Imperialism in the Twenty-First Century - John Smith

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the traditional, pre-neoliberal pattern of North–South trade, and do not in general correspond to cheap labor-seeking outsourcing. Second, a small but significant fraction of developing nations’ manufactured exports arise not from outsourcing relationships controlled by imperialist leading firms but from home-grown industrial development. Brazil’s aerospace industry and China’s solar panel and wind-turbine industries are examples of this. But, as we shall see in more detail in the next chapter that discusses the structure of world trade, these higher value-added exports form a small part of overall South–North trade. With these caveats, then, we can agree with Milberg and Winkler and regard manufactured imports by imperialist countries from low-wage countries as a whole to be a composite of diverse outsourcing and offshoring relationships, manifested in different types of global value chains. Developing countries’ share of imperialist nations’ manufactured imports have rocketed since 1980, more than tripling their share of a cake that itself quadrupled in the subsequent three decades. In a study published by UNCTAD in 2013, Rashmi Banga found that 67 percent of the total value-added generated in global value chains is captured by firms based in rich nations.37

      Transnational corporations, the majority of which are headquartered in imperialist countries and owned by capitalists resident in those countries, are the supreme drivers of the globalization of production. Their connection with production processes in low-wage countries takes two basic forms: an “in-house” relation between the parent company and its overseas subsidiary, as in FDI, or an “arm’s-length” relation with formally independent suppliers—an important distinction that will be examined in the next chapter. Its diverse forms, problems of definition, and non-availability of data mean that obtaining a precise measurement of the magnitude of outsourcing is fraught with difficulties. Nevertheless, UNCTAD estimates that “about 80 percent of global trade (in terms of gross exports) is linked to the international production networks of TNCs.”38 The extent of this transformation is indicated by UNCTAD’s 2013 World Investment Report, which estimates that “about 60 percent of global trade … consists of trade in intermediate goods and services that are incorporated at various stages in the production process of goods and services for final consumption.”39

      In conclusion, South-North (S-N) export of manufactured goods as a whole must be thought of not so much as trade but as an expression of the globalization of production, and this in turn must be seen not as a technical rearrangement of machinery and other inputs, but as an evolution of a social relation, namely the relation of exploitation between capital and labor. International competition between firms to increase profits, market share, and shareholder value continues, but the fate of each worker is no longer tied to the fortunes of her/his employer; on the contrary, the employers that survive are those who most aggressively substitute their own employees with cheaper foreign labor.

      The production process can be thought of as a sequence or choreography of tasks, of different concrete labors, in which “task” means a production task; as the labor expended in the production of commodities, “industry” is where this takes place. A striking feature of neoliberal globalization of production is the outsourcing of individual segments and links of production processes, leading analysts to talk of the fragmentation of production, or “slicing up the value chain,” as Paul Krugman described it in a much-commented-upon article.40 The old conception of North-South trade of raw materials for finished goods sorely needs updating. Baldwin’s notion of “task trading” captures a change in the nature of global competition, “which used to be primarily between firms and sectors in different nations, [but] now occurs between individual workers performing similar tasks in different nations.”41 This manifests an evolution of the capital-labor relation, which increasingly takes the form of a relation between Northern capital and Southern labor. Before the transformations of the neoliberal era, when competition consisted of firms producing different final goods, the relative wages and security of employment of workers in imperialist countries was dependent on their employer’s defense of market share and conditioned by the threat of redundancy resulting from the introduction of labor-saving technology. Before the neoliberal era the more successful and dominant the TNC, the greater the number of direct employees it concentrated in domestic factories. “Task trading” signifies that employers now have an alternative way of making their employees redundant, an alternative way of cutting production costs, by outsourcing individual tasks, that is, jobs, to where wages are significantly lower. Now the successful TNC is the one that has outsourced production to low-wage countries and does as little as possible itself. Apple has replaced GM in terms of market capitalization by going much further down the road that GM itself is traveling. Competition between workers is therefore sharpening and becoming more direct, and is less and less a simple function of their firm’s competitiveness.

       EXPORT-ORIENTED INDUSTRIALIZATION: WIDELY SPREAD OR NARROWLY CONCENTRATED?

      For nearly half a century, export-oriented industrialization has been the only capitalist option for poor countries without abundant natural resources.42 Yet it is a widely held view that the growth in the Southern industrial proletariat is highly concentrated in a small number of Southern nations, namely China, “the supplier of choice in virtually all labor-intensive global value chains,”43 and a handful of others. Ajit Ghose, a senior economist at the ILO, argues that “what appears to be a change in the pattern of North-South trade is in essence a change in the pattern of trade between industrialized countries and a group of 24 developing countries…. The rest of the developing world, in contrast, remained overwhelmingly dependent on export of primary commodities.”44 “The rest,” comprising more than 107 developing countries, “face global exclusion in the sense that they became increasingly insignificant players in the global marketplace.”45 Yet the 24 countries that Ghose reports have “shift[ed] their export base from primary commodities to manufactures” include eight of the ten most populous Southern nations, home to 76 percent of the total population of the global South. Of the ten most populous Southern nations, only Nigeria receives more from primary commodity exports than from manufactures.46 In addition, many other smaller nations have made a brave effort to reorient their economies to the export of manufactures and play host to manufacturing enclaves, also known as export processing zones, which exert a powerful and distorting influence on their national economies.

      The southward shift of production during the neoliberal era is strikingly portrayed in Figures 2.1, 2.2, and 2.3. The solid line in Figure 2.1 shows that Southern nations’ share of global exports of manufactured goods began its steady rise in the late 1960s. Its ascent steepened in the second half of the 1970s, rising from around 5 percent in the pre-globalization period to 30 percent by the first decade of the twenty-first century. Figure 2.2 decomposes this trace to shows the share of developing nations in Europe, Japan, and the United States’ manufactured imports. The traces for Japan and the United States show a dramatic increase in their manufactured imports from low-wage countries, rising from around 10 to 45 percent in the case of the United States and to nearly 60 percent in the case of Japan, results that make IMF estimates of Japan’s static outsourcing intensity reported above appear ridiculous.47

      The second trace in Figure 2.1 (broken line) shows that the share of manufactured goods in developing nations’ total exports commenced its astonishing ascent around 1980, increasing from 20 percent in that year to more than 60 percent in barely one decade. It then stabilized at this much higher level and, from the early 2000s, sloped downward, reflecting buoyant primary commodity prices and deteriorating manufacturing terms of trade. Figure 2.3 (page 54) decomposes this into different regions, revealing the widespread yet uneven character of the shift from the export of raw materials and foodstuffs to manufactured goods. If the different regions were disaggregated into individual countries we would find, as Ghose argues,

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