At 15:21 16/04/2013, you wrote:
Wallerstein is always worth listening to. He posts twice a month. Sally
Here follows a copy of what I have written to him.
Keith
<<<<
Dear Dr. Wallerstein,
I have just been reading your piece, "End of the Road for Runaway
Factories?", which was recently posted to Futurework List by Sally Lerner.
I'm puzzled when you say that there is a continuing rise in the pay levels
of the least skilled workers, and therefore "worldwide negative pressure on
capitalism." But that is only true of the least skilled workers in the
least developed countries -- whose GDPs are growing fast from low
baselines. In countries with high GDPs, such as the US and the UK, median
wages of those who are less than very highly-skilled have been receding for
the past 20+ years.
Then again, we'll always have capital, won't we? It will always be
necessary for major projects. We'll always have major projects when
maintaining infrastructure or developing a new technology or carrying out
'atom smasher' types of experiments.
The beginnings of capitalism is really only due to England's war with
Napoleon two centuries ago which caused the Bank of England to print
immense quantities of banknotes to pay for armaments and naval
ship-building. The new banknotes rapidly appeared in millions of wage
packets and began to be accepted as equivalent to the metal coins
(particularly the gold sovereign) that workers used to receive. By the time
that England went back onto the gold standard in 1819, the whole population
treated banknotes as valuable as gold and began to open bank accounts in
their millions. Even though the deposits were short-term, it meant that, at
any one time from then on, high street banks had immense sums of money they
could invest. Banks no longer depended on a few rich proprietors.
Capitalism today is carried out by a variety of methods. Banks can extend
credit, multinationals can offer bonds, pensions funds can buy shares,
private equity groups can inject capital into failing businesses, etc.
I agree with you. We don't want capitalism with the other features you
mention -- hierarchy, exploitation, polarization -- but only
within something more demographic and "relatively" egalitarian. My own
predilection is for socialism that's based upon lateral groups.
Keith Hudson
----------
From: Commentary Subscribers [[email protected]] on behalf
of Becky Dunlop [[email protected]]
Sent: Monday, April 15, 2013 4:51 AM
To: [email protected]
Subject: Immanuel Wallerstein's Commentary No. 351
Please do not reply to the listserv. To correspond with the author, write
<mailto:[email protected]>[email protected]. To
correspond with us about your email address on the listserv, write
<mailto:[email protected]>[email protected]. Thank you.
Commentary No. 351, April 15, 2013
"End of the Road for Runaway
Factories?"
Ever since there has been a capitalist world-economy, one essential
mechanism of its successful functioning has been the runaway factory.
After a period of significant accumulation of capital by so-called leading
industries (usually about twenty-five years), the level of profit has gone
down, both because of the undermining of the quasi-monopoly of the leading
industry and because of the rise in labor costs due to syndical action of
some sort.
When this happened, the solution was for the factory to "runaway." What
this means is that the site of production was transferred to some other
part of the world-system that had "historically lower wage levels." In
effect, the capitalists who controlled the leading industries were trading
increased transaction costs for reduced labor costs. This maintained
significant income for them, if nonetheless lower than in the previous
period when they still had a quasi-monopoly.
The reason why labor costs were lower in the new location is that the
runaway factory recruited labor from rural areas that were previously less
involved in the market economy. For these rural workers, the opportunity
to work in these runaway factories represented a rise in real income,
while at the same time for the owners of the runaway factory these workers
were being paid less than those who had been working in the previous
location. This is what is called a win-win solution.
The problem with this seemingly wonderful solution has always been that it
was not lasting. After about another twenty-five years, the workers in the
new location began to launch syndical action, and the cost of their labor
began to rise. When it rose enough, the owners of the runaway factory had
only one real option - to runaway once again. Meanwhile, new leading
industries were being constructed in zones that had accumulated wealth.
Thus, there has been a constant movement of the location of industries of
all sorts. Quasi-monopolies after quasi-monopolies! Runaway factories
after runaway factories!
It has been a marvel of capitalist adjustment to a long process of
constant change of circumstance. This marvelous system has however
depended on one structural element - the possibility of finding new
"virgin" areas for relocation of runaway factories. By virgin areas, I
mean rural zones that were relatively uninvolved in the world market economy.
However, over the past 500 years, we have been "using up" such areas. This
can be measured quite simply by the de-ruralization of the world's
populations. Today, such rural areas are reduced to a minority of the
world's surface, and it seems likely that by 2050, they will be a very,
very small minority.
To see the consequences of such massive de-ruralization, we need only turn
to an article in The New York Times of April 9. It is entitled "Hello,
Cambodia." The article describes the "flocking" to Cambodia of factories
that are fleeing China because of the rise of wage-levels in China, a
previous recipient of such runaway factories. However, the article
continues, "multinational companies are finding that they can run from
China's rising wages but cannot truly hide."
The problem for the multinationals is that the incredible expansion of
communications has caused the end of the win-win situation. Workers in
Cambodia today have begun syndical action after only a few years, not
after twenty-five. There are strikes and pressure for higher wages and
benefits, which they are receiving. This of course reduces the value for
the multinationals of moving to Cambodia, or Myanmar, or Vietnam, or the
Philippines. It now turns out that the savings of moving from China are
not all that great.
The Times article notes that "some factories have moved anyway, at the
request of Western buyers who fear depending on a single country."
Conclusion of a manufacturing consultant: There are risks of moving to
Cambodia, but "there's a risk in staying in China, too." In any case, is
there somewhere to move the runaway factory? Or is Cambodia the end of the
line?
The bottom line is that the combination of already enormous and still
increasing de-ruralization and the rapidity with which workers can learn
of their relatively low wages and therefore begin to take syndical action
has resulted in a continuing rise in the pay levels of the least skilled
workers, and therefore a worldwide negative pressure of the possibilities
of accumulating capital. This is not good news for the large multinationals.
This is all one element in what has become the structural crisis of the
modern world-system. We are experiencing a combination of ever-increasing
austerity pressures on the 99% with a capitalist system that is no longer
so profitable for capitalists. This combination means that capitalism as a
world-system is on its way out.
Both sides are seeking alternatives - but obviously different ones. We are
collectively facing a "choice" over the next decades. One possibility is a
new non-capitalist system that replicates (and perhaps worsens) the three
essential features of capitalism - hierarchy, exploitation, and
polarization. The other possibility is a new system that is relatively
democratic and relatively egalitarian. The latter system, one should
underline, has never existed in the history of the world. But it is possible.
In any case, Cambodia is not the future of the modern world-system. It
represents rather the last vestiges of a mechanism that no longer performs
its task in salvaging capitalism.
by Immanuel Wallerstein
--
Becky Dunlop
Secretary, Fernand Braudel Center
Binghamton University
PO Box 6000
Binghamton NY 13902
<http://www.binghamton.edu/fbc/>http://www.binghamton.edu/fbc/
_______________________________________________
Futurework mailing list
[email protected]
https://lists.uwaterloo.ca/mailman/listinfo/futurework
_______________________________________________
Futurework mailing list
[email protected]
https://lists.uwaterloo.ca/mailman/listinfo/futurework
