Saturday, April 28, 2007

Amalgamating Global Labor on the Model of Global Capital: A Challenge to the ILO Framework

It has been a curiosity of modern market based forms of economic globalization that even as the structures of global markets for goods and capital are strengthened, markets for labor are not. Particularly in the case of capital, the thrust of recent efforts has been to make it easier for capital to amalgamate, and thus amalgamated, to travel without impediment across the borders of nation-states. Thus, the global network of bilateral investment treaties, the multilateral trading system, increasingly open financial markets for securities (including the provision of financial services), and global systems of private and public arbitration have made it infinitely easier for capital to combine, recombine, and travel across the globe without political impediment. In addition, investment vehicles, principally in corporate form, have found it increasingly easy to move across the globe. The Centros decision (Centros Ltd. v. Erhvervs-og Selskabsstyrelsen, Case C-212/97, ECR 1999 I-01459), for example, making it harder for Member States of the European Union to regulate the operation of foreign corporations operating beyond the territory of the state of their incorporation, also contribute to the mobility of amalgamations of capital. See Larry Catá Backer, The Autonomous Global Enterprise: On the Role of Organizational Law Beyond Asset Partitioning and Legal Personality, 41 Tulsa Law Journal (2006).

These principles of globalization, however, appear inverted in the case of labor. While capital appears to be fungible, labor appears to have succumbed to a more complex characterization. To some great extent labor is treated as fungible--that is the skills necessary to accomplish a particular set of tasks can be learned and produced by virtually every human being otherwise physically able, irrespective of nationality. But while capital is composed of units of value, even units of value with nationality (for example, the U.S. dollar), labor is composed of people. And people are different. People are bearers of culture, nationality, ethnicity, race, religion, tastes, and consciousness. They are a means of production and its beneficiary. People are both subject and object of globalized economic systems. As a consequence, whether from the left or the right, whether clothed in the language of "rule of law" or that of progressive rhetoric, the tendency is to speak of labor and labor policy in old fashioned classical Marxist-Leninist "control economy" terms. The International Labour Organization, for instance, promotes a state centered set of principles designed to provide a legal basis for labor market protectionism. Its Declaration on Fundamental Principles and Rights at Work "commits Member States to respect and promote principles and rights in four categories, whether or not they have ratified the relevant Conventions. These categories are: freedom of association and the effective recognition of the right to collective bargaining, the elimination of forced or compulsory labour, the abolition of child labour and the elimination of discrimination in respect of employment and occupation." ILO, Declaration on Fundamental Principles and Rights at Work, Abut the Declaration. The idea is to provide a baseline for labor market regulation in every state but to permit every state to erect barriers to entry and exit into those markets. These views serve as a basis for market centered and free movement capital centered states, especially through organs such as the Organization for Economic Cooperation and Development (OECD). See OECD, Jobs Study Report (1994).

Labor migration is viewed as destabilizing and in its extreme form, invasive. Alternatively, labor migrants are viewed as innocents preyed on by an institutionalized "evil" set of actors. Thus, for example, the Soros Foundation Central Eurasia Project describes how in "
many destinations, largely illegal populations of workers are often preyed upon by unscrupulous employers or corrupt law enforcement officials; in Russia, violent gangs may victimize migrants unchecked by police." Soros Foundation, Central Eurasia Project, Labor Migration. The issue, thus, is not one of labor markets but of basic human rights norms. The cure is to ensure labor contentment sufficient to prevent "excessive" outward or inward migration. Labor migration is thus also tied sometimes to issues of development rights that focus on states. Like much of what passes for norm making in the twenty first century, labor markets, like states and war, is something that must be managed. See, e.g., Philip Martin, Manolo Abella, and Christiane Kuptsch, Managing Labor Migration in the Twenty First Century (Yale University Press 2005).

And it is in that management that a capital system based on free movement and flexible amalgamation can exploit disjunctions across labor markets based on development, need, population growth, and the host of other systemic and demographic factors within states that make such disjunctions possible. These disjunctions are hinted at by the OECD and its capital privileging programs for labor management.

"A key reason for slow and sporadic implementation of the OECD Jobs Strategy is the perception that undertaking reform involves conflict with policy objectives concerning equity and social cohesion. In particular, concern has been expressed in some quarters that the Jobs Strategy recommendations to enhance wage flexibility and to reform social transfer systems would be at odds with the policy objectives of ensuring some degree of equity across members of the labour force or the population at large. The EDRC reviews did not provide conclusive evidence as to the nature and magnitudes of any potential trade- offs, though in some cases it was suggested that these objectives do not necessarily conflict when seen in a dynamic perspective."
OECD, Implementing the OECD's Jobs Strategy (1997) at 11.

It is the conflicts referred to in the OECD Report that the "progressive" elements of labor rights groups tend to base their opposition to free movement of capital and for a greater effort at control economy regulation of the traditional sort. Curiously, little attention has been paid to the power of amalgamating labor in the ways that capital has been permitted to combine. And the attention that is paid to labor aggregation (outside of the traditional labor unionizing context) is usually dismissive, especially among "progressive" forces. It comes as no surprise, then, that In an interview with Saepol Tavip, a member and past chair of the Indonesian Association of Trade Unions, published in 2006 (Interview, A Kind of Modern Slavery: Labor Flexibility Comes to Indonesia, Multinational Monitor (July/August 2006) at 37) the OECD's approach on state centered labor "flexibility" was criticized in favor of a system of state regulation that would significantly expand the rights of individual laborers and those of labor organization, at least in their traditional representational form.

"Number one is about outsourcing, or contracting out. We reject outsourcing, because it creates a flexible labor market, and we think labor market flexibility is a kind of modern slavery. Labor flexibility means workers will be flexible in the wages they receive, flexible in their working hours, flexible in the social security benefits to which they have a right, flexible in accepting dismissal — because the employer can fire the worker at any time under any condition." Id.

The great difficulty, of course, is that labor NGOs, including labor unions, are loathe to embrace the dynamics of markets on economic policy. They tend to see no distinction between labor and political issues, and tend to privilege the political (and thus to privilege the state apparatus) over mere institutionalized economic power.

"Foreign investors don’t want to have ongoing obligations to their workers, and they don’t want to be burdened with labor problems if they want to withdraw investments from Indonesia. But now, if they want to close their factory or investment in Indonesia, they can go easily — they don’t have obligations to justify the dismissal of their workers or to provide funds to pay compensation to them." Id.

But the criticism also focused on the way in which treating labor issues as economic under the system of globalization has significant consequences for labor participation in politics. "Now it is very difficult for the union to organize a strike when they don’t agree with the policy of the employer. Under the Manpower Act, workers can strike only in the context of collective bargaining agreement negotiations. We can’t go on strike to show our solidarity with other workers’ problems in a different company. We cannot go on strike when we oppose state policy." Id.

The solutions are thus the usual, and usually unrealistic, sort: greater state intervention, privileging the political as the site through which economic decisions are made and markets managed, using law as a substitute for market behavior, relying on the state to regulate taste, desire and culture. What is ignored or viewed with suspicion, is the adoption by labor of the mechanisms for amalgamations of power by capital--the use of the institution of the firm. Criticizing the behavior of multinational corporations in Indonesia, Mr. Tavip explains:

"they open their factories, but they won’t contract directly with the workers. They use another agent to supply the workers. And the workers only sign a contract letter with the agent.

So they don’t have any obligation to pay compensation, or to think about working conditions. They can do anything, at their will. Because the obligation to think about the workers’ rights has been shifted to the agent. The existence of the agent is endorsed in the law. This way, there is a shifting of burden — shifting of obligation — from the investor to the agent. The agent becomes responsible for handling all of the problems of the workers — their rights, salary, social security and many things." Id.

Ironically, though typically, Mr. Tavip rejects a powerful tool of levering the power of a factor of production because of its resonance with "capital." In so doing, Mr. Tavip, and many of those focusing on labor issues, tend to overlook a potentially powerful form of labor organization that might tilt the balance of power away from capital on capital's home turf. When labor controls labor, and does so through the mechanics of power that operate within a dominant system of institutionalized power, labor will be able to meet capital on its own terms: domiciled within the network of nation states but free to move globally and to take advantage of disjunctions in capital markets. It might be worth thinking through the possibilities of a global system in which labor controls labor, in which labor is no longer controlled by capital, in which the individual laborer is no longer arrayed against aggregations of capital. But this requires labor to lose their dependence on the state--to take the step that capital took two centuries ago when it effected what would be an increasing independence from the state. When labor begins to use the state in the way that capital has learned to do it, when labor ceases to organize itself like an element of civil society and becomes more like a value optimizing factor of production, then perhaps the global conversation about labor may take on a different hue.

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