Monday, October 15, 2007

State Capitalism and Burma

Amongst opponents of free market economies, some of the most under handed are those who pretend to be the exemplars of capitalist economies: The large corporations. When people speak of laissez faire, it is usual that opponents will point to the actions of various large corporations to "prove" that laissez faire cannot work. Likewise, "vulgar libertarians" that should know better correctly use economic theory against their critics to refute claims that the free market wouldn't work, but then seem to be persuaded by their critics that "actual existing capitalism" is laissez faire.

The reality is, of course, very different: Both the "vulgar libertarians" and the "vulgar authoritarians" are incorrect - the status quo is not libertarian, is not free market, and is not capitalst. Some countries more closely approximate free markets than others, and do so in some respects and not others, but none does so very much, and many does so barely at all.

It is often in third world countries that both the vulgar authoritarianism and vulgar libertarianism come into play. Socialists point out the plight of workers in sweatshops as "proof" that markets can't help workers, and laissez faire only grants employers the power to exploit workers, and that, instead, international effort is justified to force governments to intervene in economies to enforce minimum working standards and wages. Vulgar libertarians then respond that, in a free market workers earn according to their marginal productivity, and so attempts to raise their incomes above the price the market will pay will result in pricing them out of the market, into even worse black market conditions, or starvation... therefore the low wages experienced in the thirld world are justified, and a necessary stage in the development of the industrialised countries.

The trouble with the libertarian response is that, whilst correct in many places, it is not universally true, and it is untrue precisely because the libertarian response assumes that the socialist critic is correct and that what is happening in the world is the result of free markets. Often, however, it is definitely not. And the vulgar authoritarian is wrong to assume that corporations favour laissez faire when the reality is that they all to often favour state intervention when it serves their purposes.

The most pertinent example in today's news is Burma. Burma, or Myanmar, has been in the news recently where mass protests have been shaking the streets of the capital Rangoon.

About 20,000 protesters led by Buddhist monks and nuns on Sunday mounted the largest anti-government protest in Myanmar since a failed 1988 democratic uprising, shouting support for detained pro-democracy leader Aung San Suu Kyi.

At one point a small crowd of about 400 -- about half of them monks -- split off from the main demonstration and tried unsuccessfully to approach the home where Suu Kyi is under house arrest. The monks carried a large yellow banner that read: "Love and kindness must win over everything.

The support of the monks was key in the protests.

In our country the monks are the highest moral authority. When the monks take the leading role, the people will follow," said Soe Aung, a spokesman for the National Council of the Union of Burma, a coalition of opposition groups based in neighboring Thailand.

So what does this have to do with state capitalism? The answer is here: "The protests began on Aug. 19 as a movement against economic hardship, after the government sharply raised fuel prices, increasing the overall cost of living."

So, again, "what has this got to do with state capitalism"? Why aren't these just more socialists calling for state intervention to provide for people when the market fails? Because it is the rising fuel prices that was the trigger for the protests, and it is in the fuel prices that the hand of the corporate state is most evident:

Fueling the military junta that has ruled for decades are Burma's natural-gas reserves, controlled by the Burmese regime in partnership with the U.S. multinational oil giant Chevron, the French oil company Total and a Thai oil firm. Offshore natural-gas facilities deliver their extracted gas to Thailand through Burma's Yadana pipeline. The pipeline was built with slave labor, forced into servitude by the Burmese military.

The original pipeline partner, Unocal, was sued by EarthRights International for the use of slave labor. As soon as the suit was settled out of court, Chevron bought Unocal.

Chevron's role in propping up the brutal regime in Burma is clear. According to Marco Simons, U.S. legal director at EarthRights International: "Sanctions haven't worked because gas is the lifeline of the regime. Before Yadana went online, Burma's regime was facing severe shortages of currency. It's really Yadana and gas projects that kept the military regime afloat to buy arms and ammunition and pay its soldiers."

The U.S. government has had sanctions in place against Burma since 1997. A loophole exists, though, for companies grandfathered in. Unocal's exemption from the Burmese sanctions has been passed on to its new owner, Chevron.

Rice served on the Chevron board of directors for a decade. She even had a Chevron oil tanker named after her. While she served on the board, Chevron was sued for involvement in the killing of non-violent protesters in the Niger Delta region of Nigeria. As in Burma, Nigerians suffer political repression and pollution where oil and gas are extracted, and live in dire poverty. The protests in Burma were actually triggered by a government-imposed increase in fuel prices.

In addition to oil and fuel, however. 16 percent of all of Burma's exports go to the US. Most of these are apparel, clothing etc. exports of which greatly increased during the 1990s, growing 272 percent since 1995. 80 percent of all exported apparel from Burma goes to the US, bought by companies such as Adidas, Kohl’s, Warner Bros., Bugle Boy, Jordache, and Nautica, a consortium of low-cost-clothing providers.

Note, however, in the above quote, the mention of forced labour. This reminded me of an interesting article in Journal of Libertarian Studies a while ago. Ellennita Meutze Hellmer restated the typical free market economic argument against critics of sweatshop labour, against those that demand that companies improve working conditions and wages in poorer parts of the world (an excellent summary of the argument, in fact, well worth reading). However, she then says

Given these points, many observers —especially libertarians— tend to view the actions of such student organizations as USAS as actions arising from an ignorance of basic economics (e.g., Block 2000). However, it is not necessarily correct to entirely dismiss the sense of injustice felt by these groups. Although these organizations may be misguided in only attacking the wages paid by corporations, the claims of injustice are not always fictitious, not by a long shot. In some countries, such as Burma/Myanmar, workers are forced by the state to work in miserable manufacturing jobs for powerful multinational corporations (The Economist 2000; Amnesty International 2004).

Hence it is wrong for both vulgar authoritarians to point to the plight of Burma's sweatshop workers as proof that laissez faire free's employers to exploit workers, and it is wrong for vulgar libertarians to try to use free market economic theory to defend the low incomes and poor working conditions of those workers. As Hellmer went on,

a number of other grassroots organizations, including the Free Burma Coalition, Global Exchange, and the Campaign for Labor Rights, have campaigned in the past to use the force of the state to end the importation of apparel made in Burma. Generally, reasons for concern cited are the usual anti-sweatshop rhetoric, most notably contempt for corporate profits. For example, a study by the National Labor Committee (NLC) concerning the source of NBA hooded sweatshirts manufactured in Burma reports that garment workers’ wages are as low as 7 cents per hour, and that the workers in Burma are paid just 4 cents for each NBA hooded sweatshirt they
sew; their wages add up to less than one-tenth of 1 percent of the NBA’s $60 retail price for the garment.

Sadly, however, the NLC and most other organizations miss the linchpin in an attack on the Burmese system of manufacturing. Mentioned (very briefly) in this report is the fact that merely questioning factory conditions can result in imprisonment. This last fact is reasonably well-documented but tragically far from the ony individual
liberties violation that is a way of life in Burma. However, it is brushed over by an organization that claims to care for international labor rights. The truth is that the military regime of Burma abducts its own citizens and forces them to work in factories owned by multinational corporations. Often, the laborers are political dissidents or petty thieves, but the criminality requirement is a mere formality.
Many innocent people, as well, are forced to work in the factories as well, bringing the number of slaves to a total of 800,000 (The Economist 2000). These forced laborers toil all day in dangerous and disease-ridden conditions under the gaze of armed guards. Often, they are chained together for months at a time. Those who refuse to work are beaten; thousands are raped or killed (Amnesty International 2004). The U.S. and the international community have imposed sanctions on Burma, but the regime and the state-dominated economy continue to thrive.

In this case, it is clear that many of the economic objections made by free-market defenders do not apply. The condition of slavery prevents many of the workers from pursuing better jobs, even when manufacturers move to the country to take advantage of the cheap labor. According to capitalist theory, the high profits made by corporations that manufacture their clothes in less-economically developed nations attract more entrepreneurs who want to further increase their profits, and these new entrants into the Burmese manufacturing market then have to bid up wages in order to entice workers to work for them. However, this logic only applies when workers are free to choose which jobs to work and receive the benefit of their productivity in the form of wages, which is not always the case in Burma. Here, the government is often paid by the multinational firms in order to utilize the labor of the prisoners. In such a situation the bidding up of the price of labor does not affect the incentives of the prisoner-workers. Rather, correct economic reasoning suggests that the politicians would respond to the increased demand for their cheap workers by raising the price that they (the government) charge for the labor. The upward movement in prices in turn provides the ruling classes with an incentive to enslave even more workers, ceteris paribus. As long as this upward movement in the price of labor allows corporations to maximize profit, they will continue to locate manufacturing in this nation, and this will lead, in a truly vicious circle, to still more enslavement of the population and little increase in
the standard of living for the impoverished worker.

In the light of this, government responses to the protests can be seen to be benefiting the corporate allies of the Burmese state. And those responses have been harsh:

In the pre-dawn hours Wednesday, military vehicles were patrolling the streets using loudspeakers to blast the warning: "We have photographs. We are going to make arrests!"

Shari Villarosa, the acting U.S. ambassador in Burma, told The Associated Press that military police were pulling people from their homes in the middle of the night and citizens of Burma's largest city were terrified.

"From what we understand, military police ... are travelling around the city in the middle of the night, going into homes and picking up people," she said.

CTV's Paul Workman, reporting from neighbouring Thailand since journalists are now banned from entering the country, said several young monks had made the escape across the border, telling horrific stories of the violent crackdown.

"They witnessed of course people being beaten up and arrested and had come across the border for safety, although they say they do want to go back," Workman told CTV Newsnet.

"But they had certainly come because they wanted to get out of Burma for at least a period of time and were being given some refuge in that part of Thailand."


A SENIOR Burmese intelligence official claims thousands of protesters are dead and the bodies of hundreds of executed monks have been dumped in the jungle.

After defecting from the military junta and fleeing to the Thai border, Hla Win told a reporter from London's Daily Mail: "Many more people have been killed in recent days than you've heard about. The bodies can be counted in several thousand."

The horrific details emerged as Burma's top general continued to snub the UN's peace envoy, who is in Rangoon on a mission to convey the world's outrage to the junta.

With protests quashed and many monasteries empty, fears are growing for those who have disappeared into Burma's grim jails.

Observers say many detainees have been taken to the city's notorious Insein prison, the Government Technological Institute, the police battalion number seven compound, the Kyaikkasan racetrack and possibly elsewhere...

A Swedish diplomat told the Daily Mail of more reports that monks had been tortured and killed in large numbers.

"We were informed from one of the largest embassies in Burma that 40 monks in the Insein prison were beaten to death today and subsequently burned," the diplomat said.

At least there will be more cheap slaves for multinational corporations then!

The proper libertarian position on this sort of thing is plain, and it is not the vulgar libertarian apologetics for the exploitation of the Burmese. As Brad Spangler has put it:

What you might not be aware of is that oil companies Chevron and Total are business partners with the Burmese state. These enterprises are complicit in propping up a tyrannical regime. Agorists recognize that, like most of the corporate dominated “white market” economy, the source of their wealth is not really production and exchange but subsidies, sweetheart deals and generally cozy relationships with the bandit gangs more commonly referred to as “governments”...

Chevron and Total are complicit in the atrocities in Burma via their relationship with the Burmese government. This constitutes an active disregard for the rights of the Burmese, rather than the merely apathetic passive disregard of the average person who feels to overwhelmed with the challenges of day to day life to pay attention to such things and is not directly involved in the first place. Chevron and Total, by means of their business partnership with the Burmese government ARE involved.

It is my opinion that this active disregard rises to a level sufficient to nullify corporate property claims, at the very least until such time as Chevron and Total sever all ties with the Burmese government.

Brad concludes from this that "If I were on a jury, as a matter of moral conscience I could not vote to convict anyone of a property crime involving purported property of Chevron or Total — from petty shoplifting through multi-billion dollar embezzlement and including destruction of property where no egregious risk to others was created by the destructive act." I'm personally not certain that this would be appropriate: The petty theif and shoplifter stealing from Chevron or Total is not a victim of them. Rather, I suggest it would be much more appropriate for the workers, the slaves that the Burmese state forced, in exchange for bribes, to work for these companies and others, to rise up and seize those companies for themselves. They built them, after all.

In the meantime, we might be able to use our purchasing power, or, rather, non-purchasing power to punish those companies supporting the Burmese military Junta with a boycott.


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