Globalisation and Labour

Navin Chandra 

Globalisation has become a cliché since 1980s after the so-called Washington consensus. It is being proclaimed as a new phenomenon that was only born in the last quarter of the 20th century but the fact is that capital has been global from its inception. The global character of capital was brilliantly depicted by Marx and Engels:

‘The bourgeoisie has through its exploitation of the world market given a cosmopolitan character to production and consumption in every country. To the great chagrin of the reactionists, it has drawn from under the feet of industry the national ground on which it stood. All old-established national industries have been destroyed or are daily being destroyed. They are dislodged by new industries, whose introduction becomes a life and death question for all civilised nations, by industries that no longer work up indigenous raw materials but raw material drawn from the remotest zones; industries whose products are consumed not only at home, but in every quarters of the globe. In place of the old wants, satisfied by the productions of the country, we find new wants, requiring for their satisfaction the productions of distant lands and climes. In place of the old local and national seclusion and self-sufficiency, we have intercourse in every direction, universal interdependence of nations and as in material, so also in intellectual production. Intellectual creations of individual nations become common property. National one-sidedness and narrow-mindedness become more and more impossible and from the numerous national and local literatures, there arises a world literature!’

This paragraph from the Communist Manifesto depicts both the contemporary reality of globalisation of capital and its global tendency. The reality of globalisation during Marx’s days was that of the three forms or moments of capital in the circuit of capital only the commodity capital was global; the money or finance capital and productive capital were still national. This impelled the industrial countries to gain control over the global market and ensure cheap raw material from other nations. Colonialism was thus born as a concomitant of laissez-faire or competitive capitalism.

The laissez faire capitalism came to a crisis in early 1870s. This crisis was gotten over through industrial restructuring and relocation on the basis of new technology and scientific management. This gave birth to giant joint stock companies heralding the arrival of monopoly capitalism. Monopoly capital became flush with investible fund that could not be profitably invested within the countries producing it. Capital (money form) export was the answer to this problem. With the export of capital arose the economic, especially financial, domination of the poor countries by the rich. This is what was called imperialism. The crisis that preceded the World War I could not be resolved by economic and industrial restructuring for lack of revolutionary change of technology. The same holds good for the Great Crash that led to the Second World War.

The new orthodoxy that emerged after the War was based on the understanding that the market economy can be led up a crisis-free path of development through Keynesian demand management. Deficit financing, market regulation, full employment creation, and social security for the unemployed were all elements of this accumulation regime. The maintenance of economic activity on the basis of this economic policy entailed the capacity to control or regulate all economic flows. This in turn implied the existence of a relatively closed economy. This policy was eminently successful in creating the ‘Golden Age’ of capitalism as the period between 1947 and 1973 has been hailed. This regime of accumulation also confronted the immanent tendency of the rate of profit to fall in the capitalist mode of production. Most developed countries showed continual fall in the rate of profit during the last lap of the golden age. When the rate of profit dipped too low, capital resorted to investment strike. This is what happened during 1973-76 in all OECD (Organisation of Economic Co-operation and Development) countries and the crisis ensued. The first reaction of the state was to inject more demand but that proved infructuous. It was then that the path to globalise national economies was mooted in order to revive the rate of profit and restore the rate of investment in the developed countries. It is the process of transfer of value from less advanced capitals located mainly in the developing countries to more advanced ones that are located mainly in the OECD countries led by the USA. This is the crux of the Washington consensus between the IMF, World Bank and US Treasury.

The consensus consists of a catena of measures that include, inter alia, fiscal and monetary austerity, moderate taxation, lowering interest rates, floating exchange rates, elimination of government subsidies, and liberalisation of foreign trade, deregulation, privatisation, and an open door policy for foreign direct investment. This process of globalisation dominated development theory and policy for much of the 1980s and 1990s. Three factors facilitated the ascendancy of the Washington consensus. Firstly, there was the final demise of Keynesian development theory and policies that were the orthodoxy of the 1950s and 1960s. Import substitution, five year plans; government control over flows of saving and investment and other elements of that orthodoxy seemed to have suddenly lost their effectiveness in the 1970s and 1980s. Secondly, the golden age of capitalism saw the emergence of a small but prosperous middle class in developing countries that wanted luxury goods of international standards. Finally, the Bretton Woods institutions (the IMF and World Bank) actively advocated the neo-liberal policies of the Washington consensus. They used the lever of conditionality to force developing countries to fall in line.

Global Capitalism and Labour

The source of power of a capitalist is the capacity to pay i.e. money. Since money as a source of power does not exist for labour and the individual worker is a dispensable commodity for the employer, an individual worker is simply powerless against capital. However, since capital cannot do without labour which is the only source of surplus value, collectively, the working class is all powerful. Hence the workers’ collective or combination is the only source of power of labour. Unfortunately, while the capitalist class is automatically united through the formation of the average rate of profit produced by competition, the working class has to be consciously combined.

Hence capital puts all kinds of obstructions in the way of the formation of workers’ combination. It maintains and fosters the ideology of inherited racial, ethnic, social and political division in order to maintain the identities that obstruct the development of the working class consciousness, essential for class solidarity. The members of the working class thus are normally actuated by alien values, so much so that the working class movement has got into the morass of economism since the movements are by and large based on pecuniary motive which is bourgeois. Capital composes/decomposes the working class by imposing its political economy of competition through fostering the inherited divisions such as caste, race, gender and nationality, and creating workplace divisions both hierarchical and horizontal for effective control and efficiency. It is this reality of the contemporary working class movement represented by trade unions that prompted Lenin to aver that class consciousness has to come to the class from outside.

In this process, capital discriminated in favour of some segments against others and played one against the other, white against the black, men against women, regular against casual or contract labourers. Once the wage question became the dominant issue for trade unions struggle, especially after the struggle for 8 hours day was by and large won, the unions tended to accept the capital imposed divisions for unionisation. The pecuniary motive became the dominant if not the sole motive for trade unionism. Hence arose the bureaucratic business unionism. The pecuniary motive made unionisation depend on the workers’ capacity to pay regular subscription. Hence unionism got confined dominantly to regular employees. Casual or temporary workers were shunned by the unions of regular employees. The unemployed were simply defined away as non-workers.

All this implies that the working class movement has implicitly and sometimes explicitly accepted competition-based capitalist political economy. Class solidarity has apparently been jettisoned even by those who ideologically swear by it. Global capital has successfully used the segmented, hence divided working class to restructure and relocate industry in such a way as to make the recomposition of the class more difficult. Fordist mass production with regular employment has given way to lean production with large-scale contingent employment. This has weakened whatever power the working class had mustered after long struggle. Except the ‘core productive activities’, the rest, and that is the bulk, of production has been pushed into the informal/unorganised sector.

In such a situation, traditional unionism is not working. The working class, therefore, needs to develop a new strategy and tactics to cope with the situation.

The Working Class Response

Logically and historically capitalism goes from one crisis to another. Every time capital enters crisis, the working class is confronted with only two options. It can overthrow the rule of capital and embark upon a post-capitalist society dominated by the production of use value rather than exchange values. This is what is known as socialism. Otherwise, it has to concede defeat which may involve accepting unemployment, wage cuts, a longer working day, precarious jobs and even fighting a war.

The working class of all countries have clearly conceded defeat in the wake of the ‘Second Slump’ as they conceded it in the wake of the 1870s crisis. They even fought the wars in 1914 and 1939 in the wake of the respective crises that could not be resolved through restructuring. At the heart of these defeats is the failure of the workers of all countries to unite. This failure is rooted in the acceptance of pecuniary logic instead of the solidaristic logic of organising; the former is essentially bourgeois while the latter is proletarian. The moment pecuniary logic guides organising, the political economy of capital dominates the working class movement. The capital-imposed divisions and divisive ideology guide the unionising process, precluding the possibility of ideological unification of the working class. Whites consider themselves superior to black workers; regular employees feel threatened by the casual worker; male workers cannot accept women workers as equal; the unemployed are defined away as non-workers; the native workers blame the migrants for their plight and finally the workers accept the ideology of nationalism which pits the workers of one nation against the working class of another nation rather than uniting them.

As mentioned earlier, capitals unite through competition and thrive through competition. The workers’ living becomes more precarious through competition. Hence the political economy of labour has to be based on the logic of co-operation, localist labour cannot cope with the national capital and the nationalist labour cannot match the power of global capitals despite the competition as warfare among the latter. The emergence of global solidarity of labour can only be realised if the national contingents of the international working class are guided by the proletarian logic of organising which is associational rather than pecuniary. The global solidarity of labour is of course contingent on the national solidarity of the labour. Any action by any of them has be judged by whether it tends to transcend the nationalist or other capital imposed divisions or fosters it. If any action of a fraction of the working class tends to foster the division of the class, the logic of that action is necessarily bourgeois and hence anti-labour. Only if the working class activity tends to transcend the divisions among them, it may be said to be guided by proletarian logic.

To drive home this point, let us consider the question of social clauses in trade agreements. The bourgeoisie of imperialist countries told their working classes that if the labour standards did not get included in trade agreements, capital would fly from their countries and unemployment would result. The working classes of those countries accepted this logic and rallied behind their bourgeoisie. The bourgeoisie of the developing countries told their working classes that if labour standards found place in trade agreements, their international competitiveness would be jeopardised and they would close shop and the working classes of these countries would lose jobs. The working classes of these countries rallied behind their own bourgeoisie. Thus the international solidarity of the working class was put to the winds while capitals remained globally united through competition.

Inclusion of labour standards in trade agreements has insidious and invidious implications for the working classes of all countries. Hence it should have been opposed by the globally united working class. This is because it ties labour standards to the ups and downs of capitalist competition. The history of the working class movement is tantamount to the history of struggles to free labour standards from capitalist market competition. Accepting the social clause in trade agreements amounts to the reversal of the gains of labour movement. If this proletarian logic had guided the working class movement, the social clause should have been opposed by the workers of all countries.

All this does not imply that global capitalism entails that global capital can only be fought globally. Global capitalism is/shall be organised by nation states. Hence the main arena of struggle will be within the nation, but the national struggle has to have such a strategy as to develop more global working class solidarity. ‘Be Indian and buy Indian as an answer to ‘be American and buy American’ will prove disastrous for the international working class solidarity. Concretely, workers of different national units must develop solidarity among themselves while reaching out to international working classes. To be more specific, the workers of a unit of multinational or transnational corporation cannot hope to deal effectively with their management in the absence of their solidarity with the workers of other units of their company spread over the globe.

The working class of each developing nation is characterised by a small segment of organised labour and an inordinately large segment of the unorganised. This dichotomy of the labour market is being used to beat the organised workers in the name of being considerate to the unorganised workers. This danger can be overcome by shifting attention for organising laterally to the unorganised/informal sector. The resources of the organised sector unions need to be transmitted to the unorganised sector for the purpose of organising the unorganised. In every nation the concerted solidaristic action as the logical necessity of survival in this difficult world must be realised sooner rather than later.

There are some signs emerging on the international horizon that shows that the international working class is moving towards realising proletarian unity based on proletarian logic. It is, however, too incipient to predict the realisation of global proletarian class consciousness. The world is tilted more towards the realisation of barbarism or collective suicide rather than socialism. Let us hope, the working class would muster strength ideologically and organizationally in time to save humanity from barbarism or death.

This lecture was delivered at the Dr. Ramanadham Memorial Meeting organised in New Delhi by the People’s Union for Democratic Rights.

Click here to return to the April 2004 index.