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Product Details
| ISBN-13: | 9780745336008 |
|---|---|
| Publisher: | Pluto Press |
| Publication date: | 11/15/2015 |
| Series: | Wildcat |
| Pages: | 224 |
| Product dimensions: | 5.33(w) x 8.50(h) x 1.00(d) |
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CHAPTER 1
The Industrial Proletariat of the Global South
In the 20th century manufacturing was deemed essential for national economic development and modernization. Today international economists consider manufacturing as a sign of the subservience of emerging and developing countries to global capitalists and financiers in the advanced economies of the North. The terminology of the World Economic Forum and multinational economic institutions that differentiates between advanced, emerging, and developing economies contains an underlying contradiction. Advanced economies provide high-technology inputs into the consumer goods, such as automobile global positioning systems (GPS), technology, and creative content determined by the tastes of affluent consumers in the advanced countries. A range of industries are now considered dispensable for advanced countries: automobile production, shipbuilding, electronics, and even manufacturing of high-tech products are outsourced to 'emerging' and 'developing' countries that can produce commodities at a fraction of the cost in wages, while the profits are realized by firms in the North.
The shift of most industrial production to the South from 1980 to the present is a fundamental feature of neoliberalism in which monopoly capitalists in the North gain advantage over workers in the imperial world. The economies of the South, which were once considered to be developing, are in a position of permanent subordination to the advanced countries. Profitability is expanded and a higher surplus on investments is produced using inputs from the South, where newly proletarianized workers are being impoverished.
In the three decades from 1980 to 2011, the share of industrial employment in the Global South expanded from just over 50 per cent to 80 per cent of the world's 3.27 million workers in the formal sectors of the economy. The shift of foreign direct investment (FDI) to the South for industrial production has dramatically enlarged a class of especially oppressed and exploited industrial workers that far exceeds the development of mass industrialization in Europe and North America in the 20th century. Foreign companies thrive on a workforce composed primarily of migrant contract laborers whose rights to strike are limited. Independent unions are banned or opposed. Contract and temporary workers deprived of rights keep wages down for all and expand profit margins which are appropriated by multinationals in the Global North. These are the New Industrial Proletariat.
As states in the South have competed for capital, they have also succeeded in removing the fangs of traditional unions that formed and consolidated in the postwar era of independence and national liberation struggles. The forces of organized labor formed in the image of their European colonial predecessors have adopted policies that demobilized workers in exchange for dispensations to union members employed in industrial sectors in key industries. Today's mobilization of workers in the South is challenging not only national and international capitalists, but also the institutional regime responsible for co-opting unions into a system that protected a small proportion of the urban working class. Worker assemblies and newly formed independent workers' organizations in the South are making demands reminiscent of those made by the mass industrial organizations advanced by rank-and-file workers who formed the Industrial Workers of the World (IWW) a century ago.
POVERTY NORTH AND SOUTH
The focus of media and academic research is on poverty in the North, in response to growing recognition of the generalization of destitution worldwide, as popularized by the Occupy movements in 2011. Poverty and inequality is indeed endemic in the North, above all in states that have eviscerated the social welfare protections that emerged in the mid-20th century in Europe and North America. Growing disparity and indigence intensified in the wake of the economic shocks of 2008-09 through government policies that allowed industrial producers to declare bankruptcy in order to restructure wages while banks foreclosed on the homes of the working poor. The divergence was particularly marked in the centers of finance capital, London and New York.
Yet despite the decline of industrial jobs and the growth of poverty and inequality in the North (especially among racial minorities, immigrants, and youth), wages and material conditions in the imperialist core in Europe and North America remain far better in the era of neoliberal capitalism than those of almost all unionized workers in the South.
The expansion by multinational conglomerates of foreign investments in extractive and production industries in the South has in many ways contributed to a divergence of interests between workers in the North and South. While workers in the North may seek to keep commodity, food, energy, and natural resource prices low, capital is financing investments in the South designed to increase profitability through extracting higher levels of surplus labor, impoverishing industrial workers in poor countries, and threatening the remaining production workers in the North.
An enduring feature of existing trade union leadership in the auto industry of Europe and North America has been opposition to investment in low-wage factories in the global South. Organized labor in the North has only sought to improve conditions in the South with a view to advancing its own organizational interests. Raising the cost of labor in the South has always reduced the propensity of capital to export production, and redounded to the benefit of union members in the North. Given the concentration of mass production in North America, Europe, and Japan during the 20th century, existing trade unions unfailingly aligned with big business in their industrial sectors to prevent free trade. These efforts to preserve industrial production in the North failed miserably, as trade unions typically became allied with national manufacturers to defend shrinking industrial turfs from further outsourcing of production to the South.
THE 21ST-CENTURY 'FORCES OF LABOR'
A leading interpretation of the rise and fall of workers' movements is Beverly Silver's Forces of Labor. Silver posits that in response to worker militancy in locations of industrial development, capital undertakes two primary fixes in the workplace: spatial and temporal.
Drawing on the development of capitalism in Europe and North America from the 1870s to the 1930s, Silver asserts that the expansion of capitalist production in a specific state and region inevitably leads to a concomitant intensification and strengthening of working-class organizational power, creating a crisis of profitability. The centralization of production tends to stimulate the organization of the working class through the mobilization of workers and the consolidation of labor unions. Successful unions rooted in rank-and-file militancy typically organize and strike to improve wages and working conditions, forcing capital and nation states to mollify worker demands through wage concessions and the establishment of social safety nets. However, higher wages and welfare states undermine the stability of capital and are likely to produce economic crises. Thus capital is forced to consistently identify strategies to reduce labor costs through the reversal of social gains and reduction in wage costs, and 'intensifying the commodification of labor'. In turn, the likelihood that measures that discipline the working class also weaken social harmony and legitimacy forces capital to seek out lower-cost regions for production.
The growth of labor movements and the consolidation of trade unions in the 19th and 20th centuries gave rise to higher wages, improved working conditions, and state labor laws which standardized the relationship between organized labor and capital. While capital retained control over workplaces, collective bargaining agreements with unions tended to increase wages and states expanded social welfare protections to the broader working class. The contradiction between capital accumulation and worker militancy creates a historical crisis for capitalism. When a mobilized working class inhibits capital from reasserting hegemony to expanding profits, over the past 140 years capital has consistently relocated to new low-cost production regions with more docile labor forces. Silver argues that the propensity toward crisis in the 'temporal dynamic' contributes to an effort to recover profitability through 'fixes in the spatial dynamic'. Thus capital seeks to identify geographic regions with a higher intensity of labor commodification in order to offset higher wage standards and welfare regimes that increase the cost of production and reduce profitability, and to assure that 'profits can be made - even with the partial de-commodification of labor and the establishment of expansive social contracts - as long as these concessions are made to only a small percentage of the world's workers.'
While capital unceasingly seeks to pursue spatial fixes by the continuous relocation of production geographically to new regions, these initiatives only temporarily postpone crises, which reappear as militant working classes emerge in these new regions and challenge profitability by demanding higher wages and social benefits. Silver observes that the 'successive geographical relocation of capital constitutes an attempted spatial fix for crises of profitability and control that only succeeds in rescheduling crises in time and place.'
Despite the growing labor militancy in the South, capital has preserved the dominance of the imperialist core by recapturing profits and material gains in the financial centers of the North. Silver views the monopoly over trade and investment by capital in the North as a tendency rather than a structural feature of the world economy, but one that nevertheless accentuates inequality and poverty. This tendency has now become an essential feature of monopolistic firms which earn higher profits selling products in the North than can be obtained in the South. The emergence of a middle-income urban stratum in the South who can afford consumer goods also advantages firms in the North which own the financial assets of firms in poor countries, and has turned peasant and rural workers into highly exploited impoverished semi-proletarian laborers. South-South industrial trade is captured by financial firms which control FDI, commerce, and distribution systems, and which repatriate profits in the North.
To corroborate the North-South inequality that rests on imperialism and capital flows, Tables 2.1 to 2.4 demonstrate that, despite developing countries' low share of world gross domestic product (GDP) and FDI, globally Northern capital is completely dependent on the super-exploitation of low-wage Southern labor.
PRODUCTION AND IMPERIALISM
By the 2010s, for the first time since the 1980s, the expansion of trade and finance had given rise to a new stage in labor-capital relations, which depends decisively on the exploitation by multinational corporations and local contractors of workers in the South, buttressed by the dominance of the imperialist states in the North. There are several reasons for this.
Forced Migration
International capital, expanding through finance and banking, has invested in land and real estate in the South, inflating land and property prices beyond the reach of peasants and workers, and forcing them out of the countryside into industrial and urban centers where they become manufacturing, construction, and service workers.
Growth of Megacities
In the two decades from 1990 to 2010, the rapid and unending imposition of market liberalization expanded the population and area of urban conglomerations to include areas that once formed part of the rural hinterland. The majority of the population of the new megacities in Africa, Asia, and Latin America consists of displaced rural peasants who have moved to shantytowns on the periphery of urban centers, many of which lack clean water, medical services, and sanitation.
Industrial Production
Multilateral financial institutions determine the value added to industrial goods in each nation on the basis of GDP rather than the direct surplus value extracted from workers employed by the subcontractors of multinational corporations. As work is contracted out to low-price producers, calculation of corporate profits and contribution to the economy is concluded without acknowledging the labor input of Southern production workers who work for a fraction of the wages of the North. In addition, through establishing subsidiaries and relying heavily on labor contractors, multinational corporations seek to disown accountability for the impoverishment and dangerous and exploitative conditions that ensure profitability from enterprises employing the newly proletarianized labor forces.
The relocation of industrial production to the South compels us to reconsider the nature of global class relations in the early 21st century. As political economist John Smith asserts, 'What's involved here is not merely the globalisation of production but the globalisation of the capital-labour relation, in which capitalists in imperialist nations have become very much more dependent on value extracted from workers in the Global South.' Smith sums up the dramatic shift in industrial production from North to South thus:
In 1980 half the world's industrial workers lived in Europe, Japan, and North America, i.e. the imperialist nations. Since then, in just three decades, their numbers have declined in absolute terms by around a quarter, while the export-led expansion of the industrial workforce in low-wage countries has grown rapidly and now comprises 80 percent of the world's industrial workers. The scale and speed of this global shift, and even more so the form it has taken, are strong evidence of the significance of the outsourcing phenomenon.
In a highly referenced report on the importance of low-wage labor to the world economy, Stephen Roach, former chief economist for the investment banker Morgan Stanley, confirms the strategic importance for finance capital to redirect and expand production to the South:
In an era of excess supply, companies lack pricing leverage as never before. As such, businesses must be unrelenting in their search for new efficiencies. Not surprisingly, the primary focus of such efforts is labour, representing the bulk of production costs in the developed world. In the United States, worker compensation still makes up more than 75% of total domestic corporate income. And that's precisely the point. Wage rates in China and India range from 10% to 25% of those for comparable-quality workers in the United States and the rest of the developed world. Consequently, offshore outsourcing that extracts product and/or services from relatively low-wage workers in the developing world has become an increasingly urgent survival tactic for companies in the developed economies. Mature outsourcing platforms, in conjunction with the internet, give new meaning to such tactics.
The vast transfer in economic wealth and resulting inequality between developed North and industrializing South are demonstrated in the statistical tables. Table 2.5 shows the labor share of national income and Table 2.6 the capital share of national income around the world in 2008. Table 2.6 demonstrates that capital share of income for the developing countries is 22 percent higher than that in the developed countries, and the labor share of income is 12.4 percent lower in the developing countries than in the developed countries. Capital share is calculated by dividing gross operating surplus by the sum of gross operating surplus and compensation of employees based on data from 1992 to 2002 in developed and developing countries. Gross operating surplus is gross output less the cost of intermediate goods and services (to give gross value added), and less compensation of employees. It is a gross figure because it makes no allowance for depreciation of capital. The capital shares of Bolivia, Philippines, Poland, Tunisia, and Ukraine were obtained indirectly. In the UN source document (2004), gross operating surplus for those countries includes gross mixed income, which is the income of private unincorporated enterprises. However, in an earlier edition of the National Accounts Statistics, a ratio of gross mixed income to gross operating surplus is available.
Table 2.7 shows mergers and acquisitions (M&As) as a share of FDI inflows in developing countries, and Table 2.8 the number of FDI projects by destination from 2003 to 2013. These tables reveal that multinational corporations rely more than ever on M&As (representing the centralization of already existing capital by way of the takeover of monopolies by other monopolies) or profits generated from capital investments in the Third World, consisting in greenfield FDI (new capital investment in productive capacity without local restrictions).
(Continues…)
Excerpted from "Southern Insurgency"
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Copyright © 2016 Immanuel Ness.
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