Can the goals of free trade and social progress be pursued simultaneously? Columbia University economics professor Jagdish Bhagwati answers a thought-provoking “yes,” in his new book, The Wind of the Hundred Days: How Washington Mismanaged Globalization, that both promotes and critiques free trade as it is currently practiced. Though a scholar and expert on international trade, Bhagwati writes well for a general audience.
His new book is a collection that includes magazine articles, newspaper op-ed columns, essays contributed to other books, and papers prepared for conferences. In these he defends free trade with theoretical and practical arguments and criticizes U.S. and other western government, business, and labor officials. He has little patience with those who point the finger at other countries’ transgressions while ignoring their own, like U.S. advocates of trade sanctions against Mexico who cite Mexican fishing industry cruelty to dolphins but overlook cruelty to chickens and hogs in the U.S.
At the same time, he is sensitive to the problems of poverty, human rights violations, and environmental damage in many of the developing countries with which we trade. To his mind, history and economic analysis show that more international trade drives economic growth and development. Poorer countries have especially benefited from free trade. More jobs mean lower poverty rates, and often more children are educated, reducing illiteracy.
However, while economic growth often opens doors to social gains, Bhagwati argues against the idea promoted by some economists that growth will by itself take care of social and poverty concerns. Social agendas, by which he means specific reforms, must move hand in hand with economic growth.
To Bhagwati, free trade is a moral cause precisely for the reason that the elimination of poverty and social progress depend upon economic prosperity. He acknowledges that governments and private companies are often guilty of morally offensive practices but views the use of trade sanctions as the wrong way to respond.
Instead, international organizations, such as the United Nations-affiliated International Committee on Human Rights, and the credible social action groups known as nongovernmental organizations, such as Human Rights Watch and Amnesty International should address these abuses.
These NGOs and television networks such as CNN can spotlight offensive practices, embarrassing governments and corporations. This approach, he says, is more effective and more appropriate than trade sanctions.
NGOs are operating in many countries in the way that Bhagwati suggests—and on a broader range of issues. Jane Nelson’s The Business of Peace: The Private Sector as a Partner in Conflict Prevention and Resolution documents the efforts and growing influence of NGOs. The book is a report by three NGOs—the Prince of Wales Business Leaders Forum and International Alert, both London-based, and the Council on Economic Priorities in New York—and serves as an instruction manual on assessing the roles of corporations in areas of conflict and potential conflict, and in post-conflict conditions in foreign countries.
That armed conflict and war are bad for business ought to be motivation for companies to enact the NGOs’ recommendations. Nelson’s report links economic and social causes of conflict and socially responsible corporate behavior.
More than ninety percent of armed conflicts now occur within poorer countries. Companies can begin to counter the forces that contribute to armed conflict by doing what they do best—creating economic wealth and employment. But without a social conscience, merely creating wealth can do harm, too.
The report lays out methods for evaluating the influence of business in countries where conflict may occur. Business activities are good if sustainable local livelihoods are developed, if access to human needs such as water and food are developed, if good relations are established with the communities where the business operates, and if environmental damage and social disruption from the business activities are minimized. Corporate activities are bad if these standards are not met, and if the business is involved in non-competitive or unfair patronage, or if it does not contribute to the socio-economic development of the community, region, or country.
Yet different situations merit different evaluations. The emphasis in places like the Balkans and Central Africa, where rivalries between groups cause conflict, should be business-initiated promotion of workplace (and community) diversity and tolerance. In countries where governments are weak, despotic or lack legitimacy, and where there are other failures such as corruption and cronyism, absence of the rule of law, state-sponsored human rights abuses, and unreasonable press controls, companies need to encourage more responsible governance and support an open society and free press.
Moving beyond corporate critiques, the report discusses the role of business in a society in the throes of conflict and during post-conflict reconstruction and gives examples of corporate responses to repressive regimes and illegal trade.
During the past decade the forces of political transformation and economic globalization have created a world of new opportunities and hope for some, but increased instability and insecurity for others. . . . This has important implications for the private sector, which has become an influential player in many conflict-prone or conflict-ridden countries. From Azerbaijan to Zimbabwe, the potential and reality of violent conflict is becoming an unavoidable business issue.
–The Business of Peace
The report The Business of Peace is available prepaid by check or credit card from the Council on Economic Priorities, 30 Irving Place, New York, NY 10003. The $29 price includes shipping.