Who pays the price for free trade? Farmers, workers, the unemployed.

Questions have been raised repeatedly in certain quarters concerning linkage between human rights and trade privileges; most recently, the principal areas concerned have been China and Mexico. And while some concern is occasionally heard from government sources, most of the noise comes either from human rights nongovernmental organizations (NGOs) or from groups opposed to the exportation of manufacturing jobs to the third world under agreements such as NAFTA. When governments are involved, they often appear to be highly selective in their concerns for human rights. Departments of trade and industry, perhaps rightly, do not feel that human rights are part of their brief. When Canada's Prime Minister, Jean Chretien, visited Mexico in March, the question of Mexican human rights problems and the events of Chiapas in January were fresh in people's minds, although an agreement had apparently been reached between the Mexican government and the Mayan leaders of Chiapas. For his part, Mr. Chretien never raised the question of human rights. His visit to Mexico was concerned with trade. With the assassination of Luis Donaldo Colosio, the ruling Institutional Revolutionary Party (PRI) candidate for the Mexican presidency in this summer's elections, Chretien's chief concern appeared to be that rumors of political instability might dampen enthusiasms for Canadian investment in Mexico under the newly signed NAFTA agreement.

Warren Christopher's problems with China gave rise to similar questions. Unlike Mr. Chretien, he chose to raise the question of human rights when he visited China in March, and was told that this was none of his business. Both in China and Mexico the casual observer might be forgiven for speculating as to what is involved in our concern for human rights. In other words, are we talking linkage or leverage? When our governments do raise questions concerning human rights, are they linking human rights with trade, or cynically using the question of human rights to gain trade concessions? If Mr. Chretien refuses to do either, it may well be to his credit. After all, except for fringe groups on the left, one hardly ever hears of any concern for human rights in (say) Indonesia or East Timor. Guatemala is nearly forgotten. In South Korea we are more concerned with maintaining its military potential against the threat from the North. Perhaps we do not need to raise the question of human rights in these places; we have what we want already: a safe haven for investment for our own transnational corporations, a pool of cheap labor, and a stable political environment for trade and investment.

Beyond this, there is a deeper contradiction. Both in China and in Mexico there is another linkage, one that cannot be made or unmade in Washington or Ottawa. In both places problems with human rights are exacerbated by development policies pursued by those countries, policies which are vigorously supported and praised by governments in the United States and Canada. One might even say, given the pressures from the International Monetary Fund and other agencies, that these policies are imposed by our governments, through their strong influence in these agencies. While one hears talk of the markets in both Mexico and China, the labor market is of primary concern for many investors. Here there is, with the favored development policy defined as export-led free market capitalism, considerable pressure to depress wages; industrial production is principally for export, not for home consumption. And all this, as a Chinese ministry for social affairs noted in a recent report, can only lead to an increase in poverty, unemployment, and social unrest. And this is perhaps even more the case in Mexico, where it is estimated that five million campesinos will be added to the urban population as a result of the neoliberal economic policies enshrined in NAFTA.

Some of these campesinos may find employment. A majority will not. Already, many of the workers in the maquiladora are young, female, and short-term. For their men, cheap subsidized corn from the United States and the new agricultural policies of the Mexican economic miracle have already made agriculture, for them, a no-win adventure. So they move to the cities to join the ranks of the urban unemployed. There is also, for some, the safety valve of emigration to the United States or Canada. But while our governments have welcomed NAFTA, and indeed, worked hard to get NAFTA signed and delivered, we are less enthusiastic about absorbing the surplus population created by NAFTA, despite the fact that most of the immigrants, like those in the past, are hard-working, frugal, and self-motivated people who are willing to undertake work that most descendants of older waves of immigration are not interested in doing.

Henry Ford's genial notion of paying his workers $5 a day so that they could buy his cars is no longer the rule in the post-modern division of labor. Today's underclass is lucky to get the legal minimum wage; in Mexico its members live by their wits. In Adam Smith's day no one thought it odd that the craftsmen who made carriages for the wealthy could never ride in one. Today most workers in Mexican industry are unable to buy the products of their labor, most of which are in any case sold abroad. Except for some privileged elites, eighteenth-century workers were poor, and if they fell below the subsistence level, they were forced to beg or steal, just as are many Latin Americans today. Adam Smith cites a seventeenth-century magistrate to the effect that those whose labor did not bring in the ten shillings a week required to support a family of six - "the father and mother, two children able to do something, two not able" - "must make it up either by begging or stealing" (The Wealth of Nations). Smith obviously sympathized with the working poor, and was even somewhat optimistic, although he noted that while combinations of workers to raise wages were severely punished, combinations of masters to keep wages low went unnoticed. Theft was the common strategy for supplementing low or inadequate wages. It can be argued that the lower classes in most third-world countries are in a similar situation, along with increasing numbers in developed countries. In most Latin American countries, one routinely removes windshield wipers and locks them inside when a car is parked. In many North American cities, one has to take similar precautions with a car radio. Petty crime is all too often a question of survival.

From discussions about the Free Trade Agreement (FTA) and NAFTA it appears that those whose advice is most effectively heard by governments are not worried by the fall of real wages. In Canada and the United States, one now hears more often of a "recovery without jobs." And while things are not as bad as they were in eighteenth-century Europe or in the third world today, it is obvious that consumer demand cannot be maintained at the levels we are accustomed to. In the current recession, Statistics Canada noted a rise in consumer spending, but added that it was financed by savings. It is now a foregone conclusion that the consumer society as we have known it may be enjoyed by working classes only if several adults in a family are working. The days of stay-at-home housewives are as foreign to today's working class as they were to those of the 1840s in England. Unemployment over I 0 percent is now declared to be the natural rate in Canada, and it is a given that jobs lost to the South - whether this be the South of the United States, Mexico, or other low-wage areas - as a result of these agreements are gone for good.

For the ideologues of neoconservatism this is not a problem. A spokesman for Canada's Fraser Institute (a neoconservative think-tank in British Columbia) declared that the Canadian economy could do without any manufacturing sector. In the developed countries, in spite of recent riots in Paris over a lower minimum wage, it is assumed that the combination of more police, more prisons, a well-disciplined media, and increasing political apathy will enable the economy to function with lower wages, lower welfare and unemployment insurance rates, more nonunion jobs, and other features of "lean-mean" capitalism. While we in Canada and the United States deal with theft by having the highest prison populations in the developed world, begging is becoming more and more common. Today the streets of Ottawa remind me of those of La Paz, Bolivia, in the 1950s, and Ottawa is one of our more prosperous cities.

To the South, matters are even worse. When we first began to think about economic development, import substitution was the common strategy for third-world industrialization. For today's theorists, import substitution involves unacceptable protectionist practices, since its success depends on the protection of nascent enterprise from foreign competition. This means in fact the subsidizing of inefficient, or, at least, less efficient industries. But it did create some pressure for higher wages so that there would be greater effective demand for local manufactures. With export-led development this pressure, ineffective as it was, is entirely gone. There is active international competition for the lowest wages, and ideas such as community loyalty are regarded as relics of pre-industrial societies.

This very competition provides a strong incentive - or should we say a strong temptation - to governments to discourage such activities as union organizing to the point where real human rights problems arise, and indeed have already arisen in many places. Union organizing is not tolerated. If necessary, death squads will be employed to deter union organizing. Given the way the international labor market works today, this is almost "necessary." If wages are allowed to rise, the industry will move elsewhere. We tend to associate this with fly-by-night operations, but if we think twice we can recall countless serious and sophisticated industrial operations in Ontario, Quebec, and the American rust bowl that have packed up and moved South in the past ten years. We used to think of ghost towns in terms of mining, logging, resource industries. Now, as often as not, they are industrial.

Neoliberal policy (in North America it is called neoconservative policy) is centered on the conviction that the discipline of the market is necessary for economic efficiency. In 1944 Karl Polanyi published The Great Transformation (Beacon Press, 1954), a book dedicated to the thesis that a society integrated by a self-regulating market inevitably creates self-destructive pressures, so that historically, toward the end of the nineteenth century, conservative governments, in self-defense, introduced the beginnings of what we now know as the welfare state: workmen's compensation, health insurance, minimum-wage legislation, abolition of child labor, legalization of unions, and other measures which all tend to protect small players from the destructive forces of the market. Orthodox economists deplore these measures as "market imperfections," but as John Kenneth Galbraith noted in response to a Hungarian journalist with respect to Friedrich Hayek's market model, "...it was a design that we in the West would not care to risk" (Manchester Guardian Weekly, February 4, 1990). We try to maintain at least the rhetoric of equality as a social ideal, but markets do not lead to equality. On the contrary, they systematically exacerbate social inequalities unless their impact is limited by social legislation, trade unions, and other "market imperfections." We have forgotten our history; everywhere there are strong pressures to rollback the welfare state, which, it is said, we can no longer afford. We expose ourselves to the destructive dimension of market economics. And in third-world countries, one form that this destructive tendency takes is that of systematic abuse of human rights.

The January events of Chiapas were triggered by Mexico's economic reforms, that is, by a concerted effort to install lean-mean capitalism on a national scale, including the commercialization of the communal lands (ejidos) of native communities. In the reforms of the 1850s, this led to the loss of land by indigenous communities and individuals, the formation of the hacienda system (the Spanish colonial regime had protected the communal lands of indigenous communities), debt peonage, and eventually, to the revolution of 1910. Zapata's cry of tierra o muerte is now heard again. We have come full circle. When land is defined as a commodity under these conditions, it is almost inevitable that arable land possessed by indigenous communities or individuals will be taken over by more powerful players in the marketplace - haciendados in the nineteenth century, modern capitalist agriculture today. In Chiapas, the reaction was only to be expected. But even after Chiapas, the commercialization of ejido lands stands as part of Mexico's neoliberal policy. Peasant agriculture stands condemned as inefficient, and the peasants feel strongly that they are condemned with it. Their only recourse is to join the ranks of the urban unemployed, living by their wits beyond the margins of society.

There was a time when, in discussions on third-world development, many in the South read the European and North American message as: "We had our nineteenth century; now you can go and have one too!" This can be true in more ways than one. The logic of a society completely integrated by a self-regulating market is to create the possibility and often the reality of economic growth, while also creating a permanent underclass of poverty, since the benefits of growth flow in greatest share to the local and distant elites who control the process. And this leads inevitably to serious human-rights problems. As is well known, in Brazil hundreds of teen-agers, and even younger children, living by their wits in the cities, have been eliminated by death squads. They do not murder children as a public service; there is a market for their services, just as there is no place in the market for their victims. For these children, as for the family mentioned by Adam Smith, crime and begging are the only means of survival. There is nothing else. Neoliberal policy and reliance on the market makes it worse, although attempts by governments or NGOs to remedy the situation are often met by serious capital flight on the part of the elites.

The situation is in fact desperate, and while one cannot blame neoliberal strategies for all of it, they have made the situation worse, not only in the third world but in developed areas as well. Already there has been a reaction in Britain, from within the Conservative party, to Thatcher's lean-mean capitalism, although critics would argue that the return to a universal market discipline begun under Thatcher is still extremely destructive. To cite one example, social assistance costs have increased phenomenally. In Ontario, after ten years of neoconservative rule, they have doubled. Some of this is simply the recession, but the way in which the economy was managed is a significant part of it.

This is not inevitable. In East Asia, the "Tigers" have pursued their development with vigorous industrial policies that have no place in the "pure" market model. Like Galbraith, they have been unwilling to let the market make all their development decisions, and they have defended their institutions against the ideologies of free trade. And we should not forget that for Polanyi the market is not simply a natural institution. It is created by legislation.

All this obviously goes beyond the problem of human rights as we usually define it. Western nations have always been skeptical about the cluster of economic and social rights in the UN declaration of 1948. Yet the negation of these rights almost inevitably leads to actions, on the part of those deprived, that are met with a real denial of political and civil rights. Any effective political and social organization on the part of the poor is opposed by force. Such organization is incompatible with a market-driven society. It is not to be allowed, because it necessarily limits the scope of the market, and the market is sacred. It also involves some hard social choices. This is hardly a new discovery. "Capitalism as a means toward freedom and equality," wrote Peter Drucker in 1939, "had been proved illusory by 1848..." (The End of Economic Man). There will be no end to this problem, since people will not give up in their search for freedom and equality. Can the developed nations impose their own standards of human rights on developing nations even as they impose policies that make human rights impossible to realize? Perhaps we need to look again at our basic policy decisions. They promise nothing but trouble in third-world nations, and we face serious problems at home. Have we "won" the cold war only to be defeated by our own propaganda?

Blessed Were the Poor

During the Great Depression About the only thing Affordable was good taste. So we had that. It took Us several decades To realize that's why The era was called Great