If you follow the news at all, you heard about that factory fire in Bangladesh that killed about 100 workers in a textile plant. One of the striking details was the fact that these workers made something like thirty-five dollars a month.
Now the popular wisdom these days on development is that the market will take care of situations like this. Bangladesh is just going through an early phase where it has cheap labor as its main asset. Capital accumulation and so forth will allow Bangladesh to eventually become a more developed country, where people make maybe thirty-five dollars a day.
The problem with this popular wisdom is that it ignores history specifically the history of Bangladesh/Bengal. Back in the days of yore, when the British East India Company was just moving in to the subcontinent, Bengal was the first Indian province that it swallowed whole. At that time Bengal was a country three times the size of Great Britain, and was something of an economic powerhouse, based on the fact that it produced a lot of – textiles. I don't know how much money weavers in Bengal made, I'm sure it wasn't much, but it was more when Bengal had an Indian ruler than after it got a British one. For you see, the East Indian Company used its power in Bengal to favor British cloth over Indian cloth. That policy – and others –had such a devastating that millions of Bengalis died from starvation. Britain, on the other hand, became the workshop of the world, and had a dominant position in the cloth trade for a very long time. Back when people studied economic history, this was a classic topic on the effects of the Industrial Revolution.
You can see why people in Bangladesh might be getting a little impatient waiting for classical economics' predictions that a rising tide lifts all boats to get around to their neck of the woods.
Perhaps the better word would be "pseudo-Classical economics." The types who are peddling this stuff claim that they are inspired by, or applying the principles of Adam Smith and Jean-Baptiste Say, but in fact almost everything they attribute to those thinkers ranges from grotesque distortion to outright falsification of what they said. Having just reread Smiths' "Theory of Moral Sentiments" and his various philosophical essays, his real views are fresh in my mind. Were he alive today, he would angrily exposed the current crop of economic "market" crusaders as frauds and scoundrels.
ReplyDeleteThe Bengal disaster is virtually identical to the Triangle Shirtwaist Factory fire of 1911, the horror of which launched the reform movement that established the necessary laws to prevent future disasters --- the "market" had nothing to do with it. I can assure you that Adam Smith would have heartily endorsed such regulation.
The market is powerless in the face of political desire.
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