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Abandon all hope ye who subscribe here. Varn Vlog is the pod of C. Derick Varn. We combine the conversation on philosophy, political economy, art, history, culture, anthropology, and geopolitics from a left-wing and culturally informed perspective. We approach the world from a historical lens with an eye for hard truths and structural analysis.
Varn Vlog
Rethinking Sweatshops: Labor Exploitation from the Industrial Revolution to the Gig Economy
Ridhiman Balaji offers a profound examination of sweatshops and labor exploitation, challenging us to rethink everything we know about these complex global issues. From the historical roots in the Industrial Revolution to the alarming similarities with today's gig economy, Ridh unravels how labor practices have evolved yet remain fundamentally exploitative. Is the gig economy just a modern-day sweatshop in disguise? Listen as we dissect these parallels and explore the intricate web of labor rights worldwide.
Our conversation extends to the persistent problems within informal economies and child labor, with an eye on the roles of both the United States and India. The International Labor Organization's efforts and the challenges faced by smaller countries striving for economic autonomy are scrutinized, uncovering political and economic intricacies. We explore the interplay between labor movements, trade agreements, and minimum wage systems, revealing the hidden motivations behind policies that often prioritize tax revenue over worker welfare.
Taking a critical turn into the realm of Marxist theory and labor internationalism, we delve into contentious debates surrounding sweatshop labor, intellectual defenses, and critiques of Marxist exploitation theory. By bringing in perspectives of notable figures like G.A. Cohen, we question conventional wisdom and consider how these arguments shape today's anti-sweatshop movements. Ridh's insights promise to stir debate and inspire thoughtful reflection on global labor dynamics, pushing listeners to question where they stand on these pressing human rights issues.
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Hello, and I'm here with a friend of the show, rid Balaji, and we are talking about sweatshops and labor exploitation and its relationship to Marx and other things. Actually, this conversation is based largely off of an article you wrote for the Business and Professional Ethics Journal Sweatshops and Exploitation a critical analysis of scholarly debate, but we're going to go into it a little more in detail now. Um, I link the anti-sweatshop movement with both liberals and sometimes third worldist, marxist, um, but I often find the term to be very loosely and incoherently employed. So let's get into it. What is a sweatshop and what is this historical context Like? Why do they exist and why do we deal with it at all?
Ridhiman Balaji :Yeah, so first of all, thank you for having me. Yeah, so the term sweatshop is actually a pejorative. Sweatshops, I think best should be viewed as a method of production, method of producing commodities. They're an offshoot of what's called the factory system, which is an offshoot of the putting out system. Putting out system basically is kind of like home production and then factory system is production like production and factories.
Ridhiman Balaji :So the sweating system is basically, um, it emerged during the industrial revolution in great britain and it has kind of like a bunch of features like, for example, uh, the piece rate method of payment, which is kind of like, uh, you're not getting paid, uh, at the hourly rate, you're getting paid according to how much physical quantities of goods you're producing. So that's one kind of feature. The other feature is that, uh, obviously, obviously you know poor working conditions, you know child labor is kind of very prevalent, and then you have a lot of subcontracting of work, which means that you often have like groups of people which are given a task, and this is still kind of the way it works. And let's say Bangladesh, where you have a garment industry, which are given a task, and this is still kind of the way it works. And let's say Bangladesh, where you have a garment industry but a lot of the work is subcontracted to groups, and then you have, kind of like children working alongside your mom or your dad.
C. Derick Varn:And yeah, so that's kind of, uh, an overview. Well, one of the things I noticed when reading your piece that something I hadn't thought about with sweatshops is that piecework does two things it mimics the artisan system that was prior to capitalism, formally like it, but also puts it in an industrial context. Right so, and this creates a way, um, a way of exploiting labor that is different than traditional free labor when there's a wage, because the wage here is more piece per you know yeah even it produced.
Ridhiman Balaji :Um, yeah, it was actually it's interesting to look at kind of the history of the peace peace wage because this was actually a way of underpaying workers because, um, prior to, uh, the minimum, the peace rate was the most common form of payment and people would oppose kind of capitalists would oppose the implementation or the transition from peace rate to the minimum wage because they would say it would increase the cost of labor. So it was actually a way of underpaying workers of labor.
C. Derick Varn:So it was actually a way of underpaying workers. So treating workers in a factory section like they're petite bourgeois artisans actually has consequences and that leads to underpayment. And what I find somewhat interesting and I don't think they're the same, I don't want people to think they're the same this was an early capitalist exploitation thing. Marx talks about it as kind of the ideal to think they're. They're the same as this was an early capitalist exploitation uh thing. Marks talks about it as kind of the ideal capitalist exploitation uh mechanism uh. And I forgot if it's capital what I want to do, but but ideal for the capitalist, that is not ideal for anybody else. Um, uh, but I have thought about how the gig economy and using contract work to approximate something like a piece rate is similar but it still can't reach that kind of level of exploitation that you see in sweatshops like no the gig work.
Ridhiman Balaji :That's an interesting kind of comparison. The gig work is basically, uh, you're basically classified as an independent contractor, um, more of a way of kind of uh avoiding uh affiliation with labor unions, um, but you are still getting paid, uh at the hourly rate. So it's not quite the same, but yeah so so it's more.
C. Derick Varn:You know, the gig work is basically more of a way of getting around uh, labor regulations, a relatively unregulated market, right market with no unions, um, where there's no set like work week or whatever. It's not as necessary but that. But if there, if there's no regulations usually and no strong sectoral union bargaining, you usually have one or the other. It seems pretty clear that that's you weren't. You're not gonna get gig work, you're going to get, you're gonna get, piece rate pay.
Ridhiman Balaji :So it's not a whole lot better, um, so yeah, the other thing that's kind of maybe we can talk about is the fact that, uh, the term sweatshops isn't really used, um, uh, by academic economists. It's because because of, like, the moral connotations behind of it, um, the term that's used is called something called the informal economy, so maybe we can talk about that I I do know that's used.
C. Derick Varn:I've always been slightly confused by the use of informal economy for sweatshops because there is um, there's other like, there are other things that like Marxist proper would call like lumpen markets or whatever, that also are sometimes used in the category of informal economy and they're not sweatshop conditions. It's more just like gray market stuff?
Ridhiman Balaji :yeah, so I guess maybe yeah, in the informal there's two things. There's the informal enterprise firm, um, where it's you have production going on within the, within the household. So, for example, in india you'll find a lot of households that are both farms and households, and so that kind of like blurs the line between what is a what is a sweatshop, because in those enterprises you still have child labor, your family is sending the child to work in the farm, you have poor working conditions, but it's not what you would think about when you think of sweatshops, because when you think of sweatshops you think of people working in factories. So that kind of complicates the discussion. The other issue is that you have informal employment, and the important thing to note is that you can have informal employment within formal enterprises and so that's another kind of big issue.
C. Derick Varn:So informal employment here includes sweatshops, but may also include family production. Yes, so sweatshops are generally generally, uh, a flash point. Usually the only people who defend them are libertarians, although every once in a while something weird will happen, like matthew will argue that they're progressive or something.
Ridhiman Balaji :Um uh, they are kind of like libertarian types who who justify sweatshops on social justice grounds and they give it that kind of progressive veneer.
C. Derick Varn:Yeah, a glacius, who I don't think is a breeding heart libertarian, but it's like some ways. The most craven of progressive liberals will sometimes argue that sweatshops are like a necessary evil for the development of productive capacity in developing world countries.
Ridhiman Balaji :So it's yeah, that is kind of the zwolinski and powell position. I'm not sure if you know who they are, but yeah, that is kind of like they're basically arguing that their necessary aspect of a country's developmental process, which is an interesting position to take. But because it doesn't really explain then why sweatshops persist in the developed world quote-unquote developed world, uh, I mean, we still have sweatshops uh in the us quote-unquote sweatshops in the US, right, Can we talk about what you, because I think that would surprise people.
C. Derick Varn:What do we mean by that? Like, I don't disagree with you, but what's an example of an entry of sweatshops in the US?
Ridhiman Balaji :Yeah. So if you look at kind of the ILO reports, india, for example, 70 to 80% of the economy is informal sector, china 50, 60%, the US is 10 to 15%. Okay, so significantly lower, but sweatshops still persist in the US. So you know, that could range from kind of like your, you know kind of like your abusive factory type situation to household production, which is what we would call self-employment, right, so yeah. So again, if it's a necessary stage, then why do they persist in the developed world?
C. Derick Varn:That's an interesting point. One thing I would ask and I think the informal economy part of it confuses people because, on one hand, when we think of sweatshops, people think of big, usually something like the way Mark's talked about it, honestly Garment production, or small commodity production, something small for the market. We think of large warehouses of workers which is probably not always true, but it was at one point and we think of um, child labor and maybe subcontracted labor supply, right so, and I think all those things are actually fairly true of traditional sweatshops, but they wouldn't be obvious in the United States. The sweatshops don't look the same way now and I think you're right that a lot of it gets hidden in stuff like the rules that relax labor restrictions on family businesses and in-house production, right.
Ridhiman Balaji :Yeah, and I mean you still have child labor in the US, like you. Still it's not like super prevalent, it's not like to the same degree to in as in India, but there's all sorts of like individual stories. It's not like to the same degree to in as in india, but, you, there's all sorts of like individual stories that you can find on the internet. Okay, so when?
C. Derick Varn:so meat factory was employing children, right, and we've seen red states literally start to change their labor, their child labor restriction law precisely without just removing them yeah um so. So, like most industrial production, this starts out in great britain, right like it actually starts there. Uh, it makes its way over to the ass, and then it's still fairly common in the developing world um particularly in southeast asia, I think, and parts of africa, although oh yeah, in africa.
Ridhiman Balaji :Africa you'll have like 90% of the economy is informal.
C. Derick Varn:One of the things that hit me. I was surprised how much of it was still going on in China. It's much better in China relative to, say, india or Africa but it's still 50- 60 percent, which is kind of like it's still quite, quite a bit.
Ridhiman Balaji :So we talked a little bit about the methodology the ILO uses For those of you who don't know what is the ILO, the ILO is the International Labor Organization and kind of like one of the main branches of the UN. You have the ILO, the WTO and then I'm forgetting the third one. But the ILO is responsible for kind of production-related issues. Labor issues, the trade-related issues fall under the purview of the World Trade Organization, but labor issues fall under the purview of the ILO. And yeah, the ILO has a very sophisticated methodology for classifying production, productive units, and so there's something called the Hussman's Matrix and this is all getting technical now. But yeah, there's a big, big literature on the informal economy, the ILO, that type of thing.
C. Derick Varn:So I mean, you know this tells you where the UN and the capitalist government's interests are, because you hear about the World Trade Organization all the time. You hardly ever hear about the ILO, unless you are actually in the global labor studies. Um, so I imagine the process of formalizing informal economy, which is the move from piece rate into some kind of more steady wage, uh, and also more formal points of accounting, because the other thing about this is this is effectively day labor. You show up, you do production, you get paid for it by peas.
Ridhiman Balaji :And actually just on that point, in many cases, for example in Bangladesh, you don't get paid until three months down the line, so you don't even get paid unpaid labor. This is a big, big issue, and what are you going to do? You have no other choice. You three months is kind of like the average. Three to six months, um, that's what it was like in in, in, uh, in great britain too, by the way, during the industrial revolution right.
C. Derick Varn:I uh, the weekly or monthly paycheck was actually a fight for people who don't know. Capitalists prefer to pay day labor wages, but pay them in large lump sum, and people might wonder why they want to do that. But because you're like, well, they're going to pay the same amount every day. But I'm like that gives them time to accumulate surplus and it can leverage the difference of value between when something is made and when you pay it out. So that's why time is really important in figuring this stuff out for those of you who don't study this?
Ridhiman Balaji :And yeah, just on the topic of formalizing the informal economy economy, that's a very kind of uh uh complicated issue. I haven't looked at it too much, but there's a number of reasons why the informal economy persists. Uh bottom line, though, is that it's very expensive and it's a whole political issue. Um uh, you know there's two, two things, as I mentioned, there's the uh formalizing uh workers, organizing them into unions. That's one issue. The other issue is formalizing enterprises, and governments typically uh tend to prioritize formalizing enterprises, because you get more tax revenue if you integrate them into the formal economy. So big, big, big issue.
C. Derick Varn:Now those people who grow up on modern monetary theory will probably wonder why did? Why did? Why do these governments care about tax revenues?
Ridhiman Balaji :yeah, I mean, uh, I, I, I guess I just don't accept the whole idea that, uh, taxes aren't necessary for expenses. I mean taxes. I think maybe it's true for the US, which is I forget the term that's used, but A currency sovereign. Yeah, yeah, yeah.
C. Derick Varn:Currency sovereigns suspiciously all look like the British Empire. It's actually kind of interesting, with the exception of Japan.
Ridhiman Balaji :But it certainly doesn't apply to poor countries.
C. Derick Varn:Yeah, it doesn't. Mmt requires a highly developed economy with the ability to compel market capture outside of it, right? So you either have to be productive enough or have enough guns, and these small countries can't do that. They don't have the reason. I mean, literally they don't have the physical resources by themselves to to operate semi-autotically like that, right? So? So they do have to get tax revenues. Often, they're getting tax revenues. I mean, some of these countries are getting tax revenues not even in their local currency. I mean, like there's some countries that take this shit in USD or whatever. It's interesting, though, to think about this why did formalizing the economy become big in the British and European systems? It does seem to me that that isn't obvious.
Ridhiman Balaji :Yeah, that's an interesting point. Things got so bad in Great Britain that the British Parliament eventually picked it up and commissioned several studies and then it became a very kind of like a political issue. It got picked up by the labor movement and they kind of agitated for better working conditions, better pay, that type of thing. So that is kind of why and same thing in the US, but not to the same degree. But yeah, that is kind of why it's reduced, it's been minimized, but it's still there.
C. Derick Varn:You know, but not to the same degree it's still there, you know, but not to the same degree. So when did the process of formalization really kick up in the in the uk? Was that the late uh 19th century, or is it later than that?
Ridhiman Balaji :yes, I don't. I talk about it in the paper. I don't remember it offhand. But uh, yes, I. I think that seems correct. Yeah, right. So, but it was a very slow process, you know.
C. Derick Varn:Right. I always find it interesting that when we talk about industrialization, we always talk about the primary model, because the first thing that was industrialized was garment production.
Ridhiman Balaji :Right.
C. Derick Varn:And then it spread like wildfire to all sorts of production. But it is interesting today that I always talk about. If you want to look where the shittiest working conditions are, the most exploited parts of capital and the industrial capital sector are, you want to follow garment production even still, where is garments produced Like Bangladesh? Conditions of produced Like Bangladesh, conditions of capitalism In Bangladesh are terrible.
Ridhiman Balaji :Just Bangladesh, but and then you can also kind of Think about what the conditions must have been like during COVID-19. Right, because that's kind of Another layer of Impoverishment that they have to deal with that we don't, because that's kind of another layer of impoverishment that they have to deal with that we don't. I mean, we're here sitting about, we're here kind of like debating lockdowns, kind of all that, but then they have to, like, work under COVID conditions so the first anti-sweatshop movement comes out of the british parliament.
C. Derick Varn:But the modern anti-sweatshop is movement, is way modern um yeah, so that's, that's true.
Ridhiman Balaji :so criticism of sweatshops, you know I mean that that has a long history. But what we think about is what we might call the modern anti-sweatshop movement. That has a relatively recent origin Late 80s, early 90s, in the US at least, and that has to do with the kind of there was significant institutional pressure from the afl-cio. So, yeah, maybe should I talk about that now yeah, please do yeah, so the afl-cio.
Ridhiman Balaji :Um, there was a, a person named jeff bollinger who basically went to congress and started to raise awareness about Indonesia, in particular Indonesian footwear factories, nike factories, that type of thing and after that, coverage of sweatshops in Indonesia and Vietnam increased significantly and you started to hear a lot more about child labor. So here I'll just read something Media coverage of global sweatshops increased 300% increase in the number of articles regarding child labor, 400% increase in the number of articles focusing on sweatshop activities. There was a documentary also Nike sweatshops behind the swoosh.
C. Derick Varn:Yeah, I remember this. I think I saw this actually. Yeah, it's been in the 90s right.
Ridhiman Balaji :Yeah, yeah, in the 90s. And, and then there's a switch. There's a person named John Sweeney who gets elected to the AFL-CIO and he applies a lot of effort to uh, uh kind of aggressively campaign against sweatshops, uh, by targeting uh university students. And so he, he formed, he, with the help of uh the afl-tio, there was uh the formation of something called the united students against sweatshops and that's a kind of a very uh, that organization plays a significant role. And so you think about the name united students against sweatshops. You think, okay, this must be kind of like a youth-led movement that emerged organically. But actually there was significant institutional backing that led to the formation of this organization. And then the USAS, they start to advocate for policies like the adoption of codes of conduct and things like attaching workers rights to trade agreements and yeah.
Ridhiman Balaji :So in essence, there was this switch in administration, led to a deliberate effort to target college campuses and Indonesia in particular was targeted. And so what was the impact of that? Well, actually, so both due to external pressure and kind of pressure within Indonesia, there was a significant hike in minimum wage, quadrupled in nominal terms and doubled in real terms, so that's between 1989 and 1996. So significant increase in minimum wage. And the way that materialized was because the afl-cio due to if the afl pressure from the afl-cio, the us government basically threatened to revoke special sheriff privilege and so in order to avoid that, they hiked their minimum wage. And that's kind of where the academic literature starts. They're kind of like criticizing these efforts by the AFL-CIO but they're criticizing United Students against Sweatshop. So it makes it seem like they're kind of like criticizing students, naive students, that type of thing but they're actually criticizing lobbying efforts by the AFL-CIO lobbying efforts by the AFL-CIO.
C. Derick Varn:So why did the AFL-CIO suddenly care about this, other than people being exposed to good production?
Ridhiman Balaji :Yeah, that's a good question. So it seems like they're advocating for workers' rights. What's wrong with that? Who opposes that? But actually there's a kind of ulterior motive. Actually, this is a form of hidden productionism, which is something that people don't really recognize, and so the whole campaign to attach labor provisions to trade agreements is a form of protectionism, meaning that it's a way of making US exports more competitive relative to exports from, let's say, indonesia. So, for example, indonesia is forced to pay their workers a higher wage. Indonesian exports become more expensive relative to US exports, so US exports increase in sales. Better for US workers, okay.
Ridhiman Balaji :Ambiguous effect for workers in the third world Okay, some people get laid off, you know they don't work anymore. But other workers, they work for a better pay, but so it has. It has an ambiguous effect, uh. But the other thing to note here is that, uh, these, there's two things. One, on the one hand you have these types of provisions are almost always directed at countries that don't have a favorable political relationship with the US, so, for example, countries like Syria, because it's opposed to Israel. China, cuba Okay, those countries are subjected to these provisions, but countries that have positive relations aren't really up to the same standard. They're not held to the same standard. And the other point is that, well, actually there's significant labor exploitation within the US. Right, you can think about like, let's say, prison labor. Okay, the US criticizes China for, let's say, quote-unquote slave labor in cotton farms in Xinjiang. But if you look at, let's say, farms in Louisiana which are producing organic goods the largest exporters of organic goods they're made under very similar conditions. So there's a kind of a double standard there.
C. Derick Varn:Yeah, I mean the use of prison labor was actually probably higher 20 years ago, but it's still a huge part of the industrial sector in the United States, particularly in like agrarian labor, and that's because the constitutional limit that prevents slavery has an exemption clause for prisoners. Um, although most states do pay uh prison labor something, it's usually to the tone of like a dollar an hour or less, so it's, it's a very exploitive labor system um, the other thing that I want to mention really quickly is the.
Ridhiman Balaji :when you include these labor provisions in trade agreements, one of the things that it does is that it effectively discourages capital investment, uh, in in countries like such as cuba. Let's say, cuba is routinely accused of employing quote-unquote forced labor, and so what that does is that it discouraged well, I mean there's an embargo as well, but it also kind of discourages uh, I mean there's an embargo as well, but it also kind of discourages a capitalist from investing in Cuba or, let's say, china, right, so that's that's also important to recognize.
C. Derick Varn:So it's depriving them of very necessary capital. Is my point Right? So this is why it's ambiguous. There might be some workers who benefit under these regimes, but you're going to have layoffs and this is going to be used as a means of trade and maybe even labor arbitrage that suppresses wages in the developing world, sometimes, sometimes raises them, but it's going to, it's going to slow down capital accumulation, but it's going to slow down capital accumulation.
C. Derick Varn:And it seems, you know one of the things I was thinking about as I was reading your paper, and your paper doesn't mention this, but the prior real pushback on this was like in the East Asian garment industry, like in South Korea in the 60s and 70s when they were really subject to tariffs, and one of the things South Korean chaebols, which are these mega firms, did is they established wet shops in Bangladesh to get around the tariffs, so it, and that was going on in the 70s.
C. Derick Varn:So it seems to me that part of the part of the protectionism the AFL-CIO was pushing and I don't want to say that it was totally cynical, and the AFL-CIO was pushing and I don't want to say that it was totally cynical, like I do think they actually did care about some workers' issues, but that it is interesting the timing here that switching from direct protectionism and tariffs to indirect protectionism and tariffs is partly responsive to develops, develops of capital in asia moving, you know, moving to subcontracting their labor to southeast asia, making the direct tariffs of specific countries and regions a little bit less effective.
Ridhiman Balaji :Yeah, um, yeah, I mean, yeah, that's kind of the important thing to note is that it's uh, they didn't explicitly adopt a protectionist orientation.
C. Derick Varn:It was very, uh, indirect, but the net effects are arguably the same so another interesting debate around this is the rate uh on minimum wage versus living wage. Um, that seems to emerge at this time Now, when we talk about piece work and sweatshops, they're not even really making A true minimum wage Because they're getting paid per item.
Ridhiman Balaji :But you know, like one, like two cents a piece, three cents a piece.
C. Derick Varn:Yeah, but it was kind of astounding to me, like when I was in Mexico, not a lot of people made the actual minimum wage. The actual minimum wage Was something like I don't know $20 a day or something it was for. No, it wasn't even that. It was very, very low. Actually I should, so I was being optimistic at $20 a day.
C. Derick Varn:There are two minimum wages in Mexico and I live near the border, so I was actually in the northern border minimum wage zone, which was about twenty two dollars a day. Now it's three hundred and seventy four point eighty nine Mexican pesos a day, which is about twenty two bucks a day, which is about 22 bucks. Um, that's higher than when I live there. And the general minimum wage for the entire country, um, is, uh, 448.93 Mexican pesos, which is about $15 a day. Now, that's not as bad as anywhere in Southeast Asia or like Africa, but it is still remarkably low because while things are significantly cheaper in Mexico, you do need to make a prox, probably about a 20 K, to approximate an American middle-class lifestyle in so much of that as possible.
Ridhiman Balaji :Yeah, I was just going to say the minimum wage debate gets very complicated and because I mean, you're right, it is quite low. But the thing to keep in mind is that the minimum wage isn't the only source of income that workers have. And I'm not saying I'm not like without making any judgments about whether it's too high versus too low. That's kind of an important on the minimum wage in the US. There's a huge literature on this. There is some evidence to suggest that people, the types of people who work on the minimum wage, aren't necessarily on the low end of the income spectrum. So, for example, you could have a high income household where you have, like, a teenager who is working on the minimum wage and they're getting paid the minimum wage, but they're not necessarily on the low end of the income spectrum. So the discussion gets very complicated, it's polarized along political lines and, yeah, I'm kind of neutral on it, but I do think it's important to recognize those issues.
C. Derick Varn:Well, I was just going to talk about this a little bit, because the minimum wage required you to be formally employed and that was not.
Ridhiman Balaji :Precisely. So, yeah, I mean, by definition you are only getting paid if you work, at least work in the formal sector. So if you're not working, you're not getting paid. So by definition it's biased towards those who work.
C. Derick Varn:And the other thing I'd like to point out. I just did some quick calculations while we were talking. Thank you, calculator and Google for making that easier for me. But the minimum wage in Mexico, if you actually make the northern border minimum wage, you make the equivalent of roughly $17,000 a year, which is not great. But I want to remind you that the poverty line in the united states is fourteen thousand dollars a year.
C. Derick Varn:So so you would be making above the us poverty line. But you, as you said, you and I both know it's not the only form of income for a household, and household incomes in places like mexico are not even two family, they're more like three or four. And there's a lot of income on and gray and informal markets. So both great gray market trading, uh, all those neat you know haggle bazaars that you go to in foreign countries, those are gray market tradings.
Ridhiman Balaji :And and um, but also, like you get a lot of like social benefits from the government, um, and your, your tax liability is lower if you're on the lower end of the income spectrum, uh, so you have to consider a lot of things, not just the, not just look at the minimum wage on its own well, I mean, that's that's even true in the us.
C. Derick Varn:When a lot of people look at wages in the us, uh, they'll talk about average income, but they don't even look at, like, the cost of benefits, the cost of additional tax burdens, etc. And as a person who, uh, as a petite bourgeois person and I pay self-employment tax, uh, that tax burden is not insignificant, um, you know, it basically effectively doubles your tax rate. So now again, I'm not, I'm not here to like say pity, the poor petite bourgeoisie, but it's just something to to note when people talk about compensation, um, and the different costs of compensation and also relative goods. And one other thing that makes this very complicated is the same thing that you see in the US actually is social infrastructure varies greatly in different parts of Mexico. If you're in District Federal, what we call Mexico City, there's a pretty good infrastructure for the poor. If you're in Oaxaca, chiapas, michoacan, that infrastructure often is not there, and if you're in like a rural peasantry place or a ranchero or something like that, there might not even be electricity for anybody for anybody.
Ridhiman Balaji :And just on that point the US, compared to other developed countries, has a very kind of poor welfare system.
C. Derick Varn:Yeah.
Ridhiman Balaji :Not as much in terms of social benefits relative to, let's say, france or Germany.
C. Derick Varn:Or even the UK, as pathetic as that is.
Ridhiman Balaji :Yeah and I mean like the healthcare situation is ridiculous, right? So, that right there is like one of the biggest factors.
C. Derick Varn:As a person who's gotten healthcare in the developing world, it is often still, even for poor people, proportionately cheaper, and that's not even not to go off too much, but that's even true in places that don't have socialized medicine. It's just. It's just. It just doesn't work the way it works in the US. I want to go into this a little more, though. I think it's interesting to think about this problem, because your article makes it clear that there are things that people utilize that we might say like. Your paper does not say that the effects of the AFL-CIO on developing nations was all bad, but it's just, it's not all good, and the motivations for it. I'm sure that a lot of the activists that were recruited on college campuses non-organically were very sincere. Yeah, I mean, I'm sure they were, yeah, very sincere.
Ridhiman Balaji :Yeah, I think you're quite right. Uh, yeah, I mean, it wasn't all bad, nor was it all good. It was mixed, um, um. You know, I'm sure kind of, uh, you know, uh, some of the activists within these developing countries wanted these provisions, but others maybe didn't, and so, like you know, I think it's not fair to say that it was all negative, but I do think it's important to recognize that, at the end of the day, they were prioritizing the well-being of American workers, and one of the ways that they did it was by artificially kind of making their competition worse off, by forcing them to pay, in the case of the minimum wage issue. Forcing them to pay in the case of the minimum wage issue. Forcing them to pay higher minimum, higher wages right.
C. Derick Varn:This is why sean fain of the uaw is not asking the united states to drop its unnecessarily high tariffs on chinese electric vehicles, for example. Um, yeah, um, and that can't be said to be all out of the the goodness of the uaw's heart, like they have their own interest at hand. This is also occurring in europe right now, and even bigger things, uh, bigger degrees, because europeans have more trade agreements with with china that aren't subject to tariffs, but they're terrified of the ev market, like german automakers are, are absolutely uh, concerned and want to push back. Uh, and if they can put, you know, if they can push back and make it look as good for everybody, they will. Um, I also think this is why labor internationalism is both very important but very hard to do, because, like we look at the anti-swep shop movement from the 90s and that's like, that looks like labor internationalism, but its downstream effects are not always great yeah you know, that's yeah.
Ridhiman Balaji :So, like you know it, it, it. You know you're advocating for higher labor standards. What's wrong with that? Except they're doing it. They're doing it within a framework, you know, like, for example, they're advocating for attaching higher labor standards with, you know, liberalizing tariffs with uh. You know liberalizing tariffs and that I think uh is much more problematic than just advocating for higher labor standards, you know right?
Ridhiman Balaji :um, it is interesting to think about how all that works, and even something and it's also important to look at which countries are being targeted, like china is being targeted, but uh, you know other india probably isn't like brazil or to the right now to the degree that india, maybe, is targeted. It's targeted in sectors that are directly competing with the us.
C. Derick Varn:So we've mentioned a little bit about this as a concern for Marxists. One of the things that is an issue for modern day Marxists is they obsess over the general wage fund. But we think about it in terms of modern wage relations, right, think about it in terms of modern wage relations, right, um, and we have to remember that, particularly before, when we were dealing with a lot of individual commodities that are finishable and within one factory, like a garment. Um, marx is talking about this as much as he's talking about the way we think of wages now, which is not to say he wasn't talking about the way we think of wages now, he was. But this is even though this is the informal economy. Um, this is not what, like we would consider and marks. This category is lumpen labor or um, I just want to make that clear or black market and gray market labor.
C. Derick Varn:I mean it is kind of a gray market because it's unregulated and yeah, I mean, it's not what you would call a crime.
Ridhiman Balaji :You can't classify it as a crime. It's a. It's the unregulated, unmonitored sectors of the economy and that's where most of the uh exploitation occurs. Exploit I'm using that term loosely here um, abuse, abuse, exploitation. That's where most of that occurs, because they can hide it well right right.
C. Derick Varn:So, um, after indonesia, there is an academic pushback to the anti-swab shop movement, and your article actually made this kind of clear to me because I remember when I was in high school and it was still kind of going on in early colleges, but I would I'm of the age where this happened, like I would have been in high school when the when a USA ID stuff was, you know, at its peak around the time I was graduating from college. I think this was around 2002 to 2006. That's when I started seeing all these articles that have been written in academic journals and but we're now bleeding out from, you know, the Cato Institute into newspapers, yeah, about why sweatshops really weren't that bad really, and also maybe this protectionism is actually motivating a lot of this. Yeah.
Ridhiman Balaji :I mean, I guess the libertarians are kind of correct on that point, you know like maybe there are some ulterior motives to consider. But yeah, I mean, I guess the libertarians are kind of correct on that point. You know like maybe there are some ulterior motives to consider. But yeah, I mean that entire literature was in response to this effort. This union led effort to tie increases in labor standards with trade agreements, and that's where kind of the intellectual defenses of sweatshops start to emerge. And so, um, you have maitland I talk about him uh, who kind of like pushes back into the idea of paying workers according to a quote-unquote living wage, because that's a very ambiguous category. You, you know what's a living wage? How do you determine that? That can get very complicated. Zulinski and Powell are kind of like very, very famous. You know Zulinski, I think 2007 is where he defended on moral grounds, moral social justice grounds. Powell has a book and they often collaborate together and yeah, that's kind of where the literature emerges.
C. Derick Varn:As a side note, one of the reasons why I'm skeptical of social justice claims is because I see them even more than marxist claims to be able to be used to justify pretty much any damn thing, including things that seem pretty exploitative to common people in the common sense of the term exploitation. And for those of you who wondering why red and I are being careful about this, we're going to talk about marxist exploitation in a little while, and that's very specific. It is not the same as, like general exploitation um, yeah, yeah uh so.
C. Derick Varn:So I remember powell's book around social justice. So it's like, yeah, the bleeding heart libertarians are. That's also from the time period of the libertarian uh, where where there was like a group of libertarians who were like you know what, maybe we should be more, speak to social justice concerns and even work with Democrats for a little while. They didn't last very long, it kind of faded as soon as the Bush administration was gone, but it was a thing. But a lot of their arguments around sweatshops, as I'm saying, I even heard Zelensky and Powell were actually cited, I believe, by Matthew Iglesias.
Ridhiman Balaji :Yeah, yeah, I mean, they are the ones that have developed this kind of like what's become a standard pro sweatshop academic response, pro-sweatshop academic response, and actually I think even Paul Krugman was kind of, you know, pushing back against the AFL-CIO efforts, that type of thing.
C. Derick Varn:Yeah, so let's go into Selinskyinski and powell's arguments. Um, in your paper you say that not all their points are invalid or cynical. What are some of the points that you think they actually are correct on?
Ridhiman Balaji :well, uh, I mean. Uh. I mean they say, for example, working in a sweatshop is a choice. Okay, I mean, okay, it's a choice, but I think we have to look at why they're making the choice Right. And I mean they're making the choice to work there out of desperation, okay, so I mean there's a kind of a kernel of truth there. Uh, okay, the other point that they make is that, uh, okay, they're, they, they are benefiting from working in sweatshops. Okay, they're benefiting. Uh, they get paid. Uh, I mean, of course they're benefiting. Uh, why, why else would they work? So, okay, there, there, there's some kernel of truth in what they're saying. Uh, but kind of my main pushback, the main uh issue is, um, uh is their treatment of marx and, uh, how they're kind of dismissing marxist theory of exploitation based on a misunderstanding which is I think it's a moral argument yeah, that's, that's the other issue.
Ridhiman Balaji :Um and uh, I don't talk about this too much in the paper but uh, there's a whole sub debate about whether marxist theory of exploitation is a moral critique, and I think that's a complicated. Maybe you can tell us what you think, but I think it's not, that it's not a moral critique. But I also think it's not a moral critique. I think it's probably somewhere in the middle. I think Marxist theory of exploitation is a technical kind of political economy concept, but I do think that marx, when he talks about labor exploitation there, that he does have kind of like a moral connotation, uh, embedded, uh.
C. Derick Varn:So I think it's more complicated, but it's not like a he's not providing like a moral critique of capitalism yeah, I, uh, I will say from a meta ethical standpoint, not an ethical standpoint you have to think that what marx is describing is wrong in some normative sense. To get upset about it like if you're a nietzschean and you just think that humans can exploit other people because they're, you know, great aristocratic ubermensch, then Marxist appeal isn't going to apply to you, but that's actually not even to me. I'm using very technical terms here for my audience, but that's a meta-ethical concern. The actual argument is about surplus, value or surplus. I might not even throw the value in here, because that's a messy word, as you and I talk about all the time, but it's about surplus.
Ridhiman Balaji :Maybe we can talk about what he means by exploitation.
C. Derick Varn:What do you think Marx means by exploitation?
Ridhiman Balaji :The way I understand it is that he's talking about surplus labor. What is surplus labor? Surplus labor means workers are working beyond what is surplus labor. Surplus labor means workers are working beyond what is necessary to produce a commodity, and that's how I interpret Marx's theory of exploitation, that what makes exploitation exploitation, in Marx's understanding, is that workers are doing more work than what is necessary to produce a commodity. And, by the way, we are talking about work in the sense of work necessary to produce commodities, things that are produced in exchange on the market. So that's kind of important to recognize, not just work like, let's say, you know, you're working in the service sector, which, okay, that's not what marx is talking about, but I'm not saying that's not exploitation yeah, service sector gets complicated because it's its relationship to commodities are not obvious yes um and uh.
C. Derick Varn:There's a uh. This is also true for logistics, which which Marx even tries to deal with. Some of this stuff actually does come up in Capital Value too. In theories of surplus value, the capitalist to sell the commodity on the market and and get a price that is more than its cost of both fixed and variable capital. Fixed capital is all the materials that would, including machines and factory instruments and all that that are used to create a commodity inputs, machines. And then variable capital is primarily labor. It's labor, it's wages or piecework Like so Yep.
C. Derick Varn:And the reason why it's variable is you're trying to push people to work more than they need to work. And the reason why it's variable is you're trying to push people to work more than they need to work and that's a way to command more stuff from to leverage that surplus.
Ridhiman Balaji :Yeah, and I guess the issue so that's Marx. But the issue with kind of the sweatshop defenders is that they completely misread Marx and they make it about some make it may. They introduce other concepts like fairness, like, for example, uh Zulinski, you know he says uh, he has a completely different way of looking at it. He says uh, you know, uh uh, workers, uh uh, he doesn't look at it. You know capitalists are buying and selling uh workers, labor power, he says. You know individuals are exchanging uh uh services, right, right and uh.
Ridhiman Balaji :So it's an exchange-based perspective, uh and uh. That exchange leads to. It generates a social surplus and it's the distribution of that social surplus, it's the unfair distribution of that social surplus that makes it exploitative and that raises a whole host of issues Like what's a fair? Is there such a thing as a fair distribution? What is the social surplus? So the point is that they have a completely different way of looking at exploitation and that leads to kind of a whole issue of what is exploitation, like that's a kind of a. It can be a difficult concept.
C. Derick Varn:So we talked a little bit about what it means in Marx, but we also, basically, these libertarians pretend that Marx's primary concern is that that's unfair, or at least unequal distribution, because they've never read Critique of the Goethe Program or any of the other places where Marx says that we're not primarily, are initially, worried about even the uneven distribution, because you need, you know, uh, which I think surprises people so, yeah, and I mean marks in the, in the critique of the gothic problem is is one of the things he says, I'm paraphrasing uh, the bourgeois, uh, say that the world as it exists is already fair.
Ridhiman Balaji :You know what I mean. Like, the capitalist system is already fair, so it's not about fairness, yeah, which is something that they miss completely.
C. Derick Varn:Yeah, I mean he mocks LaSalle for talking about a fair day's wage. He outright mocks him. So it's interesting to think about that that in a lot of these papers on sweatshops the critique of Marx is either a straw man or sometimes it's not even a straw man. It's just completely wrong. It's like what they're arguing it's just not what mark said at all.
Ridhiman Balaji :and um, in fairness to libertarians I'm not defending libertarianism but in fairness to libertarian, even kind of your marks friendly academic like cohen. He also misrepresents marks because I think he says uh, uh, exchange value is determined by socially necessary, necessary labor time. So that's what? That's wrong, that's factually incorrect. So it's not even just libertarians that get him wrong, it's not.
C. Derick Varn:Oh yeah, for those of you who don't know, that means that he has a labor theory and I'm very, very clear about this of price.
Ridhiman Balaji :Yeah.
C. Derick Varn:Which is not. There are different schools of Marxists who approach this, but very few of them who still believe in labor theory of value, believe in labor theory of price, and what Cohen and a lot of analytic Marxists do with this is to actually say, well, Marx is kind of right, but we need to fix these concepts. What are we going to bring in? A lot of times, it's like neoclassical equilibrium economics, which is like what? Like you know, that's not the case for Cohen. I'm actually not sure what Cohen brings in. Cohen.
Ridhiman Balaji :I think I've read Cohen a little bit. I criticize him in the paper. Cohen kind of in my as I read him he kind of like shifts the goalposts a little bit. So for example in his 1979 paper I think he says that labor theory of value and exploitation are mutually irrelevant. But then in his 1983 paper I think he says that it's not a suitable basis for charges of exploitation. So those are two different claims. He says it's mutually irrelevant, then he says it's not a suitable basis. But then when you go into it, what does he mean by labor theory of value? He's completely kind of strawmanning Marx.
C. Derick Varn:Yeah, so we agree that he kind of misreads it as a labor theory of price, which is not an uncommon misreading. Which is not an uncommon misreading. He also seems to take the transformation problem at face value, which is bizarre for a so-called Marxist to take at face value, cause that was not even hard to get around. Nor do all the people who posited even agree on what the problem is. So he kind of he had a kind of famous debate on sweatshops I think you mentioned this in your paper the Coleman-Hallstrom debate. Can you go about his debate a little bit? Why do we care about JA Cohen other than he's popular again?
Ridhiman Balaji :He's not debating sweatshops, he's actually debating the exploitation, whether or not Marx's theory of exploitation is a valid kind of theory. And so he basically argues that it's not. Holmstrom says look, you are misinterpreting Marx. She says exactly what you're saying, that it's not a theory of prices. The idea of a socially necessary labor time is meant to describe as the substance of value, not as opposed to the form of value. Uh, but she doesn't. She doesn't say this, but that's what it is. But uh, yeah, but he doesn't get it. He, he, he kind of just repeats what he says in his previous paper and then that's it. And which is why I'm kind of like it bothers me when you have people on the left who are kind of like expressing admiration for cohen, because this person is not really defending marx, he's a critic of Marx.
C. Derick Varn:Right and you would rather there be. You prefer your critics of Marx to be outright and direct, not people who claim to be on our side. Let's talk about this a little bit. It's easier for me to deal with and even like debate, interlock, even even grapple with, even make political compromises with someone who I realize is an explicit enemy. It's harder when the critics and stuff are within our own roles and tearing down our own conceptual apparatuses while claiming to be defending them.
C. Derick Varn:And that's, like you know, cohen's most favorite book uh, karl marx's theory of history, of defense, which turns karl marx into a wig, because that book reads development of production, uh, as basically linear and also as about just creating more and more stuff that we can build off of. And I'm like that's just Whiggish history. That's all that is and that's not what Marx thought. And it's clear that that's not what Marx thought because Cohen admits he has to bring in a bunch of other concepts from other more, you know, less Marxist sources, everything from equilibrium economics to game theory, to make some of the stuff work. We also see this in Romer. We see this in someone I don't dislike as much as I dislike Cohen, but it comes up in. Eric Olin writes book on class.
Ridhiman Balaji :Like Elster is the other one.
C. Derick Varn:Yeah, elster writes book on class like elster is the other one. Yeah, elster, um, and the analytic marxist had influences on other groups. They had influences on both, uh, the political marxist, that's, that's brenner, and ellen mcconwood's and the world system school of of wallerstein and a rigi and, I guess to some degree, uh, samir amin, who also do not use, um, a lot of classical marxist concepts uh like exploitation in the same way marx does.
C. Derick Varn:So it is, cohen is like endemic. Um, david harvey doesn't uh, kind of accepts cohen's critique of labor theory of value because he reads it as labor theory of price. And I find it very weird that people would do that as Marxists, because we've been talking about how that was a bad reading when Marx was alive, forward Like it's an argument we've literally been having since Marxism has been a thing that when we say labor theory of value we do not mean it is predictive of individual prices of commodities.
Ridhiman Balaji :Yeah, I think I don't really talk about this in the paper, but I think the term labor theory of value is kind of like a problematic term in my opinion, because, first of all, all it doesn't appear in either smith, ricardo or marx. Right, for people who don't know, even adam smith and david ricardo are, uh, often characterized as having a labor theory of value. And even if you use that term to describe adam smith or david ricardo, it's not that they are directly trying to explain commodity prices, it's indirect. I'm talking to smith and ricardo now. Like they have, they distinguish between natural price and market prices and they're not trying to explain market prices, which is something people don't understand. And maybe this suggests that they're not trying to explain market prices, which is something people don't understand, and maybe this suggests that they're not familiar with the things that they're criticizing.
C. Derick Varn:I don't think a lot of people know the difference between classical and neoclassical economy and a lot of the distinctions get wiped away, Like you're right, Like this idea of natural versus market price that's obliterated in neoclassical economics, and so when people approach the earlier text they don't seem to know what's being talked about. And that's a huge problem, and that's not just for Marx, that's for the people Marx is, you know, interlocking with too.
Ridhiman Balaji :And Marx makes this distinction as well Prices of production, which is more comparable to natural price, and versus market price. So he's not explaining market prices, he's explaining prices of production. And just on that point about labor theory of value, this term actually originates in bombauer. Uh and uh, you know kautsky uses this term, uh, but he's accurately describing marxist theoretical apparatus. Uh, you know, it's not like people when they say this term they're using it as a catch-all term to describe the totality of Marx's theoretical system. But once you kind of dig down into it, it doesn't effectively capture the difference between form and substance.
C. Derick Varn:for example, why is the difference between form and substance important? This is more for my audience than me.
Ridhiman Balaji :Yeah, so the form, uh, it's important to distinguish between the two because, uh, as you mentioned, as we've been discussing, uh, uh, people often uh confuse the definitions for the two and what it? It ends up in a very confusing kind of critique of marx except they're not criticizing Marx, they're criticizing strawmans, which is the issue with Cohen but also libertarians, as determined by its exchange value and substance, as in the content of the commodity, as determined by socially necessary labor time. And people don't distinguish between the two and so they're kind of talking past each other. So it's important to distinguish. This is kind of a point that I drive home in the paper, that it's important to distinguish between the two.
C. Derick Varn:And yeah, Now just to tie this last little bit in why is this distinction important in the discussion of sweatshops? This will be our last point.
Ridhiman Balaji :Well, because it's not exploitation, isn't? It's not that people are, it's not on the basis of price. It's on the basis of price, it's uh, it's on the basis of, uh, surplus labor, uh, which is, um, you know, as we mentioned, it's more um, uh, the work that you're doing, above and beyond what is necessary. And so, um, people, um, you know, if you don't distinguish between the two concepts, you're going to think that you're going to start from the premise that Marx had a labor theory of value, which you're going to interpret as a price theory of price, and then you're going to get confused. So it's important to distinguish between the theoretical concepts.
C. Derick Varn:Right, because the reason, like even in the case of sweatshops I think it it's important to get the difference in theoretical concepts the reason why, um uh, exploitation is more possible in sweatshops is by, as by paying peace, you can. You can up productivity more than you can with a standard hourly wage oh, yes, yes, yes, uh, I I mean, yeah, sorry.
Ridhiman Balaji :So what? Yeah, there's different ways of kind of increasing the degree of exploitation. You can pay your workers less, you know. You can make them work more hours. You can deprive them of wages, like for example, in bangladesh, as I mentioned. Like you don't get paid three, three months, at least three months, um, okay, these are all ways of increasing the degree of exploitation. Um, so uh, in the paper, what I say is that, look, I'm not saying Marxist theory of exploitation is the only way to conceptualize exploitation, but this is one way to do it.
C. Derick Varn:And that would mean that sweatshops are pretty exploitative, not even on grounds of fairness. It's a pretty clear point. Well, thank you, ridd, I always like coming in and getting into this more technical side of Mark's for you. What are your current projects? What are you working on?
Ridhiman Balaji :I have a paper coming out. I have a paper that I'm working on on David Ricardo coming out. I have a paper that I'm working on on david ricardo. Um, uh, kind of how, uh, his theory of foreign trade is misrepresented in economics textbook, and then I'm going to be starting a starting a book on imperialism and anti-imperialism, which is going to take some time. But yeah, that's kind of what I'm working on.
C. Derick Varn:All right, Imperialism and Marxism is one of the stickiest wickets Us up there with the national question on yeah, Not that most Marxists think imperialism exists, but if you actually get into the nitty gritty of what peopleistic imperialism exists. But if you actually get into the nitty-gritty of what people say imperialism is, Marxists actually often don't agree on their definitions. On that Almost everybody agrees imperialism exists and it's bad. But we don't all agree about what the actual mechanism of imperial force is. Is it primitive accumulation? Is it?
Ridhiman Balaji :labor arbitrage, is it? Uh, yeah, I mean, hobson's theory of imperialism is based on under consumption right right, exactly, and wasn't marxist either.
C. Derick Varn:It's like. It's like proto uh, indian almost. Yeah, it's like per occasion, um and Kotsky's theory of imperialism is very, very different from Lenin's, even though they both are based on assumptions around exploitation. They think it leads to different things. Uh, et cetera, et cetera, et cetera. So I think that's, that's something to deal with. It's. It is to me one of the stickiest wickets in all of Marxism, because later schools redefine imperialism. So like what say world systems people mean by imperialism and their world is mean by imperialism, is different.
Ridhiman Balaji :Yeah, depending on the theory, unequal exchange, that type of thing.
C. Derick Varn:Yeah, it's different than what earlier Marxists thought imperialism was. So, uh, I'll be looking forward to talking to you about that book. Uh, thank you so much. Uh, rid of. Am I gonna be able to link the paper in the show notes, or is it?
Ridhiman Balaji :yeah, yeah, yeah, I'll send you uh the link. Okay, it's an early, it's an early version, but uh, it should be appearing in a volume soon. But it's been accepted and it'll be published soon sweet.
C. Derick Varn:Thank you so much yeah, all right, thank you for having me thank you for coming on and I look forward to talking to you again. So get into the nitty-gritty stuff, sure.
