Edward C. Lorenz, Defining Global Justice: The History of U.S. International Labor Standards Policy. Notre Dame, IN: University of Notre Dame Press, 2001. x + 318 pp. $54.95 (cloth), ISBN: 0-268-02550-09; $27.95 (paper), ISBN: 0-268-02551-7.
Reviewed for EH.NET by Mark Perlman, Department of Economics, Emeritus, University of Pittsburgh.
Defining Global Justice is by a social historian who chronicles in an unusual and intriguing way the rise and eventual sequential transformations of the International Labor Organization from an agency originally intended to standardize and enforce internationally what industrialized nations were coming to believe to be workers' rights to an agency that is, at its best, no more than 'an adult education program.' His approach involves tracing the private-public interest groups that first created the International Labor Organization and then maintained an interest in the United States for American participation.
It is one of the lesser ironies of our times that few who hear of the rioting whenever there is a global economic conference realize that a great deal of the history of economic thought has been tied up with profound differences about optimal policies regarding trade among nations. That fact is not the best evidence that can be adduced about the real costs of the economic profession's degrading of that sub-field but perhaps it is the most recent.
Since this review is primarily directed at economists rather than historians it is useful to start with a digression summarizing the history of the profession's perception of the underlying problem, i.e. applications of the static theory of the benefits of free trade to a dynamic world.
Laisser-Faire vs. Mercantilism
The Physiocrats' "laisser-faire, laissez-passer" really applied to trade within France. It was Adam Smith who best popularized free trade among nations. And even Smith, himself, must have had profound doubts about that program as a national policy since he subsequently gladly accepted appointment as Collector of Customs in Scotland, a traditional family sinecure, where he distinguished himself by strenuously collecting all the duties owed -- something his own familial predecessors had pursued only lackadaisically.
David Ricardo gave Free Trade Doctrine its major theoretical thrust, albeit his model, neglecting transportation costs (to say nothing of costs of information), was of a static nature. Nonetheless, the Doctrine became the dominant program argued by the leading British social thinkers such as John Stuart Mill. Indeed so strongly did Alfred Marshall feel about the issue that he intervened -- certainly unusually, if not actually improperly, in the selection of his successor and promoted the candidacy of a very junior pro-Free Trade, Arthur Cecil Pigou, over the more conventional candidacy of Herbert Somerton Foxwell, who was skeptical about the social costs of the Doctrine.
In recent decades what is left of the alternative doctrine in Britain was Professor Kaldor's suggestion that the British Free Trade Doctrine was at best a special case for Protection - at a point when one's own nation is head-and-shoulders ahead of all others from the standpoint of technology, then a policy of universal Free Trade makes dominant sense. Kaldor's view, whatever its actual source, also can explain the famous Menger-Schmoller Methodenstreit, which although phrased in terms of deduction versus induction, was most probably about Menger's fear of Prussian protective-trade policy crippling Austrian economic development. This is the explanation offered by Joseph Schumpeter -- who, by the by, shared Menger's fear of Austria being economically exploited by its very much larger and more economically developed northern neighbor.
Labor and the Closing of Borders
In order to put the problem in its bitterest context, we turn to the questions not of the international mobility of products nor even the international mobility of capital, but of the international mobility of labor. Although there are many theories of why and how labor suffers from the industrialization process the two dominant ones are theories of exploitation on the shop floor (by the employer who owns the capital) and exploitation in the market place by the appearance of cheap foreign goods and/or cheap 'foreign' labor. The first of these (exploitation on the shop floor) was enunciated by Marx and very much broadened first by John A. Hobson and then vastly popularized by Lenin, both of whom stressed that capitalists would forever be looking for both cheaper labor and unexploited product markets -- first at home and then abroad. The second theory (exploitation in the product and labor-factor markets) was developed at the University of Wisconsin by John R. Commons who saw as a data-derived generalization (explaining American unionism) a record of workers' efforts to keep up product prices so that their wages would not suffer. Commons's price/wage relationship, implemented by workers' opposition to 'cheap goods' (meaning imports into any local market) and 'cheap labor' (meaning greenhorns and green hands), was consistent with his views about curtailing immigration, particularly from Eastern and Southern Europe. It is perhaps an anomaly that his successor as a labor historian, Selig Perlman (himself, an immigrant from Tsarist Russia), recast the Commons theory into its present form -- namely that American workers with a history of political experience and self-organization came to view (and thus to justify) their jobs as a collective property right; and for good reason they had been more confident of the method of collective bargaining than the method of legal enactment. Perlman's representative unionists grasped with both hands the principle of unions being the protector of a collective job-right -- right to ownership being probably as American a cultural tradition as any.
Thus it was that within the economics profession the policy issue of international mobility of products and factors often separated deductive (theorist) economists from inductive (in this case labor) economists. Each group went its own way; the former usually proving deductively (but without so specifying that it was a static model) the overall advantages of free trade in goods and services as well as the advantages of easy movement of the factors of production, while the latter embraced the idea that such competition should be regulated by a series of international conventions designed to improve the living standards of workers in backward economies with the intended result that the urge to migrate from backward economies to industrialized ones would be mitigated. As is all too well-known, interest in turn-of-the-twentieth-century labor problems (also known as Commons's Institutionalism) all but died in the 1970s.
The Book at Hand
1. Lorenz's Approach.
Thus it is that the book under review may seem to most of today's professional economists as an anachronism. But its author, Edward C. Lorenz, who teaches history at a relatively small Michigan college, seems blissfully unaware of the rigid graduate-school-head-start-school conventions found in most college's economics departments' curricula. The consequence is, as already noted, both a novel and very interesting history of real-life battles regarding international labor standards and an important reminder that within the traditions of our profession there once thrived a strong concern about standards of human dignity. And if that tradition is now moribund amongst us, it thrives elsewhere in our country.
The treatment, arranged into eight chapters, is chronological. The narrative starts with Lorenz discussing the evolution of international reform movements growing out of private organizations. More important than his list of names (not that names like Robert Dale Owen, Daniel Legrand, Karl Marx, etc, are not in themselves interesting) is his development of an empirical thesis about inter-faction cooperation such that in the end welfare reformers, advocates of factory acts, trade unionists, and most important clerics and academics managed both to popularize Progressive reform in the years prior to World War I and to reorient American policy anent the ILO during the New Deal years and most recently during the decade when Soviet hegemony was imploding. Briefly put, most of these factions were steered by elite groups who had both agendas and a capacity for organizing grass root support. Among them were not only intellectual 'do-gooders' such as social workers like Jane Addams, but also influential Roman Catholic and Protestant clerics (the one influenced by Rerum Novarum, the other by ideas similar to Rauschenbusch's Social Gospel), and that says nothing about the quondam power of John R. Commons's and others' American Association for Labor Legislation.
Eventually these activities ripened so that when the League of Nations was established a separate body, the International Labor Organization, was also created. The League was a legislative body made up of national governmental delegations, each named by a member country. By way of contrast the ILO was made up of governmental delegations of which two were named by each government and one each from each country's labor groups (meaning unions) and one from industry (meaning industrial confederations). In short, the ILO was tripartitism in practice, certainly a concept originally formulated by men like John R. Commons. A secretariat (under an elected Secretary-General) was set up in Geneva. He exercised the Prerogative between annual conferences where the delegates assembled to fraternize and pass conventions pertaining to minimum standards for industrial life. He also had a secretariat , the principal nominal duty of which was to collect relevant data (in the tradition of the American Bureau of Labor Statistics).
2. The American Record.
In any event, in 1919-20 the Congress rejected American membership both in the League of Nations and the International Labor Organization. But that was hardly the end of the story. Frances Perkins, Franklin Roosevelt's Secretary of Labor, and Isador Lubin (her Commissioner of Labor Statistics) had always been sympathetic to American membership in the ILO, and the total collapse of the American textile in New England gave them (and eventually even the Congress) sufficient reason to reconsider the earlier refusal. In 1935 the Americans joined -- even though it was clear that many Americans, particularly those who favored isolationism and the freedom of contract provisions found in the fifth and fourteenth amendments, continued to fight against participation. Even the American unions (the AFL) were split about membership -- one faction arguing the traditional line about collective bargaining, not the method of legal enactment, being the way to go, observed all too tartly that any conventions that the ILO was liable to vote would be much weaker than American unions had already or should achieve through bipartite bargaining.
During World War II the ILO removed its headquarters to the Western Hemisphere. Its biggest achievement (as part and parcel of the multipartite negotiations that included the Bretton Woods Agreement) was a program voted in Philadelphia in 1944 including planks referring to:
- Programs of minimal income security
- Health insurance for all workers
- Social security for members of nations' armed forces
- Organized programs for the demobilization of World War II veterans
- Publicly paid-for employment exchanges
- Public works to relieve cyclical unemployment
- Agreement that all these programs would be extended to colonial territories
After the war employer resistance to the ILO, if anything, increased -- a 'Bricker' Constitutional Amendment was repeatedly proposed to formalize the point that no international treaty could in any way supplant the aforementioned two Constitutional Amendments. Nonetheless between the efforts of internationally-minded reform groups and a more-or-less indifferent labor union attitude American membership was maintained, albeit that during the Eisenhower Administration the United States did try to direct the ILO secretariat to pay more attention to statistics-gathering and less to policy statements.
But what eventually in 1975-77 managed to all but end American participation was a growing realization that the Secretariat was clearly too friendly to the newly-joined Communist countries and that the annual conferences were becoming vociferously critical of American foreign policy choices. Increasingly American unions despaired of getting the ILO to condemn the slave labor conditions in Communist countries and they moved to persuade some in Congress that the ILO was becoming a Soviet partisan. When the ILO voted to give the Palestine Liberation Organization observer status Congress eventually stopped the ILO appropriation, and President Ford gave notice of American withdrawal.
However, within a couple of years (1978) not only was a Pole elected Pope, but in Poland a shipbuilders' union, Solidarity, emerged as the leader in disrupting the Soviet hegemony. And the new Carter Administration had turned strong programmatic attention to human rights violations. These, together, served to crumble any further labor resistance to membership in the ILO, and the Americans appeared once more on the Geneva scene. Since that time the positions of various private public interest groups have shifted. The clerics, particularly some leading Roman Catholics, continue to take a very strong interest in labor problems throughout the world. Economists, however, have become enamored by abstraction and few, if any, write about labor problems any more. Yet, among other academics, particularly those in law faculties, the old concerns remain viable. And given the growing importance of multinational corporations, business's attitudes have become far more sophisticated; they no longer oppose international conventions, as such, they merely object -- in the name of freer trade -- to the conventions being enforced.
3. Conclusion
What Lorenz chronicles is the long experience within the United States of various groups' interests not only in the ILO (with all the vagaries of its choices reflecting the growth in number of Communist and then liberation governments) but even more in trying to formulate American international policies setting those civilized standards. Thus it is a history of the transformation of Roman Catholic doctrine about the role of unionism (as seen several encyclicals -- specifically Rerum Novarum [1891], Quadragesima Anno [1931], and Centesimus Annus [1991]), a record of the American Federation of Labor's coping with left-wing radicalism seen not only internationally but also domestically, and an account of a wide-variety of transitory groups (e.g., even the American Enterprise Institute) intent upon making the world a better place for workers.
The great virtue of Lorenz's sympathetic treatment of protests against consumerism-uber alles, is a concern about not only working conditions but also much of the current impetus to emigration, the importance of which cannot be swept away either by police protection (as in riot control) or intellectual neglect (as in the professionalization of economics). No doubt cheap clothing has its virtues; but it also has its costs. One cannot do better than recall a few of the lines of Thomas Hood's 1843 Song of the Shirt:
1 With fingers weary and worn,
2 With eyelids heavy and red,
3 A Woman sat, in unwomanly rags,
4 Plying her needle and thread--
5 Stitch! stitch! stitch!
6 In poverty, hunger, and dirt,
7 And still with the voice of dolorous pitch
8 She sang the "Song of the Shirt!"17 "Work -- work -- work
18 Till the brain begins to swim,
19 Work--work--work
20 Till the eyes are heavy and dim!
21 Seam, and gusset, and band,
22 Band, and gusset, and seam,
23 Till over the buttons I fall asleep,
24 And sew them on in a dream!25 "O, Men with Sisters dear!
26 O, Men! with Mothers and Wives!
27 It is not linen you're wearing out,
28 But human creatures' lives!
29 Stitch--stitch--stitch,
30 In poverty, hunger, and dirt,
31 Sewing at once, with a double thread,
32 A Shroud as well as a Shirt.89 --With fingers weary and worn,
90 With eyelids heavy and red,
91 A Woman sat, in unwomanly rags,
92 Plying her needle and thread--
93 Stitch! stitch! stitch!
94 In poverty, hunger, and dirt,
95 And still with a voice of dolorous pitch,--
96 Would that its tone could reach the Rich!--
97 She sang this "Song of the Shirt!"
4. A Troubling Postscript
Yet, the lure of cheap goods has been irresistible, and multinational corporations have learned to give lip-service (if no teeth are involved) to international labor standards. The ILO bureaucracy is safe, talk is endless, and little really changes.
Moreover, there is no proof that raising wage-costs (with loss of employment opportunities) in developing countries would not work in the direction of greater emigration. If the division that now threatens war between most Islamic nations and the West suggests anything, it is that the culture of democratic representation envisaged by those who first agitated for, then created the ILO, and afterwards ran it is not the culture of most of the poorest national economies. Wilson's dream of making the world safe for democracy (and democratic institutions) was punctured in 1920; it flew briefly during and after World War II, and then again after the implosion of the Soviet economies. But now the idea of representative democracy and such things as free trade unions are stuff of the Western world -- perhaps a recurrent dream for others, but not one easily made a reality.
Mark Perlman is University Professor of Economics (Emeritus) at the University of Pittsburgh. His The Character of Economic Thought, Economic Characters, and Economic Institutions Selected Essays was published by the University of Michigan Press, 1996.
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