[OPE] industrial capital is shifting to ....

There was a big debate about that in recent years, but it's best not to confuse international capital movements with employment and output levels these days.

Worldwide, manufacturing net output (gross value added) has taken a nose-dive this year, it's now at a level about where it was in 2001, even as the global manufacturing workforce grew meantime. Total global manufacturing employment has fallen since the first quarter of 2008. See for example http://www.ism.ws/files/ISMReport/JPMorgan/JPMorganMfg-Svcs090408.pdf

In the US, BLS estimates there are now 13.4 million manufacturing workers employed out of a total 138.5 million employed workers, that's about 9.6% of the US employed workforce (there are about one million farm employees included in the grand total). In the world as a whole, there are if I am not much mistaken circa 105.8 million paid manufacturing jobs (UNIDO 2006), implying US manufacturing employment is now about 12.6% of the world total (there are of course far more other "industrial" jobs, in mining, construction, utilities etc.)

In August 2007, i.e. a year ago, there were 13.9 million US manufacturing workers employed, meaning that within in one year, from August 2007 to August 2008, a net loss occurred of 506,000 manufacturing jobs. That is half a million manufacturing jobs gone in one year, something missed by AEI and Cato in their flavour-of-the-month reports. In the year 2000, there were about 17.3 million US manufacturing jobs, so there's been a net loss of 4 million manufacturing jobs since that time.

Taking just specifically the production workers, there were 10 million US production workers in August 2007 and there are 9.6 million US production workers now, meaning a net loss of 389,000 US manufacturing production jobs in the last year.

Using 2005 US census data, you can calculate that average employment per "physical establishment" (an office or factory, not a company or other legal entity) in total US manufacturing was about 41 employees (there were about 333,000 such physical establishments in total). Half of all US manufacturing workers work in establishments where the staff level averages 20 employees. Some 622 large US manufacturing corporations (with more than 5,000 US employees on the payroll) employed about one third of all manufacturing workers in 2005, i.e. some 4.4 million workers in total, in about 16,000 separate establishments which averaged 275 workers each. http://www.census.gov/csd/susb/susb05.htm

On this basis, you can "guesstimate" that the US must currently be losing manufacturing establishments (plants at a separate location) at a rate of around 10,000 per year, but most of these would be the small plants which are not competitive.

There is no way that a "re-industrialization" countertrend in US manufacturing - which utilizes niche markets, patented technologies and cheap skilled labour - will offset the overall longterm decline of US manufacturing employment as a whole. You simply cannot compete with foreign manufacturing workers who earn five to fifty times less than you do, and work longer hours as well. What remains of US manufacturing is just the highly profitable, high technology, highly automated, and upmarket parts. These parts are very competitive in world markets, as Cato and AEI correctly say.

In 2007, Asia accounted for 57% of the total net increase in paid jobs worldwide (about 26 million paid jobs) - all the OECD (developed) countries together accounted for only about 4% of the net increase (about 2 million paid jobs extra) (ILO data). The vast majority of new manufacturing jobs now occur only in four countries: China, Malaysia, the Phillippines and Indonesia. In other countries, for example Brazil, Thailand, Vietnam etc. new manufacturing jobs occur only in one industry or a few specific types of industries, usually producing a very specific type of product for a world market.

Morgan Stanley forecasts "a prolonged period of relative economic stagnation" in the G7 countries rather than a very deep, severe recession, which I think is probably correct, but scientifically one should add (1) government policy and political upheavals could make the economic problems worse, and (2) the recession is much more severe in financially weaker countries.

In its Global Report on Manufacturing & Services (see above), Morgan Stanley surveys executives in 26 countries which together represent 81% of world GDP, but you can calculate that this excludes circa 167 countries which together represent 47% of the world population who get the other 19% of world GDP. When the bourgeois analysts talk about the "world economy", they basically leave out half the world population. They leave that out, because it is largely irrelevant for global capital accumulation.

Morgan Stanley diagnoses "underlying inflation pressures" quite apart from those induced by commodity price hikes, which is also correct. The result is stagflation, which means that either raising or lowering government interest rates significantly for anticyclical purposes is neither very feasible, nor that it really has much effect on output and investment levels. If inflation rises, however, generally bank interest rates will rise as well, which favours the rentier class and strengthens its position, whereas workers suffer a loss of purchasing power.

The big analytical problem which the bourgeois analysts typically do not understand and gloss over, is the socio-economic segmentation and stratification of the world population. The impact and meaning of changes in various standard economic variables endlessly cited in the press is completely different, depending on what segment or stratum of the world population you are in.

Jurriaan

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Received on Thu Sep 11 16:01:36 2008