Introduction

Sri Lankan labourers in the apparel sector are amongst the most educated workers in the global industry. Sri Lanka's human development achievements, however, came through decades of state intervention in the social welfare of its people, especially through investment in public education and health. The highly educated nature of Sri Lankan workers has played an important role in the apparel sector, cultivating an image in which ‘quality, reliability, and punctuality’, as management repeatedly informed me, are givens. As I noted in Chapter Four, it is an image that, according to suppliers, imbues buyers with the confidence to source from Sri Lanka.

The workforce that Sri Lankan apparel firms make proud proclamations about in their websites is then the product of previous state actions in response to labour agitation during the late colonial and pre-1977 periods (Jayawardena 1971, 1972; Kearney 1971). However, the critical role collective labour struggles played and how the state had to respond to them rarely get the attention or acknowledgement they deserve. They need to be taken account of in order to acknowledge how labour too shapes the state and industrial development (see also Chang 2003; Featherstone and Griffin 2016; Silver 2019; Palpacuer 2020). Chang (2003, 2014) makes this and other related points about the pivotal role of the state in industrial development in several places. He stresses its importance not just for East Asia, but also for most Western nations – including the USA, where protecting infant industries was key in the industrial development trajectory. While it may be that this level of mediation to secure a good quality of life for Sri Lankan citizens was a pre-1977 preoccupation, Sri Lankan apparel firms did not do it alone in the post-neoliberal landscape either. As I outline here, labour struggles were crucial for how the ethical sourcing strategy was secured for the apparel sector. In this chapter, I hone in on three such pivotal moments for post-liberalized Sri Lanka, with a particular emphasis on the post-recessionary phase (circa 2008 onwards).

In the sections to follow, I start by revisiting accounts by labour scholars and historians to allow me to place collective labour struggles in the chronicle of the country's political economy.

The decision to repeal the usury laws in British India did not remain uncontested, not only by protesting farmers, but also in the legislatures and courts. While one of its effects certainly was to enhance the importance attributed to the written form of contracts, the actual practice of debt relations in Indian society remained to some extent unaffected by it. The vast majority of debt contracts did not lead to litigation. Instead, moneylenders frequently relied on written contracts and court litigation either as a last resort in cases of default or to ‘fleece’ debtors once the accumulation of interest payments had led to default. The Deccan Riots formed a major threshold in the development of British Indian policy, especially in the development of law and legal interpretation. Yet the comprehensive sway of the Benthamite doctrine on the futility of usury laws had been challenged even before, especially in tenancy laws. Thus, for instance, the Bengal Landlord and Tenant Procedure Act of 1869 (Act VIII B. C. of 1869), concerning the procedure of suits between landlords and tenants, in Section 21 provided an interest rate of 12 per cent per annum for arrears in rent, unless otherwise provided for by written contract. Read together with Section 67 of the same act, stipulating the signing of a kabuliyat for outstanding arrears in rent for transfers of landed property between tenant and (new) landlord, the act in practice imposed an effective maximum interest rate for a significant number of debt relations.

The effects of legal measures on the actual practice of debt relations should not be overstated as even where suits were instigated, especially the subordinate courts were unlikely to employ this legal reasoning to set aside the evidence of a written contract. The case of the aforementioned act, however, emerged as one of the early cornerstones in the development of legal doctrine regarding debt cases.

On a crisp, beautiful autumnal morning in 2007, I attended my first away-day in British academia. Quite a few of us in Southampton's School of Geography, had made the transition from North America to a British university. We were Cool Britannia then, and we all felt novelty, excitement and dread in equal measure. Little did I know the collective energy I enjoyed on that first day would generate a humbling journey that has culminated in the pages of this book.

That morning, I was treated to a presentation by one of my senior colleagues, Neil Wrigley, about his work with Alex Hughes and Martin Buttle, on multi-stakeholder initiatives and ethical trading. As I sat listening, a nagging question began rattling around my brain. During the question and answer, I first voiced it: ‘What about the workers? What do they think of these ethical trading initiatives? Where is their voice?’ I don't recall any discussion, but later, during lunch, Neil and another senior colleague, Peter Sunley, followed up and gave encouragement to this newly formed idea: ‘That was an important perspective you flagged; there is something there, you should explore it.’ Soon I secured an ESRC (Economic and Social Research Council) grant (061-25-0181), which allowed me to launch this project, where I explore these questions in the context of the Sri Lankan apparel sector.

My question had its roots in work I had done before coming into academia. My time at the International Labour Office (ILO) in Geneva, Switzerland, introduced me to senior colleagues who valued ILO's tripartite spirit: Manuela (Tomei), Auret (van Heerden), Naoko (Otobe), David (Kucera), Clare (Harasty) and Azita (Berar-Awad). The many projects I did there instilled in me the need to pay attention to workers’ voices and their quest for justice.

Primed to ask questions, I arrived in Sri Lanka where the generous, committed, feisty garment workers taught me what I needed to know to tell this story and answer the questions I posed on that away-day many years ago. And those workers, in turn, taught me the value of listening.

I brought these tenets to my research and analysis on the apparel sector of Sri Lanka.

‘Can you imagine that I am handing out interest-free loans right now?’ I was asked in December 2016 by a moneylender in Banaras (Varanasi) who normally charged a rate of 30 per cent per month. A few weeks earlier the Indian government overnight had withdrawn banknotes of 500- and 1,000-rupee denominations, the vast majority of all cash in circulation – certainly one of the biggest policy misadventures in recent history. Since the ‘demonetization’ misadventure had not included any apparent planning for a re-monetization, trade in the city's ‘bazaar’ had collapsed, by some local estimates upwards of 80 per cent. While many extra-legal lenders were simultaneously engaged in commerce, and therefore affected by the policy, it also constituted a business opportunity. Old denominations could be exchanged for new ones only with significant difficulties, in an endless-seeming array of fresh regulations restricted to very low amounts. For richer Indians, exchanging old banknotes that had become practically worthless depended considerably on finding poorer people who would exchange them in their stead. The market value of the ‘old’ banknotes in Banaras, as elsewhere, dropped drastically. They became available to buyers within days of the policy announcement for 75 per cent of their nominal value. By early December this value had dropped to 60 per cent, and to 40 per cent around mid-December. One way of getting the devalued banknotes into the banking system hinged on loans by moneylenders. The depositors – frequently depicted obnoxiously as ‘money mules’ or chotus (lit. little ones) in the parlance of India's upper-middle classes – made deposits consisting of (frequently interest-free) loans given to them by moneylenders. Consisting of devalued banknotes, these loans thus entered the banking system, and could be withdrawn in legal tender a few months later to repay the moneylenders. For the depositors, this practice brought about a significant respite from economic distress.

When I asked the lender why he did not charge interest, he proceeded to outline an argument that I had already become familiar with in my fieldwork. The agreed-upon interest rates for a transaction mostly served as a guideline. Eventually, given their exceedingly exploitative character, almost all debtors would default.

The shift in policy towards granting the courts discretionary powers led to a significant drop in litigation cases reaching the higher-level courts, visible almost as soon as the Usurious Loans Bill was enacted in 1918. There are indications that matters of usury continued to be dealt with for a time by small causes courts, though. In principle, the shift in legal doctrine on credit markets marked a significant rupture. It rescinded the operation of contractual law for transactions that were defined to be usurious, just as much as the repeal of the usury laws in 1855 – in principle – had imposed contractual law on the earlier economies of debt. The policy shift towards the doctrine of unconscionable bargains clearly relates to the endeavour to define propriety in economic relations, though the definition of the ‘proper swindle’ (Birla 2009) with regard to credit markets took on an ambiguity that needs to be emphasized here. While marking a broad array of credit transactions as improper, and dissecting these from the proper debt relations that continued to fall under the purview of contractual law, the shift towards discretionary powers did not envision state supervision of propriety through regulation. It did not constitute a move towards enhanced formality. On the contrary, it (vaguely) delineated an economic enclave in which state regulation would remain incoherent and arbitrary, and implicitly envisioned creditors in this segment to seek redress in extra-legal manners. While ‘proper’ debt transactions became increasingly subjected to regulatory regimes, their ‘improper’ equivalent was implicitly intended to remain fuzzy.

While it is difficult to ascertain the precise effects of the new policy with respect to the lower courts, the influence of the shift in legal doctrine on the actual operations of credit markets can only be seen in long-term developments. Credit markets in northern India were extremely complex and could not be expected to become neatly detached into two segments within a short period of time. The United Provinces Banking Enquiry Committee described the credit markets they encountered in 1929–30 in derogative fashion as ‘a tangled jungle of disorderly transactions’, marking their disapproval of the messy character of Indian business relations, despite the fact that colonial interventions through the use of discretionary powers increased rather than decreased the complexity of markets.