Canada, Colombia, and the Global Race to the Bottom

May 4, 2010

The Failure of Global Capitalism: From Cape Breton to Colombia and Beyond by Terry Gibbs and Garry Leech, Cape Breton University Press, 2009, 176 pp., $19.95 (paperback)

The exploitative dynamics that link the global North and South are not always clear. How, for example, does the exploitation associated with neoliberalism simultaneously affect the working classes in developed countries and the popular masses of the South? Terry Gibbs and Garry Leech have attempted to extricate those links in The Failure of Global Capitalism: From Cape Breton to Colombia and Beyond. Not only are popular sectors all over the world increasingly affected by the neoliberal dynamics of the global economy, they argue, but the logic behind neoliberalism has pitted them against each other in a vertiginous race to the bottom.

The book begins in stark opposition to those who see the neoliberal economic model—comprising financial deregulation, free trade of commodities and services, privatization of state industries, and the dismantling of the social safety net—as an inevitable and evolutionary feature of globalization. Gibbs and Leech fall in line with those who see neoliberalism not as a necessary stage in some modernizing teleology, or an unstoppable, macro-structural process, but “a conscious, ideologically motivated set of policies” that benefits certain identifiable actors at the expense of others. In fact, according to Gibbs and Leech, the only inevitable aspects of neoliberalism are its two damaging consequences: massive inequality and environmental unsustainability. Hence, the book’s objective is to prove that those negative effects are not exceptional “collateral damage,” nor misapplications of the neoliberal model, but are built into its very logic, and its “success” will only maintain and worsen these harmful consequences.

Contesting the claim that neoliberalism will eventually benefit everyone, reproducing the “relatively luxurious lifestyle enjoyed by most in the North to everyone on the planet,” the authors convincingly demonstrate that this “impossible dream” actually contradicts neoliberalism’s very premises. That is because neoliberal logic dictates that the material wealth of some can only be secured at the expense of others:

After all, in order for more than six billion people worldwide to enjoy an equally materialistic lifestyle, the majority of the population in the South would have to see a significant increase in their incomes. Any such drastic rise in their incomes would increase the cost of living in the North as a result of higher manufacturing costs for goods produced in the South, thereby diminishing standards of living in wealthy nations. In other words, the majority of people in the South could only achieve a standard of living equal to peoples in the North if the latter accepted a dramatic decline in their levels of material comfort and the two worlds met somewhere in the middle.

Gibbs and Leech are not advancing a zero-sum argument here; rather, they maintain that generating material goods under the neoliberal model requires the ever-increasing concentration of wealth and the persistence of socio-economic inequalities. This is a crucial contribution of the book. The Failure of Global Capitalism also emphasizes the environmental damage generated within a neoliberal global economy. Here lingers an implicit Malthusian concern about the unsustainability of consumerism and the eventual exhaustion of natural resources. On the one hand, Gibbs and Leech remind us of George W. Bush’s statement in 2008 that “consumerism is a significant part of [U.S.] GDP growth, and we want to sustain the American consumer, encourage the American consumer and, at the same time, we want to encourage investment.” On the other hand, the authors join energy experts in announcing that global oil production will peak in the next five years. Following this line of reasoning, an economy that heavily relies on fossil fuels and petroleum-based goods will sooner or later have to face pressing problems of scarcity.


On top of this, the book presents an extraordinary amount of evidence of the environmental destruction that the de-regulation and privatization of coal mining in Colombia and Atlantic Canada have created. The profit-based mentality of multinational mining corporations, together with federal and local governments’ lax regulatory requirements for accountability and social responsibility, have produced both the Sydney Tar Ponds in Cape Breton, “a cesspool containing 700,000 tons of toxic sludge,” and El Cerrejón in Colombia, “the world’s largest open-pit coal mine, a massive hole in the ground, measuring [almost 30 miles] long and [almost five miles] across.”

Although the book’s objective is to present a general critique of global capitalism, its flesh and bones comprise meticulous and highly descriptive accounts of the Colombian and Canadian cases. Chapter 1 presents the history of Cape Breton’s labor struggles around coal mining during the 20th century. In response to the domestic demand for coal, iron, and steel, the construction of the steel plant in Sydney, on Cape Breton Island, transformed the small fishing town into an industrial city between 1891 and 1911. The island’s history would then be shaped, first, by the labor conflicts between the steelworkers’ unions and the capitalist owners of the steel plants and coal mines, and, later on, by the collaboration of these two groups within a Keynesian framework of governmental intervention beginning in 1940.

The industrial vocation of Cape Breton would be transformed once again with the introduction of neoliberal policies in Canada during the late 1980s. Two factors produced the incentives to import cheaper coal from other parts of the world, Colombia among them: on the one hand, the privatization of the coal-burning Nova Scotia Power, which consumed most of Cape Breton’s coal, and, on the other, Canada’s opening to international trade.

This eventually led to the closing of Cape Breton’s coal mines, leaving behind an army of unemployed people and a landscape of environmental catastrophes. Although the working conditions during the island’s industrial era were rough and it was never possible to impose a more radical model than the Fordist compact of management-labor collaboration, the authors argue that the post-industrial, neoliberal, and service-oriented economy in Cape Breton has produced even worse living conditions, now that the social safety net has been dismantled. The national tendency to cut public funding for health care and education, enhanced by the provincial government of Nova Scotia, and provide incentives for multinational corporations, have dramatically reduced wages in the area and withdrawn the provisions for social security once provided by the Fordist compact.

Chapter 2 turns to the Colombian side of the story: the workers who supposedly “benefited” from the international transferring of jobs in search of greater economic efficiency. But this story is also tragic. The violent labor conflicts of early-20th-century Cape Breton were displaced to Colombia, with its legacy of entrenched oligarchies and an ongoing internal conflict, but on a larger and more brutal scale. The U.S. government’s influence on policy making through Plan Colombia, the multibillion-dollar military aid program, and the country’s openness to international capital have fostered a number of harmful consequences. Under the excuse of generating (low-paying) jobs, the Colombian government, collaborating with multinational corporations, has forcibly relocated entire communities and launched an aggressive campaign against labor unions. Gibbs and Leech highlight the “1,165 documented murders of Colombian trade union members between 1994 and 2006,” according to the International Confederation of Trade Unions, with an impunity rate of 95% for all these crimes. They also offer breathtaking testimonies that document the clandestine agreements between multinational corporations and paramilitaries to intimidate resistant communities and even eliminate vocal union leaders and human rights activists.

After establishing the two sides of this equation, the authors move on to consider two alternative scenarios to neoliberal hegemony: the Bolivarian socialism of Venezuela and the local egalitarianism of Las Gaviotas, a community in the middle of the Colombian rainforest. In the first case, Gibbs and Leech praise the performance of Venezuelan state-owned industries under the government of Hugo Chávez, particularly in relation to the redistributive practices that they permit. In this reading, Chávez’s socialism manages to defy the orthodoxy of the old left as much as it challenges the apparently unstoppable forces of neoliberalism. Moreover, it has innovated international relations and trade through initiatives like Petrocaribe and the exchange of oil for doctors with Cuba. Nonetheless, Gibbs and Leech observe an important weakness in the Venezuelan economy’s continuing dependency on oil production and export, which still undermines the Bolivarian Revolution’s transformative potential.

On the other hand, Las Gaviotas is presented as a counter-example of successful sustainability and equality. A micro-community of a few hundred people in the inhospitable Colombian jungle, Las Gaviotas maintains an egalitarian social structure where everyone participates in decision making and enjoys free food, lodging, health care, and schooling while innovating in environmentally friendly technologies.

The highly descriptive ethos of the book, especially in the two central cases from Canada and Colombia, is strengthened by an excellent presentation of empirical data. Interviews and testimonies complement the historical research, bringing the authors’ general critique of neoliberalism to the forefront. Most importantly, Gibbs and Leech do an extraordinary job in advancing a two-tier explanation of the consequences of neoliberalism upon the working classes of the industrialized and post-industrial countries and upon the popular sectors of the South. Their argument is notably poignant when they extricate the logic through which neoliberalism antagonizes both groups and turns their competition into a race to the bottom where everybody loses except a small number of multinational corporations.

For example, in their discussion of the vulnerability that the post-industrial economy has generated in eastern Canada, the authors point out that it is only under neoliberalism that wages are reduced and collective layoffs systematically undertaken even when the company is making profits. This is because the competition between countries to attract investment provides multinational companies with the leverage to negotiate the terms under which they will locate productive processes in new places. The economic rationality of these enterprises puts downward pressures on labor and environmental regulations, levels of taxation, the commitment to long-term investment, and consumer accountability, while concomitantly undermining unionization and constraining governments’ capacities to provide basic services.


The two-tier explanation of The Failure of Global Capitalism nonetheless suffers from two shortcomings. Although it might be unfair to criticize a book for what it does not do rather than focusing on the soundness of what it does, these shortcomings matter because the book sets an ambitious task for itself. In the first place, the book relies on an unexplained theoretical framework that only comes to the surface in a dislocated fashion in parts of the introduction, conclusion, and epilogue. Such a detailed theoretical discussion would not be necessary if this were only an empirical study, but the book claims to advance a critique of neoliberalism at the global level. The authors’ critique becomes disconnected and not always fully elaborated in the chapter on alternatives, wandering into tangential and secondary arguments. Important information is offered in these sections, but it is not always clear how it relates to the larger objectives of the book. Although Gibbs and Leech make occasional references to Karl Marx, George Monbiot, and Vandana Shiva, the absence of a strong theoretical framework at the level of international and comparative political economy makes their work vulnerable to the existing counter-arguments that neoclassical economists have used against previous critiques of global capitalism.

To be sure, the imprint of world-systems approaches implicitly runs throughout the book. Gibbs and Leech’s two-tier explanation takes the Marxist analysis of social relations under capitalist modes of production and replicates it at the global level. This theoretical strategy thus supports the authors’ claim that a global capitalist class that is mostly concentrated in the core countries has emerged at the same time as a transnational working class, pushed towards the periphery and exploited by the asymmetries of power that the neoliberal model generates. Although these arguments are cogent, they have already sparked long discussions that cannot be overlooked. The Failure of Global Capitalism would have benefited from an engagement with these theoretical influences and a thorough discussion of the relevant literature.

The book’s second shortcoming is at the other end of the methodological spectrum. Gibbs and Leech’s pair of case studies could have been strengthened by a more detailed extrication of the mechanisms that interconnect Canada and Colombia. The two-tier explanation’s clarification of how different social groups are antagonized by the global economy would have been greater if the project also showed that the two tiers actually overlap when the trans-nationalization of the working class sets workers in competition against each other and removes incentives for collective action. To be fair, something like this is offered in a short section of Chapter 2, where Gibbs and Leech explain the changes in Canadian policies that made it easier for Canadian corporations to invest in Colombia’s mines and to import Colombian coal to satisfy the demand in eastern Canada.

However, since the core of the argument is founded upon these empirical claims, a more detailed analysis, especially concerning the financial and commercial aspects of Colombian-Canadian bilateral relations (i.e., which companies were involved in which specific coal mines, under what price incentives; which markets demand the coal of each region, under what conditions; what percentages of Canadian coal consumption are covered with Colombian exports, etc.), would have allowed Gibbs and Leech to open the black box that converts the free flow of capital and commodities into the material impoverishment of the developing world.

In other words, the two-tier argument would have been a much more powerful critique if the two case studies provided thorough evidence of how the wages of Cape Breton were (directly) transferred to Colombia, along with the attendant labor conflicts. This would be a major contribution to critiques of neoliberalism and global political economy, since it would go beyond the existing, highly abstract explanations that juxtapose the rich North against the poor South. Instead, a more detailed analysis and research of the links through which a particular community in the North is interconnected with one in the South would have allowed the authors to pinpoint the exact mechanisms through which power is exerted and exploitation occurs.

Despite these shortcomings, the book still offers a powerful critique of neoliberalism. Moreover, the upside of avoiding extensive theoretical explorations or methodological justifications is that Gibbs and Leech present their argument in a highly accessible way. This makes the book attractive to the general reader and an excellent textbook for introductory courses on international political economy. The pertinence of The Failure of Global Capitalism is particularly significant in the context of the ongoing conversations around a free trade agreement between Canada and Colombia. In a recent twist, the Swiss mining company Xstrata, which in 2006 bought one third of the share of the Cerrejón mine, announced in February that it would re-open the Donkin mine in Cape Breton 20 years after it was first explored, triggering a new debate around the mine’s economic and environmental consequences.

Agustín Goenaga Orrego is a doctoral student in political science at the University of British Columbia. His research interests include comparative political economy, postcolonialism, Latin American cultural studies, and the intersection between aesthetic and political narratives.


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