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Confronting the root causes of forced labour: globalisation and the rise of supply chains

Too often, globalisation is viewed as inevitable. How does this shape our understanding of the link between globalisation and forced labour?

IIlustration by Carys Boughton(CC BY-NC 4.0)

Former UN Secretary General Kofi Annan is rumoured to have once complained that arguing against globalisation is like arguing against the laws of gravity. So widely accepted is its inevitability that most never question its nature, and those who do still see it as unstoppable.

This aura is powerfully depoliticising. It implies that, for good or ill, globalisation just is – like gravity, an impersonal force shaping our lives and beyond our control. This is why, when globalisation is given as a reason for something, the speaker often accompanies her explanation with a slight shrug of defeat. The ILO, for example, famously labelled forced labour as the “underside of globalisation”, implying it to be just some bad accompaniment to an inevitable event. [1] We seek a stronger explanation, however, to understand the links between globalisation and forced labour.

Neoliberalisation and its architects

The project of neoliberalisation

 

Neoliberalisation has been a dominant policy paradigm since the 1970s, centred around the following core trends:

• increased capital mobility and exposure to international trade;

• structural reorientations in favour of shareholder value and financialisation;

• the generalised intensification of competitive pressures, speculation and short-termism;

• widespread evasion and externalisation of the costs of social and ecological reproduction;

• the development of various forms of state outsourcing, devolved governance and lean bureaucracy;

• the weakening of specific national government capacities, especially with respect to sociospatial redistribution and long-term (public, social) investment.

Source: Peck, 2010: 29.

 

The term ‘globalisation’ has become an everyday shorthand for the complex mix of social, cultural, political and economic change characterising our times: the heightened exchange of information and ideas; the increased mobility of people and money; and especially the transnational integration of production, investment and trade.[2] Having a catch-all term for the world’s increasing complexity and interconnectedness is useful, but it does not get us any closer to explaining why, how, or at whose behest these changes are taking place. This makes it a poor explanatory tool for forced labour.

In our view, it is more useful to speak of neoliberal or capitalist globalisation, or better still ‘neoliberalisation’. Neoliberalism, in the words of geographer David Harvey, is primarily a theory of capitalist governance that sees human well-being as best advanced through “liberating individual entrepreneurial freedoms” against a backdrop of “strong private property rights, free markets, and free trade”.[3]

Unlike amorphous globalisation, neoliberalisation can be traced, dissected and analysed as a distinct policy framework. Its proponents have names, its guiding ideas and recipes for action are known, and its policies produce recognisable patterns of consequences as they propagate throughout the world. This gives it far more explanatory power for why the world looks the way it does today.

Originating in the work of scholars like Hayek and Friedman – who were prominent in the elevation of the market to its current status – neoliberalisation has been driven primarily by business elites, their allies in Western governments and institutions such as the World Bank. Its philosophy conceives of all individuals as potential entrepreneurs and of markets as society’s primary and ‘natural’ organising force: we get what we pay for, pay for what we can, and reduce the government’s role to that of a policeman protecting our property.

What has this meant in practice? For four decades, governments around the world have pushed – and, in the case of poor countries, have been pushed – to remove most subsidies and tariffs; to roll back the social protections serving as safety nets for those in need; to reduce anti-poverty redistribution and privatise public goods provision; to allow large-scale foreign direct investment; and to reinforce power imbalances between workers and employers.[4, 5, 6, 7, 8, 9, 10, 11, 12]

The promise of all this has been of a new dawn of prosperity, with creative energies liberated and market efficiency fostered by the state getting out of the way of freely chosen, voluntary exchanges between workers and employers. Neoliberalism would improve the lives of western consumers by bringing them ever-cheaper goods from overseas; while for Southern workers the carrot has been nothing less than an end to poverty itself, through inclusion into the world market as producers of those goods. This is where global supply chains enter the picture.

The growth of global supply chains

The chances are that you are reading this on a computer, tablet or smart phone. If so, you are sitting at the end of a long and winding global supply chain. Today, a typical computer might contain a memory chip from Malaysia, a battery from Indonesia, a screen from South Korea, RAM from Germany and a hard drive made in Thailand. This all before it was assembled in China and bought off a shelf in New York, Buenos Aires, or wherever you may be.[13] Apple, the company from which you may have bought it, sources its parts from a global network spread across over a dozen countries, including China, India, Italy, Indonesia, Ireland, the Philippines, Puerto Rico, Singapore, Malaysia and the Czech Republic.[14]

This reflects a key shift in global production practices spurred by neoliberalisation. It has engendered the rise of a new, international division of labour in which vast brand and retail companies coordinate production across a panoply of sub-contracted suppliers located all over the Global South.[15, 16, 17, 18, 19] Initially, lead firms were predominantly Western, but today there are a growing number of large companies located in the ‘rising powers’ which also make use of global supply chains to produce their products.[20]

Source: Emilia Saarelainen and Merten Sievers (2011) ‘ILO Value Chain Development Briefing Paper 2: The Role of Cooperatives and Business Associations in Value Chain Development’.

Today, companies such as Tesco or Nike design and sell products but produce very little themselves. That crucial middle step is outsourced to smaller firms in an attempt to expand profits and reduce legal liability. For instance, mega-company Nestlé has almost 165,000 direct suppliers and 695,000 individual farmers worldwide.[21] Many supply chains cut across transnational borders to take advantage of lower labour costs and weaker labour protections in other countries, but some also remain concentrated within national borders.[22, 23]

As we further explore in chapter 8, the reorganisation of global production has led to monopolisation, soaring profits and the rise of corporations whose scale and political power has hitherto been unknown. Apple is officially the world’s most valuable ever company and holds cash reserves of over US$200 billion.[24] The United Nations Conference on Trade and Development (UNCTAD) has estimated that the productive networks coordinated by firms like this encompass fully 80% of world trade, with one in five jobs linked to their operations.[25, 26] Indeed, as scholars Peter Dauvergne and Jane Lister observe, “one third of global gross domestic product (GDP) and 70% of all employment and activity in developed countries are now tied to retail”, with firms like Costco and Carrefour leading the way.[27]

The links to forced labour

What does all of this have to do with forced labour? And which aspects of globalisation are important for our understanding of it? There are many, and it will be the task of this report to spell those out in greater detail. For now, however, let us underline a few key points.

First, the global spread of neoliberal models of market and social governance has been neither an organic nor an even development. It has happened as a result of elite, powerful actors pushing through changes in the interests of big business, financial capital and the wealthy. It is and always has been an inherently unequal project that has been shown to deepen inequality.[28, 29]

Second, this rising inequality has thrown onto the global labour market a vast army of people so poor and lacking in state protections that they epitomise the inability to say no to exploitation.[30, 31] In Mexico, for example, the number of people living in extreme poverty rose by 500% at the height of neoliberalising reforms, between 1994 and 2000.[32] In much of Africa, real wages declined substantially around the same time period, with average household food consumption falling to 25% lower than it was a quarter century previously.[33]
Numerous factors explain this immiseration, and the specific dynamics at work vary across industries and regions of the world. One of the most pernicious, particularly in the agricultural sector (where existing research has documented severe labour exploitation to be disproportionately concentrated),[34] is that the global reduction in tariffs and subsidies has proceeded in highly unequal fashion. That is, while poorer countries have typically removed their protections under pressure from the rich, the rich have often failed to follow suit.[35] For example, despite urging African countries to liberalise their cotton sectors, the US government subsidised American cotton-growing multinationals by over US$13 billion between 1996 and 2002 – a per-kilogram price subsidy of almost 50%.[36] This decimated much African cotton production.[37, 38] These and similar trends are key to explaining why we see forced labour in the cotton industry, and indeed, in many other industries.[39]

Third, many of the dispossessed farmers and other workers impacted by these sorts of changes end up at the bottom of supply chains, where they face highly predatory business practices from more powerful firms. The companies directing many supply chains command enormous power in the global economy, which they use to control as well as reduce the costs of production.[40, 41] They do this, for example, by imposing short-term contracts, penalties and fees for late or low-quality orders. They also float disproportionate profits to the top of value chains by demanding razor thin margins at the bottom.[42]

In the words of Nelson Lichtenstein, big brands squeeze their suppliers “by shifting every imaginable cost, risk, and penalty onto their books”.[43] This, in turn, places major pressure on suppliers to balance their own books through the use of coercive, exploitative, and otherwise unacceptable labour practices. As later chapters of this report make clear, extensive research now shows correlations between such lead firm practices and the widespread abuse and exploitation of workers.[44, 45]

For the next eight chapters, we explore these structural supply and demand factors in detail.

Next chapter: Supply 1 of 4: Poverty


  1. ILO (2005) ‘A Global Alliance Against Forced Labour’, International Labour Conference 93rd Session 2005, Report I (B), Geneva: ILO. ↩︎
  2. Globalisation is a contested concept within political economy. For theorisations of its core attributes, also see work by: David McNally; David Harvey; Stephen Gill; Naomi Klein; Nelson Lichtenstein; Shirin Rai; Bridget Anderson; Ananya Roy; and Nancy Fraser. ↩︎
  3. D. Harvey (2005) A Brief History of Neoliberalism, New York: Oxford University Press, 2. ↩︎
  4. P. Mosley, J. Harrigan & J. Toye (1991) Aid and Power: The World Bank and Policy-Based Lending, Volume 1: Analysis and Policy Proposals, London: Routledge. ↩︎
  5. M. Williams (1994) International Economic Organizations and the Third WorldHarvester Wheatsheaf. ↩︎
  6. SAPRIN (2002) ‘The Policy Roots of Economic Crisis and Poverty’, Washington, DC. ↩︎
  7. G. Arrighi (2002) ‘The African crisis: world systemic and regional aspects’, The New Left Review, 15. ↩︎
  8. D. Harvey (2005) A Brief History of Neoliberalism. ↩︎
  9. P. Bond (2005) ‘Globalisation/commodification or deglobalisation/decommodification in urban South AfricaPolicy Studies, 26(3/4), 337-358. ↩︎
  10. A. Saad-Filho & D. Johnston (2005) Neoliberalism: a critical reader, London: Pluto Press. ↩︎
  11. J. Peck (2010) Constructions of Neoliberal Reason, Oxford University Press. ↩︎
  12. B. Selwyn (2014) The Global Development Crisis, Cambridge: Polity Press. ↩︎
  13. See Sourcemap, ‘A Typical Computer’. ↩︎
  14. Apple (2017) ‘Supplier List’, February 2017. ↩︎
  15. R. S. Russel & B. W. Taylor (2008) Operations and Supply Chain Management, 9th ed., Wiley, 11. ↩︎
  16. N. Lichtenstein (2010) The Retail Revolution: How Wal-Mart Created a Brave New World of Business, New York: Picador. ↩︎
  17. E. Bonacich & R. Appelbaum (2000) Behind the Label: Inequality in the Los Angeles Apparel Industry, Berkeley: University of California Press. ↩︎
  18. P. Dauvergne (2008) The Shadows of Consumption, Cambridge: MIT Press. ↩︎
  19. L. Mosley (2008) ‘Workers’ Rights in Open Economies: Global Production and Domestic Institutions in the Developing World’, Comparative Political Studies, 41(4-5), 674-714. ↩︎
  20. K. Nadvi (2014) ‘“Rising Powers” and Labour and Environmental Standards’, Oxford Development Studies, 42(2), 137-150. ↩︎
  21. Nestle, ‘Responsible Sourcing’. ↩︎
  22. A. Crane, G. LeBaron, J. Allain & L. Behbahani, (2017) ‘Governance gaps in eradicating forced labor: From global to domestic supply chains’, Regulation & Governance. ↩︎
  23. J. Allain, A. Crane, G. LeBaron & L. Behbahani (2013) ‘Forced Labour’s Business Models and Supply Chains’, Joseph Roundtree Foundation. ↩︎
  24. Paul La Monica (2015) ‘Apple has $203 billion in cash. Why?’, CNN Money.
  25. ILO (2015) ‘World Employment Social Outlook 2015’. ↩︎
  26. UNCTAD (2013) ‘Global Value Chains: Investment for Trade and Development’, New York and Geneva: United Nations. ↩︎
  27. P. Dauvergne & J. Lister (2012) ‘Big Brand Sustainability: Governance Prospects and Environmental Limits’, Global Environmental Change, 22(1), 36-45. ↩︎
  28. Oxfam (2017) ‘An Economy for the 99%’. ↩︎
  29. T. Piketty (2015) The Economics of Inequality, Cambridge: Harvard University Press. ↩︎
  30. S. Ferguson & D. McNally (2015) ‘Capitalism’s unfree global workforce, Beyond Trafficking and Slavery. ↩︎
  31. G. LeBaron & N. Howard (2015) Forced Labour in the Global Economy, Beyond Trafficking and Slavery Shortcourse: Volume 2. ↩︎
  32. SAPRIN (2002) ‘The Policy Roots of Economic Crisis and Poverty’, 180. ↩︎
  33. G. LeBaron & A. Ayers (2013) ‘The Rise of a ‘New Slavery’? Understanding African unfree labour through neoliberalism’, Third World Quarterly, 34(5), 882. ↩︎
  34. Verité (2017) ‘Strengthening Protections Against Trafficking in Persons in Federal and Corporate Supply Chains: Research on Risk in 43 Commodities Worldwide’. ↩︎
  35. J. Clapp (2012) Food, Cambridge: Polity Press. ↩︎
  36. K. Çalışkan (2010) Market Threads: How Cotton Farmers and Traders Create a Global Economy, Princeton University Press, 159. ↩︎
  37. K. Watkins (2002) ‘Cultivating Poverty: The impact of US cotton subsidies on Africa’, OXFAM. ↩︎
  38. In the words of Jennifer Clapp, what this exemplifies is a world market characterised by “an uneven set of rules which disadvantage smallholder farmers in developing countries while maintaining rich world subsidies that benefit large-scale farmers and agribusinesses” (2012: 57-8). ↩︎
  39. Verité (2017) ‘Strengthening Protections Against Trafficking in Persons in Federal and Corporate Supply Chains: Research on Risk in 43 Commodities Worldwide’. ↩︎
  40. W. Milberg & D. Winkler (2013) Outsourcing Economics: Global Value Chains in Capitalist Development, Cambridge University Press. ↩︎
  41. G. Gereffi (2014) ‘Global value chains in a post-Washington Consensus world’, Review of International Political Economy, 21(1) 3-97. ↩︎
  42. R. Kaplinsky (2005) Globalization, poverty and inequality: between a rock and a hard place, Cambridge: Polity Press. ↩︎
  43. N. Lichtenstein (2010) The Retail Revolution: How Wal-Mart Created a Brave New World of Business, 46. ↩︎
  44. R. Appelbaum & N. Lichtenstein (2006) Achieving Workers' Rights in the Global Economy, Ithaca: Cornell University Press. ↩︎
  45. N. Phillips (2013) ‘Unfree labour and adverse incorporation in the global economy: Comparative perspectives on Brazil and India’, Economy and Society, 42(2), 171-196. ↩︎
About the authors

Genevieve LeBaron is Senior Lecturer in the Department of Politics at the University of Sheffield.

Neil Howard is an academic activist and Fellow at the Institute of Development Policy, University of Antwerp.

Cameron Thibos is the managing editor of Beyond Trafficking and Slavery.

Penelope Kyritsis is an assistant managing editor for Beyond Trafficking and Slavery.


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