From: glevy@PRATT.EDU
Date: Sun Nov 07 2004 - 03:49:05 EST
---------------------------- Original Message ---------------------------- Subject: production shifts -- a subject for discussion? From: "Jurriaan Bendien" <andromeda246@hetnet.nl> Date: Sat, November 6, 2004 7:24 pm -------------------------------------------------------------------------- Well, Jerry, I can give you a quick note of my recent thoughts on this topic if you like: The significance of outsourcing in the US economy is considerable. Earlier this year, it was estimated by some economists that the number of US jobs lost by movement of operations overseas since 2001 was 188,000 in the services sector and 502,000 in manufacturing, totalling 690,000 for three years. That is obviously a small fraction of the 58.6 million in overall layoffs that companies undertook between 2001 and 2003, which was largely offset by new hiring elsewhere in the US economy, but on a net basis, payroll employment levels declined by 2.3 million during this period, so outsourcing accounted for some 30% of the net loss of waged jobs in the US economy over three years. Obviously, internationally outsourced jobs are a net loss to the domestic economy, not offset by new hiring. I think the trend will continue; this is what the law of value would lead you to expect. There is not a lot that the Bush administration can do about that. Why? Ex-Bank of America managers and contractors say that in India, work that costs $100 an hour in the U.S. gets done for $20. In New Delhi, Wipro Spectramind Ltd. employ 2,500 young college-educated people processing claims for a major US insurance company and providing help-desk support for a big US Internet service provider at a cost up to 60% lower than in the US. No amount of tax breaks or incentives can compete with that, because we are dealing here with a completely different cost structure. The data shows us some important things: (1) you can be hired and fired much more easily in the USA than in Japan or Europe ("labour market flexibility"), producing more rapid job mobility upwards or downwards, and (2) the trend towards "globalisation of insecurity" which Alvater talks about; the enterprise is increasingly organised along a hierarchy with a core staff of management and technical specialists with permanent contracts, then a layer with annual contracts, and finally a layer of workers brought in on a casual or parttime basis. This enterprise structure is replicated in the class structure of society, but the proportions are different in rich and poor countries. CNN recently reported that half the people who voted have incomes of $50,000 or more a year. That situation does not exist in developing countries. Basically in most industrialised countries, around half of all the workers are now in jobs which they have had since only a year. The debate in Germany centres very much on labour-market flexibility; capitalists want to provide workers with the opportunity to migrate downwards in the wage scales, to make production costs more competitive. There is little that employers can do about their fixed costs, which are the biggest part of the capital outlay; but wages can be reduced of course. Apart from Norway, Germany has the highest labour costs in the world (but profitability and productivity is lower than in Norway) and a lot of rules governing hiring and firing. The "new international division labor" is already very much an accomplished fact. Higher-level services, technological innovation, distribution, and corporate management are concentrated in the developed countries; lower-level services and the production of material goods has shifted increasingly to less developed countries. Marxists and semi-Marxists were among the first to note this development; see the relevant works by Ernest Mandel, Christian Palloix and Folker Frobel et al. But just as important is the division of labor within the developed countries itself, in which job quality has become increasingly important. Here is the occupational structure of the employed labor force in the US in 2002, in approximate figures: Managers and executives 15,800,000 Supervisors 9,100,000 Teaching staff, all kinds 6,600,000 Machine operating and assembly workers 6,400,000 Food & beverage preparing and service workers 6,100,000 Administrative support clerks n.e.c. 5,800,000 Construction trade workers 5,300,000 Aides, ushers, guides, orderlies, and attendants 4,800,000 Mechanics and repairs workers 4,500,000 Technicians 4,300,000 Cleaners, janitors, private cooks, maids & housekeepers 3,700,000 Retail sales workers 3,400,000 Truck drivers 3,200,000 Secretaries, stenographers, and typists 3,000,000 Scientists 3,000,000 Sales representatives in finance and business services 2,900,000 Cashiers 2,900,000 Accountants, auditors, underwriters, and other financial officers 2,600,000 Engineers, architects, and surveyors 2,600,000 Freight & stock handlers, baggers & packers, machine feeders 2,400,000 Labourers & helpers 2,400,000 Registered nurses 2,300,000 Financial records processing clerks 2,200,000 Management analysts, specialists & consultants in human resources, PR and labour relations 2,100,000 Materials recording, scheduling, and distributing clerks 1,900,000 Sales representatives in mining, manufacturing, and wholesale 1,500,000 Childcare workers and childcare assistants 1,400,000 Lawyers, judges and legal assistants 1,300,000 Barbers, hairdressers, cosmeticians, pharmacists, dietitians 1,300,000 Therapists, counselors, social workers and welfare service aides 1,200,000 Artists, entertainers & designers 1,200,000 Police, detective, and law enforcement officers 1,200,000 Military personnel 1,100,000 Medical doctors, dentists, vetinarians, optometrists, and podiatrists 1,100,000 Receptionists 1,000,000 Security guards 1,000,000 Working children under 16 1,000,000 Prostitutes 1,000,000 Farmers 968,000 Non-financial records processing clerks, 995,000 Inspectors (construction, production and compliance) 955,000 Groundskeepers and gardeners (non-farm) 940,000 Earthmoving equipment, crane, industrial truck, forklift, lorry and tractor operators 898,000 Metal workers 826,000 Farm workers 726,000 Computer programmers 605,000 Bus drivers 605,000 Bank tellers 477,000 Postal delivery workers, messengers & couriers 468,000 Editors, writers, reporters and proofreaders 417,000 Religious clergy, and employees of religious institutions 393,000 Personal services n.e.c. 348,000 Taxi drivers and chauffeurs 340,000 Street and door-to-door sales workers 334,000 Corrective institution & prison officers 328,000 Doctor's and dental assistants 318,000 Firefighting and fire prevention workers 262,000 Electrical and electronic equipment assemblers 237,000 Librarians, archivists, and curators 231,000 Butchers and meat cutters 229,000 Dressmakers, tailors and shoe repairers 189,000 Professional photographers 178,000 Animal caretakers (non-farm) 170,000 Interviewers 169,000 Airplane pilots, airplane staff, air traffic controllers 152,000 Bakers and baking workers 148,000 Recreational services workers 129,000 Telephone operators 119,000 Oil & mining extraction workers 115,000 Railway workers 111,000 Cabinet makers, furniture & wood finishers, and other woodworkers 104,000 Newspaper vendors 103,000 Ship captains, sailors, mates & deckhands, fishermen 98,000 Professional athletes 95,000 Social welfare eligibility clerks 86,000 Sales demonstrators, promoters, and models 77,000 Water and sewage treatment plant operators 77,000 Forestry & logging workers 77,000 Optical goods workers 72,000 Other precision production workers n.e.c 72,000 Pest control workers 63,000 Food batchmakers 54,000 Other plant & system operators 45,000 Electric power plant operators 35,000 Bookbinding workers 35,000 Nursery workers 33,000 Hand molders & shapers 21,000 Patternmakers, layout workers, & cutters 12,000 Bridge, lock, & lighthouse tenders 3,000 Hunters & trappers 2,000 If you look at the total annual disposable income of the American population (surveyed) in 2002, you find that $6.8 trillion is income from labor, $2.1 trillion is income from property, and $1.2 trillion is income from benefits. Obviously the proportions are very different in India. In order for the argument that "American jobs are taken away by foreigners" etc. to be really credible, it must first be proved that (1) the same jobs producing the same output, which were previously performed by Americans, are now being done by foreign workers offshore, in the same proportion; (2) that Americans actually wanted to do those jobs, or were prepared to do them; (3) that it would be practically feasible to do those jobs in the USA, under the given conditions. Undoubtedly this is the case for a portion of jobs lost to the USA. But for many other jobs this is simply not true, because: (1) If an employer closes down a plant in the USA, and opens up a new plant overseas with a different production technique or a different output, then you cannot say "American jobs are taken away by foreigners", moreover it ignores "who" is actually taking those jobs away, namely American employers and American investors. After all, it is American investors and employers who decide to hire workers in the USA or overseas; it is not as though "greedy workers" offshore are "grabbing or stealing" employment opportunities from American workers. They are in no position to do so, they can only respond to employment opportunities which are actually being offered where they are. At best you can say that American employers are creating insufficient jobs at home, or that it is too difficult to set up self-employed business (the Bush administration aims to change tax law to make things easier for small businesses which create a lot of the extra jobs; in reality, proprietors and partnerships dodge a lot of tax anyway). (2) many new so-called "outsourced" foreign jobs, performed by workers offshore for American employers, do not represent the substitution of an American job by a foreign job at all, but rather the creation of a new and different job by an American employer offshore, reflecting an investment decision that overall production costs are cheaper offshore. In other words, in considering whether to hire new employees in the USA or offshore, the employer decides for economic reasons to hire offshore. The managerial, financial and marketing functions might be sited in the USA, whereas the actual product is made overseas. (3) Production outsourced by American employers to foreign countries very often involves getting less foreign workers to produce a larger output than was made previously within the USA, and so, it is not as though enormous amounts of new jobs are being created in foreign countries as a result of outsourcing anyway. If an American employer previously used 2,000 American workers to produce an output worth $400 million and then uses 1,500 foreign workers to produce an output worth $500 million, it does not make much sense to talk about "foreign workers stealing American jobs". The idea of "foreign workers stealing American jobs" is suspect because: 1 - while blaming the working class as per usual, it fails to explain exactly how foreign workers could possibly "steal" American employment in the first place, 2 - it conveniently ignores that the decision to reduce employment levels in the USA, is made by American employers and investors, and not by American workers, who are just looking for a job where they are, because they have no other way to survive, and cannot easily move somewhere else. 3 - the same American people who argue "foreign workers stealing American jobs", are quite happy to consume competitively priced products imported from overseas, and in many cases could neither do otherwise, nor stay within their budget, without purchasing foreign-made products. Thus, in reality, the argument that "American jobs are taken away by foreigners" is more a jingoism, the logical endpoint of which is that American workers, uniformed and in civvies, are send abroad to fight wars, or to grab oil resources to fuel American cars, even although they could quite easily negotiate to get oil from other sources if required. As regards (3) Taking 2002 data, the total $ value of goods imported into the USA for use (i.e. not re-exported) was about $1.1 trillion. But only about 40% of that total dollar value of imported goods used in the USA consisted of ordinary consumer goods used by households, and of the value of all consumer goods and services imported, at least 10-15% consisted purely of luxury consumption goods, i.e. things like jewellery, trinkets, antiques, numismatic coins, works of art, gold, luxury cars, luxury clothing, luxury furnishings, pleasurecraft, luxury cars, personal aircraft and so on. Then you must conclude that out of the total dollar value of all goods imported into the USA, only a third refers to ordinary consumer durable and perishable goods, representing about 10% of the value of all consumer goods bought by Americans each year. Out of the total dollar value of all goods and services imported into the USA, only a quarter consists of ordinary consumer durables and perishables. If you are are prepared to do some research into real American working-class consumer expenditure beyond theories, then you would conclude, that foreign goods and services they buy, comprise only a very small portion of their wages, and the only "big ticket" foreign durables in their budget, are foreign-made cars and foreign-made personal computers. (If you actually look at average American personal consumer expenditure, only 12% is actually expenditure on durable goods anyway). In 2002, American workers produced new cars and trucks worth $377.5 billion, $80 billion of these American-made vehicles are exported, and new cars and trucks worth $133 billion are imported. So the stock of new cars and trucks appearing on the US domestic market is nowadays worth about $390 billion or so. On the other side of the story, only about a fifth of the total annual payroll in the USA is paid out to American working-class people who produce new tangible material goods. Just under a third of those goods are not consumed in the USA, but exported, yet those exported goods represent two-thirds of the total value of all exports as conventionally defined. The debate about free trade versus protectionism is not really about no institutionalised rules for trade versus institutionalised rules for trade (the absence or presence of legal rules) but really about how the market should be regulated and about how regulated it should be. Hence, the debate about free trade versus protectionism is itself a reified expression of market freedom such as it appears in the minds of businessmen, who seek to improve their relative bargaining position for the purpose of reducing costs, increasing sales and increasing profits. The real issue at stake here has little to do with freedom per se, but with competition and the ability to compete. However, economic theory depicts the market as something in which everybody is equal, because everybody has the same access to the market. In reality, this is not the case, because bargaining position is established basically through buying power (money in pocket) and asset ownership. If you own money or assets, then that gives access to markets and increases the ability to compete, if you don't have those things, you may not be able to have access to markets or be unable to compete at all. In addition, the changing class structure makes markets increasingly segmented; entry into those markets is no longer possible for just anyone. In discussing the relationship between capital and wage-earners, Marx notes for example that this means an unequal bargaining position for owners of work capacity and owners of capital. In negotiating about trade in human work, for example, the owner of capital can normally wait, whereas the individual owner of work capacity cannot wait, he must sell his work capacity. This gives rise to trade unions, a form of protectionism of sorts, in which workers cancel out competition between them and combine their collective strength, to improve their bargaining position in the competitive process and thus increase the selling price through collective negotiations, which the employer of workers cannot ignore. The extent to which they can succeed in this depends on the legal framework and the level of unemployment. If unemployment is high, then bargaining position is reduced, if unemployment is low, bargaining position is strengthened. But for owners of capital and employers of workers, the concern is with (1) the right to buy things, at a certain price, and sell things, at a certain prices, and (2) the restriction of competition of a kind that would increase costs, reduce sales and reduce profits, ultimately driving them out of business. Consequently, the market always involves power relationships between competitors, and ceteris paribus, those who are in a strong bargaining position will favour free trade, whereas those in a weak bargaining position favour protectionism as a general rule. But in addition, individual owners of capital aim to promote free trade only where it is conducive to cutting their own costs, increasing their own sales and their own profits. Since competition is a dynamic, changeable process, that means that whereas today they might be in favour of free trade, tomorrow they might be in favour of protectionism. It all just depends on the specific conditions conducive to reducing costs as much as possible, increasing sales as much as possible, and increasing net profits as much as possible. However, the ability to realise surplus-values from labour is dependent on the defence of the right to own private capital assets, and prevent access to them by people who do not own them. If workers were not shut out from access to means of production in specific ways, then they would not be compelled to sell their ability to work and work for a boss, they could just help themselves to resources. This being the case, the owners of private capital have a common interest, a universal class interest in safeguarding the ownership and entitlement to private assets against theft, robbery and competing claims about ownership entitlements. It is this which provides the basis for the free trade versus protectionism debate, because the question then is by what strategy private enterprise might best be promoted, what strategy best promotes the accumulation of private capital, and that just depends of relative bargaining position. If therefore the working class adopts either a "free trade" or "protectionist" stance as a general preference, then the working class adapts itself to the economistic bourgeois ideology that all have equal access and rights in the market, and all are equal in their bargaining position when it is a question of competition in trade. But as I just noted, that is not the case. What is the case, is that competitive processes are structured according to the real interests of different social classes and fractions of social classes in society. If the objective is to advance the position of the working class in society, this requires a class consciousness, and this class consciousness requires the assertion of the needs, interests and desires of the working class. But this already presupposes that the working class has interests in common. This is certainly true, but class struggles operate through a triple competitive process, namely workers compete with other workers for incomes, positions, opportunities and promotions, workers compete with employers for wages and conditions, and employers compete with other employers for sales, profits and business oportunities. Therefore to improve the bargaining position of the working class, socialists have to try to achieve several things at the same time: (1) to reduce or cancel out competition between workers, (2) to strengthen bargaining position in the competition between workers and employers, and (3) to increase the divisions and competition among employers. From this point of view, the question of whether free trade or protectionism is generally speaking preferable is completely irrelevant, because the issue is quite different, the issue is own of improving the bargaining position, cohesion and collective strength of the working classes. Getting trapped into that dispute is to be swayed by market reifications. The issue is not an economic one, but a political one, because it is about power, about bargaining position, and the aim here is to use whatever ethically warranted means are useful to improve that bargaining position. Consequently, it is quite permissible for the working classes to argue for regulation here, and deregulation there, from the point of view of advancing their collective interests. At the most simple level, these are the interests of a group of workers, at a more complex level, a national working classes, and at the highest level, the international working class. That is what it means to take a class approach: in other words, we penetrate through market fetishism to understand the bargaining position of different social classes and what their interests are, we take sides with one or more classes, and seek to advance their interests vis-a-vis other social classes. It means for a start the recognition that we are not "all in the same boat", that the population is situated differently according to their class positions. In forming a class awareness, one seeks to shape up a set of values which responds politically to the real competitive process and the real position of the working class. It is in the interest of the workers to seek regulation here, and it is in the interest of the workers to seek deregulation there, and we know that, because we can verify what strengthens or weakens their bargaining position. Libertarians will argue for increasing individual strength, but socialists argue for increasing collective strength, and the collective strength of not just anybody but of the revolutionary and progressive strata of social classes. That is the real framework. Because of the complexity of competitions and the dynamics of the competitive process, generalities obviously will not suffice, except for Neanderthal Marxists who already know what is in the interests of social classes, before they have experientially verified that. Marxist ideology is actually quite harmful here, in that sense because it specifies what interests are in general terms in advance of actually experientially verifying this. They impute a theoretical interest which people would have if they acted in accordance with a theorised class interest. But this is a strategy which never leads to success, the question is one of diagnosing real interests, not abstract, theoretical ones. Given the proliferation of competing interests, it is not possible to do justice to all interests at any time, rather, we must focus on those themes in political discussion which reflect the priorities of social classes, and thus, we must prioritise specific themes, which satisfy the criteria and they unite class friends, strengthen class position and divide class enemies. Nevertheless, the evolution of class conflicts have a "logic", because the dynamics of capital accumulation in the production and exchange of specific use-values sets limits to what can happen and how power relations can evolve. The first step towards prioritisation of useful themes is therefore an analysis of the real, objective position of social classes in economic and social life created by the specific way in which the capitalistic mode of production operates. That position sets limits to what can happen, and it suggests the parameters within which class conflict can evolve, and what the fights are ultimately really about, whatever the level of awareness or insight people may have about that. If there is a general guiding principle, it is that freedom for capital and the accumulation of capital is conditional on the unfreedom of the working classes, and consequently anything that expands the freedom of the working classes promotes the bargaining position of those classes in the bella omni contra omnes of bourgeois society. If protectionism expands that freedom, it is necessary to support protectionism. If free trade expands that freedom, then it is necessary to argue for free trade, and this must be evaluated in the framework of the triple competition I described previously. If protectionism promotes cooperation among workers, then socialists are in favour of protectionism. If free trade promotes cooperation between workers, then socialists are in favour of free trade. This position just means breaking with market fetishism, and turning an economistic controversy into a political one, for the purpose of asserting political interests. If some capitalists argue for free trade and other businessmen argue for protectionism, why should a class conscious worker care about that ? All they are talking about is what benefits their own business. It is just that, at the most general level, the phenomena of ideology seek to present a sectional interest as a general interest, and therefore, businessmen will argue that free trade is in the interests of workers because it creates jobs and opportunities, or they will argue that protectionism preserves jobs and opportunities. But that is just a generality, what matters is what the specific policies are, and they should be evaluated from the point of view of class interests, and only if that is done, can a position be articulated in the competitive process which truly reflects how a social class, like the working class, can advance its position. The usual objection to the interpretation I have provided concerns reformism, which ultraleftists get terribly concerned about. It is argued that protectionism is a reformist strategy and so on, therefore socialist should always be against it on principle. This is Neanderthal Marxism. In view of what I have said, it is also meaningless, because it ignores what a market is, and how the competitive process actually occurs. The real question has nothing to do with protectionism or free trade as such, but with who to ally or unite with, and who to oppose, for the specific purpose of advancing class consciousness and class interests and with a definite project for reconstructing society along socialist lines.. However defined, reformism always means a change in the regulation of the market and a correction of income distribution and ownership of wealth and income, with the aim of mitigating bad effects of market forces on human beings. The objection is not that this is necessarily or intrinsically a bad thing, but rather that in the attempt to do this class interests may be confused and disregarded, with the effect that the interventions made may help social classes and groups quite different from the ones they claim to help. The stated purpose of interventions in the market may, in other words, be quite different from their real purpose or real effect. Free trade is just as much a reformist strategy and protectionism is, precisely because free trade also seeks to reform the market. The real point concerns whose bargaining position these strategies reflect, who they benefit. In addition, the very idea of intervening in the market in order to change its modus operandi, tacitly accepts the idea that only those human needs, desires and interests have reality which are validated through buying and selling things, or that it is emancipatory if needs, interests and desires which previously existed outside the market are marketised through provision of buying power and outlets. Here again a form of reification is concerned, because who says that a need, desire or interest must necessarily be satisfied via the market, and who says it cannot be satisfied in ways other than via the market ? Imperialism is an effect of market expansion, as Rosa Luxemburg noted (even though not all her arguments are correct), and market expansion normally requires a free trade approach to remove obstacles to the market. Hence, an aggressive imperialist approach usually involves a free trade stance, which reflects the interests of the most powerful strata of the business class and their interests. But this does not mean at all, that the very same business people isn't interested in protectionism, because they are. It is just that from their point of view, there should be free trade here, and protectionism there, in a way which is consistent with their interests. Take, for example, the issue of immigration. The bourgeoisie argues for "labour market flexibility" and labour mobility, yet at the same time wishes to prevent immigrant hordes from taking over the country. This is a point of view that is not consistent. The job of socialists is then to point of why this is not consistent, and does this in a way which strengthens the position of the working classes. This critique involves saying, if you are in favour of free trade here, why can you be against it there ? If you are in favour of protectionism here, why are you against it there ? And that leads me to the issue of hypocrisy, namely, free trade and protectionism are merely ideology - ideology which presents a sectional interest as a general interest. If what I argued above is true, then the dispute concerns only different ways of regulating the market, in accordance with specific interests, such that some groups or classes benefit, and some groups and classes don't. Consequently, it is a hypocritical debate, and that hypocrisy is revealed as soon as we ask the question "who benefits" and investigate who benefits. Then it runs out that the propagation of certain market values as universally beneficial in reality just benefit sectional interests and specific social classes. Neanderthal Marxists don't investigate anything, so then all they have is ideology, and that ideology must ultimately be hypocritical insofar as what it claimed to be a collective interest is just an individual interest of the Neanderthal Marxist. Socialists defend the idea that markets are merely one instrument for the allocation of society's resources, but there are also other forms of allocating resources, that is to say, entitlements to access and ownership of resources don't have to be regulated by the market (or for that matter by the state) at all, and this is shown by the very fact that markets themselves are regulated by legal rules and enforcement procedures. Moreover, markets cannot even operate without a lot of non-market labour: housework and voluntary labor. For a statistical study of unpaid work and time-use in Japan, see http://www5.cao.go.jp/98/g/19981105g-unpaid-e.html http://www.stat.go.jp/english/data/shakai/1.htm See also for Germany and other countries: http://www.newint.org/issue181/facts.htm See for the United States: http://www.bls.gov/news.release/atus.nr0.htm For Britain: http://www.cev.be/Documents%5CFacts&Figures_UK.pdfhttp://www.statistics.gov.uk/STATBASE/ssdataset.asp?vlnk=3720 If markets operate efficiently from the standpoint of the working classes, if they benefit those classes, then socialists should be in favour of them. If they are not beneficial, then socialists should oppose them. This creates a specific attitude to trading processes and how one works with them, and is the basis for culture wars. But in working with them, one should not impute to significance to them which they do not really have. What counts is human beings, human needs, interests and desires. It is only the reformist who get trapped in commercial arguments and adopt the language of the market to describe human processes in a way which reifies them. It sad to note just how many Marxists have no articulate ideas about all this, and thus reconcile themselves with a debate framed in the ideological terms of the people they oppose. On that basis, no class consciousness can ever be articulated politically, and in that case, however "revolutionary" you may say you are, you are still reformist. You subscribe to economism, rather than turning the economistic competitions between different fractions of the business class into a political issue addressed from the point of view of the needs, interests and desires of the working classes. "Free trade ? For the benefit of the working class ! Protectionism ? For the benefit of the working class ! The bourgeois is bourgeois, for the benefit of the working class" - Karl Marx & Frederick Engels, The Communist Manifesto, section "bourgeois socialism". Jurriaan
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