Roots of Insecurity: Why American Workers and Others Are Losing Out

In 2004 the International Labor Office (ILO) published a voluminous though mistitled report called “Economic Security for a Better World.” This is in fact a treatise about the economic insecurity that has been afflicting the world’s working people for the past several decades. It is also an argument criticizing the “liberalization context” of insecurity and the policies that have deliberately fostered it. Liberalization, says the ILO, is the objective of policies formulated by international financial institutions in concert with the U.S. Treasury—policies that are based on the “Washington Consensus.”

The ILO defines liberalization in terms of certain “key policy commitments,” all of which affect the situation of workers, though at times only indirectly. One of the crucial commitments is a reduction in the size and role of the public sector of given countries, which usually results in cutbacks in public employment and productive public assets and the elimination of much of the state’s regulatory capacity. Other key commitments include unobstructed capital mobility, regardless of the effects on the value of a country’s exchange rate and ability to finance domestic business (hence to sustain employment levels), and labor market “flexibility,” a euphemism for removing (or restricting) such labor market “distortions” as trade unions and minimum wage laws and, in brief, subjecting workers to the dictates of supply and demand.

The Washington Consensus does not, in fact, govern the economies of the leading industrial countries, but its doctrines are broadly shared by their leading economists. The rights of labor and various labor standards are seen as “rigidities,” to be modified or if possible removed. In his Global Labour Flexibility, Guy Standing, a senior economist with the ILO, writes, “In the 1980s . . . those favoring the cold bath approach were back in ascendancy, and it is no coincidence that in the latest era of insecurity no fewer than eight Nobel Prizes have been awarded to economists from the University of Chicago, where . . . the Chicago school of law and economics depicted regulations as impediments to growth . . . . In the 1980s and 1990s, security has been derided as the source of “rigidity” and dependency . . . .” This “neo-classical paradigm” is the very antithesis of what the ILO stands for—thus another ILO writer: “It essentially ignores the value of labor standards as instruments of social justice.”

Nelson Lichtenstein notes the disdain with which this concern is viewed by top government representatives. “At a 1998 meeting of the G-8 industrial nations in Cologne, a delegation of trade unionists, representing virtually all the big labor confederations in the developed world, found themselves completely stymied when they tried to put international labor standards, financial market regulation, and compensatory help to displaced workers on the agenda. In an...