Human Rights and the Global Economy: A Response to Meyer

While few scholars and officials today believe the simplistic notion that economic progress automatically brings about political and civil freedom, many think that such progress will automatically enlarge the social welfare of all citizens. This theory, which is widely held in the West, is an obstacle to the development of national or international social welfare law since it denies the need for rights to social welfare. ¹

I. Introduction

In his 1996 article in the Human Rights Quarterly, William Meyer examined the relationship between the presence of transnational corporations (TNCs) and human rights practices within developing countries. ² The evidence he examined supported his claim that direct foreign investment in a country is positively associated with favorable civil, political, social, and economic human rights practices. Meyer’s analysis used a sample of approximately fifty developing countries to examine correlations between transnational corporate presence and measures of both first- and second-generation human rights practices. While Meyer’s statistical findings showed consistent, positive relationships between levels of direct foreign investment (DFI) and human rights, there is reason to examine additional evidence in order to further test this relationship. Although the predominant economic logic would anticipate the findings Meyer showed, it would be dangerous to conclude that there is a necessary association between transnational corporate investment and human rights if no such relationship exists. This conclusion would contribute to even greater complacency among policymakers who seem all too eager to enter into international trade agreements, thereby facilitating the free flow of capital at the expense of state authority to mitigate the negative social and environmental effects of economic development.

Even a cursory overview of recent major events related to transnational corporate activity and human rights suggests that any relationship between these two would be negative, or nonexistent at best. For instance, uprisings in Nigeria’s Ogoniland protesting environmental destruction by Shell Oil, a British TNC, have led to widespread and violent repression of the Ogoni minority and to the execution of Ogoni leader Ken Saro-Wiwa. ³ Not only has Shell failed to use its economic leverage to put pressure on Nigeria’s military government to reverse the coup and restore Nigeria’s democratically elected leaders, but it has also provided economic and military assistance to this antidemocratic government, thus enabling the government to maintain its repressive policies. Another example is the ongoing case in US courts between Texaco, the US-based oil transnational, and indigenous peoples in Ecuador. This case centers around Texaco’s alleged responsibility for polluting indigenous land and poisoning water sources during its years of operation there between 1967 and 1990. ⁴ Finally, other TNCs like Nike have only moved to adopt minimalist labor rights standards after consumer groups have drawn attention to abuses such as child labor, low wages, and unhealthy labor practices. ⁵ The fact that these cases exist suggests that TNCs are not always beneficial to human rights. Therefore, further exploration of the relationship between TNCs and rights becomes necessary. ⁶

II. Theories of TNCs and Human Rights

Meyer reviewed two antithetical approaches to thinking about the relationship between TNCs and human rights. The “engines of development thesis” dates back to the post WWII-era belief that economic development automatically would generate improved human rights practice. ⁷ An alternative approach, the “Hymer thesis,” ⁸ argues that the very structure of TNCs will contribute necessarily to widespread impoverishment and to human rights violations. The division of labor within the transnational firm leads to uneven development concentrating management activities in major, industrialized cities. As a result, poverty becomes concentrated in the areas removed from these urban centers where the firm’s productive activities take place. This dual track necessitates repressive policies to control potentially explosive populations. Thus, TNCs encourage repressive government policies to suppress labor demands and promote stability. ⁹

Along similar lines, Pauline Herrmann asserts that there is a conflict of interest in state-TNC relationships. ¹⁰ This conflict of interest results from the fact that governments have the dual responsibilities of protecting and insuring quality lives for their citizens...