Doug
>Democratic Development as the Fruits of Labor
>
>Keynote Address
>Industrial Relations Research Association
>Boston January 2000
>
>Joseph Stiglitz
>World Bank
>
>Development Strategies and the Labor Movement
>
>Objectives of Development
>
>Today, there is growing recognition that the objectives of
>development go beyond simply an increase in GDP: we are concerned
>with promoting democratic, equitable, sustainable development. If
>that is our objective, then it is natural that we should pay
>particular attention to the issue of how the plight of workers
>changes in the course of development; and we should look not only at
>their incomes, but broader measures--at their health and safety, and
>even at their democratic participation, both at the workplace, and
>within the broader political arena. Workers' rights should be a
>central focus of a development institution such as the World Bank.
>
>I am just completing serving three years as Chief Economist of the
>World Bank. During that time, labor market issues did arise, but
>all too frequently, mainly from a narrow economics focus, and even
>then, looked at even more narrowly through the lens of neo-classical
>economics. Wage rigidities--often the fruits of hard fought
>bargaining--were thought to be part of the problem facing many
>countries, contributing to their high unemployment; a standard
>message was to increase labor market flexibility--the not so subtle
>subtext was to lower wages and lay off unneeded workers. Even when
>labor market problems are not the core of the problem facing the
>country, all too often workers are asked to bear the brunt of the
>costs of adjustment. In East Asia, it was reckless lending by
>international banks and other financial institutions combined with
>reckless borrowing by domestic financial institutions--combined with
>fickle investor expectations--which may have precipitated the
>crises; but the costs--in terms of soaring unemployment and
>plummeting wages--were borne by workers. Workers were asked to
>listen to sermons about "bearing pain" just a short while after
>hearing, from the same preachers, sermons about how globalization
>and opening up capital markets would bring them unprecedented
>growth. And nowhere, in all of these discussions, did issues of
>workers' rights, including the right to participate in the decisions
>which would affect their lives in so many ways, get raised?
>
>It was finance ministers and central bank governors--and outsiders
>who often seemed to be representing international financial
>interests--that had the seats at the table, not labor unions or
>labor ministers. Indeed, even as debate on reforming the
>international economic architecture proceeded, these people, who
>would inevitably face much of the costs of the mistaken policy, were
>not even invited to sit in on the discussions; and I often felt
>myself to be the lone voice in these discussions suggesting that
>basic democratic principles recommended that not only should their
>voice be heard, but they should actually have a seat at the table.
>To be sure, increasing attention did get focused on safety nets,
>but: was it simply an attempt to assuage feelings of guilt,
>providing too little, too late, or even worse, an attempt to
>moderate public criticism of "globalization without a human face?"
>The suspicion of the international institutions evidenced in Seattle
>was perhaps the not unsurprising outcome of the attitudes and
>policies of recent decades.
>
>As Chief Economist, I faced several problems. I simply could not
>ignore the standard arguments about the adverse effects of
>inflexible labor markets--and while I agreed with some of the
>arguments, there were others that left me unconvinced. I had to
>tackle those issues on terms that the economists themselves--viewing
>the world from their particular perspective--could understand. But
>there was a more positive agenda: Improving labor relations,
>including promoting core labor standards.