Imagining a World Where Labor Rights Trump Property Rights

Note: Shel Horowitz's book, Principled Profit: Marketing That Puts People First, contains a great deal of other information about the interplay of marketing and social change, and ways to move a business toward both environmental and economic sustainablity.

The "free market" and "free trade" are very nearly a state religion in the United States today. But what's quietly ignored in these phrases is a little thing called "property rights," which we might better term the rights of wealth holders. These are the only human rights the free market respects.

We see these rights protected in trade agreements, when Mexico is told to stop nationalizing industries, or when the World Trade Organization insists nations change intellectual property laws to protect corporate patents. The free-trade regime insists wealth be protected. It equally insists the environment not be protected. That jobs not be protected, nor worker health, nor the right to organize. When labor and environmental concerns seek equal protection, it's called "interference" in the free market. These rights are said to be protected by the "invisible hand," which leads free markets to work out to the benefit of all.

Yes, well. Perhaps it's time to notice how invisibly wealth rights are integrated into free market thinking. We might imagine a different arrangement of power, in which labor and environmental rights are enthroned in law, and the rights of the wealthy are left to the invisible hand.

Today we imagine stockholders are the corporation... In our imaginary world, we would believe employees are the corporation. They are, after all, running the place. Hence only employees could vote for the board of directors, and the purpose of the corporation would be to maximize gains for employees. In theory, stockholders would receive income they negotiated through contracts. In practice, the corporation would dictate those contracts -and stockholders could accept the terms, or go elsewhere, where they would find nearly identical (and dismal) terms.

In this world, stock would be sold in a manner controlled by the corporation, much as wages are set today. Stockholders wishing to buy or sell stock would appear, alone, at the company, where they would be made an offer. They could accept or decline. There would be no reliable way to compare current price to past price, or to compare the price one person gets to what others get. Wage data would be published daily in the Main Street Journal, and the movement of the Dow Jones Wage Index would be tracked nightly on the news. But returns to shareholders would be considered "proprietary" and would be secret.

When stockholders might try to improve their negotiating position by organizing into mutual funds, corporations would threaten to cut off payments altogether. The companies would threaten to replace stockholder money with funds from overseas, willing to accept lower returns.

Of course overseas stockholders would have less power. For while free trade agreements would provide intricate protections for labor and environmental rights, they would offer capital no protections. "What does capital have to do with trade?" pundits might ask. "Trade is about goods and services and the people who create them, it's not about capital."

If stockholders staged protests at the World Labor Organization to suggest changes in this economic order, they would be accused of "tampering with the free market."

That's what we're told today. But we don't have to buy it. For we can begin to see how the sleight-of-hand of the "free market" serves as an apology for institutional arrangements. The truth is, free market ideology contains two separate assertions, worth unpacking.

First is the assertion that natural processes are self-regulating. Which is valid. We see it in nature, where the renewal of life in spring comes on its own. Where we mate for our own pleasure-and thus help in the rebirth of the world. In like manner, we serve the economic polity best by serving ourselves. The drive to make money gets us out of bed in the morning, and brings us to do our part in holding the world together. Our economic drives are part of the natural order and are trustworthy. We can take comfort in this assertion.

But free market ideology carries a second assertion: that corporate and trade governance structures embody the natural order. And this does not follow logically from the first. For it glosses over institutions of power. To call the stockholder-centered corporate structure "natural" is reminiscent of the ancient claim that the monarchy was the only "natural" way to structure government.

A truly natural free market would free all groups to compete equally, to pursue their own self-interest. Real free markets are not about enshrining the self-interest of one group alone in law. Privilege like that has no place in a market economy. Even an imaginary one.

Excerpted from The Divine Right of Capital: Dethroning the Corporate Aristocracy, by Marjorie Kelly, published November 2001 by Berrett-Koehler Publishers. Kelly is co-founder and editor of Business Ethics, a magazine about corporate social responsibility based in Minneapolis. To read the introduction to the book without charge, click here. Newspapers and newsletters may run this excerpt as an opinion pieces free of charge, provided you credit it as an excerpt from The Divine Right of Capital.

Note: Shel Horowitz's book, Principled Profit: Marketing That Puts People First, contains a great deal of other information about the interplay of marketing and social change, and ways to move a business toward both environmental and economic sustainablity.

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