Why might the liberalisation of border controls for people be more controversial than the liberalisation for goods, services and capital?

Abstract

This paper tackles the common misunderstanding of liberalised borders of people identified under the current neo-liberal paradigm. Controversies assigned to liberalised borders of people have ignored processes of globalisation and elimination of capital controls as the culprits of controversies blamed on liberalised border controls for people. Contrary to such suggestion, the paper explores beneficial implications of migration, controversies associated to liberalised controls for goods, services and capital and highlights the presence of Eurocentric/Westphalian limitations under the migration rhetoric. In short, I argue that possible controversies implied by liberalised border controls of people are rooted in liberal economists’ contradictions and the technicality of the language accompanying controversies of liberalised goods, services and capital.

Initial thoughts

In light of the establishment of neo-liberalism as the dominant paradigm over the past forty years, much has been said in favour of the liberalisation of capital movements and the reduction of constraints on trade of goods, services. Since the fall of the Bretton Woods system, economic prosperity has been directly associated with liberal stances towards finance and trade, whereby capital controls and tariffs have been replaced by globalised frameworks of finance and multilateral trade agreements. Scholars have focused on the degree to which commodities and finance have been liberalised from an overly Eurocentric and positivist view. However, migration and the Global South have had a secondary role. This paper argues against the assumption which sees the liberalisation of border controls for people more controversial than the liberalisation for goods, services and capital. I will begin by exploring the extent to which migration is a useful mechanism for the development of the Global South states, and some misconceptions of the effect of remittances in these countries, followed by pointing out fundamental controversies associated to liberalised trade and capital movements. On from this, I will expand upon how despite that recent literature has mainly praised the beneficial effects of the liberalisation of goods, services and capital, they are not exempt from critical controversies. Finally, I will reflect upon the limitations of the securitisation of the debate on migration and the excessive Westphalian bias with regards to migration.

Even if the number of people living abroad amounts to just 3% of the world’s total population, the presence of foreign-born can be heavily felt in countries where they constitute a fair share of population. Foreign-born people represent their home countries through their language, culture and traditions in such way that any issue related to their movement will be much more visible than issues associated with trade or capital. Under the capitalist paradigm, capital creates new demands for labour mobility since it constantly seeks new sources of labour, new resources and new investments. However, within the capitalist sphere there is a basic contradiction among liberal economists, who support the liberalisation of goods and services, but deny the need to liberalise labour markets at an international level. Such condition is possible by the globalisation of factors of production, which as Karl Polanyi understood it, undermines human condition and commodifies labour. Commodification, Polanyi argues, will result in the demolition of society, and submitting labour to the laws of the market will annihilate organic forms of existence. Possible controversies associated to the liberalisation of borders of people, I believe, stem from such a contradiction amongst economists which justify negative bias towards international migrants. Under this logic, it is not surprising that bourgeois democratic states provisionally resolve crises of accumulation through repatriating legal migrant labour, what M. Samers calls ‘spatial vent’.

International migration as the development mantra

As introduced at the beginning of the paper, there is a ubiquitous Northern-hemisphere attentiveness in the debate on migration which focuses primarily on the receiving end of migration. In turn, migration and development policies often constitute different policy domains. This hinders the capacity of Western states to agree on policies which could enhance the contribution to welfare state made by migrants and overall well-being in both the sending and receiving countries. Another side-effect of shallow conceptions of the implications of migration is the establishment of ‘myths’ which contribute to mistaken ideas and norms towards migration. In this section I argue in favour of remittances as a source of development for the Global South whilst identifying some flaws of potential arguments against them. I identify the following six remittance myths.

Propositions of the 20th and 21st century as the ‘age of migration’ are simply misleading. The upsurge in migration levels of the 1990’s were similar to those of the 19th century, furthermore, the percentage of world migrants in the 19th century was similar to the current 3%. Contrary to alarmist views, there is no indication of migration control crisis. It is also worth mentioning the change in migration patterns following the end of WWII, as the rapid economic growth in Western countries led to an increase in migration from the Global South. This explains the common perception of unprecedented levels of migration, since Western countries were faced with an influx of culturally and physically different people, making migration more visible, hence the emergence of unjustified controversies associated to free movement of people.

Secondly, poverty and misery are not the root of migration. Instead, migration involves cost and risk analysis, social networks and those with certain aspirations. Thus, there is a socio-economic development factor behind it, which also explains why leading emigration countries are not the poorest. Broadly, development is linked to increasing mobility and subsequent migration. Only in the long-run of development processes, countries will become importers of people instead of exporters – like Italy, Greece or Spain. Such relation between development stages and migration is portrayed as an inverted U-curve effect – or ‘migration hump’, whereby outflows of people rapidly increase in early stages of development and gradually slows down before flowing inversely.

Additionally, development policies and trade liberalisation are said to reduce migration rates, when in fact they encourage people to emigrate as showed by studies suggesting that economic growth related to trade liberalisation – like the EU’s association agreements with North Africa – leads to more migration in the short and medium run.

Fourth, is the supposition of migration causing ‘brain drains’. Though this is a valid suggestion at first glance, it has been sustained over major assumptions. Though there are certainly skilled workers leaving their countries, quantitative assessments of brain drain conclude that emigration of skilled workers does not account for a significant proportion of the better educated. It also assumes that every migrant is highly skilled. By the same token, ‘brain gains’ can follow ‘brain drains. The departure of the better educated can in the medium and long-run suppose a counter flow of remittances, trade relations, new knowledge, attitudes and information. As commented earlier, capitalism has led to the commodification of labour, and some countries see skilled labourers as an export, like the Philippines, where nurses are educated with the purpose of generating remittances from abroad. Far from playing their part only in economic terms, skilled labour also has a positive influence in socio-political debates and the development of civil society, underscoring the fact that development consequences of migration do not simply boil down to remittances.

Another common myth is that remittances are spent on conspicuous and non-productive investments. This argument has been proved to be rather inaccurate, and considers consumption as being detrimental, when there is the possibility to argue that such money contributes to the well-being of people in the short-run. There is empirical work on Latin America and Africa proving how migration does not necessarily lead to passive dependency on remittances, but rather leads to more economic activity and wealth.

The sixth misconception of international labour and remittances is “that the orientation of migrants towards their countries of origin is an indication of the lack of social and economic integration in the receiving countries’ societies”. There is a widespread bias towards ‘receiving’ countries in the international labour debate from Eurocentric critics, clearly exemplified in the Netherlands, when in 2002 some politicians accused immigrants of not investing their money in the Netherlands and sending it to their home countries instead, hindering their integration. This ignores the contribution to development made by migration to ‘sending’ countries.

Having demystified international labour and remittances, it is possible to observe the extent to which remittances provide a solid alternative to development strategies based on foreign aid and liberalisation of trade. Remittances from North to South have doubled in size during the 1990’s and proved to be less volatile than foreign direct investment (FDI), whereas official foreign aid has declined. Furthermore, remittances are a key source of foreign exchange, and appear to be a ‘private’ form of foreign aid which flows directly to people who really need it and is less prone to end up in the hands of corrupt governments like in the case of large amounts of foreign aid in African countries.

Although international movements of people and remittances have huge benefits, they must not be seen as development panacea. Borders of people should be more liberal in order to allow circular cycles of migration to function adequately. The literature should also pay closer attention from a constructivist point of view to the origins of the negative bias towards migrant flows of money, which I believe are rooted in a securitisation of the debate and excessive importance given to Western state actors.

The hypocrisy of NDC’s and liberal borders for goods

In the following section, I expand on what I consider to be an overly optimistic stance towards liberal movements of goods and services as a development strategy. By showing how the likes of Britain and the US did not always rely on laissez-faire development policies, I highlight the inevitable hypocrisy and hence controversy behind free trade as a development strategy. Thus, this contradiction hints how developed states are “kicking away the ladder” they climbed to achieve economic greatness –as Friedrich List metaphorically puts it. From a historical point of view, prominent icons of capitalism like Britain or the US adopted radically different policies to what we nowadays call ‘good’ policies to establish themselves as such symbols.

Britain relied heavily on aggressive activist policies to promote their infant industries, which date back to Edward III times in the 14th Century when woollen manufacturing was the leading industry at the time. In the 18th century, Britain actively used export subsidies and import tariffs to protect its infant industry. In short, Britain’s leading role in global economic terms was reached after long-lasting tariff barriers to protect their infant industry.

Following Britain’s example, the USA was the most ardent user of modern protectionism. Between 1816 and the end of WWII, the US had one of the highest rates on manufacturing imports in the world, added to the country’s natural protection due to high transportation costs until the later stages of the 19th century. It was not until the end of WWII that the USA started championing the cause of free-trade.

Other developed countries like Germany or the Netherlands made use of protectionist measures. During the late 19th Century and early 20th century, Germany accorded strong tariff protection to strategic industries such as iron or steel. The Netherlands deployed an impressive range of interventionist measures until the 17th century to build up its maritime supremacy.

Each NDC (now-developed country) used different tools in their development processes, such as export subsidies, cartel arrangements, directed credits or conferring of monopoly rights, underscoring how there has not been a historical one-size-fits-all successful development strategy, yet the Washington Consensus proposes a standardised, radically different model to historically successful strategies. If developing countries can adopt policies more suitable to their stages of development, it will enable them to grow faster.

Liberalised financial services and capital controversies

Financial services and liberalised movements of capital are not exempt from controversies either, nonetheless an increasing number of governments have sought to liberalise their capital accounts in recent decades. Since the breakdown of Bretton Woods, transnational capital movements have dwarfed the size of real economies. The Asian financial crisis represents a clear example of the controversies associated to capital control liberalisation. Several East Asian countries liberalised capital controls in the 1980’s and 1990’s, which facilitated an substantial increase in short-term portfolio investment flows, enabling the rapid transmission of the crisis from Thailand to other countries in the region. Despite strong evidence of potential hazards or controversies associated with liberalised financial services and capital, there is an almost collective support towards the liberalisation of controls of capital. Part of this is thanks to the diffusion of the norm of capital mobility by three major institutions like the IMF, the European Commission and the OECD. Moreover, the technicality of the language related to financial movements is much more complex and remote for civil society than the language related to international movements of people, hence the possibility that the liberalisation of border controls of people seems an easier policy to blame by governments when facing economic downturns. Likewise, ‘people’ are tangible sources of change, as opposed to capital flows which in the eyes of the average civil society member do not have a direct impact in their lives. Another controversy associated with the liberalisation of capital is the emergence of problems with offshore finance and tax havens. Such a problem puts high pressure in high-tax developed countries, which lose potential public revenue to finance public spending through tax avoidance and evasion practices by individuals and businesses.

Limitations, securitisation and Eurocentric perspectives

The literature focuses extensively on the negative effects of labour movements and the ways in which illegal or bad practices of migration can be regulated. Though bad practices of labour movements are not uncommon, the role of states and institutions should be put under scrutiny as there is a lack of consensus at an international level with regards to efficient policies to cope with international labour movements. Taking labour movements from the Mediterranean as an example, there is a prevailing Eurocentric perspective which sees security issues as central to the migration debate, disregarding the role it plays in the socio-economic development of North Africa. Likewise, injecting security imperatives into international labour movement policy-making simply presents a form of sovereignty assertion, and justifies tighter border controls, against the needs of financial capital which requires labour mobility.
The emergence of sovereignty discussions and Westphalian understandings of migration stress the importance of approaching the international labour movement debate from a Global South perspective in order to acknowledge the potential positive outcomes from migration and not just the challenge it poses to Global North states. It would also be interesting to do more extensive research into the origins and establishment of norms which look at the liberalisation of borders of people with certain scepticism, away from realist approaches based on interstate relations.

Final remarks

In conclusion, the paper positions itself against the common belief of liberal borders of people being more controversial than those of goods, services and capital. I consider contradictions amongst liberal economists and the agential qualities of labour as opposed to goods, services and finance as the root of such misinterpretation of liberalised borders and related controversies. To substantiate my defence of liberalised borders of people, I identify development opportunities in the form of remittances provided by international labour to the Global South. Afterwards I identify controversies related to the liberalisation of borders of goods, services and capital, which though they might seem remote to civil society, have a bigger impact on socio-economic terms than possible controversies associated with liberalised borders of people, making them more controversial than the later.

Pablo Correas is from Madrid and recently finished his degree in Economics and Politics from Swansea University. Currently he is studying towards a Master’s in International Political Economy at the University of Warwick. Pablo is particularly interested in governance matters and over the summer will be writing his dissertation on international organisations and underdevelopment in Eastern Europe.

Bibliography:

• Adams Jr, R. H. (2003). International migration, remittances, and the brain drain: A study of 24 labour-exporting countries.

• Bairoch, P. (1995). Economics and world history: myths and paradoxes. University of Chicago Press.

• Baldwin-Edwards, M. (2006). ‘Between a rock & a hard place’: North Africa as a region of emigration, immigration & transit migration. Review of African Political Economy, 33(108), 311-324.

• Boxer, C. R., Plumb, J. H., & History of human society. (1965). The Dutch seaborne empire, 1600-1800 (p. 238). London: Hutchinson.

• Brochmann, G., & Hammar, T. (Eds.). (1999). Mechanisms of immigration control: A comparative analysis of European regulation policies. Bloomsbury Academic.

• Broome, A. (2014). Issues and actors in the global political economy. Palgrave Macmillan.

• Castles, S., & Miller, M. J. (1993). The age of migration: international population movements in the modern world.

• Chang, H. J. (2003). Kicking away the ladder: Infant industry promotion in historical perspective. Oxford Development Studies, 31(1), 21-32.

• Chwieroth, J. M. (2009). Capital ideas: The IMF and the rise of financial liberalization. Princeton University Press.

• De Haas, H. (2005). International migration, remittances and development: myths and facts. Third World Quarterly, 26(8), 1269-1284

• Faini, R., & Venturini, A. (1994). Migration and growth: the experience of Southern Europe (No. 964). CEPR Discussion Papers.

• Gammeltoft, P. (2002). Remittances and other financial flows to developing countries. International migration, 40(5), 181-211.

• Jonakin, J. (2012). Economic narratives and international migration under liberalization: lost in translation. Economy and Society, 41(2), 177-198

• Kapur, D., & McHale, J. (2003). Migration’s new payoff. Foreign Policy, 49-57

• List, F. (1885). Political and cosmopolitan economy. Theoretical evolution.

• Lowell, L. B., & Findlay, A. (2002). Migration of Highly Skilled Persons from Developing Countries: Impact.

• Martin, P. L., & Taylor, J. E. (1996). The anatomy of a migration hump. Development Strategy, Employment, and Migration: Insights from Models. Paris: Organization for Economic Cooperation and Development, 43-62

• Mavroudi, E., & Nagel, C. (2016). Global Migration: Patterns, Processes, and Politics. Routledge

• Noble, G. W., & Ravenhill, J. (2000). Causes and consequences of the Asian financial crisis. The Asian financial crisis and the architecture of global finance, 1-35.

• O’brien, R., & Williams, M. (2016). Global political economy: Evolution and dynamics. Palgrave Macmillan

• Polanyi, K., & MacIver, R. M. (1957). The great transformation (Vol. 5). Boston: Beacon Press.

• Samers, M. (1999). ‘Globalization’, the geopolitical economy of migration and the’spatial vent’. Review of International Political Economy, 6(2), 166-199.

• Skeldon, R. (1997). Migration and development: A global interpretation.

• Zlotnik, H. (1998, June). The Dimensions of International Migration: International migration levels, trends and what existing data systems reveal. In UN Technical Symposium on International Migration and Development, The Hague (Vol. 29).