NYU JILP Symposium: John Ohnesorge Responds to Jed Kroncke

[John Ohnesorge is currently Professor of Law at the University of Wisconsin Law School .]

This post is part of the NYU Journal of International Law and Politics Vol. 46, No. 1 symposium. Other posts in this series can be found in the related posts below.

I completely agree with Professor Kroncke that the world of law and development, both scholarship and practice, has not paid enough attention to labor, and applaud him for addressing this deficit. Even defining development in purely economic terms, the regulation of labor is obviously relevant to GDP growth, as well as to how the economic pie is distributed. If one defines development to also include democratization, then the legal regime governing the ability of labor to organize and to participate in the political process is obviously important as well. As Professor Kroncke argues, labor has clearly been a force for democratization in some successful political transitions, and in established democracies organized labor generally plays an important role in determining economic and social policy. My response to Professor Kroncke’s fascinating paper is to offer some ideas about why labor issues seem so hard for the law and development regime to take on, and to suggest a framework for further research on that topic. The first part of my response focuses on the general issue of how legal fields get on the law and development agenda, and the second part suggests why labor issues may be especially likely to be excluded when countries are pursuing development strategies associated with the “developmental state” concept, which many are now doing.

A legal technical assistance effort, whether carried out by an organization like the World Bank or by an arm of a national government like USAID, will involve an international negotiation that can be modeled in terms of what Robert Putnam called “the logic of two-level games.” [Robert D. Putnam, Diplomacy and domestic politics: the logic of two-level games, 42(3) Int’l Org. 427 (1988).] The immediate actors on both the exporting and importing sides of the legal assistance negotiation will not be unitary free agents, but will instead be constrained by the contexts within which they operate. The image in Putnam’s classic article is of the negotiators each simultaneously being engaged in two games, one with each other, and one with their respective national constituencies. To succeed, legal reform initiatives must have made it to each side’s own list of desired reforms, and then have survived the negotiation process between the two sides.

Viewing expansive legal protections for organized labor through this lens, it should not surprise us if they often don’t survive the two-level game, while property rights or other reforms seem more likely to. From the point of view of the law reform exporter, even if the immediate actor, for example USAID under President Obama, wants to support organized labor abroad, the ability of USAID to pursue that position in international legal aid activities is likely to be constrained by the influence in U.S. domestic politics of business interests who do not favor the rise of organized labor in countries within which they produce. Law reform projects focusing on property rights or contract law are less likely to encounter opposition from the exporter’s local constituents, so for that reason alone are more likely to stay on the international agenda. Legal development projects of the World Bank or the IMF are not as sensitive to national politics, but they are constrained by the politics of their governance structures, which are themselves responsive to the wishes of national governments.

With respect to importing side of the game, even if international actors do decide to actively advocate for expansive labor protections, developing country governments may have reasons for not sharing that enthusiasm, even if they are generally in favor of promoting development, and even if they are democratic. The role of organized labor in the development context will depend on what general model of development a country follows, and that will depend on both the government’s own preferences, and the constraints the local political and social context places upon the government. If local forces are too strongly arrayed against organized labor it will not succeed as a law and development project, even if both the local government and the international actor would otherwise be in favor. On the other hand, if the developing country government and its local constituencies both favor strong protections for organized labor one might expect them to just enact them on their own, with no international involvement.

In addition, even if one feels strongly committed to organized labor, it is important to explore why even governments who sincerely favor development might approach it with caution. Here it will be helpful to consider Professor Kroncke’s critique of China’s corporatist labor regime in light of Northeast Asia’s “developmental states,” which were lauded by the World Bank as examples of “growth with equity,” [World Bank, The East Asian Miracle (1993).] and which are often cited in current attempts to theorize more state-centric, post-Washington Consensus approaches to development. China’s authoritarian corporatist labor regime is in some ways unique, but it is not so different from the approach followed by South Korea during it’s high growth era of the 1970s and 1980s, notwithstanding that China’s government purports to be of the Left, while South Korea’s was considered to be of the authoritarian Right. [On South Korea’s labor regime, see generally, James M. West, South Korea’s Entry Into the International Labor Organization: Perspectives on Corporatist Labor Law During a Late Industrial Revolution, 23 Stan. J. of Int’l L. 477 (1987).] Even if they are in favor of rapid, market-oriented economic development, it is not surprising that authoritarian governments such as China’s are attracted to state-dominated systems of corporatist labor regulation for purely political reasons. In my view, Professor Kroncke’s paper raises perhaps even more challenging issues for countries such as Brazil, where he now works, that wish to be “new developmental states,” to be vibrant democracies while also retaining a large role for the state in supporting and guiding economic development.

Professor Kroncke does not focus on the different implications that might follow from strong unions in the private versus the public sector, but while they both raise challenges for an erstwhile developmental state, the implications are different. Looking first at public sector unions, the East Asian developmental states were characterized by civil service bureaucracies known for being highly meritocratic and professionalized, yet also lean in the sense of not constituting a major drain on government resources. This was certainly part of the reason observers described the East Asian developmental states as “hard” with respect to social and political forces, able to enjoy a comparatively high level of autonomy and flexibility in implementing industrial policy. Strong public sector unions may be desirable for other reasons, but it seems clear that they contribute to a politicization of the bureaucracy, they introduce rigidities in policy implementation, and they may contribute to an expensive bloating of the public sector workforce. Any developing country interested in the developmental state model will have to grapple with how to maintain the insulation and technocratic expertise of its economic bureaucracy, and will also have to keep public sector spending under control so as to maintain fiscal discipline. Strong unionization rights in the public sector will be in some tension with these goals for any developmental state, even one strongly committed to democracy. An expansive role for private sector unions will be in some tension with another characteristic of the classic developmental state, which is the ability to keep wage growth roughly in line with productivity gains. This is important for the export competitiveness of local manufacturers, as well as for the attractiveness of the country for foreign direct investment. For a developmental state to be truly developmental wages must rise, but export-orientation and openness to FDI both require that wages remain globally competitive. A government that wishes to purse a developmental state model involving export orientation and attractiveness to FDI may be reluctant to share control over wages and other labor issues with truly independent unions, even if it is otherwise committed to democracy.

Although it would be quite an irony if true, the more free-market development strategies associated with neoliberalism might be able to accommodate strong unions as effectively as developmental state approaches that call for the state to be actively involved in administering industrial policy and maintaining national competitiveness. To neoliberalism, strong unions might be an unfortunate cost of doing business. To the developmental state model, however, strong unions present almost existential challenges, certainly in an authoritarian context such as China’s, but perhaps also in a democracy. Professor Kroncke’s paper challenges us to explore these important issues, and it will be interesting to see how they play out as more developing countries experiment with the policies of the developmental state.