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Trade and poverty


by Conor Foley    
October 15, 2008 at 2:48 pm

I did an interview with Foreign Policy magazine yesterday for the launch of my book on humanitarian interventions which will be published next week.

The interviewer asked me a series of hypothetical questions like “what should be done about Darfur, Zimbabwe and the Democratic Republic of Congo”, etc. which I suppose I am going to have to get used to answering in the next few weeks. The problem with this whole “are you for or against humanitarian interventions?” question is it rather misses the point. Of course everyone should be in favour of an intervention where it is the only practical way of saving people’s lives and can do more good than harm. This seems to me to be so obvious as to almost go without saying (although having read the woeful level of debate on this subject amongst the British left, I now know that this is not the case). It just does not seem to take the debate very far forward in the real world.

So I said to the interviewer, if Barack Obama and Joe Biden actually want to do something about such conflicts they should not be proposing to claw-back US foreign aid, they should be cutting ethanol subsidies and ripping up the whole system of subsidies and protectionism for US agro-business. The same, obviously, also goes for Europe. No matter how many times I read the statistic, I am still shocked by the fact that rich countries spend ten times more subsidising their own farmers than they give to the poorest countries in aid and that an EU cow receives more financial support than half the world’s population struggles to live on. You don’t need to be Paul Kruggman to see there is a relationship between trade and poverty and poverty and conflict.

One of the biggest differences between living in a rich country, like Britain or the US and living in a poor country, like Brazil, is that we constantly think about issues like trade, exports and northern protectionism because it has such a direct and immediate effect on our economy.

Straight after doing the interview I was reading an article by Dave Osler on Marx and the markets. I like Dave – both as a person and a writer – and enjoy his blog. But there was a half sentence in the article – which took me back a bit. He mentioned that one reason why working class living standards in Britain had risen because “levels of consumption have been bolstered by . . . .superexploitation of the third world”.

Now maybe I have misread, or misunderstood, him, but the implication of this is that he thinks that western consumers are enriching themselves by “sucking wealth” out of poor countries. The logic seems to be that buying commodities from, and western companies investing in, poor countries makes them poorer. This, presumably, is why some people campaign against multinational companies investing in “sweatshop economies” and think that it is a good thing that the last world trade round collapsed.

Now, of course, the current terms of trade are unfair and there is a need to reform world rules and democratise global institutions. The case can also be made that this type of direct exploitation happened in colonial times – look at Portugal’s relationship with Brazil, for example. Western banks have also commercially exploited poor countries by lending them money that they could not afford to pay back; again Britain’s old relationship with Brazil was a good example.

But does Dave, or anyone else, actually believe that poor countries get poorer by increasing their trade with the rest of the world? It is a very odd argument to make, but it is surprising how many people seem to assume it. As Foreign Policy notes, Obama’s economic platform contains some distinctly protectionist proposals. Given that today is blog action on world poverty day, perhaps it is a good time to bury this myth.


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About the author
Conor Foley is a regular contributor and humanitarian aid worker who has worked for a variety of organisations including Liberty, Amnesty International and the UN High Commissioner for Refugees. He currently lives and works in Brazil and is a research fellow at the Human Rights Law Centre at the University of Nottingham. His books include Combating Torture: a manual for judges and prosecutors and A Guide to Property Law in Afghanistan. Also at: Guardian CIF
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Reader comments

Frankly, I dont buy the superexploitation line either or rather I dont buy it as the sole determinant. Where the Marxist left goes wrong I think is to overemphasise, or ‘bend the stick’, to pick out capitlaism’s flaws which it is right about and forget that amoung the vices lay also virtues – one of them being capitalism’s ability to motor forward (only, of course, to be stopped by periodic crisises). I think exploitation has taken place but also has progress in the productive forces of the leading nations quite independant of this exploitation….

I think the right policy on this are;

a) to address the terms of trade and redress them and call for the democratisation that you do and

b) level up labour conditions which without question are an issue in poorer nations through much the same process as the above.

Actually ‘exploitation’ doesn’t imply those incorrect conclusions: exploited countries/individuals are having wealth’sucked out of them’ by stronger exploitER countries; exploited countries/individuals do better if they are not exploited.

Whatever sensible Marxist theory of exploitation you take, exploitation involves some party taking a worse deal than they would have done under less unequal conditions: unequal distribution of productive resources entails some further unjust/unequal distribution of wealth. The point (cf. Roemer) isn’t that one should ‘abolish exploitation’ it’s that the exploited party get the raw end of the (freely sought, freely entered into) deal because they started out in a weaker position.

How this relates to some less developed country trading with more developed partners should be obvious. Exploitation doesn’t suggest that the exploited benefit from making no deal at all, even if all the trade they do engage in is exploitative: not even the most hardcore Marxist argues that a worker is better off unemployed than in (exploitative) employment. The point is that more (freedom to) trade/work, isn’t certain to produce good solutions, so long as the agent still bargains from a weaker position.

3. Conor Foley

Hmm well maybe. I work as a free-lance consultant so I sell my labour power to various employers, who presumably ‘profit’ from my work in that what they receive from me is worth more to them than what they pay me to produce it. Some of the work that I do is boring and some of it is dangerous. In that sense I am being suffering from ‘exploitation’.

But I am also immensely privileged compared to the people around me. A few miles away from where I live there are people living in home-made shacks with no electricity or running water. Several million Brazilians go to bed hungry every night.

It does not make any sense to compare my philosophical ‘exploitation’ to theirs.

A couple of centuries ago Brazil was the biggest sugar exporter in the world. The sugar plantations were concentrated up in the north-east, which is now the poorest region of the country. The Brazilian sugar industry went into decline for a lot of reasons, but it would still be more competitive than European and US produced sugar, except they receive massive subsidies and protection.

That is one of the biggest problems developing countries have. Wages are lower – and that is why so many industries out-source – but the people in the countries themselves benefit from that out-sourcing. The reason that people work for multinationals in ’sweat-shop’ conditions is because they pay far more (and have better health and safety) than can be found elsewhere.

The European and North American left do not seem to understand this simple fact when they talk about “third world exploitation”.

4. Mike Killingworth

[3] Yes. The word “exploitation” is both a term of moral censure and a technical term in a certain kind of economics. A lot of the left confuse the two, and indeed left-wing agitators and polemicists derive much of their force from just that confusion. Indeed, in its “purest” form Marxian analysis regards all transactions involving the sale of labour power as exploitative. As you suggest, this is rather like staying in bed to eliminate the risk of falling down the stairs.

What is, I think, clear is that for international trade to work both trading countries need effective civil societies as an absolute minimum precondition. (There is of course the other wee problem that Ricardian comparative advantage presupposes a low, if not nil discount rate – protectionism is rational if people prefer its present benefits to the future gains it offers – removing trade barriers implies that both economies will need to restructure and, at least in its simplest form, the theory assumes that this is costless – which is absurd.)

Perhaps we should start from the other end and identify “ethical” international trade flows, and tease out what makes them so.

5. douglas clark

Conor,

Having gone to the link about your book, I have to ask. My understanding of your position is that in defined circumstances you do think that interventionism is worthwhile. I have read what you said above, but the blurb for your book suggests that you think otherwise. I quote:

The idea that we should “do something” to help those suffering in far-off places is the main impulse driving those who care about human rights. Yet from Kosovo to Iraq, military interventions have gone disastrously wrong.

In this groundbreaking new book, Conor Foley explores how the doctrine of humanitarian intervention has been used to allow states to invade other nations in the name of human rights. Drawing on his own experience of working in over a dozen conflict and post-conflict zones, Foley shows how the growing influence of international law has been used to override the sovereignty of the poorest countries in the world.

The Thin Blue Line describes how in the last twenty years humanitarianism has emerged as a multibillion dollar industry that has played a leading role in defining humanitarian crises, and shaping the foreign policy of Western governments and the United Nations. Yet, too often, this has been informed by myths and assumptions that rest on an ill-informed post-imperial arrogance. Movements set up to show solidarity with the powerless and dispossessed have ended up betraying them instead.

About the Author
A humanitarian aid worker, Conor Foley has worked for a variety of human rights and humanitarian aid organizations, including Liberty, Amnesty International and the UNHCR, in Kosovo, Afghanistan, Colombia, Sri Lanka, Indonesia and Bosnia-Herzegovina. His books include Combating Torture: A Manual for Judges and Prosecutors (2003).

Is that really what you think? Obviously, I’d agree that any sort of humanitarian intervention can be appropriated, but equally, I’d have thought that, say, the intervention in East Timor was justifiable.

Whereas Iraq was palpably wrong. I thought you, of all people, could argue the difference between cloaking oneself in humanitarian language and actually being humanitarian?

Perhaps I should just buy the book. I doubt your arguement is as simple as the blurb makes it sound.

6. Conor Foley

Thanks Douglas.

Indeed, part of the problem is exactly that it is so often couched in those terms – on both sides of the divide (I am often quite alarmed by how the Guardian headlines or stand-firsts my articles as well). The blurb does not actually say that I am against humanitarian interventions – just that they have often gone disastrously wrong. It also talks about how the doctrine was appropriated by supporters of the invasion of Iraq. The theoretical part of the book is about the international law/national sovereignty tension and it is quite difficult to get this across in a simple manner.

Mike:

Yes, indeed. On your last point, that is basically what the aid charities have tried to do with the fair trade movement. Rather than call for boycotts they have promoted “ethical shopping”, trying to persuade supermarkets to stock fairly traded goods, get companies to check their supply chains, etc. Because most of the value added to a product comes at the retail end, the idea is that companies will calculate that it costs less to pay farmers a decent price for their goods, implement basic health and safety, etc. than run the risk of losing consumers (think of how much you are likely to spend in your local supermarket over your life time and you realise how valuable you are).

This kind of ‘positive engagement’ has also forced the aid agencies to think far more seriously about issues like child labour (where boycott campaigns will be hugely counter-productive). There has been lots of really interesting debates going on about these issues for years. I am really surprised about how it seems to have passed some people by.

There’s no sense in comparing the two for their (completely different) ‘moral wrongness’ , it makes perfect sense if you want to look at the common causal process. In both cases the reason why the best deal that one can hope to get is a rather raw deal, is because one party is weaker than the other in some relevant respect: you don’t own a company, Brazil can’t provide mass-subsidies, the sweatshop worker can’t get a living wage elsewhere etc…

If ‘the left’ fail to understand the ‘best deal that one can hope to get’ bit of the above, it’s not because they’ve analysed trade with the poor through the lens of exploitation. (Presumably such views are more to do with the supposed analogy between sweat shop labour and slave labour: i.e. so barbaric that they just must be stopped, though the heavens fall and though the newly unemployed worker starves; but that’s a fallacy for another day).

As for protectionism: well, one can assume that Obama and the EU support protectionism because it’s in their interests and they (but not Brazil) have the resources to follow through. They’re certainly not subsidising farmers as a means to reducing trade with LEDC’s because marxists count such trade as exploitative!

8. douglas clark

Conor,

Thanks. I’ll buy the book when it comes out. I am still a responsibilty to protect fan. With all that means about justification before action. Which, frankly, is not something I’d even thought about in a structured way, before you started writing about it.

Best wishes.

Thanks Douglas.

David, I think that the main reason for Obama’s position ethanol subsidies is because the way in which the Democrats organise their primary elections makes it very difficult for any aspiring candidate to alienate farmers in the mid-west. One of the huge problems of US foreign policy is the strangle-hold that some special interest groups have developed (the Miami Cuba lobby, the AIPAC, the christian right, etc.). But is this a good way to run the world?

Excellent article, (I’m fairly damn sure I’ve never expressed a similar sentiment on this site before).

“not even the most hardcore Marxist argues that a worker is better off unemployed than in (exploitative) employment”

Evidently you have yet to stumble upon Terry Kelly.

As to the whole “fair trade” initiative, I supported it intil finding out how badly it affects those parts of the trade not lucky enough to be brought into the system. Free trade would be much more helpful to the poor, (free trade including getting rid of subsidies).

11. Charlieman

Quote Conor: “…and that an EU cow receives more financial support than half the world’s population struggles to live on.”

I don’t fully understand why cattle subsidies are compared with international development/cost of living. Everything that we do in the developed world is so expensive in international terms that dramatic comparisons can be constructed. If EU citizens reduced home thermostats by one degree, we could give x million pounds in aid. If EU citizens halved the number of sub-two mile car journeys, we could give y million pounds.

Cattle subsidies provide an impressive statistic, but not a meaningful one. A genuine free trade argument would tell us how South American farmers might benefit or whether EU citizens are paying (subsidy plus retail) a sensible price for milk and beef.

I think a good analogy of this is the relationship between farmers and giant supermarkets like Tesco. Tesco holds all the power in negogiating price, delivery and payment terms and its very rarely a win win situation.

I’m in favour of a Fair Price concept rather then fair trade where the developing world pays what products are worth rather then expecting something for nothing.

In terms of Humanitarian Aid – we’ve been pouring billions of pounds into Africa et al since the early 80’s and still they are starving? When will we finally realise that it isn’t working and try something else?


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