Thinking Through the International Minimum Wage Conundrum

From the September 2013 PNL #827

by Saptarshi Lahiri

In the wake of the May 2013 Savar garment factory tragedy in Bangladesh, Mike Elk, labor journalist for the progressive publication In These Times, broke a story about police spying on the United Students Against Sweatshops (USAS).[1] While the story was primarily about the political issue du jour, i.e., encroachment on civil liberties,  my attention was drawn to what the protesters were actually demanding: “United Students Against Sweatshops aimed to put pressure on retailers like Gap, Children’s Place, Wal-Mart, Target, to sign the Bangladesh accord on fire and safety [which would] set up a third-party organization to monitor safety conditions in Bangladesh, as well as allow binding arbitration by Bangladeshi courts if terms of this agreement are violated.”

It seemed startling to me because the protesters, ostensibly “against sweatshops” are merely asking for better regulation of, you guessed it: sweatshops. One would imagine that those against sweatshops would be wholly against the entire sweatshop paradigm. Not only this, Mike Elk seemed to rue the fact that the US had limited itself to hitting the Bangladeshi government with only “a small sanction” that had cost Bangladesh a mere $40 million annually, which had done little to reform Bangladesh’s endemic corruption. This is classic victim blaming, since the relationships of power between North American and European transnational corporations (which receive their respective countries’ formidable backing) and a small low income South Asian country battered by colonial devastation, are starkly asymmetric. It is also depressingly predictable in our neoliberal era how far to the right nominally progressive voices have swung.

Garment worker union leaders protesting murder of labor activist Aminul Islam in Dhaka,
Bangladesh. Photo: Gazi Nafis Ahmed


Surprisingly, one finds a more progressive voice than the USAS in an unlikely figure, namely, American Apparel CEO Dov Charney. Focusing on the true villains of the Savar tragedy—i.e., predatory North American/European retailers looking to exploit unregulated factories in poor countries—in a recent interview he suggests the idea of an international minimum wage and lambasts multiple global retail giants for exploiting wage laborers in low income countries. [2]

So what about the International Minimum Wage? It is a neoclassical liberal economic strategy[3] in which a state can solve the problem of underdevelopment (or underconsumption) by increasing the income levels of the majority of the population either through legislation concerning wage levels (minimum wage laws, legalization of unions, etc.) or through income transfers (unemployment compensation, welfare, etc.). [4]

Lest the far right cry “socialism!” at the mere mention of a universal living wage, the above solutions are actually well within the realm of capitalism. The actual Marxist solution would be to abolish imperial relations of trade and capitalist social relations of production which lead to concentrated wealth, such as in rich European or North American countries.

The Marxist way would be to break the nexus between the State’s protection of wealthy corporations, following Lenin’s dictum of imperialism being the highest form of capitalism. Even though both liberals and Marxists attempt redistribution of wealth by extracting it from the bourgeoisie, the key difference perhaps lies in the fact that liberals only selectively criticize the State for representing the capitalist interest, while this is fundamental to the Marxist critique. Savar is by no means a unique incident for Bangladesh – as recently as November last year, an even more massive fire at Tazreen Fashions killed 661 people, followed by 41 factory fires[5] between then and the Savar incident. This trend demonstrates severe systemic problems that neither US sanctions nor well-regulated death traps will likely fix. The Marxists then, are perhaps on to something.

If the International Minimum Wage were to be yoked to even the current American minimum wage of  $7.25 an hour (considered low by many), it would be hugely unpopular —attempts at US Walmarts and McDonald’s to advance unionization/collective bargaining and the trenchant, unyielding opposition to it should give you some idea why. If there were no havens south of the border for corporations to go and seek unregulated economies and unorganized, cheap labor, why, capitalism would cease to exist! It is so massively out of the realm of political reality, primarily, because governments will necessarily back the capitalist interest.

If the International Minimum Wage were realized…well, how could that even be, one could imagine hearing a blowhard pundit sputter. Things don’t cost as much in those countries—they can get by on a dollar a day! So it seems. But the reason that seems true is precisely because those things are made by poorly paid labor. It’s a case of the snake eating its own tail. Assuming that the true costs of labor, environmental damage and resource use were internalized into a price that corporations currently do not pay, and the social conditions were in place for an international minimum wage to theoretically become a reality, no longer would immigrants clamor to come to North American or European countries seeking a better standard of living. No longer would there be peripheral zones of producing goods by paying laborers pennies in the Global South. If everyone was allowed access to a decent living wage where they lived, the proposed wall along the Mexico-US border would no longer have to be put up in order to keep the riff-raff out, and most pertinently, in places south of the border where transnational corporations locate their factories.

How opposed is the capitalist class to the idea of an International Minimum Wage? Forbes magazine (reliably assumed here to represent the capitalist class) ran an article about this in the aftermath of the Savar tragedy. [6] Calling the basic idea “silly” (along with crediting it to Muhammad Yunus, of problematic micro-credit fame), Tim Worstall argued in the article that higher wages would actually lead to worse factory conditions. Moreover, Worstall actually peddles capitalism’s deceitful, unctuous promise of pulling people into the middle class via trickle down and the gradual embourgeoisement of the labor class, when he argues: “conditions and wages [in China] have improved immeasurably in the past 15 years. Precisely because we all went and bought the products flooding out of those Chinese factories. And the solution to the problems in Bangladesh is exactly the same. We’ll make poor people richer by buying the things made by poor people in poor countries.”

In other words, There Is No Alternative to the status quo of capitalism that willfully takes advantage of low wages in the post-colony. Sure, there will always have to be an underclass exploited in perpetuity, but one has to break eggs to make a profitable omelet. Capitalism’s chronic inability to eventually emancipate human beings without grinding the poor into dirt with ruthless efficiency comes into sharp relief here.

The irony for the left, then, is to loosen neoliberal capitalism’s hegemonic death grip on our present global social order. It has to valorize a normative vision of a fairer capitalism, so that something approximating an International Living Wage can one day become a plausible political alternative. So, the left has a choice when it comes to fighting for just wages and working conditions. One way is working at small reforms that steadily attempt to dismantle the death grip of neoliberal capitalism. The other, of course, is systemic radical change or: revolution.





[4] Mike Elk also decries deunionization in Bangladesh, but it is notable that USAS doesn’t demand for this at all. The USAS strategy to counter weak regulation in poor countries by appealing to the sympathetic rich consumer is perhaps not to be dismissed as the weak tea of what passes for collegiate radicalism. Representing the academy, Dara O’Rourke, workplace safety expert at UC Berkeley, claims that consumers need to step up the pressure on global retail to sign the Bangladeshi safety accord, but in reality, consumers care very little. Not only do customers care very little about the ethics of production, buyers in the cutthroat world of retail, care hugely about small margins of profits



Saptarshi, a recent graduate of SUNY-ESF with an MS in Environmental Studies, is now a freelance writer living in Syracuse.