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