“This Isn’t Capitalism, It’s a F%*@ing Cooperative!”

In 1999 a Professor of Finance and International Business named Pietra Rivoli witnessed an anti-globalism protest at her own University (Georgetown in Washington D.C.) at which a young woman addressing the crowd asked the question, “Who made your T-shirt?” and went on to describe a story of exploitation behind this manufacture. Rivoli wasn’t aware of the story this protester told, and wondered if it was accurate. She resolved to research this question herself: she actually went to a store and bought a cheap T-shirt, looked up the company named, and tracked down the life-story of its production. Not just where it was made, but where the cotton was grown, where it was spun, and what happened to the T-shirt once it was thrown in the recycling.

The result is a remarkable book, The Travels of a T-Shirt in the Global Economy. Rivoli expected to find that the T-shirt was the result of the processes of free market capitalism, and that these processes were enriching every nation and individual involved. The truth she discovered was much more complex – not so much in that the production of the T-shirt involves much exploitation, but more that it rarely touches a free market. It is to Rivoli’s credit that she reports dispassionately what she discovers, enabling the reader to assess the evidence. The purpose of this post is to draw attention to a piece of evidence that Rivoli missed. The purpose is not to be critical – my impression is that while she remains an advocate of free market capitalism, her position is now much more nuanced and informed. I have several times seen the book inaccurately cited as providing evidence of the unequivocal power and benefit of unregulated free markets, and this is not the conclusion Rivoli reaches. However, I don’t want to go into this big picture – rather, I want to highlight points of detail in the story, to show how the benefits of what would be considered “socialist” approaches can be completely overlooked by those who are not expecting to see it.

The first part of the book analyses cotton growing in the USA. In the main she focuses on one specific family-run farm, and describes the industry from their point of view. But she does give a complete history of the development of the cotton industry in the USA, including the use of slavery, then share-cropping, and other forms of racial discrimination within that history.

Within this story she paints a picture of American ingenuity, innovation and enterprise, obviously greatly impressed by the work ethic and integrity of the farming family that she met. She describes the close partnership between the cotton growing industry and the Texas Tech University, describing a “highly symbiotic and virtuous-circle relationship between farmers, private companies, universities and the US government”. Rivoli is clear that this is not, therefore, a free market following the assumptions of perfect competition, but she paints a picture of this being the result of American ingenuity and intelligence, rather than deriding the Government involvement as “socialism”.

Similarly, she describes (in chapter 4) how these plucky farmers have chosen to “band together in a united front against the markets that once dominated them.” At one time, small family farms were at the mercy of the cotton gins and the prices they offered for the cotton. Farmers responded by collectively purchasing the gins, so they now run them in the interests of the farmers. My shock is reflected in the note I scrawled in the margin:

“This isn’t capitalism, it’s a f@*%ing cooperative.”

Surprisingly, this isn’t a point that Rivoli herself makes! There is a nod to the fact that this is a cooperative – Rivoli even refers to the gin being “cooperatively owned” by the farmers. She doesn’t notice the implications – the survival and indeed prospering of family cotton farms in the US is in part down to the adoption of an archetypal socialist form of business organisation.

The second example comes at the end of the book – the final part (Part IV) deals with the recycling industry that takes the T-shirts thrown in recycling bins. These are generally shipped to Africa to be sold in second hand markets. It would be absolutely wrong to present this as an act of charity, in which impoverished African people wear whatever cast-offs they receive from the US. This style of clothing, known as mitumba, provides infinite opportunities for self-expression. Shoppers will enjoy long trips to the market searching out that one piece to complement their wardrobe. Stall-holders’ success depends on their understanding of what their clientele are looking for, and searching this out from huge bales of recycled clothes. And hence the success of the multitude of small family businesses in the US, who sort through recycled clothing and create bales to sell to Africa, likewise depends on keeping their African importers happy. It is a highly skilled industry, made up of large numbers of small businesses, without a multinational in sight. Indeed, Rivoli sub-titled this part of the book ‘My T-shirt Finally Encounters a Free Market’.

She absolutely eulogises about this market and the ingenuity and entrepreneurial spirit of the actors within it. While I accept everything she is saying, it is remarkable that she breathes not one word on the cultural and economic impact of the corresponding demise of the indigenous textile industry (see, for example, this article ). By contrast, for a long time China has absolutely banned imports of US recycled clothing, precisely because of the threat that the loss of domestic demand would pose to their own textiles industry.

And indeed, all these small US businesses sorting recycled clothing knew that China potentially posed a major threat to their survival – if the Chinese lifted that ban, it would be cheaper simply to fill container ships with recycled clothes and have Chinese labour do the sorting for a fraction of the cost. The US businesses would be priced out of the mitumba market. But in the end, the threat from China came from a different angle – used clothing from Chinese citizens was being exported to the mitumba market (see Epilogue IV). In the last pages of her book, Rivoli describes how the plucky US entrepreneurs had found an innovative response to this challenge – a new way to “re-engineer the business”.

Can you guess what it is?

That’s right…

…It’s another f@*%ing cooperative. All these small US clothing recycling businesses banded together to form the Council for Textile Recyling, seeking to build coalitions, work collectively, and influence national and local government policy.

Whenever you directly criticise unfettered free market capitalism; whenever you argue for any role of the state, even merely one of regulation; if you ever suggest that cooperation is a better way to organise society’s affairs than competition – then the attack dogs of individualism will deride you and sneer, “But that’s socialism…” As described last week, the accusation of “socialism” is used as a way to close down discussion – you must be wrong because what you are saying is socialism. And of course, as explained last week, I’m not advocating for or defending socialism. I’m merely pointing out that just because an idea or proposal sounds like it might fit somewhere within the broad church known as socialism doesn’t make it wrong.

Such accusations have no place in dispassionate conversations that seek to find the truth about our economies. Each concept or proposal must stand or fall on its own terms, based on the evidence available – indeed, if people need to resort to such accusations, it may well indicate that they actually lack facts and logic to validate their own positions. We have seen that individualism as an ideology contradicts science, contradicts history, and contradicts itself!

In searching for an understanding of how our economies actually function in reality, we mustn’t allow ourselves to be deflected by appeals to the boogeyman of socialism, but dispassionately consider the empirical facts. Next week I will present a summary of a theory of economic development that is completely grounded in 500 years of empirical evidence, the work of Erik Reinert.

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