Since the mid '80s the world economy is going through a significant change of growing liberalization of trade, investment and capital flow resulting in greater inter-linkages of national economies. This process of change is being described as globalization. But, more than a description, the word connotes ideas of laissez-faire on a global scale with related assumptions about class and state power. An analytical treatment of this concept is called for as it has both major theoretical and political consequences. The concept of globalization, in the words of Ellen Meiksins Wood, 'is the heaviest ideological albatross around the neck of the left today.' With the notion of a supra-nation force pulverizing all economic and social structures to evenness, the logical outcome is that there is no alternative. This ideological mystification creates defeatism. The attempt in this brief article is to identify certain trends in the existing world capitalist economy and relate them to the process of globalization. Further, we try to relate the ongoing debate within the trade union movement to the different conceptions of globalization and suggest an approach for advancing the cause of the world labour movement.
The post-war expansion of capitalism has taken place along three axes, each associated with different political contexts. First, western capitalism based on the Fordist reorganization of production, and a social compromise between capital and labour within a Keynesian framework. Second, the transformation of socialism into bureaucratic state capitalism and its rejoining the world capitalist economy. Third, capitalist development in the ex-colonial countries as a result of the national liberation movements and the formation of third world states. Their industrial development was limited by the constraints of the imperialist system. This expansionary phase had been exhausted by the '70s. Beginning with the 1974-75 recession a prolonged recessionary phase has emerged modulated by recurring recession and weak recovery, This has induced a crisis in world capitalism.
Globalization is the strategy of western capital to reconstitute capitalism in the face of this crisis. As Marx formulated, 'the basis of the capitalist mode of production is constituted by the world capital itself.' Capitalism has always tended toward internationalization. The collapse of bureaucratic state capitalism in the Soviet Union and the national projects in the third world countries created the conditions for this new phase of internationalization.
The key features of this globalization are the emergence of generalized finance capital through the interpenetration of the national capital of the imperialist countries, uniform global market in money capital and the development of international finance institutions to sustain and safeguard this generalized financial interest. The political consensus on this is reflected in the position of the G-7 countries which enables appropriation of social surplus in the form of a return on financial assets over and above the business assets of a particular productive capital.
The underlying assumption of neo-liberal globalization is that capital is shifting from high-wage developed countries to low-wage developing countries. The European trade union movement under right-wing influence argues that unemployment is a consequence of this shift. This assumption has been both theoretically contested and empirically refuted by even the mainstream bourgeois economists. Paul Krugmans, by just introducing economies of scale in the rigid Heckscher-Ohlin model, has shown the tendency for greater regional disparity. One such economy of scale comes from positive externalities of agglomeration - specialized supplying, skilled labour force, efficient infrastructure - which is always in favour of the industrialized countries. Even in case of developed regions, like the European Community (EC), Prudhomn found a 'threshold effect' that prevented backward regions from catching up.
The empirical evidence of Foreign Direct Investment (FDI) from the EC is at variance with this assumption. Even as recently as 1993, of the total FDI outflow from the EC, the USA received 11%, Japan 12% and Asia received just 3%. The share of the Triad Countries - US, Europe and Japan - in the total FDI stock of selected Asian countries fell from 64% in 1985 to 52% in 1993. Even in 1994 more than 60% of the global FDI was directed towards developed countries. Moreover, a third of the FDI flowing to developing countries is going to China alone.
In terms of trade, the share of imports from the Dynamic Asian Economies and China to the 24 nation OECD in 1993, constituted only 1.5% of the OECD gross domestic production. Moreover, this trade has been job-creating rather than job-destroying as it was always in balance or surplus. Even the ILO, in a report prepared for the recently held G-7 Employment Conference, cautioned against the viewpoint that the extension of trade with the low-wage countries has a downward pressure on wages in developed countries because the North-South trade remains relatively modest in contrast to the major trade taking place among the developed countries.
Another feature of the present globalization is the vertical restructuring of the world economy along the poles of the US, Europe and Japan. With the decline of US imperialism the inter-imperialist contradictions have intensified and each of these blocs is attempting to carve out its zone of influence. These two trends are existing simultaneously and interacting to shape the globalization process. But, for the present, the creation and sustaining of the generalized interest of finance capital is the principal aspect. The rapid expansion of the financial sphere, more than either commodity trade or productive investment, is a manifestation of this fact. Even people perceive this feature in the fetishist form of a casino economy.
The process of financialization is reshaping the reproduction scheme of finance capital at a global level. The money capital of the imperialist countries can move with immense speed as financial investment, without moving any factors of production, siphoning the social surplus from every production system, in the form of a return on financial assets. It centralizes the surplus value in the imperialist centre at an unprecedented level.
The unity of the imperialist finance capital is directed towards taking over the other two axes of post-war capitalist development. Hence, the immense pressure for integrating the money market, full convertability of currencies and establishing a new unregulated investment regime. Irrespective of the national form of the finance capital, their integration into western capital and investment as financial investments in the economy of the third world and the East European countries is a mode of reproduction of the imperialist finance capital. This unity of the imperialists is stable for the moment.
The inter-imperialist contradictions surface in the area of investment as productive capital, which mobilizes factors of production, and in the area of the market share. The contention for building zones of influence is for securing their investments and market share. As the inter-imperialist contradiction has not developed into an all-out contention and war, it is crucial to grasp both the aspects of unity and struggle of this contradiction. The unity exists for the generalized financial interest and the struggle is developing in the sphere of investment in production and commodity market share. This unity contains the struggle. This will continue till the expansion of western capitalism in the third world and the East European region continues. The intensification of the trade war between the three blocs of imperialism will gradually undermine this unity. But for the moment the struggle has not developed to a level which can rupture this unity.
It is this appropriation of the production system and the market by western capitalism, primarily through the finance mechanism, that makes the globalization imperialist. It is not a case of developing new markets but more of taking over the existing market. The national markets are not expanding enormously in the process of global integration. Only the market share of western capitalism is increasing. The evidence of this phenomenon is the increase in the profit rate without much world economic growth.
This internationalization is not a dispersion of capitalism allowing multiple offshoots of independent growth thereby extending the boundaries of capitalism. On the contrary, centralization of capital within western capitalism from the dispersed areas of capitalist growth of the earlier expansionary phase, is taking place. In our view, therefore, the proper conceptualization of this trend in the existing world capitalism is that of imperialist globalization.
Debt repayment has become a new and permanent mechanism for transferring social surplus from the developing countries to the accumulation needs of western capital.
The irony of the situation is that it is the third world money which was used to induce the debt dependence of the third world economies. The additional revenue generated by high oil prices following the united action of the oil producing third world countries was attracted by high interest rate and were deposited in western banks. These petro-dollars were used to fund loans to the third world to finance purchases from developed countries. The creation of the debt burden was a relaunching of the imperialist push into the southern economy.
The UN statistics show that the third world debt had increased from $567 billion in 1980 to $1,419 billion in 1992, an increase of 280 percent. It is estimated that each year $160 billion is drained from the third world nations as debt repayment, of which only $90 billion is for principal payments. This debt has restricted and retarded the economic development of these countries. The growth rate of the third world has fallen from 6% in the 1970s to 3% in the 1980s. It is more drastic in terms of the fall in the per capita growth rate, which fell from 3% to 1%. One Unctad study in 1980 showed that a 30% reduction in the debt would enable 34% more investment to take place thereby contributing to a 24% increase in the per capita income.
According to the UN, the ratio between the third world export price and third world trade has fallen from 100 in 1980 to 48 in 1992. As a result the South lost 52% of its real export income. Now, under the Structural Adjustment Programme the South and East are forced into export-oriented economics. This universalization of export is bound to induce competitive pressure for reducing the prices of third world commodities. It will also produce a constant downward pressure on wages in these countries. Augustin Papic, a former member of the North-South Commission, has estimated that the invisible transfer from South to North due to the degradation of terms of trade is $200 billion a year.
Besides this, the exorbitant price for freight, insurance, packaging and marketing is far higher than the real contribution in terms of value addition. This price mechanism is yet another form of surplus extraction. Many studies have shown that third world countries receive only 10-15 percent of the average real retail price for their products.
The effect of this international mobility of capital is two-fold, one, in the long run, global capital owners like international traders, investors and producers of export-oriented tradeable goods gain relative to labour in general and national specific capital. Second, in the short run, owners and workers in specific sectors in each country have to face the cost in adjusting to this capital mobility. This is increasingly felt in the form of a trade-off of macro-economic policy autonomy for exchange rate stability.
As a consequence of the globalization and restructuring of the world economy, there is a massive level of unemployment in the western economies. The unemployed in the G-7 - Canada, France, Germany, Italy, US and the UK - rose from 30 million to almost 24 countries, along with 4 million unemployed who have stopped looking for jobs and 15 million who are underemployed as part-time workers. This unemployment is not transitory, but a structural long term unemployment. Even the upswing and the peak of 1987-1991 did not reduce the level of unemployment significantly.
America today has become a land of down-sizing. Challenger, Gray and Christmas, a Chicago consultancy firm, has estimated that companies have sacked at least 1.7 million workers since January, 1993. Further, these job losses, as Council of Economic Advisors concede, are more likely to be permanent.
This persistent unemployment is bound to generate restiveness among the working class and become a major concern of the Trade Unions. The emergent dominant mood among the workers is one of protectionism. A growing trend is the questioning of the existing economic system. For the employers and the state it is a necessity to ideologically contain the mood. This requires layering of the popular consciousness in a manner that enables the protectionist sentiment to co-exist with dominant neo-liberalism. The trade-linked labour rights is precisely one such political project that can achieve such an objective. The stability of such a layering of popular consciousness depends on the form and intensity of political opposition.
Mr. Steve Charnovitz, Policy Director of the Competitiveness Policy Council in Washington, and earlier International Relations Officer in the US Department of Labor, writes that there are many pockets of resistance to free trade on grounds of job loss, unfair competition, and the immorality of buying products from countries and corporations that mistreat their workers. Attention to labour standards, therefore, may be a way to reduce the opposition to new trade agreements. The social clause in the WTO is a political project.
The trade unions and social movements in India have unanimously rejected the linkage of the social clause with trade on the grounds that it is neither efficient nor effective for developing an international regime of fair labour standards. We have earlier pointed out and emphasized the ideological function that this social clause project serves.
The strength of bourgeois ideology is reflected in the fact that the concept of labour rights has emerged in the present situation in the context of WTO. This has resulted in the concept of labour rights becoming subsidiary to the twin concepts of fair competition and comparative advantage. Labour rights have no independent status. If fair competition and the comparative advantage of factors of production are not undermined the labour right ceases to exist.
In fact, fair competition and comparative advantage are at times in opposition. The concept of the labour right has been actually used to mediate this opposition. In the form of social clause, the labour rights exist for the need of capital, mediating two specific and concrete forms of capital, and not for the need of labour. Its function is to decide the real balance between these two categories as it unfolds in a particular situation.
For this reason, the institutionalizing of the social clause in WTO is being pursued with unprecedented persistence and vigour by the imperialist countries. In the mechanism of WTO, the labour right will function as an instrument for capital, which is always adjunct to it. Labour rights will not become an instrument of labour for struggle against capital. At best, it may give an indirect and peripheral benefit to labour.
Moreover, both enforcement or non-enforcement of the social clause will legitimize the WTO. Labour and labour rights are peripheral to this process of legitimation. The weakness of the International Trade Union Movement is witnessed in its accepting this peripheral status, not as a tactical retreat, but more as a consequence of ideologically accepting global capital and free trade as essential and inevitable in strategic terms.
In the western world there is a dominant false perception of developing countries being culturally and sociologically divisive and incapable of building an effective, coherent and sustained political mobilization for social change. This illusion is built up through a structured reproduction of images, reports and studies that point to the lack of political will, fatalism, universal corruption, the fragmentation of social protest and the absence of a cohesive democratic movement. Such perceptions persist even among the western trade unionists, social activists and academicians. These false perceptions are not episodic but hegemonic ideological constituents of western political culture. This is reinforced by some sections of third world intellectuals and organizations.
There is also a growing section of social and political activists who are critically concerned with the earth's threatened ecology, depleting non-renewable resources, starvation and poverty caused by inhuman under-development, humanity-destroying technology and the arrogance of nationalism and racism. Though these articulations have been disjointed and primarily limited to a cultural critique of the international social order it has generated intense ideological debate.
The space for this ideological discourse has expanded with the increase of inter-governmental agencies and forums and is being constituted by these sections of the western society. They have even termed international NGOs, campaign groups, ITFs, TNCs, etc. as the emergent global civil society. Without quibbling or entering into a debate over this concept, it is important that we accept the fact that the international terrain has expanded with globalization. And this terrain is being filled by institutions and ideologies which are subservient to capitalism.
No doubt, this terrain without a global state is weak and only ideological. It can play a limited political function in effectively changing the balance of class forces globally. But engaging and contesting the bourgeois ideology on this terrain can surely contribute to reshaping the balance of forces for partial reforms in a particular country and area.
A large section of the people of the western world who have a genuine concern for the people of the third world remain ideologically entrapped in these false perceptions. In the absence of politically clear and coherent articulation from the third world people, they occupy left liberal positions in this spectrum of globalizing ideology. It is in our interest to evolve a strategy that enables them to make a break from this illusion. The conditions for a genuine solidarity with the third world people will then be made.
It is a major achievement of the western states to have been able to articulate the two trends of protectionism and left liberalism with its project of controlling trade by linking labour rights with the institutional mechanism of WTOs. In the process, the west attempts to acquire a wide social base for itself and forestall the possible radicalization of social and TU movement in the western world, primarily in the direction of solidarity with the third world labour. It is a project of building a political consensus against the third world.
It is this political project that needs to be engaged and defeated. The rejectionist position of the third world TUs and social organizations is a moment of opposition from the terrain of the nation state. But, it is devoid of a component that challenges the ideology of globalization with a counter-proposal of real reform, the opposition has no force to breach the imperialist political consensus. The position of rejection is projected as yet another manifestation of the weak democratic capacity of third world society.
The history of capitalism has always divided and redivided the working class in the constant process of recomposition. These divisions are sustained ideologically and therefore the constant struggle for an independent labour ideology is crucial for building the unity of working class.
The labour movement is always in the process of becoming. It is important to grasp this process of becoming in its totality. The aspirations of reform and the breaking open into revolts are part of this process. As Lenin said, reforms are by-products of revolution. It is also true that real reform postpones the revolution. For Marxists, revolutions are fundamental for social transformation. As the labour movement develops unevenly, aspiration for reform has a wider base. But, the economic and social possibility for such reform should exist. There are times in history when this possibility is reduced. When this happens the insurgent mood of the workers develops.
From a revolutionary viewpoint, it is important to understand and accept this aspiration and direct it along a line of reform that follows the faultline of capitalism. It will actually change the balance of forces between capital and labour if the actual possibility exists. In case the economy is in a crisis the possibility of reform will be restricted and diminishing. The actual contradiction within reformism, between the aspiration and possibility will reach a crisis, opening up space for historical transformation. The ideology of reformism has to be struggled with. It is more important to enable the workers to acquire the political experience of the futility of reformism. This requires identifying the proper line of reform and leading the masses along that line.
Even by restricting the focus to the interest of the organized labour movement, a different line of reform can be taken. The issue of trade union rights concerns all sections of the international trade union movement. There is enough evidence, writes Stephen Deery, to indicate that the intensity of employer opposition to trade unionism in America is greater than anywhere else in the industrial world. The American employer will engage in any action, legal or illegal, to create and maintain an union-free environment.
The workers desire and feel the need for a union to represent them. The 1994 Workplace Representation and Participation Survey of American Workers reported that nearly 1/3rd of the non-unionized respondents would vote for a union representative, but their concern was the non-cooperation of the management to their representative union. The legal and institutional arrangement gives the management capacity to influence the unionization process.
In Germany the employers are demanding a fundamental change in the collective bargaining mechanism of the social market economy system called Mithestimmung (co-determination). They want the general agreement to be limited to only basic wages and working hours and to include an escape clause of not implementing this basic contract if the situation requires. The rest of the issues are to be negotiated between individual firms and their workers.
Union membership in Germany has dropped by about 20% since 1991 and is continuing to decline. In 1995, the membership of the German Trade Union Federation fell by 3.9% to 9.4 million. The recent offensive under the guise of reform for a change in the collective bargaining system, reduction in social benefits, wages freeze in the public sector, the removal of job protection guarantees for firms with 10 or fewer employees etc. are all geared for a change towards the Anglo-American model of capitalism.
The proportion of low-paid wages in America, Canada and the UK is considerably higher than the other G-7 countries. Even then the proposal to raise the federal minimum wage from the current level of $4.25 an hour to $5.15 is being fiercely opposed. Around 12 million people are earning less than the proposed minimum wage. Of these about 40% are the sole bread earners of their families.
The TNCs adopt more aggressive policies and practices against the trade unions and labour activists in the third world countries. The reservoirs of huge capital resources are used to break unionism by capital withdrawal, beside the termination and forcible retrenchment of union activists and removing of the leadership from democratic unions. Moreover, systematic subcontracting is used to eliminate unionization as well lower the cost of production. Local companies are forced to compete with each other to win contracts from TNCs even when they actually act as subsidiaries. To remain economically viable they have to indulge in the super-exploitation of labour. This is made possible by the general practice of violent suppression of unions, forcible formation of company unions and the repression and murder of trade unionists.
In such a situation the key issue before the international trade union movement is to build a system of institutions from the global to the local level through which it can act to enable the workers' rights to be established and enforced at the workplace. In such a perspective the social clause proposal of the ICFTU is wholly inadequate for the purpose if not counter-productive.
The real debate within the international labour movement is for a redefinition of labour right that adequately addresses the production relations os the TNCs, and an effective international campaign for the universal acceptance of such labour rights, surveillance and enforcement independent of the needs of international capital. The struggle is for that autonomy to the extent that is possible within the existing political situation.
The struggle of the working people of the world has unfolded broadly along two axes, one, for equity between different economies, and second, for equity between capital and labour as a whole. The labour of the developed countries living in economies which are historically in a advantageous position focus their concern on the second. This is regressive from the viewpoint of the labour in historically disadvantaged economies.
The policy of world labour has to simultaneously address and operate in these two domains. Such a policy requires sharp focus, but it must be based on an analysis of this complexity of the two domains and not by a simplistic reduction into any one domain. Both the national and international labour movement have to redefine their tasks in keeping with this general policy.
Labour is located and embedded in national economies which are increasingly overlapping and integrated into a world economic system. Democratization of the global economy is essentially enhancing the equity between different strata and sections of global labour. The struggle for equitable terms of trade, cancellation of the imperialist debt, building of monetary and financial institutions that allow relatively autonomous economic development of the developing countries should become a part of this general policy. The solidarity of the western labour movement on this count is far from desirable. The struggle within the international trade union movement is for bringing these issues to the centre stage and redefining the labour movement.
In contrast, the dominant section of the western labour movement is projecting the concept of social democratic globalization. This, like the social clause is ideological. In fact, the social clause in the WTO is assumed to be one such mechanism of social democratic globalization. Social democracy in Europe was a response to the spectre of revolutions in Europe and the transition to socialism emerging on the political agenda of the time. This historic capital-labour compromise was a trade-off of political silence on imperialist accumulation for social and political concessions at a national level. The communist and the militant European labour movement could not break this silence. The ideology of reformism with significant material gains in terms of a social welfare system contained the mood of the working class. But the onset of a prolonged phase of crisis has limited the accommodative process. The social democratic ideology is cracking; social peace is giving way to a massive social stirring.
The reformist and liberal left pose the neo-liberal globalization in terms of opposition between regulation and free market. Within this framework, they propose the project for social democratic globalization in opposition to neo-liberal globalization. It sounds plausible. But it is wrong for the reason that its premise is an ideal construct of a global market. There is no homogeneous global market for goods, services and factors of production. This formulation dissolves the actual division of the participants, resulting from the historic evolution of capitalism: between TNCs and international finance capital on one side and the national economies of the third world with producers and labour embedded in these economies.
This division gives a structural inequity to the global market. In fact, only global mobility of capital exists and labour is segmented and restricted into national markets. Labour is not uniformly spread globally but confined to political regions. Similarly, the markets for natural resources are outside the political boundaries. This structuration and its perpetuation is missed by the neo-liberal globalization.
Social democratic globalization as a political agenda is a mystification of the existing capitalist system. As a project for providing globally a set of social benefits similar to Europe, it is only possible on the basis of rupture with imperialism. It cannot be negotiated by a labour movement which is weak and fragmented both organizationally and ideologically. The largest federation, the International Confederation of Free Trade Unions (ICFTU), is financed by the imperialist countries, consisting to a large extent of company unions and the corrupt, dictatorial unions of the third world. It is devoid of any political will. It can hardly safeguard the basic trade union rights even in its strongest centre let alone take on the agenda of social democratic globalization. This myth has to be broken.
The defeatism that has gripped the left movement is a result of overestimating the strength of capitalism. The ruthless onslaught of global capitalism, the collapse of the socialist states and the quietism of the western working class has given rise to a view that there is no alternative to capitalism.
In fact in such times the conviction in Marxism matters the most. Instead of sanitising the Marxism into a formal system, its dialectical nature has to grasped. Marxism's insight was that in the very process of attempting to achieve social hegemony capitalism inevitably creates resistance to such domination. The class struggle is inevitable; the emergent form of such struggle is made opaque by the existing dominant ideological framework.
The main political task is to oppose this globalization process. The advance of western capitalism in new areas and industries - its weakest link - must be resisted by a wide alliance of labour and people. Solidarity and support of the international labour movement must be organized with the focus of such struggle. This will also weaken the imperialist centre and intensify the capital-labour contradiction in the western sphere. The ideological debate and the recomposition of forces centred around such struggle will provide the ground and the elements for restructuring the International Trade Federations and the world labour movement.
The political consequence of globalization is not the retreat or withering away of the states, as is projected, but the reduction of the state to an instrument of the TNCs and global capital. The third world states are meant to allow capital flow across national boundaries, enable and facilitate acquisition of industrial and financial assets, the absorption of the national saving and financial resources; ensure flexible and a non-regulated labour market.
In fact the state has played a vital role of breaking the previous restrictions so thoroughly and quickly and the imperialists have forced this role on them against the reluctance of the third world ruling class. It also showed the limitation of the industrialization undertaken by the third world bourgeoisie within the general dependency of the imperialist system. It can reshape the process of dependence but not eliminate dependence. In a situation of crisis the imperialists will always force concessions. As Samir Amin argues, only delinking from imperialism can begin the process of independent development.
The erosion of the class rooted in third world society makes the state openly coercive. Organized centres of opposition and resistance have to be repressed and a minimal 'social face' for political management of social protests are adopted. Globalization has reduced politics to management at a political level of class and social conflict, and political parties as a means of the corporate management function of the TNCs and international finance institutions.
The issue is whether labour has an interest and role in defending this national economic space, i.e. national macro-economic policy autonomy. For sustaining capital in a global market control over the state is required. This is not given but is negotiated and shaped by various social forces. The weakening of the social base of the state opens up the possibility of different alliances. The first and effective terrain for confronting imperialism are the third world nation states. It cannot be abandoned as the global reformists assert but become the focus of a major initiative. The beginning has to be made with labour building effective local coalitions to shift the balance toward autonomy of national macro-economic policies.
More important, is the maturation of the revolutionary situation in particular regions or countries and the possibility of the balance of forces shifting radically for a national and popular opposition to imperialism. This presents the task of third world labour differently. No social democratic compromise to smoothen the process of globalization but the revolt of labour and the people of the third world to arrest the advance of globalization. The policy of liberalization, privatization, deregulation and global competitiveness in major sectors has to be militantly opposed by mass resistance.
Today, for the international labour movement the struggle against imperialist globalization is the key task that unites the reformist project at a global level and resistance at the national level. The movement for real reform at the global level should unmask the ideological mystification of imperialist globalization and third world labour must defeat it on its ground.
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