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Ethical capitalism? The Modern Slavery Act and the Transparency in Supply Chains clause

In 2015, the UK’s first piece of legislation aimed at tackling modern slavery was passed, in the form of the Modern Slavery Act (MSA). Theresa May, Home Secretary at the time, called modern slavery “the great human rights issue of our time”, and promoted this flagship policy with speeches and articles. May’s successor, Amber Rudd, subsequently called tackling modern slavery a “top priority of this government”. It is clear the government views modern slavery as a serious challenge, and one that needs addressing.  

The most novel element of the new legislation is the Transparency in Supply Chains (TISC) clause. This acts as a new requirement for companies with an annual turnover of £36 million or more to produce a ‘transparency statement’ that details what measures they are taking, if any, to tackle modern slavery in their supply chains. According to May, this constitutes a “world-leading transparency requirement on businesses to show that modern slavery is not taking place in their companies or their supply chains”.  

There have been some immediate criticisms of the transparency requirement. To begin with, companies are able to use their discretion when writing the statements, putting in as much or as little as they like. The penalty for failing to submit a statement is also ambiguous: one third of companies failed to submit a statement in the first year. With no fines being issued, it is clear that enforcement has been lacklustre. More importantly, statements are self-reported and not independently verified. This arguably renders them unreliable.  

While such practicalities are useful for highlighting the shortcomings of the TISC clause, it does not tell us what the limits of the TISC clause are. An understanding of the limits is important for gauging how effective a tool the TISC clause is likely to be, and to get to the heart of the legislation’s aims. In order to achieve this, two questions need to be answered. First, what is the root cause of modern slavery? Second, does the TISC clause have the potential to address the problem at its root?  

Before answering these questions, a point of clarification is required. As the TISC clause relates to supply chains the focus moves away from the umbrella term of modern slavery – which includes other acts such as trafficking and child marriage – towards ‘forced labour’.  

Many attempts to define, or simply discuss, forced labour mark it as a practice separate from all other forms of labour. For example, whilst Theresa May does not provide a definition, she refers to it as a “barbaric evil”, making it clear that it is an exceptional practice. For Kevin Bales, a ‘new abolitionist’, forced labour is defined by the threat of violence and the absence of pay beyond subsistence, carried out for economic gain.   

With Bales’s definition we are at least brought closer to an understanding of what the practice might involve. Yet there is little to explain the cause or how this is different from other egregious labour practices. It is for this reason that the conceptualisation of a ‘continuum’ of labour practices has been suggested as an alternative to the neat delineation between forced and ‘free’ labour. This acknowledges that there is a spectrum of practices that exist between the two poles of extreme exploitation at one end and good working conditions at the other.  

Conceptualising labour practices in this way is useful because a degree of coercion is experienced by all workers across the spectrum. Under capitalism, workers are not free in the sense that they possess full self-determination. Their condition is instead best described as a ‘voluntary compulsion’, which requires them to sell their labour-power, with the freedom to choose who to work for, but not whether to work.  

This does not equate one end of the spectrum with the other, as there are clear differences. But it does recognise that the root cause of forced labour is located in capitalist exploitation, to which all workers must submit. The same profit motive of extracting surplus value from workers drives the exploitation of the free and the forced worker. This means that labour practices are different in degree rather than kind. 

This brings us to the second question, of whether the TISC clause can address the root cause of forced labour. To answer this, it is necessary to ‘reverse engineer’ the legislation to uncover the understanding and ideas through which it was intended to operate. The key mechanism at the centre of the legislation is found in the use of the transparency statements, which provide information to consumers.  

This point was emphasised by Arnold Schwarzenegger, California’s governor when its own 2012 transparency legislation passed, who said the statements will help consumers “make better, more informed choices and motivate businesses to ensure humane practices throughout the supply chain”.   

Yet consumers’ choices are limited – they are restricted by the goods produced and the products that are available to them. As such, some of the power to bring about change lies with the companies producing and selling goods. The combination of consumer decisions and corporate change results in a form of ‘ethical capitalism’, whereby the aggregate of consumer choices is assumed to result in change through ethical companies being financially rewarded for taking steps to eradicate forced labour from their supply chains.  

This rests on a view of capitalism best reflected in the classical political economy of Adam Smith. It is a capitalism inhabited by ‘homo economicus’, the rational individual acting through self-interest to produce the best outcome for themselves and society as a whole. Smith felt that social issues can be addressed so long as there is sufficient information upon which to make decisions. In this way, the moral limits of markets are transcended through a humane concern for others. The solution, then, is not for the government to directly intervene in how the economy functions, but instead to provide enough information in order to allow the aggregate of individual decisions to lead to better social outcomes.  

A key issue with this understanding is that it ignores the location of the root cause of forced labour in the sphere of production. Classical political economy relies on the belief that capitalist production simply expresses a pre-existing nature intrinsic to humanity itself, which provided Smith with the famous dictum that people have a “propensity to truck, barter, and exchange”. A consequence of this is that production becomes a black box, where labour inputs are viewed as another cost, not substantially different to a machine. To put it another way, classical political economy explains how production takes place, but it does not explore how production in its specific form is brought about in the first instance.   

This is a significant constraint because, as Virginia Mantouvalou suggests elsewhere in this issue,  the basis of capitalist exploitation that gives rise to forced labour is found not in the circulation and consumption of goods, but in the antagonistic social relations that lead to workers having to submit themselves to the owners of capital in the first place. It is this social relation that needs to be addressed in order to make a significant impact in the eradication of forced labour.  

As the TISC clause operates in the sphere of the circulation and consumption of commodities alone – and even then, indirectly – the location of forced labour remains untouched. With this, the government instead leaves those in forced labour, along with all other workers in other egregious conditions that might not qualify for this label, to the vagaries of the market. They must wait to be freed by benevolent consumers purchasing their way towards an ethical capitalism. Living up to the government’s rhetoric on this “barbaric evil” means doing much more than leaving it to the market alone. 

 

Chris Pesterfield is a PhD candidate in Management at the University of Bristol, researching forced labour in supply chains.

Image Credit: Kaley Dykstra on Unsplash