The free market paradox – Is migration capitalism’s unfinished business?

The following essay was originally compiled for the Mixed Migration Review 2018 and has been reproduced here for wider access through this website’s readership. 

After decades of steady, technology-enhanced globalisation, it is still far easier to move money and goods than people. A new quantitative assessment by the European Commission of the structural factors that shape migration finds that while global trade and GDP continues to rise year by year, migration remains stable at between 3 and 3.4 percent of the global population. So, is migration, the globalisation of mobility, the unfinished business of capitalism?

Supply and demand

Mixed migration flows comprise refugees as well as migrants seeking better lives, opportunities, and jobs in destination countries. Labour migration, in particular when irregular, is therefore part of the mixed migration phenomenon. Clearly, when legal migration is restricted, unmet demand for labour in destination countries and excess labour supply in origin countries are among the factors that cause people to join mixed migration flows.

International migrants, whether arriving regularly or irregularly, generally seek and find work in their destination countries, in both formal and informal sectors. Yet in spite of the obvious connections between migration and capitalism, the relationship between the two lacks conceptual and practical clarity.

Capitalism — in which private ownership and decisions about investment and the use of goods prevail over public ownership — is neither a finished project nor without its flaws and pitfalls. Capitalism has been the defining mode of production characterising the twentieth and twenty-first centuries’ forward march of globalization. The global push towards more liberal trade policies, coupled with the spread of technology and culture through globalization’s lowering of barriers, makes the world smaller. Migration as a global phenomenon is both a consequence and a driver of globalization and the associated turbulence in world politics.1 The challenges posed by migration are among many of capitalism’s outcomes that lead some to wonder whether the system is sustainable in the long term.

Missing out on $78tn?

For some, “migration is capitalism’s unfinished business”. Put simply, this means that if capitalism is to work fully, migration must be allowed to occur freely; therefore it eventually will, as long as capitalism remains the way in which the world does business. Others see migration rather as a form of resistance to the inequalities and exploitative tendencies inherent in global capitalism.2 Conceptually, capitalism exalts free trade and has pulled down international barriers in many areas, allowing goods and money to flow relatively unhindered between most nations. Regional free trade areas, or customs unions, foremost among them the European Union, deliver freedom of movement for goods, capital, services and labour.

Labour can abstractly be thought of as a mobile factor of production, and its movement might be optimal for capitalism to operate to its fullest extent, creating a perfect match between labour supply and demand on a global scale in the most efficient way. As suggested in The Economist, a world of free movement would be $78 trillion richer. Workers become much more productive when they move from a poor country to a rich one where they can join a labour market with ample capital, efficient companies, and a predictable legal system. “Labour is the world’s most valuable commodity — yet because of strict immigration regulation, most of it goes to waste.”3

Heavy footprints

In reality, open borders are a political non-starter and hardly any politician would argue for them. Some people fear open borders mean their countries would see the arrival of unmanageable numbers of foreigners, which may threaten the system that made their country worthwhile moving to in the first place.4  Migrant labourers have social, cultural and political footprints that inevitably make their mobility more than just an economic matter. As such, the freedom of movement for labour is the most complicated of the EU’s sacrosanct four freedoms. The motives for migration might be an element in capitalist economics — as argued above — but the consequences of human mobility go beyond the logic and rationality of economic theory and have always generated significant public debate.

In principle, capitalists should be able to freely choose between all potential workers, considering all the advantages and disadvantages of nationals and foreigners. Companies move production to where the cheaper workforce is available or, in cases where the nature of the business makes relocation impossible or undesirable, they seek cheaper workers to come to the production site.  Recognising this, most states have immigration programmes for high-skilled migrants. For example, Apple and Google need tech engineers, so the US has H1B visas; the EU needs engineers and scientists, so the Blue Card is developed; the UK needs doctors, so the Tier 2 visa is deployed.

Wanted: seats at the table

Nonetheless, it is governments that develop policy. Dialogue with the private sector is often problematic when, politically, migration is so controversial. Moreover, while categories for skilled immigration are developed to respond to professional shortages, those who need fruit pickers, gardeners, road builders, nannies and other less skilled workers are generally less successful in having migration policy adapted to their needs.5 There might be seasonal work visas, but generally there are restrictions and concerns about overstaying or other legal issues. Yet there is work available, and refugees and migrants in mixed migration flows know that informal employment opportunities do exist, and, with the help of smugglers, they will try to access them. At times when political expediency leads governments to decide that immigration is less palatable, even the highly skilled, whose professional capabilities are needed, might find they are turned away.

The International Migration Drivers report of September 2018 reaffirms that the economic context of destination countries, i.e. the availability of jobs there, has a positive relationship with mobility of workers from lower- and middle-income countries. Academics have long identified fluctuations in both legal and illegal immigration as being closely associated with the business cycle in receiving countries. If the demand for migrant labour is not met by supply in the form of regular migration channels, migration will not stop, but migrants will come irregularly. Only sustained economic recessions tend to significantly curb immigration. In other words: the only way to really reduce immigration is to wreck the economy.

Brexit as backlash

As they navigate the political tensions between labour demand and migration, governments often turn a blind eye to the presence of large numbers of irregular migrant workers. Even where governments have agreed freedom of movement, as in the EU’s Schengen Area, preconceptions about the reasons for mobility, as well as its associated rules and benefits, can generate unrest within the national population, and, by extension, political backlash. Brexit is a good example of this, as is the rise in populism and growth of right-wing anti-migration parties throughout Europe in recent years, and especially since the surge of irregular arrivals of both refugees and migrants since late 2014.

Migrants who arrive irregularly often take on some of the more strenuous, menial, and low-paid jobs which most native workers avoid, but which are essential to certain sectors in any economy.

Spirals of distrust

Short on other options, many irregular migrants hoping to participate in capitalist economies end up joining refugees in applying for asylum. When so many asylum seekers come from non-refugee producing countries — or countries not in conflict — and when so many are subsequently rejected, the spiral of distrust and disquiet often grows in destination countries. (“Are they really who they say they are?”) Migrants may find no escape from this spiral: if they come only to seek asylum and have no clear interest in working, they risk being labelled as “welfare profiteers.” But if they aspire not only to a safer life but also to work, and thereby contribute to the economy of the country that offers them protection, then their sincerity as asylum seekers is called into question. All of this has deep political and social consequences extending well beyond the bounds of an efficiently operating economic system.

Given the conceptual and practical relationships between capitalism and migration, will capitalism succeed in finishing its business? Will governments loosen immigration controls so that workers can go to where the jobs are, and then freely share their gains, through remittances, with family and communities in countries of origin? For capitalism to really work as a global economic system, its proponents would be expected to be the loudest voices for removing barriers to migration and letting the market have its way. But are they?

Freedom has its limits

It turns out that in many countries the very right-wing parties that embrace capitalism, free markets, and the free flow of capital and goods, and which support multinational corporations, are often conservative when it comes to migration, or even strongly opposed to it. Conversely, political parties on the left of the political spectrum — such as social democrats — are usually “softer” on migration and migrants from a humanitarian or humanistic point of view and are more critical of capitalism and big business. At the same time, left-wing parties are also generally more concerned with the position of native workers and usually have close ties with trades unions. Those who might adopt a social-democratic political standpoint but question a capitalist economic approach might be concerned that the system, pulling poorer migrants from the periphery to the centre, is perpetuating the oppression of the masses.6

Access to national welfare systems for immigrants is an additional point of contention for many. Whether the welfare system is what actually attracts migrants — the so-called “welfare magnet” hypothesis — is unclear: a recent overview study concluded that the empirical literature does not provide a conclusive answer as to whether the hypothesis is valid.

Left-right; right-left

The above further shows how migration really is the unfinished, or even undecided, business of capitalism. When it comes to movement of people, this does not easily fit into pro- versus anti-capitalism positions. More generally, as Katharina Natter and Hein de Haas have argued, it is clear there is no neat right-left divide on migration policy, They find that in the 1960s, it was mainly the political right, influenced by industry lobbies in need of migrant labour, who were in favour of guest-worker immigration to Western Europe. Left-wing parties were more critical and concerned about undermining the position of native workers. Supporters of economic market liberalism on the right favour immigration, while cultural conservatives on the right oppose it. Cosmopolitans and humanitarians on the left defend migrant rights, while economic protectionists on the left are more conservative about migration.

Any democratic state’s willingness to have a relatively open immigration policy is therefore constrained by political and popular opinion about the desirability of admitting newcomers to the state and to communities. Even if many studies show that immigration can be beneficial to society in various ways,7 some degree of fear of change or of the socio-cultural impact of migration, or in some cases plain xenophobia, seem to prevail.

The challenge ahead

Perhaps rather than being unfinished, capitalism as a project is inadequate or insufficient. Capitalist economies — alongside social-democratic politics and socially-oriented welfare programmes based on equality — are enjoyed by a country’s citizens, who are not always eager to share their benefits with newcomers, despite the strong humanitarian principles that are also present within most of these societies. This combination of systems, values, and different perspectives affects how to view and deal with mixed migration, including people seeking peace and safety as well as opportunities and a better life. The ongoing challenge will be to reconcile these cultural, social, economic and humanitarian interests, both of the societies in destination counties and of the people in mixed migration flows who move for a variety of reasons. So far, capitalism as an economic system has not yet been able to provide the answer.


1. Papastergiadis, N. (2018) ‘The Turbulence of Migration: Globalization, Deterritorialization and Hybridity’ Wiley and Sons.

2. Lopez, E. (2017) ‘Migration as Resistance to Global Capitalism: From Cause to Action in the Migration of Central American Children to the United States, Summer 2014’ in Perspectives on Global Development and Technology, Brill, Vol 16 Issues 1-3, 2017, pp34-59

3. Caplan, B. & Vipul Naik, V. (2015) ‘A radical case for open borders’ in Powel, B. (2015) ‘The economics of immigration: market-based approaches, social science, and public policy’ Oxford University Press.  Available at: https://www.econbiz.de/Record/a-radical-case-for-open-borders-caplan-bryan-douglas/10011377354

4. The Economist (2017) ‘A world of free movement would be $78 trillion richer’. Available at: https://www.economist.com/the-world-if/2017/07/13/a-world-of-free-movement-would-be-78-trillion-richer.

5. See, for example, Frank, M. (2017) ‘Can America’s Farms Survive the Threat of Deportations?’ The Atlantic. Available at: https://www.theatlantic.com/business/archive/2017/06/can-americas-farms-survive-the-threat-of-deportations/529008/

6. See, for example: Collins, F. (2016) ‘Migration, the Urban Periphery and the Politics of Migrant Lives’ Antipode. Vol 48 No 5

7. See, for example: IMF (2016) ‘Migrants bring economic benefits for advanced economies’ Blog post. Available at: https://blogs.imf.org/2016/10/24/migrants-bring-economic-benefits-for-advanced-economies/#more-15085