“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.’
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| 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
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