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Kriesler, Peter --- "Introduction - Economic Dimensions of Human Rights: an Overview" [1998] AUJlHRights 1; (1998) 4(2) Australian Journal of Human Rights 1

Introduction - Economic Dimensions of Human Rights: An Overview

Peter Kriesler[1]

The situation on the wharves, with the confrontation between Patrick Stevedores and the Maritime Union of Australia, is extremely topical. Although the industrial relations and economic aspects of the situation are receiving the most coverage, the human rights issue are of equal importance. The question of the rights of employees, viz, the right to assemble and to choose whether or not to belong to unions, the rights of the unions and the right to employment are all crucial issues in the current confrontation. In order to understand the broader implications, an analysis of the economic dimensions of human rights, particularly the rights of employees is essential.

In Eastern Europe human rights in the former Warsaw pact countries have been an early casualty of economic reforms. The events in Bosnia are difficult to contemplate, much less to understand. Nevertheless, they have been exacerbated by the economic deprivation arising from the transition from socialism to market economies. Again, the economic dimension provides an important foundation for understanding what is happening, and why, to human rights in those countries.

In the countries which used to be called the "Asian tiger" economies, one of the most controversial debates is that relating to the issues of rights associated with the economic development process. Many argue that there is an inevitable trade-off, certainly in the short run, between economic rights which require the achievement of reasonable living standards, and other human rights. Certainly this has been used by many authoritarian regimes to justify their oppression of basic rights.

In Australia, the US, England and in the other countries of the European Union, fundamental economic rights associated with social welfare provisions by the state have been seriously eroded in an ongoing process which threatens the basic right to an adequate standard of living.

Around the world, the basic right to employment is now under threat. In very few countries are employment levels currently at acceptable levels, and they are unlikely to be so in the foreseeable future.

These issues highlight the importance of economic and social rights, and of the important role of the economic analysis of human rights, as well as indicating their topicality. Many of the issues associated with the economic dimensions of human rights are being debated in the public arena, though consideration of the underlying economic aspects of those rights has been neglected.

This special issue of the Australian Journal of Human Rights focuses on these concerns. The contributors, who cross a range of disciplines, all seek to report on the economic dimensions of human rights. In some ways, the contents of this volume represents a departure from the normal substance of the journal, as the approach most of the authors take is to focus on the economic, rather than legal, aspects of the problems. In a very interesting paper in the previous issue of the journal, Peter Bailey took the more standard approach in an article which examined a fundamental economic right, viz "the right to an adequate standard of living".[2] The analysis in that paper considered the implications for the legal system of an attempt to adequately provide for the implementation of these rights. The papers in this volume examine similar issues, but from the viewpoint of their economic basis. In other words, the papers give an economic analysis of human rights as well as providing an examination of economic rights. Clearly, economic and human rights are closely related, despite the relative neglect of the former by most human rights groups. The contributors to this volume are attempting to ameliorate this neglect.

Economics can contribute to the analysis of rights in a number of ways. Two important concepts underlying economic analysis which are of extreme relevance to the analysis of rights are those of trade-offs and of opportunity costs. The opportunity cost of an action, such as the implementation of human rights legislation, is not just the actual costs involved in the implementation of those rights. Opportunity costs are the costs in terms of all other opportunities foregone as a result of that action. In other words, they would include the costs implied by loss of the benefits from all the other actions which could have been undertaken with the resources used to implement those rights. This is an important consideration when attempting to evaluate the net benefit to society and to individuals of implementation of rights. Related to the concept of opportunity cost is the concept of trade-offs. These are important due to the arguments which portray human rights issues as being antagonistic to economic growth. To the extent that this is the case, and many of the contributors in this volume do not accept that it is, there would be a trade-off between economic rights which rely on economic growth to deliver improvements in living standards, and other human rights. However, as the discussion of development in Eastern Europe has already indicated, the concept of a simple one-for-one trade-off oversimplifies the story:

One often comes across the argument that, in the countries of the Third World, what the common people need are minimum facilities of shelter, food and clothing, requiring drastic changes of government priorities. Therefore, the argument runs, authoritarianism can bring about the desired results: so-called human rights are to be restricted for the broader goal of national development. Such arguments are fallacious. They are advanced by those who represent vested interest or those who do not know the meaning of human rights. While pursuing the goal of national development, there is no reason why fundamental human rights should be denied to an individual.[3]

The discussion of rights is further complicated by the argument that as well as this trade-off, there is a further trade-off between rights and efficiency. This argument permeates much of the debate about the economic rights associated with the right to form unions, the right to employment, and the right to a minimum standard of living enacted through minimum wage legislation or through adequate provision of social security. In all these cases, some economists and politicians argue that these rights conflict with other social and economic objectives, particularly economic efficiency. In other words, the opportunity cost of the enforcement of these rights, is a reduction of economic efficiency which, in turn reduces economic growth and so reduces the total amount available for the rest of society. In considering this argument, emphasis must be given to the formal separation, in economic theory, between the concepts of efficiency and of equity. There are powerful theorems which suggest that the first does not imply the second. In other words, even if an economy becomes more efficient, and so some are able to enjoy a higher standard of living, this does not mean that the fruits of that increased prosperity will be shared by all. In particular, it is often the same people whose rights have been sacrificed in order to increase economic growth who benefit the least.

The papers in this volume all explore aspects of these issues. The most topical of these, certainly with respect to current debate in Australia, are the issues relating to the rights of employees and the relationship between industrial relations and human rights. These are examined in a more general context, in the papers by Braham Dabscheck and Chris Nyland and Robert Castle.

Dabscheck's paper examines the rights of employees, and considers the issue of the right to belong to a union, which is currently extremely contentious within the context of the industrial unrest on the waterfront; where it is one of the key issues being played out between Patrick Stevedores and the Maritime Union of Australia. He shows that the issues are not new, and examines the contributions to the debate by the Webbs, who believed that collective bargaining was essential to preserve the rights of workers. They advocated the establishment of "minimum terms and conditions of employment" which have become operational in the instruments established by international treaties and conventions.

Dabscheck argues that the theme of freedom of choice in employment is an important principle in which human rights and industrial relation issues correspond. In examining this principle, he concentrates on the questions of slavery and forced labour, prostitution, child labour, discrimination against women, trade unions and safety in the work place.

Nyland and Castle examine the origins of employee rights, identifying four main sources: human rights, statutory rights, contractual rights and enterprise rights. They critically examine the movement towards allowing market forces and individual bargaining to determine these rights; outlining the flaws in the economic arguments and demonstrating the reasons why markets cannot allocate employee rights "optimally" or "efficiently". These hinge on the fact that the theoretical conditions under which markets can "deliver the goods", can not apply to most markets, especially the labour market. In other words, Nyland and Castle provide an economic analysis of why market forces cannot guarantee an adequate allocation of employee rights. As a result, there is a strong case that social institutions are needed to enforce these rights.

Nyland and Castle also critically examine the trade-off argument that, because of the high opportunity costs of rights, many countries cannot afford them. In particular, the rights/efficiency tradeoff is argued to result from the fact that employee rights increase labour costs and so reduce the country's competitive edge. This argument is currently being used to oppose the rights of maritime workers to belong to unions on the basis of the economic cost of unions to the companies and the rest of the economy. Nyland and Castle critically examine the claim, discussed earlier, that there is a trade-off between efficiency and human rights. They demonstrate that, in fact, efficiency and productivity can be enhanced by enforcement of rights, so that the claimed trade-off is false. This is an important point, because, by establishing the counter claim for the trade-off they destroy the prima facie case that human rights are always costly in terms of economic resources. Rather, what is established is the lack of a general argument, so that each specific instance must be examined in its own right.

Damian Grace takes up this theme, which runs through most of the papers, by critically examining the supposed trade-off between human rights and the material development of peoples. In doing so, he acknowledges that "human rights which mean anything are not without costs". Importantly, he demonstrates that the argument of economic efficiency is used to justify the suppression of rights not only in developing economies, but also in countries such as Australia. The focus of his paper is on the behaviour of businesses, which "treat questions of human rights in most countries as internal matters which have nothing to do with them." He argues that this is often used to provide a simple rationalisation for large corporations to ignore human rights abuses in the countries with which they are dealing, and, more particularly, within their own branches and subsidiaries within those countries. He examines the important debate as to whether human rights are relative to particular cultures or whether they are universal, concluding that there is a strong basis for some universal ethical requirements, especially with respect to business probity.[4] Further he discusses some important examples where business and human rights have developed together, but concludes that there is a need for international institutions to ensure that human rights are given effect.

Burgess and Mitchell examine the question of the right to employment in the context of recent Australian experience. They evaluate the argument that, because there is a trade-off between employment and economic efficiency and growth, the right to employment imposes unacceptable social costs. Their counter argument is that the "scale of losses [caused by the resultant inefficiency] is dwarfed when compared with the costs of unemployment". In doing so they deny that there is a nexus between efficiency and economic growth. These costs are associated with both economic costs and costs in terms of loss of freedom, social exclusion, rights to shelter, reasonable levels of health inter alia. Within this context they look at the important question of whether the right to employment should be regarded as a fundamental human right, maintaining that it is. They further demonstrate that the right to work is "inexorably linked" to full employment within each nation. Since full employment has not been achieved in almost any country since the early 1970s, they propose a novel scheme, which they call the "buffer stock employment model" as a policy solution to allow the achievement of full employment. Although the full ramifications of their proposals need to be further explored, it is surely a step in the right direction.

The papers by Nevile, Haddad and Dyster examine questions associated with human rights in the context of different types of economies. John Nevile is concerned with human rights issues affected by the welfare state, by which he means a capitalist economy with government intervention to ensure that all citizens have at least a minimum level of economic welfare, and to improve economic welfare in general. He argues that governments implement these requirements through the welfare system, which act as a safety net and through the maintenance of full employment. Following on the arguments of Burgess and Mitchell, he argues that the right to employment has associated with it a right to a guaranteed minimum income, which, in Australia is enshrined in minimum wage legislation. Many economists argue that these rights conflict, in that they believe that unemployment is caused by wages being too high. To the extent that this argument is correct, there is a trade-off between the right to employment and the right to a minimum income. However, Nevile takes issue with these arguments, concluding that it is unlikely that it is high minimum wages which prevents full employment. Instead, he advocates a policy which is in some respects similar to the buffer employment model of Burgess and Mitchell, of increased government expenditure financed by higher taxes as a policy to generate full employment. Finally he examines the question of the most appropriate safety net, targeted or universal social welfare system. Again there are trade-offs, this time between the costs of the schemes and their impact on human rights.

Louis Haddad looks at the changes to human rights in Eastern Europe and in the former Soviet Union, that have resulted from their transition towards market economies. He questions the argument that inequality is necessary to promote growth in these countries. On the contrary, he argues that "in the long-run efficiency is good for equity and equity is good for efficiency." He uses this to provide an important critique of the omnipotence of markets; accepting that despite their limitations they still serve a useful purpose as long as they are supplemented by regulation and state activity. While the command system of the old Warsaw Pact countries was assumed by many to totally deny economic rights to its inhabitants, Haddad argues that this, in fact, was not the case. First, citizens were guaranteed basic economic rights, including the rights to employment, adequate clothes, shelter, food education and health by conventions and privileges. Similarly, he shows that the system had a labour market, though it was far from perfect. On the other hand, the range of consumer choice was significantly limited when compared with capitalist countries. Haddad concludes by arguing that the differences in levels of economic rights was one of degree rather than kind, with the basic rights, especially the right to employment, being "more or less" guaranteed in the Soviet-type countries.

By contrast, the collapse of the "command" system has led to the erosion of these rights. There is no longer a guarantee of any of the basic rights. Most of these countries have high levels of unemployment. None have adequate social security, so that there is no longer any social safety net. Huge falls in output, employment and wages led to the impoverishment of large sectors of the population. Social provision of services have also been severely affected. The result has seen huge increases in health problems, with death rates in most of these countries soaring; as well as substantial increase in crime.

Although the new status of these economies have improved certain economic rights, such as mobility, flexibility, the right to accumulate and the increased range of consumer goods, the benefit of this has only been felt by a small section of the population. For the rest, the opportunity cost has been their loss of other basic economic rights, such as the right to adequate standards of living, health, education and the right to employment.

Barrie Dyster reviews the relation between human rights and the development process. He argues that the later a country industrialises, the more governments seem to be authoritarian. This is due to technological change which has increased the capital intensity of production processes, as well as to the impact of increased globalisation. As a result, the impact on employment and on living standards during the industrialisation process is much more disruptive. This has led to an attempted evaluation of the opportunity costs of development, with pessimists and optimists reaching quite different conclusions about the net effect of the development process on individual welfare and on rights. Dyster then focuses on the newly industrialised countries of Asia where rigid regimes are imposing growth strategies which only immediately benefit a small proportion of the population. He is critical of the rationale for this strategy, viz that the benefits will trickle down to the rest of the population in the mediumto long-term.

In the final paper, Michael Pusey provides an overview of human rights in civil society, concentrating on the implications of economic rationalism. He examines the "coordinating structures" of society, differentiating the economy, markets and money from states, bureaucracies and law. Economic rationalist policies attempt to change the balance of power between these structures emphasising the role of the economy, markets and money at the expense of the other coordinating structures. This is reinforced by the underlying philosophy which stresses economic and market valuation as the only valid criteria for evaluating the worth of an endeavour. The increased reliance on markets as the coordinating structure for civil society leads to the undervaluation of any activity whose value cannot be adequately determined within that structure. This corresponds to what Harcourt has called "economic imperialism", which is the view that "economics [is] an aspect of all life":

These particular views meant that ... in principle an economic decision was involved whenever a choice situation arose.[5]

As a result of this economic imperialism, the economic aspect of society comes to dominate all others. This means that individual property rights and freedom of contract become the prevalent rights in society, in turn, dominating other human and economic rights. The economic relations established by the criteria of efficiency and economic growth determine the nature of the remaining social rights. The domination of economic goals as the major factor in determining the nature of human rights is reinforced by globalization. As earlier papers have noted, many violations of rights are justified on the basis of international economic imperatives, particularly competitiveness. Despite these attacks on civil society and on human rights, Pusey is sanguine about the possibility of a reemergence of rights. He points to the strength of the concept of civil society despite the assault from economic rationalists. In addition, globalization has also brought important advances in the form of powerful international institutions and treaties whose advocacy of human rights issues has enshrined them in international law.

There are a number of conclusions which we may tentatively draw from the above discussion. First, one of the underlying themes of all the papers has been that the supposed trade-off between human rights and economic efficiency and growth is not as rigid as is often advocated. In many cases, enhancement of rights may improve efficiency and increase growth. This is important as it provides a fundamental criticism of those who argue that the short term suppression of some human rights is a necessary precondition for economic development and therefore, for the achievement of other economic rights.

Secondly, where there is a trade-off, one must be sceptical about using it as a rationale for repression. The belief that those repressed today will be recompensed in the longer term as the benefits of growth trickle down, is based on a naïve view of human behaviour and the power of vested interest.

Thirdly, the issues associated with the economic dimensions of human rights are not only important to developing countries, they play a key role in the transition economies, and in the more developed economies. In the latter case, human rights issues are constantly being raised, especially with regard to the rights of employees and the role of the state. The rights of citizens to reasonable living standards, to shelter, health, education and employment are just as important in developed economies.

Finally, the protection of these rights cannot be left to the market. As most of the contributors have shown, the enhancement of rights requires national and international institutions which can establish and enforce human and economic rights.

In the end, we are left with the impression that a lot more needs to be done in examining the economic dimensions of human rights.

[1] School of Economics, University of New South Wales. I am indebted to Barrie Dyster, Prue Kerr, John Nevile and Teresa Bosky for helpful comments on this introduction, and for general discussions in the area.

[2] Bailey P "The Right to an Adequate Standard of Living: New Issues for Australian Law"(1997) 4 Australian Journal of Human Rights pp 25-50.

[3] Sakena K "Foreword" in Forsythe D (ed) Human Rights and Development (Macmillan, London, 1989) pp xix-xii at x-xi. For a contrasting view that, although repression often is a "contingent political choice, undertaken for largely political not technical, economic reasons" (p 306) nevertheless some repression will be needed in the early stages of development, see Donnelly J "Repression and development: the political contingency of human rights trade-offs" in Forsythe op cit, pp 305-329. For an overview of the debate \tsee Forsythe D "Human rights and development: a concluding view" in Forsythe op cit, \tpp 349-369.

[4] The papers in Forsythe op cit also examine the question of the cultural relativity of human rights.

[5] Kerr P (ed) The Social Science Imperialists: Selected Essays of G C Harcourt (Routledge & Kegan Paul, London, 1982) pp 379-380.

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