Over at the NYT, John Tierney asks us to consider whether Muhammad Yunus and the Grameen Bank really deserve the Nobel Peace Prize. Although Tierney applauds the limited benefits of Yunus’ micro-loans for alleviating poverty, he asks us.
> Has any organization in the world lifted more people out of poverty than Wal-Mart?
Tierney approvingly quotes Michael Strong, who argues that instead of receiving micro-loans to start businesses in their village:
>The best way for third world villagers to tap “the vast pipeline of wealth from the developed world,” he argued in a recent TCSDaily.com article, is to sell their products to the world’s largest retailer, Wal-Mart.
If wages are the only metric in evaluating “anti-poverty” program’s contributions to peace, then the argument on the surface seems plausible. Strong and Tierney argue that rural Chinese workers who migrate to the urban areas make more money manufacturing goods for Wal-Mart than those who remain at home (Responsible for 23 billion of China’s exports out of 713 billion in 2005). Wal-Mart they argue is responsible for bringing
>Wal-Mart might well be single-handedly responsible for bringing about 38,000 people out of poverty in China each month, about 460,000 per year. (Strong)
>Most “sweatshop” jobs — even ones paying just $2 per day — provide enough to lift a worker above the poverty level, and often far above it, according to a study of 10 Asian and Latin American countries by Benjamin Powell and David Skarbek. In Honduras, the economists note, the average apparel worker makes $13 a day, while nearly half the population makes less than $2 a day. (Tierney)
>Urban workers earn about 2.5 times as much as rural workers.[8] Even after counting the higher cost of living in urban areas, urban workers make about twice as much. (Strong)
Seems to be a compelling argument. So why wouldn’t the CEO who contribute the greatest amount of economic growth to the world economy receive the Nobel Peace prize?
Perhaps Tierney and Strong are making too much of the claim that Yunus received the prize for his successes in combatting entrenched poverty. This is, of course, how the prize has been reported in the press.
Here is the press release from the Nobel Prize Committee:
>for their efforts to create economic and social development from below. Lasting peace can not be achieved unless large population groups find ways in which to break out of poverty. Micro-credit is one such means. Development from below also serves to advance democracy and human rights.
> Micro-credit has proved to be an important liberating force in societies where women in particular have to struggle against repressive social and economic conditions. Economic growth and political democracy can not achieve their full potential unless the female half of humanity participates on an equal footing with the male.
It seems clear that the committee was considering more than the contribution to wages in awarding the prize. Peace is not a matter of wages alone, but the transformation of the social conditions in which poverty is entrenched. This is not to deny that Wal-Mart also transforms social conditions and even on a much larger scale and with a faster tempo. But the judgement of the committee would seem to rest on the claim that economic and social development from below is an important component of achieving lasting peace.
The question Tierney should be asking is does Wal-Mart increase the likelihood of lasting peace? Or, is it along with a volatile globalized economy a threat to stability, human rights, the enviroment, and long term development–and therefore peace?
But even if we grant Tierney and Strong the assumption that it is likely that economic growth is a direct measure of a contribution to lasting peace, motivation is surely relevant in awarding these prizes. For Tierney and Strong effects seem to be all that matter. It is not enough for an organization to lift people out of poverty, it must presumably also be motivated by that goal to deserve the Peace Prize. A quick reading of Kant’s Groundwork for the Metaphysics of Morals would explain why.
I think the key issue that Tierney and Strong miss is that the part about development from the ground up. Empowering people to make their own fortunes itself, even if the fortune is less than what they would be making as a wal-mart subsidiary, is worth more to lasting global peace because it contributes a sense of self-determination.
Additionally, we are also left to wonder what the working conditions for the Chinese wal-mart exporters are like, and can warrantibly assume (based on varieties of documented evidence) that these conditions are poor and oppressive, with little job security or possibility for individual growth and advancement.
On the contrary, workers who are engaged in micro-entrepreneurship have working conditions that, while maybe not ideal, are at the very least chosen by themselves. The opportunity for individual business growth is not limited in the same way as the sweatshop workers are limited, and the success of the business administered by the micro-entrepreneur directly affects the success of the individual who has a stake in the business.
Excellent post and analysis. Individual human dignity still seems to be a concept that main-stream economists still can’t quantify, or even take into account when doing these superficial analyses on labor and compensation.
Tierny and Strong sidestep the question of working conditions. They condemn abusive practices, but claim that they do not mitigate the economic benefits of these jobs. In essence, they say that millions of people prefer these jobs over the available alternatives, so they must be beneficial.
I suppose if they had data showing that when given the choice of development from the bottom up and migrating to an urban slum and working under horrible conditions, most poor people choose the latter, they might have an argument.
But in addition, they abstract from deferred social costs that are easily masked during boom times and which surface during depressions–crime, lack of social support structures for migrants, etc., never mind the huge environmental devastation that is likely occuring through this rapid development and urbanization.
Finally, there are pther comparative phenomena that might be considered. I think this sort of analysis rests on the story we tell ourselves about the urbanization and industrialization in the West which happened to result in much higher standards of living for the majority of Westerners. But a better model might be similar developments over the last 30 years in economies that boomed and then busted. What were the costs to the people of intensive urbanization and industrialization when it couldn’t be sustained? Were they worse off being unemployed in the city or marginally employed in the country? I certainly don’t know enough about this to answer. But Tierney and Strong seem to assume that economic development leads necessarily to increased prosperity for the population. Colonialism doesn’t seem to provide evidence of this.
I would also like to see a study on alternatives to “sweat-shop” labor in developing countries and a comparative analysis of both wages and working conditions.
Absent such a study, however, I think one can safely assume that the benefits of working for a Wal-Mart supplier outweigh the costs (environmental impact aside), otherwise why would people choose to work there? Lack of options? Certainly, but under such circumstances employment trumps social concern. I’m not about to recommend Wal-Mart for a Nobel Prize just for pursuing its bottom line, but unless we have concrete evidence otherwise, I believe its mere presence as a source of employment in impoverished areas mitigates the poor working conditions it promotes.
Thanks for the comment. I think I largely agree, but let my comment on this:
“Absent such a study, however, I think one can safely assume that the benefits of working for a Wal-Mart supplier outweigh the costs (environmental impact aside), otherwise why would people choose to work there?”
I think that we can safely assume that many people believe that the benefits of working for a Wal-Mart supplier outwight the costs–but not that they do. But I think I would grant that it is likely that the benefits do outweigh the costs for many (or maybe most) of the people who choose this. (But also it seems likely that for some (many?) the benefits do not outweigh the costs.)
We are dealing with different domains of value I think (which Tierney and Strong seem to collapse to the economic). Some values are tangible and easily measured ($$$$$). Others are not (e.g., community, respect, power, longterm safety). People often trade the latter for the former believing that they are benefitted. But that doesn’t imply that they are. (The economist and many others might reply that the only measure of value is a person’s occurent desires. So if they think that they are benefited, then they are.)
One does not have to be merely “for” or “against” Wal-Mart or micro-credit. One can recognize the beneficial consequences while worrying about the possible dangerous effects and harms. Prostitution is probably often caused by a “lack of options” and yet I feel a little uncomfortable saying that employment “trumps” other concerns in that case. It’s the paradox of preventing someone from choosing to enter into a degraded and oppressive relationship. To not do so, offends justice. To do so, offends the person’s “autonomy” and “self-interest.”
Here is a link on some recent Wal Mart punditry by the good people at the Nation:
http://www.thenation.com/doc/20061016/wal_mart
after reading the comments and the columns, it seems that there is something being missed, both in T & S’s piece and our analysis of it: i think there has been a conflation of correlation with causation, namely the equation of economic impact with benefit to the population impacted. yunus won the peace prize not because the numbers matched up, but because he was working towards, as mr. anderson noted, alleviating the conditions that cause and perpetuate poverty. wal-mart, on the other hand, works to maintain the conditions of poverty. like any good capitalist enterprise, wal-mart has realized they need a surplus labor force–they need the poor. however, if they actively work to better the conditions which perpetuate poverty, they deplete their labor force, in effect, if not in intent. yunus want s to eleiinate poverty; wal-mart wants to give people just enough rope to hang themselves. they toss their employees a pittance, introduce low-cost healthcare facilities into their stores to avoid paying benefits, and enable the poor with a broader purchasing power. all seemingly good things, yes? however, in doing so, they keep the poor from looking upwards and outwards. they sate the immediate needs and ignore the long term concerns. it’s a modern-day day “let them eat cake.”
Mr. Anderson,
The example you gave of the costs vs. benefits of prostitution is an appropriate analogy since both the prostitute and the sweatshop laborer are exploited due to their lack of alternative employment. I also agree with your belief that perceived benefit does not imply actual benefit.
I disagree, however, with your ambivalence over Wal-Mart’s impact (“One can recognize the beneficial consequences while worrying about the possible dangerous effects and harms”). Allow me to clarify: If one is concerned that Wal-Mart is acting in a manner that is socially irresponsible but at the same time is happy that the company is at least unintentionally benefiting the people it exploits, one is still obligated to make a judgment call. To be concerned about the negative social implications while not opposing Wal-Mart’s presence is to tacitly endorse it.
Now, one might accuse me of constructing a false dichotomy here because Wal-Mart can continue to do business in these countries while at the same time addressing these concerns. It could, for instance, buy only from suppliers who meet certain standards of working conditions. But I believe the impetus to change these conditions comes from open opposition to its current business model, not from acceptance with reservations.
Forgive me if I am taking too many liberties with your argument.
“If one is concerned that Wal-Mart is acting in a manner that is socially irresponsible but at the same time is happy that the company is at least unintentionally benefiting the people it exploits, one is still obligated to make a judgment call. To be concerned about the negative social implications while not opposing Wal-Mart’s presence is to tacitly endorse it.”
I think we are moving into difficult ethical argument about complicity and the consequences of complex moral judgments here–and far away from the orginal argument. But I will try to cautiously follow your lead here. My inclination is to argue that the moral issue is not black and white and that when values conflict (e.g. money vs quality of life) we need the full range of analysis to pose the moral problem properly.
Further our criticism can be targeted. We can criticize Wal-mart for not promoting workplace safety (just a random example) while supporting the benefits of the jobs that they create. For buying from suppliers with records of rights abuses, while valuing the “savings” we get from their store.
Some might argue that this is hypocritical. My inclination is to deny that it is (for reasons I don’t want to go into here), while acknowledging that we must always be on guard for becoming hypocritical. If it is true that there exist conflicting values or goods, and these values or goods are not commensurable or reducible to some underlying value, then in cases where they conflict it will be necessary to acknowledge the complexity of the moral phenomenon. (Though there may be cases where one good over-rides the others, such as basic human rights over-riding economic interests).
“But I believe the impetus to change these conditions comes from open opposition to its
Your last point is a strategic point. It doesn’t seem to me obvious that only “open opposition” to the business model can effect change. Publicity campaigns can be used to transform behavior. Legislation can enforce changes. There is, I think, a wide spectrum of targeted strategies that can be used to transform the behavior of a corporation.
So I don’t believe that we need to oversimplify either the moral evaluation of a business or the range of strategic option available to people who want to pursue greater justice and peace. And in fact I would argue that we must recognize the complexity of the underlying moral phenomenon and the multiplicity of strategic alternatives other than “all out war.”