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December 19, 2005

The Mahdi Bunting.

Ooooh, dear, she does get a little confused.

Cotton accounts for only 2.5% of all agricultural land use, but for 22.5% of all insecticides applied in agriculture.

That’s why we’ve developed those GM versions of course.

Textile production has always been a vital stepping stone in industrialisation (it was for us) because it's low-skill and requires only a low capital investment,

That it has doesn’t mean it must be but OK, textile production is a useful stage in economic development. We’ll accept that.

She points to the fact that the cost of clothing fell in the US in the 90s as huge quantities of cheap - often Chinese-made - goods were imported. As a result, hyper-consumption boomed, so that by 2002 the US was importing 48.3 pieces of clothing per person per year.


So that’s a good thing, right? Think of all those lovely jobs in making that clothing, all that low level and vital stepping stone in industrial development stuff.

Ah, no. The Mahdi Bunting is actually arguing that this is a bad idea.

The high social costs have been well charted in the low wages, long hours and poor safety records in the developing countries that manufacture this Christmas miracle.

Err, but luvvie, this is the industrial development you think so essential.

Meanwhile, at the other end of the global cycle, the second-hand clothes swamping developing countries kill off the chance of any indigenous clothing industry.


And apparently recycling is bad. So there.

In Maputo there are very few new clothes shops and little hope of setting up an indigenous textile industry as part of Mozambique's post-civil-war economic rehabilitation.


Sooo, let’s just run through this again. The textiles industry is a vital stepping stone in the development of an industrial economy. We and the Americans are, in our insufferably consumerist manner, buying so many clothes that vast factories have sprung up in the poor countries of the world to provide us with them. Thus providing that industrialisation so badly needed.

And this is a bad thing.

I think we need to add The Mahdi Bunting to our list of Peter Simple characters. She can stand alongside Dr. Heinz Kiosk screaming "We are all Guilty!"

Update: I get castigated in the comments and advised to go here. So I do.

These consequences can only be deemed worthwhile if we view money (the shareholder return aspect) as the ultimate value (naturally, the house view of "The Economist", "The Financial Times", etc) and ecology and human labour as sources of externalities, of costs to be reduced to the maximum extent possible.

and

In pursuit of shareholder return, ecological and human factors are monetised.

So which is it? Are they externalities that are ignored or are they monetized and thus not externalities?

Consumer spending heightened, so that although goods are cheaper, they spend as much or more

?? Everyone always spends all their money (if we include savings as spending it, naturally). So yes, if someone’s got a hundred quid a week to spend, spend a hundred quid a week they will. But this is the most joyous piece of nonsense:

If corporate structure could be reconfigured, so that clothes are not sourced or produced, cotton not farmed and workers not employed in the name of maximising financial value for a third party, the shareholders, these extraneous, burdensome social, humanitarian and environmental stresses and distortions could be removed.

The abscence of shareholders will solve everything. Right. Worked so well for the Soviet Union didn’t it? Works so well in the cotton fields of Uzbekistan doesn’t it? No ecological damage in North Korea at all. The Aral Sea is all fine and dandy.

December 19, 2005 in Economics | Permalink

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Comments

You're wrong Tim. Sacrificing human welfare and the environment we all depend on for shareholder return is madness.

When 20/21c history is taught in the future the children will be told about the folly of "the economists", who subjugated real, environmental wealth, to the illusory, manmade numeric kind.

Educate yourself here -
http://deed.squarespace.com/the-digest/2005/12/19/the-imperial-consumer.html

Posted by: Hardwin Jones | Dec 19, 2005 10:29:40 AM

Socialist Education is an oxymoron.

After companies are stolen from their rightful owners and investors i.e. "corporate structure could be reconfigured," then inevitably "clothes are not sourced or produced, cotton not farmed and workers not employed"

People should see money as only one thing, namely YOUR OWN TIME. When you are spending it think how long it took to earn it, just like when you earn it. When you correctly understand money you understand that tax punishments that extort a section of income are akin to forced labour AKA slavery.

Slaves never make the most efficient workers, and tend to flee the "plantation"/emigrate.

Posted by: Rob Read | Dec 19, 2005 12:12:56 PM

A case for returning to pastoralism???!!!

I once saw in Stoke Newington an 'organic cotton housesuit' for sale. I would love to imagine Maddy sitting at home wearing this tapping away on her Mac.

haha "real, environmental wealth, to the illusory, manmade numeric kind" ah that'd be called money then. One of the key foundations to a modern industrialised capitalist economy. Oh they even have money in socialist countries too.

Posted by: the-man-in-black | Dec 19, 2005 1:58:24 PM

Speaking of theft: corporate structure is a way of "stealing" environmental, social and humanitarian goods, by externalising costs associated with these factors, for the benefit of the owners of property, ie the shareholders.

Speaking of money and time: with about 10 minutes of my time I can afford to buy a garment sewn using at least a day of someone else's time. There's a problem of measure. If we didn't have production and consumption arbitrated through a corporate structure which *only* works to maximise benefits for property owners (rather than producers and consumers), perhaps I could pay more (20 minutes of my time), and the worker could earn a better wage, and work less hours in the day.

On tax: are you advocating no tax? Surely roads, healthcare and education etc have to be paid for somehow? Or do we rely on benevolent corporations? I don't quite understand your point.

Slavery is surely the product of the same kind of imperialist, international-exploitative consciousness that prevails under neoliberalist globalisation.

Posted by: Hardwin Jones | Dec 19, 2005 2:09:04 PM

I like the part which says that the FT's "House view" is that shareholder return is king. This does suggest that the writer has never read the FT; from the rest of the piece I conclude that they have never read anything.

As a socialist, I like the FT, because it's the only paper which carries any pieces by anyone who engages with the state of the global economy in a reasoned rather than purely slogan-based manner. Plus, it probably is the most socialist newspaper available in the UK (If you ignore the Morning Star, which I always do): It has columnists who actually talk about the economic welfare of people and households! It has people who know that businesses aren't people with interests in and of themselves!

Posted by: Marcin Tustin | Dec 19, 2005 2:20:10 PM

That's right Man-in-black, I'm referring to money.

Economics and ecology are in a conflict, under the current paradigm, which they don't need to be.

All of us are working away for money above and beyond the amount we need - for an ideal of global economic growth, the margin of which will pay for development and climate change adaptation measures, we're assured; while the enterprise we're engaged in is heating our climate and stripping our ecosystem of its lungs.

One of the two (economics and ecology) is real, and non-negotiable, and the other isn't. Of course, we can have money as an extrapolation of effort, time, capital, risk, all the good things you free marketeers love, but within the corporate structure, with its distorting imperatives, our way of doing things is simply unsustainable.

Posted by: Hardwin Jones | Dec 19, 2005 2:20:11 PM

You're right, Marcin, I don't read the FT much for comment on globalisation; they do of course have extensive business coverage, all of which business is conducted in the corporate legal form - so it's all prone to the kind of triple liability (social, humanitarian, environmental) effects Madeleine Bunting highlighted in her article.
As a socialist, I recommend you read less of the FT, and more by writers like Bakan, Korten, Robert Wade and others.

Posted by: Hardwin Jones | Dec 19, 2005 2:31:15 PM

I don't necessarily believe that the market is always the answer, but FIRST why not try and make the markets work better to achieve more sustainable development?

I am not so much a free marketeer as a realist and pragmatist.

I have trouble understanding your agenda - "Slavery is surely the product of the same kind of imperialist, international-exploitative consciousness that prevails under neoliberalist globalisation"

The last time I heard something like this was a bloke trying to sell the socialist worker round our Student halls of residence 15 years ago.

Posted by: the-man-in-black | Dec 19, 2005 3:13:51 PM

Hey Tim, sorry to keep adding comments - a sign of being pugilistic or mad to keep shouting into silence - but I've just noticed your update on your initial post. it's always great to have you debating, I love your turns of phrase. If I can delight you by adding some more joyous good sense -

On your points:
1 Perhaps I'm using the wrong terminology saying that the ecological and humanitarian factors are monetised; you know what I mean - they're counted as financial costs to then be externalised, that kind of thing.

Tim add: I’m all in favour of externalities being properly accounted for. This should be done by in fact monetizing them and thus including them in the price of the goods. Thus making price equal "true price" as the saying goes. One example would be the use or market pricing for water. All in favour of that.

2 Ok what I'm saying is that by having access to cheaper clothes, the consumers don't save any money on their clothes purchases - they just buy more clothes, encouraged by advertising and "faster" fashions. Let's have them spending more (per item) on less clothes, and have workers earn more per piece, or per hour, and work less hours.

Tim adds: But many do indeed spend what they save on clothes on other things. I do myself for example. $10 jeans means more beer can be bought.

Having people spendign more per item is equivalent to making them poorer. You can say that shiny new clothes are not things that they should want, of course, but in reality you are denying them those things they wish to have.

3 I don't know about the shareholders' abcesses, but their absence - would be a boon. Let's debate this - the cotton fields of Mali (market swamped by US cotton under neoliberalist policy) or the cotton fields of Uzbekistan? Aral Sea or Exxon Valdez?

Tim adds: What the hell’s an oil tanker got to do with it? The Aral Sea was drained, is possibly the worst ecological disaster on hte planet, in order to irrigatethose cotton fields in Uzbekistan. All, note, in the absence of shareholders. Soviet Union killed all of them in 1917 didn’t they?

I'm not advocating a Soviet system, merely a modification of the current market system. Perhaps there's a role for co-operatives; perhaps for corporate directors to be legally obliged to serve a triple bottom line.
I'm just saying that we're not there yet and need to rethink things urgently.

Tim adds: You can have a co-operative right now if you want. Nothing to stop you at all. Nobody is herded into a factory to work for the man at gunpoint you know (except in Burma and I’m not prepared to accept that as an example of either a capitalist or free society).

Indeed, if co-operatives were better then we’d all be working in them already, wouldn’t we?

It's odd that you defend corporations when they actually, in a number of ways, militate against individual freedom, which I understand is your guiding consideration.

Tim adds: I do argue against corporations at times, when they are monopolies for example. However, I also rather regard, as many economic historians do (and no, I’m not one of those professionally), the invention of the limited liability company as the third most important invention in history, right after agriculture and the scientific method.

PS Man-in-black, I completely agree re your first point. On the last, I didn't mean to bring in slavery, wasn't really clear where Rob Read was coming from with it; what I was saying that I don't believe slavery is the product of socialist policies, nor, historically, is it alien to a capitalist ideology.

Posted by: Hardwin Jones | Dec 19, 2005 3:30:05 PM

Hey Tim,

On 1: I agree with you all except for your example of market pricing for water - if you mean by that privatisation of water supply, this was famously disastrous in Bolivia (basically, people couldn't afford to buy water), and is punitive in many other places.

Tim adds: Depends on how it’s done. I wrote a piece at Techcentralstation recently about the Argentine experieince. Worked extremely well.....water bourne parasitical deiseases went down heavily in those areas that privatised supply.

I’d never argue that simply selling something off (especially a natural monopoly) would in and of itself make it work better.

2 Don't think we'll agree on this one- I think we should increase price of clothing to monetarise an externality - humanitarian cost - and give the worker a fair wage. We both believe prices should be set by the market, but I guess you believe regulation of labour practises of corporations should be minimal?

Tim adds: Prices set by the market, yes. "Fair wage" argues against that, surely?

3 Exxon Valdez had an accident (I don't remember the details) because its management were under pressure to cut transport costs, so they took a short-cut through a proscribed area - described in The Corporation, by Joel Bakan. Example of what happens under the shareholder return imperative - and that example is repeated all over the economy, in pollution, health risks, etc.

Tim adds: Exxon Valdez happened because the Captain was drunk I think you’ll find.

Re Uzbekistan, we do need to retain the positive aspects we have: a market system, accountability, democracy, etc. I'm not arguing for a Soviet system...

Tim adds: My point was that the worst pollution occured where there were no shareholders. So it’s a little tough to claim that they are responsible for all pollution.

On the next bit, corporations are entrenched, and they have the legal rights of a person - so they defend their interests to the hilt. They expand and occupy as much space as they can. In turn I can't buy my clothes, or most of my food, or my FMCGs from co-operatives. The same with job opportunities; etc.

Tim adds: Sure you can. You’ll pay higher prices and get less for them but you can, if you wish.

On the last bit- maybe limited liability companies were an important invention, but they were initially created to serve the public interest, by getting stuff done - pooling ownership etc. They have great potential benefits, but also great malignant possibilities. They should be made accountable to all stakeholders.

Tim adds: Stakeholders? That’s a word that makes me spit.

If you saw corporations as non-democratic nation states (after all many of them have higher GDP than many nation states), who wield enormous world-changing power (wealth) purely for their narrow interest, perhaps you wouldn't see them so favourably - as a social force, they are more oligarchy than democracy.

Tim adds: Please, learn a little economics. Some companies have higher turnovers than some countries have GDP. But comparing the two numbers is ludicrous. GDP is value added, which for a company is more like their profits. OK, Exxon has profits about the same as the GDP of Luxembourg. But then there’s a couple of hundred thousand people work for Exxon and a couple of hundred thousand in the workforce of Luxembourg. So that’s not all that surprising really, now is it?

Posted by: Hardwin Jones | Dec 19, 2005 4:36:56 PM

> Tim adds: Prices set by the market, yes. "Fair wage" argues against that, surely?

For me, that statement stands on its own as an indication of a corrupt worldview. Perhaps that would be ok as a statement of a kind of resigned realism; but as part of an endorsement of an ideology [the free market one], it stinks.

> Tim adds: Stakeholders? That’s a word that makes me spit.

Why- because the environment and workers don't represent money? For you, it's shareholders - property-owners - all the way.

> Tim adds: Sure you can. You’ll pay higher prices and get less for them but you can, if you wish.

Well, not really; the whole economy's structured around corporations.

> Tim adds: Please, learn a little economics... etc

Fair points you make, but you haven't answered the main point.

I think we're just too hard-line for each other. Maybe I do need to learn some economics - can you recommend me a writer? I'd recommend any ecological writer for an opposing worldview - Rory Spowers, or Wendell Berry perhaps.
Cheers though - good debate! I mean that - I've learned something (just checked out Aral Sea on Wikipedia).

Tim adds: Tim Harford’s book "The Undercover Economist" has been getting rave reviews. PJ O’Rourke’s "Eat the Rich" is both terribly funny and a good guide to the basics. Definitely read the latter if not both.

Read the Tim Harford interview at Techcentralstation today for a brief look at his views. He’s been at the World Bank for the past couple of years working on development issues, I think you’ll like it.

I have read a number of ecological wrtiers. Lester Brown, Teddy Goldsmith and so on. What irritates me so much is that they insist that economists don’t understand them. This is simply untrue. All and every point they make is well understood. It’s just that economists are usually pointing to a different (and better) method of achieving those goals.

I don’t want my grandchildren to boil or drown any more than you do yours. I want exactly the same things you do, a clean and green world. I just disagree with you on how to get from here to there.

Posted by: Hardwin Jones | Dec 19, 2005 5:51:05 PM

Cheers though - good debate! I mean that - I've learned something (just checked out Aral Sea on Wikipedia).

For someone who is passionate about the environment and the effect different economic systems have on it, I find it staggering that you have only just learned about the Aral Sea, the world's worst man-made ecological disaster. Then again, leftist environmentalists tend to go awfully quiet when you bring up pollution and ecological ruin in the former Soviet Union, if of course you can get a word in edgeways past the howls of protest about the US "wrecking the planet".

Environmental protection is far better in market driven capitalists economies than under any other system in operation, as a glance at the relative regulation in place in the US and EU compared to, say Russia and China will demonstrate.

Posted by: Tim Newman | Dec 20, 2005 12:10:13 AM

Tim W: Thanks for those tips - I will check them out. I absolutely accept that we both want sustainability - (I'm not sure we both want equitability though, which for me is its necessary complement) but that we just differ on how to get there...

Tim N: You're quite right re the Aral Sea, mea culpa, I am still finding out about the field.

Ref our Western democratic systems - I'm glad to see you see the benefits of regulation - that's all I'm arguing for, not, as I said, any kind of Soviet-style system.

Posted by: Hardwin Jones | Dec 20, 2005 5:33:30 AM