Imperialism in the Twenty-First Century. John Smith
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is being increasingly inundated with salt water, accelerating migration into the cities. As a result Bangladesh’s capital city, Dhaka, whose population has doubled in the last twenty years and is already one of the largest and most densely populated cities in the world, is growing by more than 600,000 people each year.6 Over-extraction of fresh water is depleting Dhaka’s aquifers and, worse still, exposing them to contamination with seawater. To cap it all, Dhaka sits atop an active earthquake zone. Seismologists warn that a Richter 7.5 earthquake would reduce Dhaka to rubble and 80,000 buildings could go the same way as Rana Plaza. The predicted scale of destruction is that high because, surrounded by marshland, much of Dhaka’s chaotic, unplanned expansion has been vertical rather than horizontal, typically with the same standard of construction that was exhibited at Rana Plaza.7 None of these negative consequences of capitalist development figure in calculations of Bangladesh’s GDP, yet they are real, and are borne by its workers and farmers and by its natural environment. They pay the price, but who profits? How much do the proceeds of their exploitation fuel capitalist development in Bangladesh, and how much of it feeds capitalist accumulation in imperialist countries?
Many commentators have drawn an analogy between the Tazreen and Rana Plaza disasters and notorious disasters in the United States and Europe more than a century ago, arguing that by catalyzing concerted action to tackle underlying causes these recent tragedies could force Bangladesh’s garment factory bosses to finally clean up their act. Thus Amy Kazmin, writing in the Financial Times, argued:
Across the globe, industrial disasters have proved effective catalysts for change. New York City’s 1911 Triangle Shirtwaist Fire, in which 146 garment workers—mostly women—were killed in part because fire exits were locked, helped spur the growth of the International Ladies’ Garment Workers’ Union, which successfully fought for better conditions for factory workers, including safety. Many now say that the Rana Plaza disaster—which came five months after a fire at another Bangladeshi factory, Tazreen Fashions, killed 112 people—could start to force similar change.8
There is no doubt that the Rana Plaza disaster will spur the struggle to unionize Bangladesh’s garment industry. But the FT journalist forgets two things. The response of garment employers to the rise of the ILGWU was to move production to non-union states in the U.S. South, and, eventually, out of the United States altogether, to countries like Bangladesh. Today, just 2 percent of the clothing worn in the United States is actually made there. Peter Custers points out the other weakness in the naïve liberal view expressed by Amy Kazmin:
It is necessary … to be aware of structural differences between nineteenth-century British industries and those in contemporary Bangladesh. For, unlike owners of the former, Bangladeshi garment owners are at the lower end of an international chain of subcontract relations, extending from production units in Bangladesh, via intermediaries, to retail trading companies in the countries of the North…. Garment production has been relocated to, and re-relocated within, the Third World, in order to tap cheap sources of wage labor. While local entrepreneurs obtain a part of the surplus value created, they do not get the major share. Thus, whereas the extraction of surplus value is organized by Bangladeshi owners, its fruits are overwhelmingly reaped by companies in the North.9
The collapse of Rana Plaza not only shone a light on the pitiless and extreme exploitation of Bangladeshi workers. It also lit up the hidden structure of the global capitalist economy, revealing the extent to which the capital-labor relation has become a relation between Northern capital and Southern labor. The garment industry was the first industrial sector to shift production to low-wage countries, yet power and profits remain firmly in the grip of firms in imperialist countries. This reality is very different from the fantasies projected by neoliberalism’s apologists. Few informed observers would dispute that Primark (JCPenney in the United States), Walmart, M&S, and other major UK and U.S. retailers profit from the exploitation of Bangladeshi garment workers. Why else have they raced to outsource the production of their clothes to the lowest of low-wage countries? A moment’s thought reveals other beneficiaries: the commercial capitalists who own the buildings leased by these retailers, the myriad companies providing them with advertising, security, and other services; and also governments, which tax their profits and their employees’ wages and collect the VAT on every sale. Yet, according to trade and financial data, not one penny of U.S., European, and Japanese firms’ profits or governments’ tax revenues derive from the sweated labor of the workers who made their goods. The huge markups on production costs instead appear as “value-added” in the UK and other countries where these goods are consumed, with the perverse result that each item of clothing expands the GDP of the country where it is consumed by far more than that of the country where it is produced.10 Only an economist could think there is nothing wrong about this!
All data and experience, except for economic data, point to a significant contribution to the profits of Primark, Walmart, and other Western firms by the workers who work long, hard, and for low wages to produce their commodities. Yet trade, GDP, and financial flow data show no trace of any such contribution; instead, the bulk of the value realized in the sale of these commodities and all of the profits reaped by the retail giants appear to originate in the country where they are consumed. Exploring and resolving this conundrum is a central task of this book. Our first step is to examine the social, economic, and political relations between workers and employers that are woven into the fabric of each article of apparel produced in low-wage countries like Bangladesh and sold in shopping malls across the imperialist world, where more than 80 percent of garments made in Bangladesh are sold. This will then be augmented by a forensic examination of two other representative “global commodities”: the Apple iPhone and the cup of coffee.
THE T-SHIRT
In The China Price, Tony Norfield recounts the story of a T-shirt made in Bangladesh and sold in Germany for €4.95 by the Swedish retailer Hennes & Mauritz (H&M).11 H&M pays the Bangladeshi manufacturer €1.35 for each T-shirt, 28 percent of the final sale price, 40¢ of which covers the cost of 400g of cotton raw material imported from the United States; shipping to Hamburg adds another 6¢ per shirt. Thus €0.95 of the final sale price remains in Bangladesh, to be shared between the factory owner, the workers, the suppliers of inputs and services and the Bangladeshi government, expanding Bangladesh’s GDP by this amount. The remaining €3.54 counts toward the GDP of Germany, the country where the T-shirt is consumed, and is broken down as follows: €2.05 provides for the costs and profits of German transporters, wholesalers, retailers, advertisers, etc. (some of which will revert to the state through various taxes); H&M makes 60¢ profit per shirt; the German state captures 79¢ of the sale price through VAT at 19 percent; 16¢ covers sundry “other items.” Thus, in Norfield’s words, “a large chunk of the revenue from the selling price goes to the state in taxes and to a wide range of workers, executives, landlords, and businesses in Germany. The cheap T-shirts, and a wide range of other imported goods, are both affordable for consumers and an important source of income for the state and for all the people in the richer countries.”
The central point Norfield is making cannot be emphasized enough, because so many liberals and socialists in imperialist countries try very hard to put it out of their minds. H&M makes handsome profits, to be sure, but these are dwarfed by the state’s take, once taxes on wages and profits of H&M and suppliers of services to it are added to its VAT receipts. In 2013, the tariffs charged by the U.S. government on its apparel imports from Bangladesh alone exceeded the total wages received by the workers who made these goods. The state uses this money, as we know, to finance foreign wars, health care, and Social Security, and even returns a few pennies to the poor countries in the form of “foreign aid.” As Tony Norfield argues, low wages in Bangladesh help explain “why the richer countries can have lots of shop assistants, delivery drivers, managers and administrators, accountants, advertising executives, a wide range of welfare payments and much else besides.”12 His blunt conclusion: “Wage rates in Bangladesh are particularly low, but even the multiples of these seen in other poor countries point to the same conclusion: oppression of workers in the poorer countries is a direct economic benefit for the mass of people in the richer countries.”
In Norfield’s account the Bangladeshi factory makes 125,000