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Beware the Special Economic Zone

— August 28, 2016

A few years ago, as the economic crash of 2007 was sliding into our Great Recession, I wrote a satirical piece about an Orwellian government program that introduced virtual slave camps to the U.S. under the guise of easing unemployment, homelessness and debt peonage.  The program was called COBRA, the Corporate-Operated Bankruptcy Recovery Act.  COBRA camps swallowed up the poor and indebted with the promise of housing, employment and forgiveness of debt.  Their real purpose, of course, was to provide corporations with small cities of cheap, nonunion labor.  The idea struck me as both far-fetched and quite plausible.  What I did not know at the time was that an eerily similar, but real, phenomenon was spreading like gangrene through the body of the global working class.   



In These Times has published a piece of investigative journalism (do you recall the genre?) by Matt Kennard and Claire Provost that explores the revolting world of “special economic zones” (SEZs).  SEZs are areas that countries carve out of themselves and offer up to investors with incentives of altered tax and tariff laws and, of course, an abundance of cheap labor.  Over half the nations on the planet currently host SEZs, which employ some 66 million workers, almost exclusively in manufacturing jobs.  The zones are sold to the public and the press as a means of economic development and as a humane response to the problems of unemployment and poverty, but the truth is neither so simple nor humane.  It is with good reason Kennard and Provost call SEZs “corporate utopias.”  


For one thing, SEZs change national laws, laws that were perhaps arrived at through partially democratic means and that often have as their objective at least a marginal protection of the working class–the vast majority of the countries’ populations.  Moreover, workers in SEZs routinely find their remaining rights violated.  In the SEZs they visited in Cambodia, the reporters “saw a system designed to tightly control the workforce by keeping workers fenced in and unions out. More than a dozen workers and labor activists confirmed that, while it’s not easy to independently organize anywhere in Cambodia, the law is flagrantly violated in SEZs. The result is seething discontent.”


To be sure, some countries, Pakistan and Namibia for instance, revoke their national labor laws outright in their SEZs.  “But even when this is not the case,” write Kennard and Provost, “these zones have become hotspots for workers’ rights violations.”  Organizers have great difficulty gaining access to workers in the zones, and SEZ workers who attempt to reach out to unions or foment dissent within the zones can quickly find themselves out of a job.                


SEZs can be thought of as bubbles, isolated worlds where time has been reversed and liberal reforms rolled back to a period of more naked capitalism.  But because these bubbles float through the air of global capitalism, when one bursts it can simply be replaced by a new bubble someplace else.  And these bubbles can grow too large and burst.  Kennard and Provost visit China’s Shenzhen, one of the oldest and largest SEZs in the world.  At one time a small piece of land, Shenzhen has sprawled to a size of almost 800 square miles.  As it grew into an immense city, workers began to mobilize, to use their numbers in efforts to organize and fight for their rights.  The response of the resident corporations was to close up factories and move them to more amenable SEZs elsewhere, including Cambodia.  


Shenzhen had grown in other ways, though, becoming a center of tech and finance capital.  The landscape of Shenzhen, in fact, bears a resemblance to deindustrialized American cities, gleaming high rises looking down on the ghost towns of factories.  The human landscape is familiar too, with unemployed resident and migrant workers facing destitution while gentrification  takes place in their midst.           


SEZs in the U.S.?

If SEZs are a logical adaptation of the nation-state to the condition of surplus labor under global capitalism, how has the condition of surplus labor expressed itself in the United States?  After all, for more than three decades deindustrialization and the outsourcing of manufacturing jobs (largely to SEZs) has left American urban and exurban communities crumbling shells of their former selves, riven by unemployment and that new category “underemployment.”


Well, one strategy corporate capital has for exploiting surplus American workers is to lock them up.  Currently in the U.S., a staggering 2.3 million people are incarcerated somewhere in the criminal justice system.  State prisons hold 1.3 of those inmates.  The advantage to corporations in having these high numbers of prisoners can be found in the Thirteenth Amendment to the Constitution–the amendment abolishing slavery.


According to the Thirteenth Amendment, “Neither slavery nor involuntary servitude, except as punishment for crime whereof the party shall have been duly convicted, shall exist within the United States, or any place subject to their jurisdiction.”  Corporations that cash in on the “punishment for crime” exception to the Thirteenth Amendment, and the list is long, include Wal-Mart, McDonald’s, Whole Foods and Victoria’s Secret.  These corporations are able to avoid paying prisoners the minimum wage, and in fact the average wage for prison laborers is between .23 cents and $1.15 per hour.  In addition, these companies are allotted tax generous breaks for  their selfless public service.  


Prisons, then, constitute one form of SEZ in the U.S., and a particularly telling form since in spirit special economic zones conceive of the worker as a sort of prisoner.  At least one legal scholar, however, has proposed actual SEZs for the U.S.  Tom W. Bell of the Dale E. Fowler School of Law makes the case that “the United States has lagged behind the rest of the globe in tapping the potential of SEZs.”  Arguing that SEZs lift masses of people out of poverty, Bell writes, “These United States Special Economic Zones (USSEZs) would arise on federally owned property, such as lands managed by the Bureau of Land Management, and generate sorely needed public funds by selling territorial exemptions from select state and federal taxes, laws and regulations.  Through USSEZs, special jurisdictions might bring economic growth, human welfare and individual freedom back to America.”  


Whether cynical or credulous in its enthusiasm for improving human welfare by selling exemptions to taxes, laws and regulations put in place to provide public funds and protect workers, Bell’s argument must not be dismissed as irrelevant.  Even though his explicit call for SEZs in the United States is one of the earliest, he speaks for broad sections of the corporate aristocracy in his impatience with legal hindrances to an unfettered “free” market.  Inconveniences like corporate taxes, labor laws and the minimum wage scare away investment in manufacturing and waste the immense pools of surplus labor the U.S. has to offer global capital.  Such is the logic that inexorably drives policy, and the logic of the SEZ will in time assert itself in U.S. policy, perhaps in much the way Bell envisions.


Exploitation of labor is not the only facet of SEZs that resembles incarceration.  Kennard and Provost take special note of the intense surveillance to which labor in SEZs is subjected, dubbing SEZs “capital’s panopticon.”  Of Shenzhen they report, “Along the streets of Shenzhen today are too many surveillance cameras to count, rotating like roving eyes.  Overhead, the skyscrapers shine at night in flashing, neon colors, bedecked with logos such as KFC, McDonald’s and 7-11. The effect is that of an eerie corporate utopia in which capital is wild and free, but people are heavily controlled.”


Global capitalism is a race to the bottom only as long as we who work and produce the wealth agree to race against each other.  The moment we realize that we are in fact being chased to the bottom by those who hand us worse jobs and tell us to be thankful for them, that is the moment we will make common cause with our brothers and sisters around the globe.  This is the necessary step, as only a global effort is capable of dismantling the corporate utopia of global capital.    


Sources:  “Inside the Corporate Utopias Where Capitalism Rules and Labor Laws Don’t Apply”  “These 7 Household Names Make a Killing Off the Prison-Industrial Complex”  “Special Economic zones in the United States”  

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