EH.net is owned and operated by the Economic History Association
with the support of other sponsoring organizations.

Defining Global Justice: The History of U.S. International Labor Standards Policy

Author(s):Lorenz, Edward C.
Reviewer(s):Perlman, Mark

Published by EH.NET (March 2002)

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:

1. Programs of minimal income security 2. Health insurance for all workers 3.

Social security for members of nations’ armed forces. 4. Organized programs for

the demobilization of World War II veterans 5. Publicly paid-for employment

exchanges 6. Public works to relieve cyclical unemployment 7. 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.

Subject(s):Labor and Employment History
Geographic Area(s):General, International, or Comparative
Time Period(s):20th Century: WWII and post-WWII