‘Sweatshops are better than subsistence agriculture.’

Ann Bernstein heads the Centre for Development and Enterprise, South Africa.

The Case for Business in Developing Economies is a long and not particularly snappy title for a book. However, you can see why Penguin chose it, because Bernstein has written a long argument - a ‘case’ – belligerently presented - which sets out to skewer some of the more illogical features of the 'movement' for Corporate Social Responsibility (CSR.) In short, Bernstein’s contention is that ‘Capitalism has won, but business is on the defensive.’  Business should stop apologising, and start propagating ‘the phenomenal benefits of competitive capitalism. ’

CSR may be Bernstein’s stated target, but this seemingly innocent concept allows her to strike at the very heart of development thinking. In a particularly provocative section, she exhorts the benefits of Coca-Cola, Unilever, Daewoo, SABMiller and De Beers as having succeeding in greatly improving the lives of millions of people in developing countries. De Beers' operations in Botswana are cited, in particular, as having generated the most spectacular direct benefits for the government of a developing country in history. Bernstein does not concern herself with the complexity of wealth distribution though, a subject she consistently avoids, or states (much like Milton Friedman) as being outside the responsibilities of corporations.  

Business is presented as being an unambiguously positive and ‘optimistic’ force. The limited liability corporation hailed as ‘the greatest single discovery of modern times,’ and such corporations are presented as ‘transition belts of modernity’ bringing with them spectacular social goods of human rights, democracy and openness. A particularly compelling section details how the development of a sound business environment generally stimulates the growth of the type of complex internal institutions - corporate law, transport infrastructure and self-regulating bodies - characteristic of modern and prosperous societies. Bernstein however argues that there has developed a disdain and antagonism for business, with anti-capitalist sentiments becoming the norm - notably among religious and academic leaders. NGOs – often the purveyors of anti-capitalist rhetoric – are attacked as claiming, but not representing, the rights of the people they advocate for. The Fair Trade movement is described as ‘economically unsound’ - low prices beingdue to overproduction, and fair trade does nothing solve this problem.

Business is that answer, and one thing is very clear - Bernstein is pro-business. She forcefully and mostly persuasively proclaims its successes with a directness that seems to have little time for a wayward anti-global opposition which has tried to moderate the internal operations of corporations. The work of globalisation’s most high-profile critic, Naomi Klein suffers in particular from Bernstein’s unromantic analysis. Klein’s No Logo is described as having ‘confused media hype and advertising with the whole of social reality; it fails to understand the nature of poverty in poor countries.’ This is a point Bernstein makes particularly strongly – those who profess to be on the side of developing economies have little idea of what is good for them.

Well-meaning campaigns against sweatshops and child labour are criticised because the interests and ambitions of Western activists should not be confused with the interests of developing country populations on whose behalf they frequently claim to speak.  The low wages paid in sweatshops allow developing countries to break into world markets – a view purportedly also advocated by US economist Paul Krugman. Child labour forms a neat example of Bernstein’s views of how we should regulate the products of poverty in developing countries –  ‘the only viable solution…is not to ban it (child labour), which would make families poorer and children worse off, but to help families get richer so that children don’t have to work.’

CSR might claim to be 'capitalism with a human face,' but for Bernstein, the globalisation that produces sweatshops and child labour has its own face. This is ‘millions of people who are finally getting opportunities to work, get off the land, and move off the most basic level of survival.’ The key question is how can the playing field of global trade be levelled to make these gains available for the majority.  

Bernstein states that part of the reason to write such a book was to provide business with a framework of ideas to communicate its real contribution. However, I could not help but wonder whether international corporations such as Coca-cola or Unilever are really in need of such help. Whilst the author may bemoan the concessions made to CSR - campaigns for higher wages, working conditions and more consciousness of environmental concerns - it would seem that such small restrictions on operations are unlikely to have a radically negative effect on business operations. The question therefore must follow – if business is winning/won then in what way is it truly 'on the defensive?' Perhaps Bernstein – persuasive in so much of what she argues – has fallen in to the trap of believing the rhetoric of CSR above the reality of business. CSR may be ineffective, but if it doesn’t work, then what’s the worry? Bernstein may win the argument, but winning the argument is not a solution, and she provides few alternatives. Levelling the playing field of international trade is a more difficult goal.   

Further readings

Greg Mills - Why Africa is poor

Paul Collier - The Bottom Billion   

Magnus Taylor, Royal African Society