Thursday, October 24, 2019

Nothing to Lose But Their Value Chains

“Value Chains – the New Economic Imperialism” by Intan Suwandi, 2019

This book promises more than it delivers, while repeating itself constantly.  Nevertheless I’ll highlight its main points.  Suwandi, an Indonesian Marxist, attempts to give an empirical basis to the Marxist view that imperialism still exists and is going strong.  He counters political geographer David Harvey on this question, as Harvey thinks the ‘global south’ has reversed the process, so imperialism is no longer a viable concept for him.  By doing that Harvey fails the most widespread geography test of all.


Suwandi does not really deal with the military, debt, financial (currency), political (SAP), monetary (dollar), environmental, raw material, infrastructure or ‘legal’ (local and WTO) aspects of imperialism.  He keys in on the labor exploitation question.  Suwandi’s main points, some of which are obvious:

    1.     Oligopolies and multi-nationals use two methods of expropriating labor value from the global south:  global value/supply/commodity chains and subcontractor-based ‘arm’s length contracting.’ (Nike and Apple for instance.) 80% of world trade in 2012 was connected to these types.  57% was ‘arms length’ alone.

     2.     The key metric to look at is ‘average unit labor cost’ when estimating super-exploitation, unequal exchange or uneven development.

     3.     The two main aspects of average unit labor costs are productivity and wages.

     4.     The ‘southern’ countries with the top employment in global value chains originating in the global north are China, India and Indonesia.    In 2013 39.2% of labor employment in China and 16.8% in India were for exports to the U.S.  85% of China’s ‘high tech’ exports are ‘links’ in global supply chains.  U.S. firm GM itself has 20,000 suppliers world-wide.

     5.     Firms in the global south supplying multi-nationals headquartered in the global north are subservient to and dependent on those larger and more powerful firms.  They are not really independent and must rely on ‘flexibility’ and ‘leanness’ to obey whatever requests are made.  In Suwandi’s investigation of two Indonesian contract firms, the multi-nationals they work with can dictate sub-contractors, costs, technology, quality, sales issues and even wages, as these companies demand full ‘transparency’ on the part of their suppliers.  ‘Problems’ are the responsibility of the supplier, not the core multi-national. 

6.     As a result of international control, local workers are dealing with a far-away headquarters in Silicon Valley or Hamburg, not just their local bosses.  Strikes, unions, minimum wage and unjust limits to overtime (due to low pay) were issues in Indonesia.

7.     Technology, especially information technology, has made world-wide control more possible by multi-national oligopolies.

8.     ‘Global labor arbitrage’ references the method by which multi-nationals look for the cheapest and most productive labor possible, mostly found in the global south.  For instance, garment companies pay 1-3% of the final clothing price back to southern labor.

9.     Foreign direct investment (FDI) by core multi-nationals in the global south has increased dramatically.  In Indonesia it went from $83M in 1970 to $30.54B in 2017.  In 2018 core FDI investment in the global south was 58% of all investment.

10.  The greatest concentration of productive workers are now in the global south – 541 million to 145 million in the core countries in 2010. 

11.   Core multi-nationals use peripheral global production for export back to the core, but also as a way to penetrate large local markets.

12.   Taylorism is alive and well in the global south.  Deskilling is part of the effort to lower labor costs.  However, Suwandi does not add that computerization has modernized ‘Taylorism’ to be even more precise.  It could be called ‘Gatesism’ now!

13.   While capital has ultimate flexibility to move about the world, human labor is restricted by immigration laws.

14.    International ‘monopolies’ (really oligopolies) have made price-cutting and price competition mostly obsolete.  On this level, competition is a figment of free market ideology, not fact.

15.    Average hourly compensation differences between the US/ UK/ Germany/ Japan on the one hand and Mexico/ Indonesia/ China/ India are huge, with India having the cheapest labor.  This accounts for vast differences in average unit labor costs.  For instance, the average profit rate for the iPhone 4 was 59% in 2010.  1.8% of the final cost went to assembly costs in China.  And you wonder why Apple executives and stockholders are rich?
 
Suwandi does not address the issues of computerization, robots or AI directly, so the inference is that all jobs lost in the global north are due to the transfer of labor to the global south. Kim Moody and others have noted that local technology is actually one of the other main drivers for unemployment and low pay in the global north.  Suwandi doesn't deal with super-exploitation issues within the global north – i.e. ethnic or regional super-exploitation.  He treats China as an exception to the rule while assuming China is capitalist, and not a mixed economy dominated by certain levels of planning and a dominant deformed workers' state.  That might explain his ‘exception.’
2014 Strike in Indonesia - 1 Million Go Out

This is generally a helpful book, especially for those not familiar with this topic.  However, Suwandi does not have enough economic statistics to ‘prove’ the level of profit coming from cheap labor in the global south, though the inferences are direct.  As he points out, corporate GDP figures hide profits and labor by allocating all gains to the country where the corporation is legally located, its ‘home’ - though some authors have been able to reveal them.  “Arms Length Contracting” profit flows are entirely invisible in standard economic statistics.  So in a way, international capital attempts to statistically launder their profitability by hiding the true value of value chains.  This is why Marx called labor exploitation “the hidden abode of production.”

Other reviews on this topic below, (some referenced in the book), use blog search box upper left:  “The City” (Norfield); “The Endless Crisis”(McChesney); “Can the Working Class Change the World?(Yates); “American Theocracy”(Phillips); “Russia and the Long Transition from Capitalism to Socialism,””The Law of WorldWide Value”  and “The Long Revolution of the Global South”(all by Amin); “The Open Veins of Latin America”(Galeano); “Secret History of the American Empire”(Perkins); “American Exceptionalism and American Innocence”(Haiphong); “Drug War Capitalism”(Paley); "Bali."

And I bought it at May Day Books!

Red Frog

October 24, 2019

No comments:

Post a Comment