective in which to see either contemporary debates over global capitalism or the ethical issues at their heart.

Keywords: Cheap labor, Economic theory, History, Radicalism

KRUGMAN'S CASE IN OUTLINE

As its provocative title indicates, Krugman centralizes in his argument the necessary relativity of "cheap labor" as an economic concept, a relativity which came to be central to one of us in the course of operationalizing research on the export garment industry in India (Cawthorne, 1993; 1995; 1997). Amongst Krugman's more significant factual claims related to this relativity, are the following:

(1) "...while wages and working conditions in the new export industries of the Third World are appalling, they are a big improvement over the previous less visible rural poverty" (1998: 81).

(2) "While fat-cat capitalists might benefit from globalisation, the biggest eneficiaries are, yes, Third World workers" (1998: 81).

(3) "And so countries that had previously made a living selling jute or coffee started producing shirts and sneakers instead. Workers in those shirt and sneaker factories are, inevitably, paid very little and expected to endure terrible working conditions. I say 'inevitably' because their employers are not in business for their (or their workers') health; they pay as little as possible, and that minimum is determined by the other opportunities available to workers" (1998: 82).

(4) "These... improvements [in countries with new export-oriented industries] have not taken place because well-meaning people in the West have done anything to help-foreign aid, never large, has lately shrunk to virtually nothing. Nor is it the result of the benign policies of national governments, which are as callous and corrupt as ever. It is the indirect and unintended (our emphasis) result of the actions of soulless multinationals and rapacious local entrepreneurs, whose only concern was to take advantage of the profit opportunities offered by cheap labor. It is not an edifying spectacle; but no matter how base the motives of those involved, the result has been to move hundreds of millions of people from abject poverty to something still awful but nonetheless significantly better" (1998: 83).

(5) "Even if we could assure the workers in TW export industries of higher wages and better working conditions this would do nothing for the peasants, day laborers, scavengers...who make up the bulk of these countries' population...[this] would create a privileged labor aristocracy...and it might not even do that". (1998: 84-85).

(6) Deny [employers cheap labor] and you might well deny them the prospect of continuing industrial growth....as long as you have no realistic alternative to industrialization based on low wages, to oppose it means that you are willing to deny desperately poor people the best chance they have of progress for the sake of what amounts to an aesthetic standard i. …

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