Free Markets: Torture and Capitalism China? Yahoo! Sued

Today, The World Organization for Human Rights USA file suit against Yahoo! Inc and its subsidiaries for the U.S. Internet company’s complicity in human rights abuses and acts of torture in China. For the text of the complaint, see here.

General Facts:

Journalists, human rights activists, and other Internet users in China have been subjected to a pattern of arbitrary criminal prosecution, imprisonment, and torture as a result of their expression of ideas in opposition to the positions or policies of the government of the PRC on a variety of politically disfavored topics, such as the Tiananmen Square massacre, democratic reform, human rights advocacy, or disagreement with government policies generally. As a result of the expression of their views, these “dissidents” are subjected to arbitrary arrest, criminal prosecution, and persecution in violation of numerous protections for fundamental rights of freedom of expression, association, and assembly under the Chinese Constitution and international law.

In or around the Spring of 2002, Yahoo! Inc. signed an official, voluntary
agreement that had the effect of directly involving Yahoo! in the censoring and monitoring of on-line content and communication by its Chinese users. This agreement was in the form of the Internet Society of China’s “Public Pledge on Self-Discipline for the Chinese Internet Industry” (referred to herein as “the Public Pledge”). The Internet Society of China is a government affiliated professional organization, and the Public Pledge is described as being voluntary, not required by government regulation, although pressures to sign the Pledge and to abide by its requirements as a prerequisite for doing business in China are considerable. By signing the Public Pledge, Yahoo! Inc. voluntarily agreed to help monitor and censor electronic communication use involving information that, according to the Internet Society of China, could “jeopardize state security” or “disrupt social stability,” and to report any offending on-line expression or communication to PRC authorities.

The Complaint asserts that Yahoo! cannot claim innocence, for it knew of the possible consequences when it signed the Pledge. “A number of human rights” organization had alerted Yahoo! of the consequences. Yahoo! also had to be aware that the State Department was concerned about human rights abuses in China.

The plaintiff, Wang Xiaoning, did the following:

• Edited and commented on articles calling for democratic reform and a multi-party system in China
• Continued to send Internet messages after administrators blocked his access to the “aaabbbccc” Yahoo! Group. He then sent his journal anonymously to individuals.

Yahoo!, of course, providing all the information to the police, “linking Wang Xiaoning to his anonymous e-mails and other pro-democracy Internet communications.”

Now, of course, Yahoo! will have its defenders as well as its sturdy detractors for choosing profit over human rights. After all, Wang is one individual. Yahoo! is in a battle for its corporate life, affecting far more than one individual. And China is the great playing field upon which all our corporations are moving.

But I want to twist the line of questioning a bit, focusing on economic and WTO principles. A market is considered open and free when all participants operate according to the same rules. In a profound sense, Yahoo! is simply operating on a level playing field. Any of its competitors, Chinese or foreign, would have the same playing field: Certain discussion of multi-party reform and democracy are illegal and must be reported. That reporting may well lead to torture and imprisonment.

On the Charlie Rose show last night , Secretary Paulson asserted that China would inevitably democratize. Open capital markets will accomplish precisely that. Richer people demand more freedom, more equality. Ah, but some are more equal than others.

I would counter that as long as all firms in China play by the same rules, WTO rules are met; a “free market economy” can exist. In short, there is no ideological conflict between “free markets” and totalitarianism.

I would posit that China’s leaders would argue that the conflict between capitalism and totalitarianism is illusory. They would argue that if they are successful in terms of industrializing China then that success would prove their point. Nothing like success to make one’s point. After all, China’s leaders are practical folk.

In short, the argument is between the belief that open markets lead to democracy and the assertion that free markets and totalitarianism are not incompatible.

Personally? I suspect that the two are not incompatible. One supplies the economic muscle; the other optimizes control in order to increase the muscle mass. The close tie between corporate power and government in the states might serve to make my point?

In any case, the argument is a complex one. One thing is for sure: History will write the answer.