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Is this a moral problem?

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[This message has been edited by Midnitesun (08-17-2004 09:10 AM).]

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The individual who comes closest to being the originator of contemporary capitalism is the Scottish philosopher Adam Smith, who first set forth the essential economic principles that undergird this system. In his classic An Inquiry into the Nature and Causes of the Wealth of Nations (1776), Smith sought to show how it was possible to pursue private gain in ways that would further not just the interests of the individual but those of society as a whole. Society's interests are met by maximum production of the things that people want. In a now famous phrase, Smith said that the combination of self-interest, private property, and competition among sellers in markets will lead producers “as by an invisible hand” to an end that they did not intend, namely, the well-being of society.

II  Characteristics of Capitalism
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Throughout its history, but especially during its ascendency in the 19th century, capitalism has had certain key characteristics. First, basic production facilities—land and capital—are privately owned. Capital in this sense means the buildings, machines, and other equipment used to produce goods and services that are ultimately consumed. Second, economic activity is organized and coordinated through the interaction of buyers and sellers (or producers) in markets. Third, owners of land and capital as well as the workers they employ are free to pursue their own self-interests in seeking maximum gain from the use of their resources and labor in production. Consumers are free to spend their incomes in ways that they believe will yield the greatest satisfaction. This principle, called consumer sovereignty, reflects the idea that under capitalism producers will be forced by competition to use their resources in ways that will best satisfy the wants of consumers. Self-interest and the pursuit of gain lead them to do this. Fourth, under this system a minimum of government supervision is required; if competition is present, economic activity will be self-regulating. Government will be necessary only to protect society from foreign attack, uphold the rights of private property, and guarantee contracts. This 19th-century view of government's role in the capitalist system was significantly modified by ideas and events of the 20th century.

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Smith's Wealth of Nations represents the first serious attempt in the history of economic thought to divorce the study of political economy from the related fields of political science, ethics, and jurisprudence. It embodies a penetrating analysis of the processes whereby economic wealth is produced and distributed and demonstrates that the fundamental sources of all income, that is, the basic forms in which wealth is distributed, are rent, wages, and profits.

The central thesis of The Wealth of Nations is that capital is best employed for the production and distribution of wealth under conditions of governmental noninterference, or laissez-faire, and free trade. In Smith's view, the production and exchange of goods can be stimulated, and a consequent rise in the general standard of living attained, only through the efficient operations of private industrial and commercial entrepreneurs acting with a minimum of regulation and control by governments. To explain this concept of government maintaining a laissez-faire attitude toward commercial endeavors, Smith proclaimed the principle of the “invisible hand”: Every individual in pursuing his or her own good is led, as if by an invisible hand, to achieve the best good for all. Therefore any interference with free competition by government is almost certain to be injurious.

Although this view has undergone considerable modification by economists in the light of historical developments since Smith's time, many sections of The Wealth of Nations, notably those relating to the sources of income and the nature of capital, have continued to form the basis for theoretical study in the field of political economy. The Wealth of Nations has also served, perhaps more than any other single work in its field, as a guide to the formulation of governmental economic policies.

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I could only come to the sad conclusion that greed and the underlying insecurity of the individual would always be destined to manifest itself in the macro.

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The rich get richer, the poor get poorer. It isn't artificial barriers that cause this to happen -- it is the absolute design and function of capitalism. A lesson we all learned around the Parker Brother's Monopoly board.

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Even now, by design, with our engineered monetary policy -- the Fed recognizes that 'full-employment' is a bad thing -- because it's inflationary. Even the 4% unemployment figures they thought was a good number in the Sixties was too low. They now know that if you don't have at least about 5% of the people out of work and facing trauma -- the Economy heats up -- and value is lost. (Now, this could qualify as one of those artificial barriers you refer to -- but it serves the greater good of keeping inflation in check -- right?)

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The other effect of the concentration of wealth is that it crushes one of the other promises of Smith -- that competition benefits society in it's assurance of better products and services. The reason I chose Mac and Beta as examples is because it is a clear example of that failure. The better products were there -- but, as marketing gurus Ries and Trout point out in all their books -- the guy with the most money always wins. Gates had the power and leverage of IBM -- it was IBM's ignorance and arrogance that allowed him to slip away with the dough.

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It was capitalism working. Labor and markets shift to the low cost producers. But was it moral to take the jobs away from people who had been doing them here? People who had good work ethics, who were fulfilling their obligation to the company? Just because there was a cheaper wage across the border? Did the company not owe anything at all to the people who were making it successful? Was the weekly wage the extent of the moral obligation?

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The family analogy is driving me nuts. Prolly 'cause it's one that I understand and have some personal issues about, but here goes:

Who decides the cash value of the contribution of each role of each member of the family?

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But isn't a moral action one that doesn't take into account the benefit that one receives from taking it. (I know, I know, this is the kicker).

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Sometimes, I get the feeling that none of you has ever really known the fear and terror..nothing to eat, no way to get at what is in front of others, except perhaps, by stealing.

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And Rawl's Veil of Ignorance goes directly to Ron's point;

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There seems to be a jump in opinion to always assume that people who are starving aren't working -- while in fact we probably have the largest problem amongst the working poor.  They don't get the foodstamps, WIC, or AFDC.  Latest stats for California show that only 45% of the people who need foodstamps actually make it into the program.

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What of Seniors living on Social Security who spend most of the money they get on medicine -- they can't qualify for other assistance because they're getting too much from SS.

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Reb, I don't dispute that Smith's pure laissez-faire capitalism leads to inevitable excesses in the long term. Those excesses, however, are the exception rather than the rule, and the government intervention required to abate those excesses should be equally rare. If the rich always get richer, someone apparently forgot to tell that to the Big Three car makers who have watched their world domination wither and die in the past forty years. If the poor always get poorer, someone forgot to tell that to the post-War Japanese who decided they could manufacture and market cars better. So what does our government do when Chrysler gets its tail caught in the door? And they dare cite the need for competition as their reasoning?

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My sister is ten years old. Every morning at seven she goes to the bonded labor man, and every night at nine she comes home. He treats her badly; he hits her if he thinks she is working slowly or if she talks to the other children, he yells at her, he comes looking for her if she is sick and cannot go to work. I feel this is very difficult for her.
I don't care about school or playing. I don't care about any of that. All I want is to bring my sister home from the bonded labor man. For 600 rupees I can bring her home-that is our only chance to get her back.
We don't have 600 rupees . . . we will never have 600 rupees.
-Lakshmi,1 nine year-old beedi (cigarette) roller, Tamil Nadu. Six hundred rupees is the equivalent of approximately $17.2

With credible estimates ranging from 60 to 115 million, India has the largest number of working children in the world. Whether they are sweating in the heat of stone quarries, working in the fields sixteen hours a day, picking rags in city streets, or hidden away as domestic servants, these children endure miserable and difficult lives. They earn little and are abused much. They struggle to make enough to eat and perhaps to help feed their families as well. They do not go to school; more than half of them will never learn the barest skills of literacy. Many of them have been working since the age of four or five, and by the time they reach adulthood they may be irrevocably sick or deformed-they will certainly be exhausted, old men and women by the age of forty, likely to be dead by fifty.

Most or all of these children are working under some form of compulsion, whether from their parents, from the expectations attached to their caste, or from simple economic necessity. At least fifteen million of them, however, are workingas virtual slaves.3 These are the bonded child laborers of India. This report is about them.

"Bonded child labor" refers to the phenomenon of children working in conditions of servitude in order to pay off a debt.4 The debt that binds them to their employer is incurred not by the children themselves, but by their relatives or guardians-usually by a parent. In India, these debts tend to be relatively modest, ranging on average from 500 rupees to 7,500 rupees,5 depending on the industry and the age and skill of the child. The creditors-cum-employers offer these "loans" to destitute parents in an effort to secure the labor of a child, which is always cheap, but even cheaper under a situation of bondage. The parents, for their part, accept the loans. Bondage is a traditional worker-employer relationship in India, and the parents need the money-perhaps to pay for the costs of an illness, perhaps to provide a dowry to a marrying child, or perhaps-as is often the case-to help put food on the table.

The children who are sold to these bond masters work long hours over many years in an attempt to pay off these debts. Due to the astronomically high rates of interest charged and the abysmally low wages paid, they are usually unsuccessful. As they reach maturity, some of them may be released by the employer in favor of a newly-indebted and younger child. Many others will pass the debt on, intact or even higher, to a younger sibling, back to a parent, or on to their own children.

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SIXTEEN-year-old Sudalai of Paneerkulam village in Tamil Nadu's Toothukudi district is battling for life, along with 34 others at the Kovilpatty Government Hospital, after suffering severe burn injuries on September 24 in a fire that engulfed Star Match Works in Muddukkumeendampatti village. Sixteen women and girls died in the accident. Many of those who survived are disabled and disfigured for life. Only a few managed to escape with minor injuries

A striking feature of this accident is that all the victims are women, aged between 13 and 42.

They found that women comprised over 90 per cent of the labour force in the match units and most of these workers were girls between the ages of 14 and 18 years. A household sample survey by CACL showed that while 70 per cent of the boys in the area attended school, 80 per cent of the girls worked full-time in match units. More striking is the CACL finding that children, particularly girls, are employed in large numbers in these units.

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The following was printed in "The Working World of Children" by Child Workers in Asia (CWA).

Sonsingh - bonded labourer - 11 years old.
Sonsing is a tribal(Binjhwar) living in Raipur district Madhaya Pradesh. He has been in bondage for two years for a sum of Rs.180 (US$11.25), as well as a small amount of rice as a loan for his family, since there has been a drought for some time.

"My mother, my brother and I have to work in the landord's house, and my father works as a labourer on the landlord's farm. I work more than 10 hours a day for less than two kilos of rice. It's hard, but I always do the work I am asked to do, including collecting cow-dung for fuel. I am not allowed to leave my master's house till the loan is repaid. My master beats me sometimes when I make mistakes."
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The following was printed in "CHILDVIEW" by World Vision Canada - Feb./March/ 1995.

Easwaris, now 13, still bears the scars suffered four years ago from an explosion in a fireworks factory.

Easwaris began working 12-hour days in a fireworks factory when she was just seven. For $1.75, the girl laboured six days a week, loading sulphur, aluminum dust and coal into firecracker tubes.
Four years ago, a blast from gunpowder coated fuses in the factory knocked Easwaris unconscious and badly burned her arms, back and hips. Twelve other children, including Easwaris' 8-year- old sister Munnishwari, died in the blast.

Sadly, Easwaris should never have been working in the fireworks factory in the first place. In 1986, India banned the employment of children younger than 14 in more than a dozen industries, including the fireworks industry, yet the ban is rarely enforced.

One of the reasons child labour is so difficult to curb is that minimum age laws are hard to enforce, due to factors such as a shortage of government inspectors, police corruption, an absence of strong legislation or even a lack of co-operation by parents and children themselves.
reported by Sanjay Sojwal

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The following was sent to us from SACCS India.

Ranjeet was freed from child labour late last year, and now tells his story of triumph over tremendous odds.

"My master branded me in my left leg with a hot iron rod. This happened when I was working in a carpet loom of Sobri village in Vranasi UP. A dalal brought me from my village Thutti of district Saharsa of Bihar. He told my father it would be a good future for me and gave him Rs. 100. My father is very old and six members are in my family.

My master, Shri Hira Lalyadav, used to beat me when I made mistakes and forced me to work 18 hours in a day, sometimes the entire night. In lieu of remuneration for my work, I got a course meal (two chapatis with salt). My employer did not allow me to meet my parents, even when they came to the working place.

After 3 years, I was rescued along with other children, with the help of District Magestrate. However, a Government official had me handed over to a loom owner. Again, on the 14th of October, 1996, I was released from this hell with the great efforts of BBA activists, Mr. Chaurasia, and Government officials. After getting my independence, I was brought to Mukti Ashram for rehabilitation and study. When I was only 12 years old and very weak, Mukti Ashram took me in, and now I am very active. My interest is to learn carpentry, and slowly, I have started to identify tools and make furniture also. My stay with Mukti Ashram was for 9 months from the 28th of November, 1996 to June, 1997. Within this short period of time, I became self sufficient. Nowadays, I am living in my village with my family."

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these people are at liberty to take advantage of the weak with impunity

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If you refuse to buy the Nikes, Amy, you don't give those kids more to eat. On the contrary, by effectively boycotting "their" products you only insure they WILL starve to death. To us, it may seem like a really lousy job at criminal rates. To them, it's the best thing, and often the only thing, available.

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[This message has been edited by Local Rebel (08-31-2004 12:34 AM).]

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'While it is unlikely that Smith actually held the views popularly attributed to him, speculation about what he actually did think is not helpful in arriving at the truth about markets.  Our purpose now is to explain economic systems that Smith could not have possibly imagined.  And that is why the Wealth of Nations holds only the limited interest for us today that the works of Newton have for the modern physicist or engineer.  '  -- John Kay, Culture and Prosperity

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What do you see happening in Russia? Can American-style free market policies eventually triumph in the land that invented central planning?

Probably not. Russia is one of the more extreme examples of our attempt to export a too-simple model of how it is that market economies function.

What about China? What will happen with its hybrid model of communist-led capitalism?

I think China is unstoppable, but with its own particular development of evolving economic, social and political institutions. For me, one of the great unresolved questions of economic history is why economic growth took off 200 years ago in Western Europe and not in southeast China, where so many of the objective conditions for development seemed to be in place. A problem for economists is less that of explaining why China is growing so rapidly now as of explaining why it was so economically unsuccessful for so long. This is made all the more striking by the successes of Chinese people in promoting businesses outside China itself.  

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-- globalization is adverse to poor people in rich countries. Unless we manage the social consequences of that, we risk growing opposition to globalization. --John Kay

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