USA: +1(669)289-8683 
Sign in
Your written responses should be approximately one-two paragraphs per question (i.e. 3-6 paragraphs total), but of course can be as long as you feel necessary to answer the questions adequately
DelSordi-2: Explain the complex relationship between “democratization,” capitalism and economic regulation. Explain the concept of the “cartel” party and how it limits our American version of democracy. Explain how the “mainstream,” corporate media controls the political process (you must provide at least one relevant example from the text). process of “depoliticization” in recent years and what are the consequences of this change for American citizens?
Bellamy Foster, McChesney and Jonna (2011): Explain how the globalization of capitalism has lead to the creation of an industrial “reserve army” of workers. How does “offshoring” or the outsourcing of labor lead to “super-exploitation” of the global South? Explain this overall process by using “Iphone” production as an example
Chapter 2 Critical Economics: From the Communist Manifesto to “Occupy Wall Street”
In this chapter I wish to explore the possibilities for sociology to emerge as the key discipline in helping Americans understand the true nature of our economic system and the possibilities for radical change. To do so, requires that we begin with Marx, the foundational critical theorist in sociology, and then update his theories with new economic conditions that have emerged in recent years. As I compose this chapter, I am listening to an NPR broadcast about the “Occupy Wall Street” protests which are taking place all over American cities (currently over 500 locations in 46 states and in numerous countries). One commentator is arguing that the protest movements have no particular cohesion and fail to outline a unified message as to what true economic justice would entail. Meanwhile, those in “fringe” media outlets, such as Dr. Webster G. Tarpley, an expert in history and economics, are making the case for a new version of capitalism that would seize power from the Wall Street banking “cartel” and place that power back into the hands of everyday citizens. This sounds like a lofty goal, considering that capitalism has become global in nature and the fact that America is ensnared within a larger global network of trade and economic relations with both developed and developing nations. To understand how the recent economic crisis has emerged and how it can possibly be changed, we must first begin with a basic discussion of “capitalism” as an economic mode of production, beginning with Marx’s initial critique.
Sociologists speak of “capitalism” as an economic system which takes private property and wealth as its guiding principles. Capitalism is a particular kind of social structure, or an enduring set of social relations which patterns our behavior and gives meaning to our actions. The capitalist system as we know it today has only been in existence for a few hundred years in comparison to the over 5,000 years of recorded human history. In this sense, capitalism is a very recent social invention, and it should not be held up as the system which most closely mirrors human nature, as we are often told by politicians and those with an interest in preserving the current power structure. To Marx, capitalism emerged as a system out of the ashes of Feudal Europe when the peasantry were forced off of the land that they worked into tenant housing. In order to afford the new “rent” for this housing, this newly emerging class of people were persuaded to enter into factory labor, where they sold their labor for “wages” to the newly created class of bourgeoisie, or capitalist owners. From this point on, the distinction between the owners of the means of production–or capitalists, and the wage laborers—or workers, would sharpen and the wealth inequality between these two groups would grow. Marx’s overall argument was that despite moments within capitalism where the worker may enjoy some meager benefits or an increased standard of living (such as the 1950s boom period of economic history where the middle class grew sharply and wages increased steadily), the long-term trend is for capitalism to force a concentration of wealth and income into fewer and fewer hands. This polarization of wealth would, as he argued, increase to the point where economic “crises” would develop. Massive unemployment would take away the proletarian’s wages and their ability to purchase the products of their fellow workers labor. Mass unemployment coupled with decreased consumption would cause decreased production, economic stagnation, and ultimately businesses would fail. This trend, combined with a rising sense of class consciousness among the poor and working classes would foment into revolutionary potential whereby the workers would seize power from the bourgeoisie class and construct a new economic system where the workers directly controlled the means of production and the working process. In his seminal work, “The Communist Manifesto,“ Marx calls for the working class to organize based on the similarities of their class position, despite differences in race, religion and culture. This new system would require a “direct democracy” (in contrast to the current representative democracy), where all citizens would be directly involved in the political system, which would directly stem from the will of the people.
When judged by the historical record, Marx was both correct and incorrect about capitalism. First, his belief that capitalism would become more unequal over time has been documented as quite accurate. However, his theory predicting the fall of capitalism as a system was not borne out. Later Marxist scholars, who we will discuss further in this chapter, termed as “Western Marxists” attempted to explain new social developments that took place in the 20th century which prolonged the life and stability of capitalism. These include the “culture industries” of entertainment and consumerism, as well as the ability of the government to intervene in the economy to provide some measure of social welfare for the masses of Americans. The debate over the proper amount of government intervention and whether the government intervenes in order to protect “capital” or the worker is ongoing. But it is important to keep in mind that a minimal amount of intervention in the capitalist system may stave off a revolution by the masses by giving them the false hope that they are “progressing.“ Yet this type of intervention may not be enough to allow social mobility or a standard of living consistent with democratic principles. Below I outline the debate over government intervention.
As a system, capitalism is typically centered on what Heiner calls the “free market,” or the belief that government intervention, or regulation in the economy, should be minimal and constantly reduced. If the government intervenes in the economy to a large degree, we are told that the economy will fail and we will move toward a communist/socialist model of economic development, which will drive the U.S. economy into further recession and weaken our global economic standing. Furthermore, we are told that socialism and totalitarianism are synonymous. Thus, a move toward greater regulation, it is argued, will weaken our democratic system. Whether these statements are true is up for debate, but this centers on the evidence found in other Western nations and their much larger intervention in economic relations, and their ability/inability to gain world economic power and maintain democratic governance. To begin, it is important to understand the distinction between socialist or regulatory versions of capitalism, as they exist in continental Europe and communist political systems, which are found in developing nations, such as North Korea. In American political discourse, however, we are not provided with this distinction, and thus most Americans have been lead to believe that countries that intervene in the economic matters of their corporations are not democratic in nature.
To understand the conflation of these two systems, we must look back to the Cold War, which existed after WWII until 1989. The Cold War was a geopolitical struggle between the “Western” capitalist nations and the Soviet Union, which was a communist (and non-democratic system of governance). These two blocs were essentially battling not only for ideological dominance, but military and economic expansion of their own particular worldviews. The third bloc of nations that were not yet part of the “free” Western world, but were also not consolidated under the Soviet Union were called “undifferentiated” and could potentially be swayed in either direction. The Soviets attempted to make gains in the Middle East and lost to the Afghans during the 1980s. The U.S. justification for intervention in Southeast Asia in conflicts such as the Vietnam War was based on the “Domino Effect,” which was the fear that Soviet Communism must be stopped before it overtook new regions of the world which were of strategic importance to the Anglo-American capitalist system. When Cuba was aligned with the Soviet Union in the 1960s, the fear of conflict with a nation so close in proximity to the U.S. brought the American people to associate any sort of “socialized” system (including medicine) with Soviet Communism, which in effect, meant the loss of our democratic system.
Many famous political and Hollywood figures spoke out against socialized systems for the fear that America would be driven toward Soviet communism and our citizens would lose all political and social freedoms. In 1961, Ronald Reagan, former Hollywood icon and then Governor of California, participated in a campaign called Ronald Reagan Speaks out Against Socialized Medicine. Most notable about this campaign was not the fact that it was almost completely funded by the American Medical Association (AMA), one group who would stand to lose from a socialized medical system, but that Reagan did not distinguish between the “communist” system that America was engaged in conflict with and the democratically governed systems of Europe that have robust social programs yet enjoy all the freedoms of Americans (and perhaps more). Reagan warned Americans that if there was a move toward socialized medicine, then “behind it will come other government programs that will invade every area of freedom as we have known it in this country until one day as Norman Thomas said we will wake to find that we have socialism.” Reagan then mistakenly states that “we are going to spend our sunset years telling our children and our children’s children what it once was like in America when men were free.”
From the 1960s until today, Americans were “warned” about socialism and the dangers that it would bring about. Meanwhile, the development of social-democratic systems in Europe continued throughout this period. Nations across Europe, but more specifically in Scandinavia, began to regulate the ravaging effects of capitalism. This included innovative plans, such as national healthcare, larger welfare schemes, wealth transfer and anti-poverty programs, larger subsidies for childcare, more extensive family leave policies, mandatory workplace regulations on safety and working hours, restrictions on downsizing and unemployment, among several others. As Robert Heiner claims, “we need to remember that socialism and totalitarianism are not equivalent and that European and Japanese governments are democratically elected. Their people have freely gone to the polls and chosen government leaders who would step in to moderate the harmful effects of the market. Though perhaps these countries have fewer individuals who go from rags to riches, they do not have the radical inequalities in income and wealth that exist in the United States. Their workers are less threatened by the possibility of massive layoffs, and if they are laid off, workers and their families do not face the same degree of financial upheaval as their American counterparts” (2006:42).
The overwhelming evidence suggests that citizens in these nations are afforded an overall better standard of living than the average American. However, Americans are mislead to believe in the façade of the “American Dream,” or the ideology that as long as one works hard and places their nose to the grindstone, they will achieve success, often referred to as a “meritocracy”– or a system of privilege based solely upon work ethic. If this were true, then the “freedom” from government intervention that only Americans experience would be a fare trade-off because they would be able to achieve success through hard work alone. In reality, the system does not operate under the principles of a meritocracy. Regardless of how hard one works, the majority of Americans remain in their parent’s social class position. Furthermore, more Americans are in poverty than in any other Western, industrialized nation. A smaller percentage of Americans belong to the “middle class” than in previous generations. The likelihood of an American born into a poor or working class family of rising to the middle class or higher has weakened over the last 30 years and is much lower than in Europe. Despite the fact that Americans are more educated than ever before and spend a greater amount on college education, the average worker’s wages have stagnated (when adjusting for inflation) since the 1970s. Finally, the total amount of wealth owned by the top 5% of Americans in comparison to the wealth owned by the bottom 20% of Americans (a much larger group of individuals) has more than tripled since 1970. These trends signal that the American Dream is dead—at least the classical notion that work ethic alone will bring about a middle class lifestyle.
If Americans do not experience the standard of living that they have come to expect, they do experience, we are told, a very high degree of political freedom and democracy. “Democratization,” the political sociology term for the level of democracy that a nation has gained, has been documented across hundreds of countries and over time. The World Values Survey, for example, has presented data on democratization to help us understand which nations are more democratic than others, as well as the social and cultural factors that promote democratic governance. Based on these measurements, it is clear that the U.S. is not the most democratic system on earth. However, American democracy is stronger than most nations documented across the world. The 2010 Democracy Index ratings show the Scandinavian and Northern European nations of Norway, Sweden, Denmark and Iceland as the top four democracies. The United States is ranked at number 17, which is near the bottom of Western, industrialized nations. Interestingly, the countries that have the highest level of economic regulation and intervene in the free market of capitalism have the highest level of democracy. This evidence smacks Ronald Regan’s notion of socialism and totalitarianism in the face! The more socialized nations, which offer national healthcare and larger welfare programs are also the most democratic, which signals that the citizens of these nations are demanding this particular form of intervention. Their democracies are “responsive” in that the political-economy is structured around the desires of the citizenry. Most notable is the larger “freedom” that these citizens experience in the political system. By freedom, I am referring to the freedom to choose candidates that are outside of the 2-party, capitalist system (or what Chomsky refers to as the two sides of the business party!). In these nations, there are numerous viable political parties of all stripes–many of which are defined as socialist or “leftist” in nature. In America, as previously mentioned, the rivalry between Democratic and Republican parties centers on social value issues—such as guns, god and gays, but largely ignores key differences on economic policies.
When looking globally, however, the story of all 162 nations measured under the democratization rubric becomes much more complex. Broadly speaking, societies that are more capitalist, measured by open-markets and a higher GDP per capita, are more democratic. This evidence suggests that the basic shift toward industrialization and a capitalist system has profound effects on the development of a democratic system in a particular nation. For example, in regions where economic development is the lowest (such as Latin-America, Asia and Sub-Saharan Africa), the vast majority of political systems are defined as either “flawed democracies,” “hybrid regimes” or “authoritarian regimes.” In Western civilization, where development is the greatest and capitalism has taken shape, the majority of political systems are defined as “full democracies.” Overall then, the global picture that emerges is that capitalism is healthy for democratic governance—up to a certain point! Capitalism, when left purely to the free-market, and devoid of any government regulation will actually have a counter-effect and reduce the effective level of democracy. This is precisely what has emerged in America. The key to understanding why the American democratic system has far surpassed Algeria (ranked 125th globally) but lags behind 16 other European nations lies in the peculiar formation of our political economy, which I will explain below.
The American “one-party” system has serious implications for its citizens livelihood and standard of living. True political and economic freedom in America would be defined by a multitude of alternative and viable political parties who entertain different notions of how capitalism should be structured. As long as Americans have one party to choose from, the lack of regulation in capitalism will continue and the social problems of poverty and inequality will remain. To be precise though, one must understand that capitalism can still exist as an economic system, and private property can be upheld (within reason), while also injecting a healthy does of corporate regulation. This can be accomplished without completely transforming into a socialized system. The barrier to this type of change is the formation of what Richard Katz and Peter Mair call the “cartel party”—or a party system based on the collusion of two or more parties designed to protect themselves from the possibility of smaller political parties gaining momentum. Within the cartel party, the goals of politics become self-referential, professional and technocratic, and what little inter-party competition remains becomes focused on the efficient and effective management of the polity. The election campaigns that are conducted by cartel parties are capital-intensive, professionalized and centralized (Katz and Mair, 1995). The cartelization of American political life implies that the citizenry envision nothing outside of the cartel system, that Americans battle over social and cultural value differences that the two parties espouse, and that these two sub-parties share the power position equally over time, as to present the surface appearance of competition while amassing extreme wealth to the point that smaller, alternative parties with different platforms become non-viable. This process occurs through the campaign-financing scheme that has developed in America.
It is important to recognize the power of corporate interests in shaping social and economic policy through campaign financing and lobbying. As Douglas Kellner claims, “The most powerful corporate forces have tightened their control of both the state and the media in the interests of aggressively promoting a probusiness agenda at the expense of other groups. The consequences of neoliberalism and its program of deregulation, tax breaks for the wealthy, military buildup, cutback of social programs, and the widening class division are increasingly evident in the new millennium (qtd in Heiner, 2006: 183). As Robert Heiner notes, there is no hope of electing a presidential contender who isn’t personally wealthy, beholden to wealthy special interests, or both. The primary reason that the cartel party remains in power is that smaller political parties with alternative and progressive visions of economic regulation will not receive any media or public attention due to lack of funding. It must be noted that creating a publicly financed election system, whereby all individuals with good ideas and a desire to serve their communities will have a chance at becoming political leaders, will only strengthen our democracy. Currently however, only those candidates who are part of the cartel party and are financed by large corporate interests have the chance of being recognized. On the off chance that a non-corporate sponsored candidate receives a certain degree of national attention, the mainstream (corporate controlled) media outlets are sent out to perform “hit jobs” on these candidates, as to ensure no progressive change can take place.
A current example of this phenomenon is the candidacy of Dr. Ron Paul from Texas. As of December 2011, Paul is polling in 1st, 2nd or 3rd place among the Iowa voters for the upcoming Iowa primary caucus (which more than 80% of the time is considered a litmus test for future presidential nomination). The mainstream media, including Fox News, Politico and others has been sent out to attack Paul in order to discredit his viability. As Journalist Paul Watson notes, “despite the fact that two out of the last three winners of the Iowa primary have gone on to successfully capture the Republican nomination, the political class have decided that Paul doesn’t deserve the opportunity to build the same kind of momentum, and that a victory for him in Iowa, would “do irreparable harm to the future role of the first-in-the-nation caucuses, according to Politico” (2011: 1). Governor Branstad of Iowa has already preemptively told voters to ignore Paul if he wins and to instead focus on who comes in second place. What does this attack on Paul center on? Is this particular candidate so dangerous to American prosperity that he should be marginalized prior to the election? There are three important issues where Paul strays from the mainstream cartel party line.
The first issue, which arouses concern amongst anyone in the political class is Paul’s perspective on the September 11th attacks. Dr. Paul has gone on the record on several national radio shows and media outlets stating that 9/11 must be reopened for investigation. While Paul has not officially allied himself with the “truther” movement, he has made several public statements where he claims that 9/11 was used by the Bush administration to launch wars against Iraq and Afghanistan. Furthermore, he has claimed that the attacks were used as a reason to implement the Patriot Act and crackdown on civil liberties (see Watson, 2011). In fact, Paul has openly (and correctly) claimed that the Patriot Act was written many, many years before 9/11. This particular stance on 9/11 is threatening to the power elite in America because it suggests that: a) those in the mainstream Republic party were corrupted to the point that they deceived the American people in order to initiate international aggression leading to the death of roughly one million Iraqi citizens, and b) special interests (in this case, the military-industrial complex, to use President Eisenhower’s terminology) have infiltrated the center of the party to the point that no politicians can be trusted.
The second issue where Paul diverges from the mainstream is his stance on war and international conflict. Paul has outlined a massive slashing of military spending and the removal of U.S. military personnel from all foreign entanglements. He promotes a protectionist philosophy of military power, whereby the military need only be large enough to protect from domestic attack but should not be used for “nation building.” This philosophy threatens the private interests that have a stake in future conflict, such as the ensuing drama with Iran that President Obama and Republican candidates continually allude to. Considering that over 50% of the federal yearly budget is spent on military-related costs (which is more than all other industrial nations combined), its no wonder that Paul is being demonized prior to any official ballot being cast. The military-industrial complex has such a stranglehold on the political system, that once Vice President, Dick Cheney received deferred stock option compensation valued in the millions of dollars. Cheney was the CEO of Halliburton until 2000. Halliburton and its subsidiaries received the majority of “no-bid” government contracts for rebuilding the destruction caused by the U.S. bombing of Iraq. Considering that Cheney was largely responsible for the strategy in Iraq and was part of the Bush administration before and during the conflict, we can conclude that this represents a major conflict of interest. This conflict arises from a sitting vice-president profiting from the conflict that he orchestrated. Ending international conflict, regime-change and nation-building as strategies puts these interests at a serious disadvantage and candidate Paul is the most outspoken of the candidates about the excessive special interest stronghold over Washington policymaking.
Dr. Paul’s view of the Federal Reserve banking system and its role in financial policy is clearly the most detrimental to his candidacy, which has been documented by his persistent media demonization. Paul is outside of both sub-parties within the cartel system when it comes to financial policy. Paul most closely aligns himself with a “constitutionalist” version of banking, whereby the private Federal Reserve Bank must be either audited and/or abolished completely. This private banking system was only set up in 1913 and was not set out in the American constitution. In 2009, Paul introduced HR 1207, claiming that the Federal Reserve must be audited and was responsible for the current economic depression, which was the largest since the great depression of the 1930s. Paul criticizes both the former Republican administration for their part in this current economic crisis as well as the current Democratic administration for their complicity in the dominance of the Federal Reserve in dictating financial policy. This only lends more strength to the claim that the cartel party is in full force under the Obama administration. For example, current Secretary of Treasury Timothy Geithner was once the chair of the Federal Reserve system and was appointed in a bold move by Obama to continue the banker “bailout” plan initially triggered by the previous Bush administration as they left office. Both McCain and Obama in their 2008 presidential campaigns were given more special interest money from Wall Street interests alone than the value of their combined lifetime congressional salaries. Furthermore, all members of Congress receive more contributions from Wall Street and private donors than their lifetime salaries. The dominance of special interests in the American political system is beyond comprehension, and without a counterbalance, such as a strengthening of the general “public” interest, future economic policies will be geared toward the destruction of the middle class and the concentration of wealth into the hands of the top 1% of individuals and corporations. If Dr. Paul has the interest of the average American at heart, but is not given a chance to represent their interests due to his lack of media exposure and minimization within the media (which is caused by his lack of corporate financial backing), then we must entertain the idea that the democratic process has been diminished, to use Theda Skocpol’s terminology.
Sociologists who study the political-economy closely are keenly aware of the structure of the American political system and understand what needs to change in order to create a more democratic system. As critical sociologists point out, it is the existence of a “false consciousness” regarding the operation of the political system that prevents any radical change. As mentioned above, however, the barrier to consciousness-raising is American apathy, which is driven by the rise of what Adorno calls the “culture industries.” To the extent that Americans can be distracted from the true nature of the economic system through endless consumerism, sports, entertainment and self-improvement, inequality and wealth concentration will only increase. But to a certain extent, inequality can only heighten to a threshold where even average Americans will eventually take notice.
The current “Occupy Wallstreet” movements are a manifestation of this discontent. Capitalism may have reached a tipping point. This particular movement is becoming global in nature and has organized nonviolent protests in America and other nations. At these protests, signs were observed proclaiming the “awakening” or consciousness-raising of everyday citizens. For example, one sign read, “Dear 1%, we fell asleep for awhile. Just woke up. Sincerely, the 99%.” With hundreds of cities currently involved in the movement, it is tempting to suggest that it may have staying power and particular demands may be met. But what are the specific demands of this social movement, and can these demands be realized without a complete revolution against the capitalist world system? Sociologist of the global economy, Immanuel Wallerstein suggests that the movement is really a set of overlapping movements with no direct strategy or demands. However, one consistent theme is the protest against radical “polarization”- or economic inequality. In America, the movement is centered on the critique of Wall Street dominance in U.S. economic policy. That this has taken place during a Democratic presidential administration, under the helm of a President who ran on the supposed platform of creating more economic equality, transferring capital from rich to poor, and reversing previous policies that produced greater polarization, is striking. If the Democrats were truly different from Republicans on economic policy, then the movement would not have emerged under Obama’s watch! This confirms the collusion of the two parties under the cartelized system, and also confirms the fact that politicians within both parties make outrageous claims during the campaign cycle, yet typically do not adhere to these policies once elected.
Under Bush Jr., for example, claims were made while campaigning in 2000 that “we should not engage in nation-building.” This critique was leveled at then Presidential hopeful John McCain for his more hawkish view on foreign policy. Yet within weeks of Bush’s presidency, and during his very first National Security meeting in January 2001, cabinet members, such as Treasury Secretary O’Neill, spoke of Bush’s persistence on “regime change” in Iraq and “Bush looking for any possible justification to remove Saddam Hussein.” That this occurred a full 9 months prior to the 9/11 attacks, which were the supposed justification for regime change in Iraq, is quite dramatic. Obama’s statements while campaigning had the general tone of a future President who would operate an anti-Wallstreet administration, and focus heavily on what Obama called “Mainstreet” (or the middle class sector of America). If elected, Obama promised to reverse the previous waves of elite and corporate tax cuts rolled out by Bush Jr. from 2001 to 2008. In reality, Obama reauthorized the same tax cuts once again and constructed the most Wall Street dominated cabinet in Presidential history. Occupy WallStreet as a movement may be onto something if they have realized that both political parties serve the interests of capital and WallStreet.
The main barrier to any real change is a unified message between these sub-movements. With ideological dispersion and a “leaderless” structure, it is difficult to create momentum across America. A second barrier is the size of the movement and its ability/inability to force any policy changes within government. Without significant change in the campaign finance and lobbying schemas as they currently operate, any demands from occupy Wall street groups will not be met. As Heiner (2006) claims, recent campaign reform legislation proposed and voted on by congress has been largely cosmetic. For example, the “McCain-Feingold” bipartisan campaign reform legislation of 2003 placed limits on certain forms on financial contributions and regulates campaign advertisements. However, since this legislation the amount of corporate funding and lobbying group activity has only increased exponentially. Furthermore, in 2010, the Supreme Court overturned a key component of the legislation, essentially allowing corporations to spend unlimited money to support politicians of their choosing. The problem is that because the necessary changes must take place within the system, it requires that politicians vote for legislation that support the working and middle classes as opposed to the power elite. But if these same politicians remain beholden to corporate special interests, then expecting any change in legislation is a utopian ideal. Any real campaign finance reform must be voted on and authorized by congress–the very same group with the most to lose from this reform. Expecting congress to essentially police themselves is akin to asking a corrupt police department to investigate themselves. Of course, in order for any real investigation to occur, an outside entity would need to be involved. The problem with governmental reform, is that the only outside group to exercise control or oversight over the political system is the PEOPLE!
The Occupy Wallstreet movements understand this basic fact and see the need for the citizenry to be engaged and send congress a message that they must change the ways in which they vote for legislation. The idea here is that if the congress is not responsive to the will of the general public, then they will be removed from office during the next election cycle. Regardless of how much special interest money is funneled into a political campaign, the democratic process still allows for the people to decide on the fate of ones political future. But again, without any real campaign finance reform, the next set of candidates who espouse to represent “the people” (or in Obama’s case, “Mainstreet”) will be cut from the same cloth as the previous leaders who were removed from office. So there appears to be a vicious cycle operative here. The system is structured as to not allow any fundamental change in the way the political economy operates, which would stem from the people. Perhaps this is why America is only ranked 17th on the global democracy rating!
Assuming that there are future politicians who represent the interests of the general public in place and ready to run for office, there still exists a third barrier, which is perhaps the most problematic. What Occupy Wallstreet as a set of overlapping social movements fails to comprehend is that when they speak of the 99%–or the vast majority of the public who are part of the working and lower classes who would benefit from the aims of the movement, they assume that all 99% of the public understand the message, are actively part of the movement and are democratically engaged. In reality, the current membership of the movement includes far less than 1% of the general public who supposedly represent the entire 99%! What we have then is 1% of working class individuals battling against the top 1% (or what C. Wright Mills terms, the “power elite”). When seen from this perspective, it is a losing proposition for an essentially powerless group to fight a well-financed, and well-connected group, such as the power elite. But as I’ve mentioned earlier in this book and as critical sociologists point out, the barriers to organizing a true 99% majority in a social movement are numerous and substantial. First, there are the culture industries, which distract us from the true nature of the system and keep us working hard and consuming. As Ben Agger contends, “people develop false needs for endless shopping, trivial entertainment, and the acquisition of status symbols…Marcuse calls needs ‘false’ that are imposed on the self by the culture industries and not freely arrived at through rational reflection. Selves lose the intellectual resources, the time, the space for rational reflection. [Our] lives are so ‘administered’ that [our] needs flow almost immediately out of television screens, magazines and now the internet into our minds and bodies, which are ‘totally mobilized’ for the project of endless shopping” (2004: 106). It is not coincidental that the culture industries distract us from radical change. The power elite organize this system to keep us busy while inequality grows beyond comprehension.
High speed communications and internet technologies represent a dialectic of progress and problem. As Marxist and critical theorists argue, any technological innovation contains the potential for both good and bad. Technologies can either liberate us from enslavement or further enslave us. The potential for the internet to be used as a tool for organizing grassroots movements and spreading knowledge about the true nature of the system is enormous. The development of “alternative” and fringe media outlets represents the growing trend away from corporate controlled media and biased information that serves the interests of the power elite. But on the other hand, the internet has been documented to be primarily used, by both men and women, as a means to satisfy the self, either through self-improvement or sexual gratification. To the extent that the internet is used by men as a means to satisfy their libidos and partake in the sexual objectification of women, it is a distraction from true consensus-building and further distances male and female culture, thus leading to weakened opportunity for radical change among both halves of the population. Women, like men, also use the internet for self-gratification. As the primary consumers of social media outlets, such as Facebook, as well as the majority of participants on internet dating sites, such as Eharmony and Match.com, women see the internet as a means to connect and discover themselves through heightened communication. In addition to this, women also use the internet for online shopping and increased consumption of goods and services. While this might appear to be liberating on the surface, these acts merely reinforce the dominant capitalist system, by promoting false needs and the false association of happiness with instant communication and consumption. How many women use Facebook to talk about political issues or to organize a rally or protest? How many women talk to their close friends and family about the Occupy Wallstreet movement and what it means for our society? In reality, women are using communication technologies to post pictures of themselves at the latest bar or club, or to provide instant “updates” as to which coffee shop they happened to frequent. If this is defined as true liberation from the extreme inequalities of capitalism, then we have a long way to go!
While Facebook has garnered 200 million American subscribers and dominates the digital landscape, it does not, by any means, represent a technological utopia in that it is not being used to build a stronger democracy. Meanwhile, the development of truly alternative versions of media and information have mushroomed alongside these social media sites. Operating outside of the corporate dominated media control grid, sites like drudgereport.com bring together alternative visions of democracy and the spread of information. Drudge is considered a master site, with more internet traffic than Facebook and Twitter combined (see Indvik, 2011). As an aggregator site, Drudge compiles news and information from hundreds of other alternative media sites, such as Infowars.com. These smaller sites attempt to expose the “truth” about government corruption and reveal the inner workings of our political-economy without the slant of corporate control. As an example, Infowars.com has captured the sentiment precisely, as their running slogan is “because there’s a war on for your mind” (perhaps alluding to the fact that the wars of the 21st century will be information wars, not fought on the traditional battlefield, but in the minds of global citizens). This particular site provides information outside of what site leader and journalist Alex Jones calls “the corporate controlled left-right paradigm.” Operating outside of mainstream party politics, Infowars provides stories on issues ranging from exposing government sponsored terrorism, the banking system collapse, international war and conflict, to the developing “police state” (or the crackdown on civil liberties since 2001). Infowars sister website, also linked on the drudge report, called prison planet.com proclaims that “the truth will set you free,” and also provides supposedly non-biased information. While postmodern sociologists would criticize the claim that any media outlet is devoid of bias and perspective, this particular site does provide Americans and global civil society a chance to see information regarding current events outside of the one-party political system. One of the fundamental stumbling blocks that these sites have experienced, as is also evident in the Ron Paul presidential campaign, is that they have been marginalized and often discredited.
In 2010, for example, it was documented that the largest internet search engine, Google.com, had blacklisted both info wars.com and prison planet.com from their popular searches. As Paul Watson claims, “in a damning new lurch toward web censorship, Google’s news aggregator has blacklisted Prisonplanet and Infowars despite the fact that both sites are internationally known and now attract more traffic than many mainstream media websites, while Google-owned Youtube has frozen the Alex Jones channel based on a spurious complaint about showing Wikileaks footage that has been carried on hundreds of other Youtube channels for months. After carrying our content for years, Google News last week purged Prison planet and Infowars from its aggregator system, ensuring that our stories no longer appear alongside the likes of CNN and Foxnews in a frightening early salvo in the move toward a tiered internet that favors large corporations while independent voices are strangled” (2010: 1). This bold statement by Google appears to send the message to democratic citizens that the internet is not a free and open place where dialogue can take place, but a “sanitized” version of reality, where corporate sponsored media powerhouses have greater rights than do alternative media outlets. This example of media censorship and corporate control is strikingly similar to the operation of our political system, whereby corporate control over campaign financing ensures that only certain candidates with a probusiness/promilitary agenda receive adequate exposure. If technology, as Marx claims, possesses an inherent ability to liberate or enslave, depending on our use of this technology, it appears that the internet is no longer the key to our “salvation” as a democracy. Does “Big Brother” know no boundaries?
It is not surprising that recent evidence has been uncovered to suggest Google’s deep ties to the U.S. government, and in particular, the CIA. In 2006, ex-CIA agent Robert David Steele revealed that the seed money to get Google moving as an organization was provided by the CIA (see Watson, 2006). Recent Federal Freedom of Information Act inquiries have revealed that the government has several contracts with private social media and websites, including Google and You tube, which waive the “normal” rules on monitoring users (see
http://epic.org/privacy/socialnet/gsa/
). This scene harkens back to George Orwell’s (1949) dystopian novel 1984, where he describes a futuristic society which is controlled by an inner-party elite cadre who seek to control and manipulate the minds of the citizenry through extreme surveillance tactics and the distortion of news information. Does the current police state infrastructure go beyond Orwell’s nightmarish vision? Are we truly free? What would true freedom look like?
As mentioned, the main barrier to the Occupy Wallstreet movement gaining momentum and truly coalescing around a 99% majority is the development and stranglehold of the “culture industries,” which at once distract and reorder our priorities, leading to an intense focus on consumption and a trivialization of radical change. For example, when the San Francisco Giants finally won the baseball World Series in 2010, severe riots broke out in the streets, leading to fires, overturned cars and looting (see Brown, 2010). Meanwhile, during the same weekend, more than a million French citizens rallied and protested in the streets against then President Sarkozy’s announcement to increase the retirement age. Of note is that tens of thousands of high school and university students joined the protests (Jeffers, 2010). The differences between these two scenes is striking. In America, thousands of citizens take to the streets over a sporting event, which bears no direct relationship to their livelihoods or their democracy. In France, citizens of all ages, races and religions come together for what the French sociologist Emile Durkheim termed, “solidarity,” in an effort to protect the interests of the working class. That sports and entertainment take such a high priority among Americans suggests that the barrier to Occupy Wallstreet gaining popular momentum is huge. But is this behavior not to be expected considering that Americans are bombarded with advertisements and competition revolving around football games? As Marx commented, when free, people will make informed decisions about the future of their society, their livelihood and their selves. But when shackled by larger social forces, such as the culture industries, selves make irrational decisions, and often times act and vote against their own economic and personal interests.
Secondary barriers to the movement’s potential also exist. These include massive disjunctures between racial, class, religious and cultural groups in America. To be precise, the message of Occupy Wallstreet is clear—polarization and economic inequality have increased to the highest documented in American history. But what they fail to notice is the fact that these inequalities continue to divide Americans along a multitude of various identity groups and affiliations. Sociologists who study “identity politics” are aware that group divisions based on deep-seated identities serve to block social movements from gaining momentum. Racial and religious divisions in America are quite striking, and show no sign of dissolving. Sociologists who study race, racial inequality and racial identity have documented that racial inequality in America–in particular, black/white inequality—is persistent and intergenerational. The original source of this inequality is the chattel slavery system that existed in Colonial America, which then transformed into deeply segregated housing, and a two-tiered school system and labor market. Current Census data suggests that this segregation continues today, over 140 years after slavery officially ended! This manifests itself through reduced earnings for blacks (who earn roughly 2/3 as much as whites at the national level), increased high school drop out rates, and lower college attendance rates. All of these forces add up to reduced “life chances”—to use German sociologist Max Weber’s concept–for African Americans.
A further discussion of racial and ethnic issues in America will continue in chapter four, but it is sufficient for the purposes of the argument presented to outline the basic parameters of racial inequality. Racial inequality in schooling, housing and labor translate into persistent segregation for blacks in America. Because the lions share of K-12 school funding is drawn from local property taxes, which directly relate to home values, we can conclude that one generation of racial segregation will lead to yet another because poor school systems produce poor achievement and weakened labor market prospects, which, in turn force racial minorities to reside in poorer neighborhoods with substandard schooling. The cycle is perpetuated generation after generation. If “birds of a feather flock together,” and racial groups in America are geographically isolated from one another, then this will translate into the formation of differing racial subcultures, who increasingly share little with one another. As I have argued elsewhere, it was the existence of slavery and segregation in America that lead to the African American subculture. This subculture may be seen from the inside as a source of solidarity and group identification, but in the larger sense, it is a symbolic manifestation of inequality between racial groups in America (see Delsordi, 2007). Racial and ethnic subcultures between black and white are not documented to be nearly as large in other Western, industrial nations. In the United Kingdom, for example, inter-racial harmony between blacks (Afro-Carribeans to be precise) and Anglo’s is so small that roughly ½ of the African-origin British marry whites. The rate in America is so miniscule, it is approximately 10 times less! This has consequences for the black community, but more broadly, American society in general.
Returning to the issue of Occupy Wallstreet, it is relevant to consider the inability of the movement to gather individuals across racial, religious and party lines. If Americans are distracted by the culture industries, they are also torn apart by racial and ethnic divisions, which seek to pit one group against another for the meager increases in standard of living (if there are any available). As Marx claimed, the working class must develop a sense of group consciousness. This identification must take their status as working class individuals as primary to all other affiliations. To the extent that racial cleavages exist, they only detract from class consciousness and weaken any revolutionary change. As Mills would point out, it is in the interest of the power elite to further racial inequality in an attempt to weaken class consciousness.
Racial inequality has severe implications for minority groups, but also Americans more generally to the extent that it causes massive differences in life chances. The best example of this inequality is found in the criminal justice system. America now incarcerates more citizens than any Western, industrial nation and surpasses nearly all other nations globally. Of the 2.2 million Americans incarcerated, almost half of those locked up are African Americans. However, blacks only make up roughly 12% of the American population. This means that blacks are the most likely to be incarcerated. This relates directly to schooling and the labor market. Massive differences in the quality of schools, curriculum and teachers leaves a large number of African Americans without a basic high school education. If school differences were alleviated, then the story would be much different. Because schooling correlates directly with ones success in the job market, the unemployment rates for black men has only increased. A recent study by experts at Columbia, Princeton and Harvard revealed that in 2004, 72% of black men in their 20s who did not complete high school, experienced unemployment (Eckholm, 2006). Unemployment relates directly to crime and incarceration in that these men do not have the legitimate and legal means to achieve success. As Robert Merton, the famous sociologist of crime and deviance noted, criminal activity is seen as a means to achieve success when the legitimate paths to mobility have collapsed. In 2004, a full 21% of African American men who did not complete college were incarcerated (Eckholm, 2006). Of course, successful high school graduation is a stepping stone to college attendance and completion. Therefore, the crumbling school system in predominately black neighborhoods, which is intricately tied to property values, produces weakened life chances for many urban blacks.
When we follow black, high school dropouts into their 30s, the evidence becomes even more extreme. A full 6 out of 10 of these men will have spent some time incarcerated. Among black dropouts in their 20s, more on a given day–34% are incarcerated, than are employed–only 30% (Eckholm, 2006). A basic high school education reduces the incarceration rate by more than ½, suggesting that spending on school infrastructure and school equalization would net major cost savings in incarceration costs over a 20-30 year time period. The cost to American taxpayers in funding this bloated justice system is substantial. At roughly $50,000 per year to house one inmate (which varies state by state), the cost is enormous. When felons experience “recidivism,” the criminal sociologists term for recommitting crime and re-entering prisons, the cost to taxpayers nearly doubles, as second and third term prison sentences are much longer. The question remains: in a democratic society, is the citizenry willing to allow this system to continue? What do we owe these individuals? Why aren’t Americans startled by these statistics? How can America continue to pay for this overburdened system considering that we are involved in multiple international conflicts and military spending is on the rise? With a deepening recession, massive unemployment and an impending currency crisis, is the system on the brink of collapse? These are the tough questions that Occupy Wallstreet must contemplate if it is to have any lasting impact on progressive change in America.
To the extent that massive numbers of black fathers are out of their children’s lives, it has a direct effect on the livelihood of women and families in America. Hundreds of thousands of American children are raised fatherless due to incarceration. But to be sure, the true cause is the inequality found in school systems, which was initially driven by slavery and deeply entrenched segregation that continues to persist. That women bear the brunt of this problem is no coincidence. Feminist sociologists and critical theorists both point to a patriarchal (i.e. male-dominated) social structure as the cause of women’s disadvantage. But we are told that women have experienced major progress in achieving equality with men over the last 50 years. The mainstream media speaks of the successes of the women’s rights movement. To the extent that women are still regarded as secondary to men–in the workplace, in the family, and in the bedroom–is an open-ended question. In the next chapter, we will explore the “woman question,” but more specifically we will look at the social construction of gender in 21st century America. This necessarily leads to a discussion of the feminist analysis of families and how they are structured in a postmodern world.
m o nt hlyre vie w.o rg http://m o nthlyreview.o rg/2011/11/01/the- glo bal- res erve- arm y- o f- labo r- and- the- new- im perialis m
J o hn Bellam y Fo s ter , Ro bert W. McChes ney and R. J am il J o nna m o re o n Eco no m ics , Glo bal Eco no m ic Cris is , Labo r
The Global Reserve Army of Labor and the New Imperialism ::
Monthly Review
Jo hn Bellamy Fo ster (jf o ster@mo nthlyreview.o rg) is edito r o f Monthly Review and pro f esso r o f so cio lo gy at
the University o f Orego n. Ro bert W. McChesney (rwmcches@uiuc.edu) is Gutgsell Endo wed Pro f esso r o f
Co mmunicatio ns at the University o f Illino is at Urbana- Champaign. R. Jamil Jo nna is a Ph.D. candidate in
so cio lo gy at the University o f Orego n.
In the last f ew decades there has been an eno rmo us shif t in the capitalist eco no my in the directio n o f the
glo balizatio n o f pro ductio n. Much o f the increase in manuf acturing and even services pro ductio n that wo uld
have f o rmerly taken place in the glo bal No rth—as well as a po rtio n o f the No rth’s preexisting pro ductio n—is
no w being o f f sho red to the glo bal So uth, where it is f eeding the rapid industrializatio n o f a handf ul o f
emerging eco no mies. It is custo mary to see this shif t as arising f ro m the eco no mic crisis o f 1974– 75 and the
rise o f neo liberalism—o r as erupting in the 1980s and af ter, with the huge increase in the glo bal capitalist labo r
f o rce resulting f ro m the integratio n o f Eastern Euro pe and China into the wo rld eco no my. Yet, the f o undatio ns
o f pro ductio n o n a glo bal scale, we will argue, were laid in the 1950s and 1960s, and were already depicted in
the wo rk o f Stephen Hymer, the f o remo st theo rist o f the multinatio nal co rpo ratio n, who died in 1974.
Fo r Hymer multinatio nal co rpo ratio ns evo lved o ut o f the mo no po listic (o r o ligo po listic) structure o f mo dern
industry in which the typical f irm was a giant co rpo ratio n co ntro lling a substantial share o f a given market o r
industry. At a certain po int in their develo pment (and in the develo pment o f the system) these giant
co rpo ratio ns, headquartered in the rich eco no mies, expanded abro ad, seeking mo no po listic advantages—as
well as easier access to raw materials and lo cal markets—thro ugh o wnership and co ntro l o f f o reign
subsidiaries. Such f irms internalized within their o wn structure o f co rpo rate planning the internatio nal divisio n
o f labo r f o r their pro ducts. “Multinatio nal co rpo ratio ns,” Hymer o bserved, “are a substitute f o r the market as a
metho d o f o rganizing internatio nal exchange.” T hey led inexo rably to the internatio nalizatio n o f pro ductio n and
the f o rmatio n o f a system o f “internatio nal o ligo po ly” that wo uld increasingly do minate the wo rld eco no my.1
In his last article, “Internatio nal Po litics and Internatio nal Eco no mics: A Radical Appro ach,” published
po sthumo usly in 1975, Hymer f o cused o n the issue o f the eno rmo us “latent surplus- po pulatio n” o r reserve
army o f labo r in bo th the backward areas o f the develo ped eco no mies and in the underdevelo ped co untries,
“which co uld be bro ken do wn to f o rm a co nstantly f lo wing surplus po pulatio n to wo rk at the bo tto m o f the
ladder.” Fo llo wing Marx, Hymer insisted that, “accumulatio n o f capital is, theref o re, increase o f the pro letariat.”
T he vast “external reserve army” in the third wo rld, supplementing the “internal reserve army” within the
develo ped capitalist co untries, co nstituted the real material basis o n which multinatio nal capital was able to
internatio nalize pro ductio n—creating a co ntinual mo vement o f surplus po pulatio n into the labo r f o rce, and
weakening labo r glo bally thro ugh a pro cess o f “divide and rule.”2
A clo se co nsideratio n o f Hymer ’s wo rk thus serves to clarif y the essential po int that “the great glo bal jo b
shif t”3 f ro m No rth to So uth, which has beco me such a central issue in o ur time, is no t to be seen so much in
terms o f internatio nal co mpetitio n, deindustrializatio n, eco no mic crisis, new co mmunicatio n techno lo gies—o r
even such general pheno mena as glo balizatio n and f inancializatio n—tho ugh each o f these can be said to have
played a part. Rather, this shif t is to be viewed as the result primarily o f the internatio nalizatio n o f mo no po ly
capital, arising f ro m the glo bal spread o f multinatio nal co rpo ratio ns and the co ncentratio n and centralizatio n
o f pro ductio n o n a wo rld scale. Mo reo ver, it is tied to a who le system o f po larizatio n o f wages (as well as
wealth and po verty) o n a wo rld scale, which has its basis in the glo bal reserve army o f labo r.
T he internatio nal o ligo po lies that increasingly do minate the wo rld eco no my avo id genuine price co mpetitio n,
co lluding instead in the area o f price. Fo r example, Fo rd and To yo ta and the o ther leading auto f irms do no t try
to undersell each o ther in the prices o f their f inal pro ducts—since to do so wo uld unleash a destructive price
war that wo uld reduce the pro f its o f all o f these f irms. With price co mpetitio n—the primary f o rm o f co mpetitio n
in eco no mic theo ry—f o r the mo st part banned, the two main f o rms o f co mpetitio n that remain in a mature
market o r industry are: (1) co mpetitio n f o r lo w co st po sitio n, entailing reductio ns in prime pro ductio n (labo r and
raw material) co sts, and (2) what is kno wn as “mo no po listic co mpetitio n,” that is, o ligo po listic rivalry directed at
marketing o r the sales ef f o rt.4
In terms o f internatio nal pro ductio n it is impo rtant to understand that the giant f irms co nstantly strive f o r the
lo west po ssible co sts glo bally in o rder to expand their pro f it margins and reinf o rce their degree o f mo no po ly
within a given industry. T his arises f ro m the very nature o f o ligo po listic rivalry. As Michael E. Po rter o f Harvard
Business Scho o l wro te in his Competitive Strategy in 1980:
Having a lo w- co st po sitio n yields the f irm abo ve- average returns in its industry…. Its co st po sitio n gives the
f irm a def ense against rivalry f ro m co mpetito rs, because its lo wer co sts mean that it can still earn returns af ter
its co mpetito rs have co mpeted away their pro f its thro ugh rivalry…. Lo w co st pro vides a def ense against
po werf ul suppliers by pro viding mo re f lexibility to co pe with input co st increases. T he f acto rs that lead to a lo w
co st- po sitio n usually also pro vide substantial entry barriers in terms o f scale eco no mies o r co st advantages.5
T his co ntinuo us search f o r lo w- co st po sitio n and higher pro f it margins led, beginning with the expansio n o f
f o reign direct investment in the 1960s, to the “o f f sho ring” o f a co nsiderable po rtio n o f pro ductio n. T his,
ho wever, required the successf ul tapping o f huge po tential po o ls o f labo r in the third wo rld to create a vast
lo w- wage wo rkf o rce. T he expansio n o f the glo bal labo r f o rce available to capital in recent decades has
o ccurred mainly as a result o f two f acto rs: (1) the depeasantizatio n o f a large po rtio n o f the glo bal periphery
by means o f agribusiness—remo ving peasants f ro m the land, with the resulting expansio n o f the po pulatio n o f
urban slums; and (2) the integratio n o f the wo rkf o rce o f the f o rmer “actually existing so cialist” co untries into
the wo rld capitalist eco no my. Between 1980 and 2007 the glo bal labo r f o rce, acco rding to the Internatio nal
Labo r Organisatio n (ILO), grew f ro m 1.9 billio n to 3.1 billio n, a rise o f 63 percent—with 73 percent o f the labo r
f o rce lo cated in the develo ping wo rld, and 40 percent in China and India alo ne.6
T he change in the share o f “develo ping co untries” (ref erred to here as the glo bal So uth, altho ugh it includes
so me Eastern Euro pean natio ns), in wo rld industrial emplo yment, in relatio n to “develo ped co untries” (the
glo bal No rth) can be seen in Chart 1. It sho ws that the So uth’s share o f industrial emplo yment has risen
dramatically f ro m 51 percent in 1980 to 73 percent in 2008. Develo ping co untry impo rts as a pro po rtio n o f the
to tal impo rts o f the United States mo re than quadrupled in the last half o f the twentieth century.7
Chart 1. Distributio n o f Industrial Emplo yment, 1980– 2008
No tes: “Industrial emplo yment” is a bro ad catego ry that includes mining, manuf acturing, utilities (electricity, gas,
and water supply), and co nstructio n. Fro m 2003 to 2007, manuf acturing and mining averaged 58.1 percent o f
to tal industrial emplo yment in the United States, while in China the ratio was 75.2 percent (see “Table 4b.
Emplo yment by 1- digit secto r level [ISIC- Rev.3, 1990]”). Based o n the two largest eco no mies, theref o re, the
bro ad catego ry o f “industrial emplo yment” systematically understates the extent to which the wo rld share o f
manuf acturing has gro wn in develo ping co untries. Classif icatio n o f co untries as “develo ping” (So uth) and
“develo ped” (No rth) is taken f ro m UNCTAD. T he sample averaged 83 co untries o ver the entire perio d and there
were breaks in the co untry- level series depending o n ILO data availability. Fo r example, data were o nly available
f o r India in 2000 and 2005, and this explains the spikes in these two years.
So urces: ILO, “Key Indicato rs o f the Labo ur Market (KILM), Sixth Editio n,” So f tware Package (Geneva:
Internatio nal Labo ur Organizatio n, 2009); UNCTAD, “Co untries, Eco no mic gro upings,” UNCTAD Statistical
Databases Online, http://unctadstat.unctad.o rg (Geneva: Switzerland, 2011), generated June 28, 2011.
T he result o f these glo bal megatrends is the peculiar structure o f the wo rld eco no my that we f ind to day, with
co rpo rate co ntro l and pro f its co ncentrated at the to p, while the glo bal labo r f o rce at the bo tto m is co nf ro nted
with abysmally lo w wages and a chro nic insuf f iciency o f pro ductive emplo yment. Stagnatio n in the mature
eco no mies and the resulting f inancializatio n o f accumulatio n have o nly intensif ied these tendencies by helping
to drive what Stephen Ro ach o f Mo rgan Stanley dubbed “glo bal labo r arbitrage,” i.e., the system o f eco no mic
rewards derived f ro m explo iting the internatio nal wage hierarchy, resulting in o utsized returns f o r co rpo ratio ns
and investo rs.8
Our argument here is that the key to understanding these changes in the imperialist system (beyo nd the
analysis o f the multinatio nal co rpo ratio n itself , which we have discussed elsewhere)9 is to be f o und in the
gro wth o f the glo bal reserve army—as Hymer was amo ng the f irst to realize. No t o nly has the gro wth o f the
glo bal capitalist labo r f o rce (including the available reserve army) radically altered the po sitio n o f third wo rld
labo r, it also has had an ef f ect o n labo r in the rich eco no mies, where wage levels are stagnant o r declining f o r
this and o ther reaso ns. Everywhere multinatio nal co rpo ratio ns have been able to apply a divide and rule po licy,
altering the relative po sitio ns o f capital and labo r wo rldwide.
Mainstream eco no mics is no t o f much help in analyzing these changes. In line with the Panglo ssian view o f
glo balizatio n advanced by New York Times co lumnist T ho mas Friedman, mo st o rtho do x eco no mists see the
gro wth o f the glo bal labo r f o rce, the No rth- So uth shif t in jo bs, and the expansio n o f internatio nal lo w- wage
co mpetitio n as simply ref lecting an increasingly “f lat wo rld” in which eco no mic dif f erences
(advantages/disadvantages) between natio ns are disappearing.10 As Paul Krugman, representing the stance
o f o rtho do x eco no mics, has declared: “If po licy makers and intellectuals think it is impo rtant to emphasize the
adverse ef f ects o f lo w- wage co mpetitio n [f o r develo ped co untries and the glo bal eco no my], then it is at least
equally impo rtant f o r eco no mists and business leaders to tell them they are wro ng.” Krugman’s mistaken
reaso ning here is based o n the assumptio n that wages will invariably adjust to pro ductivity gro wth, and the
inevitable result will be a new wo rld- eco no mic equilibrium.11 All is f o r the best in the best o f all capitalist wo rlds.
Indeed, if there are wo rries in the o rtho do x eco no mic camp in this respect, they have to do , as we shall see,
with co ncerns abo ut ho w lo ng the huge gains derived f ro m glo bal labo r arbitrage can be maintained.12
In sharp co ntrast, we shall develo p an appro ach emphasizing that behind the pheno meno n o f glo bal labo r
arbitrage lies a new glo bal phase in the develo pment o f Marx’s “abso lute general law o f capitalist
accumulatio n,” acco rding to which:
T he greater the so cial wealth, the f unctio ning capital, the extent and energy o f its gro wth, and theref o re also
the greater the abso lute mass o f the pro letariat and the pro ductivity o f its labo ur, the greater is the industrial
reserve army…. But the greater this reserve army in pro po rtio n to the active labo ur- army, the greater is the
mass o f a co nso lidated surplus po pulatio n, who se misery is in inverse ratio to the amo unt o f to rture it has to
undergo in the f o rm o f labo ur. T he mo re extensive, f inally, the pauperized sectio ns o f the wo rking class and
the industrial reserve army, the greater is o f f icial pauperism. This is the absolute general law of capitalist
accumulation.13
“No wadays…the f ield o f actio n o f this ‘law,’” as Harry Magdo f f and Paul Sweezy stated in 1986,
is the entire glo bal capitalist system, and its mo st spectacular manif estatio ns are in the third wo rld where
unemplo yment rates range up to 50 percent and destitutio n, hunger, and starvatio n are increasingly endemic.
But the advanced capitalist natio ns are by no means immune to its o peratio n: mo re than 30 millio n men and
wo men, in excess o f 10 percent o f the available labo r f o rce, are unemplo yed in the OECD co untries; and in the
United States itself , the richest o f them all, o f f icially def ined po verty rates are rising even in a perio d o f cyclical
upswing.14
T he new imperialism o f the late twentieth and twenty- f irst centuries is thus characterized, at the to p o f the
wo rld system, by the do minatio n o f mo no po ly- f inance capital, and, at the bo tto m, by the emergence o f a
massive glo bal reserve army o f labo r. T he result o f this immense po larizatio n, is an augmentatio n o f the
“imperialist rent” extracted f ro m the So uth thro ugh the integratio n o f lo w- wage, highly explo ited wo rkers into
capitalist pro ductio n. T his then beco mes a lever f o r an increase in the reserve army and the rate o f
explo itatio n in the No rth as well.15
Marx and the General Law o f Accumulatio n
In addressing the general law o f accumulatio n, it is impo rtant f irst to take no te o f a co mmo n misco nceptio n
directed at Marx’s tendential law. It is custo mary f o r establishment critics to attribute to Marx—o n the basis o f
o ne o r at mo st two passages taken o ut o f co ntext—what these critics have dubbed as an “immiseratio n
theo ry” o r a “do ctrine o f ever- increasing misery.”16 Illustrative o f this is Jo hn Strachey in his 1956 bo o k
Contemporary Capitalism, the larger part o f which was devo ted to po lemicizing against Marx o n this po int.
Strachey repeatedly co ntended that Marx had “predicted” that real wages wo uld no t rise under capitalism, so
that wo rkers’ average standard o f living must remain co nstant o r decline—presenting this as a pro f o und erro r
o n Marx’s part. Ho wever, Strachey, to gether with all subsequent critics who have advanced this view, managed
o nly to pro vide a single partial sentence in Capital (plus o ne early o n in The Communist Manifesto—no t o ne o f
Marx’s eco no mic wo rks) as purpo rted evidence f o r this. T hus in the f amo us summary paragraph o n the
“expro priatio n o f the expro priato rs” at the end o f vo lume o ne, Marx (as quo ted by Strachey) wro te: “While
there is thus a pro gressive diminutio n in the number o f the capitalist magnates (who usurp and mo no po lise all
the advantages o f this transf o rmative pro cess) there o ccurs a co rrespo nding increase in the mass o f po verty,
o ppressio n, enslavement, degeneratio n and explo itatio n….”17
Hardly reso unding pro o f o f a crude immiseratio n thesis! Marx’s po int rather was that the system is po larized
between the gro wing mo no po lizatio n o f capital by a relatively smaller number o f individual capitals at the to p
and the relative impo verishment o f the great mass o f peo ple at the bo tto m. T his passage said no thing abo ut
the mo vement o f real wages. Mo reo ver, Strachey deliberately excluded the sentence immediately preceding the
o ne he quo ted, in which Marx indicated that he was co ncerned in this co ntext no t simply with the wo rking class
o f the rich co untries but with the entire capitalist wo rld and the glo bal wo rking class—o r as he put it, “the
entanglement o f all peo ples in the net o f the wo rld market, and, with this, the gro wth o f the internatio nal
character o f the capitalist regime.” Indeed, the “kernel o f truth” to the “theo ry o f immiseratio n,” Ro man
Ro sdo lsky wro te in The Making of Marx’s ‘Capital’, lay in the f act that such tendencies to wards an abso lute
increase in human misery can be f o und “in two spheres: f irstly (tempo rary) in all times o f crisis, and seco ndly
(permanent) in the so – called underdevelo ped areas o f the wo rld.”18
Far f ro m being a crude theo ry o f immiseratio n, Marx’s general law was an attempt to explain ho w the
accumulatio n o f capital co uld o ccur at all: that is, why the gro wth in demand f o r labo r did no t lead to a co ntinual
rise in wages, which wo uld squeeze pro f its and cut o f f accumulatio n. Mo reo ver, it served to explain: (1) the
f unctio nal ro le that unemplo yment played in the capitalist system; (2) the reaso n why crisis was so devastating
to the wo rking class as a who le; and (3) the tendency to wards the pauperizatio n o f a large part o f the
po pulatio n. To day it has its greatest signif icance in acco unting f o r “glo bal labo r arbitrage,” i.e., capital’s earning
o f eno rmo us mo no po listic returns o r imperial rents by shif ting certain secto rs o f pro ductio n to
underdevelo ped regio ns o f the wo rld to take advantage o f the glo bal immo bility o f labo r, and the existence o f
subsistence (o r belo w subsistence) wages in much o f the glo bal So uth.
As Fredric Jameso n recently no ted in Representing Capital, despite the “mo ckery” thro wn at Marx’s general law
o f accumulatio n in the early po st- Seco nd Wo rld War era, “it is…no lo nger a jo king matter.” Rather, the general
law highlights “the actuality to day o f Capital o n a wo rld scale.”19
It is theref o re essential to take a clo se examinatio n o f Marx’s argument. In his best- kno wn single statement o n
the general law o f accumulatio n, Marx wro te:
In proportion as capital accumulates, the situatio n o f the wo rker, be his payment high or low, must gro w
wo rse.… T he law which always ho lds the relative surplus po pulatio n in equilibrium with the extent and energy
o f accumulatio n rivets the wo rker to capital mo re f irmly than the wedges o f Hephaestus held Pro metheus to
the ro ck. It makes an accumulatio n o f misery a necessary co nditio n, corresponding to the accumulatio n o f
wealth. Accumulatio n at o ne po le is, theref o re, at the same time accumulatio n o f misery, the to rment o f labo ur,
slavery, igno rance, brutalizatio n and mo ral degradatio n at the o ppo site po le, i.e. o n the side o f the class that
pro duces its o wn pro duct as capital [italics added].20
By po inting to an “equilibrium” between accumulatio n o f capital and the “relative surplus po pulatio n” o r reserve
army o f labo r, Marx was arguing, that under “no rmal” co nditio ns the gro wth o f accumulatio n is able to pro ceed
unhindered o nly if it also results in the displacement o f large numbers o f wo rkers. T he resulting “redundancy”
o f wo rkers checks any tendency to ward a to o rapid rise in real wages which wo uld bring accumulatio n to a halt.
Rather than a crude theo ry o f “immiseratio n,” then, the general law o f accumulatio n highlighted that capitalism,
via the co nstant generatio n o f a reserve army o f the unemplo yed, naturally tended to po larize between relative
wealth at the to p and relative po verty at the bo tto m—with the threat o f f alling into the latter co nstituting an
eno rmo us lever f o r the increase in the rate o f explo itatio n o f emplo yed wo rkers.
Marx co mmenced his treatment o f the general law by straightf o rwardly o bserving, as we have no ted, that the
accumulatio n o f capital, all o ther things being equal, increased the demand f o r labo r. In o rder to prevent this
gro wing demand f o r labo r f ro m co ntracting the available supply o f wo rkers, and thereby f o rcing up wages and
squeezing pro f its, it was necessary that a co unterf o rce co me into being that wo uld reduce the amo unt o f
labo r needed at any given level o f o utput. T his was acco mplished primarily thro ugh increases in labo r
pro ductivity with the intro ductio n o f new capital and techno lo gy, resulting in the displacement o f labo r. (Marx
specif ically rejected the classical “iro n law o f wages” that saw the labo r f o rce as determined primarily by
po pulatio n gro wth.) In this way, by “co nstantly revo lutio nizing the instruments o f pro ductio n,” the capitalist
system is able, no less co nstantly, to repro duce a relative surplus po pulatio n o r reserve army o f labo r, which
co mpetes f o r jo bs with tho se in the active labo r army.21 “T he industrial reserve army,” Marx wro te, “during
perio ds o f stagnatio n and average pro sperity, weighs do wn the active army o f wo rkers; during the perio d o f
o ver- pro ductio n and f everish activity, it puts a curb o n their pretensio ns. T he relative surplus po pulatio n is
theref o re the backgro und against which the law o f the demand and supply o f labo ur do es its wo rk. It co nf ines
the f ield o f actio n o f this law to the limits abso lutely co nvenient to capital’s drive to explo it and do minate the
wo rkers.”22
It f o llo wed that if this essential lever o f accumulatio n were to be maintained, the reserve army wo uld need to
be co ntinually resto cked so as to remain in a co nstant (if no t increasing) ratio to the active labo r army. While
generals wo n battles by “recruiting” armies, capitalists wo n them by “discharging the army o f wo rkers.”23
It is impo rtant to no te that Marx develo ped his well- kno wn analysis o f the co ncentratio n and centralizatio n o f
capital as part the argument o n the general law o f accumulatio n. T hus the tendency to ward the do minatio n o f
the eco no my by bigger and f ewer capitals, was as much a part o f his o verall argument o n the general law as
was the gro wth o f the reserve army itself . T he two pro cesses were inextricably bo und to gether.24
Marx’s breakdo wn o f the reserve army o f labo r into its vario us co mpo nents was co mplex, and was clearly
aimed bo th at co mprehensiveness and at deriving what were f o r his time statistically relevant catego ries. It
included no t o nly tho se who were “who lly unemplo yed” but also tho se who were o nly “partially emplo yed.” T hus
the relative surplus po pulatio n, he wro te, “exists in all kinds o f f o rms.” Nevertheless, o utside o f perio ds o f
acute eco no mic crisis, there were three majo r f o rms o f the relative surplus po pulatio n: the f lo ating, latent, and
stagnant. On to p o f that there was the who le additio nal realm o f o f f icial pauperism, which co ncealed even
mo re elements o f the reserve army.
T he f lo ating po pulatio n co nsisted o f wo rkers who were unemplo yed due to the no rmal ups and do wns o f
accumulatio n o r as a result o f techno lo gical unemplo yment: peo ple who have recently wo rked, but who were
no w o ut o f wo rk and in the pro cess o f searching f o r new jo bs. Here Marx discussed the age structure o f
emplo yment and its ef f ects o n unemplo yment, with capital co nstantly seeking yo unger, cheaper wo rkers. So
explo itative was the wo rk pro cess that wo rkers were physically used up quickly and discarded at a f airly early
age well bef o re their wo rking lif e was pro perly o ver.25
T he latent reserve army was to be f o und in agriculture, where the demand f o r labo r, Marx wro te, “f alls
abso lutely” as so o n as capitalist pro ductio n has taken it o ver. Hence, there was a “co nstant f lo w” o f labo r
f ro m subsistence agriculture to industry in the to wns: “T he co nstant mo vement to wards the to wns
presuppo ses, in the co untryside itself , a co nstant latent surplus po pulatio n, the extent o f which o nly beco mes
evident at tho se exceptio nal times when its distributio n channels are wide o pen. T he wages o f the agricultural
labo urer are theref o re reduced to a minimum, and he always stands with o ne f o o t already in the swamp o f
pauperism.”26
T he third majo r f o rm o f the reserve army, the stagnant po pulatio n, f o rmed, acco rding to Marx, “a part o f the
active reserve army but with extremely irregular emplo yment.” T his included all so rts o f part- time, casual (and
what wo uld to day be called inf o rmal) labo r. T he wages o f wo rkers in this catego ry co uld be said to “sink belo w
the average no rmal level o f the wo rking class” (i.e., belo w the value o f labo r po wer). It was here that the bulk o f
the masses ended up who had been “made ‘redundant’” by large- scale industry and agriculture. Indeed, these
wo rkers represented “a pro po rtio nately greater part” o f “the general increase in the [wo rking] class than the
o ther elements” o f the reserve army.
T he largest part o f this stagnant reserve army was to be f o und in “mo dern do mestic industry,” which co nsisted
o f “o utwo rk” carried o ut thro ugh the agency o f subco ntracto rs o n behalf o f manuf acture, and do minated by
so – called “cheap labo r,” primarily wo men and children. Of ten such “o utwo rkers” o utweighed f acto ry labo r in an
industry. Fo r example, a shirt f acto ry in Lo ndo nderry emplo yed 1,000 wo rkers but also had ano ther 9,000
o utwo rkers attached to it stretched o ut o ver the co untryside. Here the mo st “murdero us side o f the eco no my”
was revealed.27
Fo r Marx, pauperism co nstituted “the lo west sediment o f the relative surplus po pulatio n” and it was here that
the “precario us…co nditio n o f existence” o f the entire wo rking po pulatio n was mo st evident. “Pauperism,” he
wro te, “is the ho spital o f the active labo r- army and the dead weight o f the industrial reserve army.” Beyo nd the
actual “lumpenpro letariat” o r “vagabo nds, criminals, pro stitutes,” etc., there were three catego ries o f paupers.
First, tho se who were able to wo rk, and who ref lected the dro p in the numbers o f the po o r in every perio d o f
industrial pro sperity, when the demand f o r labo r was greatest. T hese destitute elements emplo yed o nly in
times o f pro sperity were an extensio n o f the active labo r army. Seco nd, it included o rphans and pauper
children, who in the capitalist system were drawn into industry in great numbers during perio ds o f expansio n.
T hird, it enco mpassed “the demo ralized, the ragged, and tho se unable to wo rk, chief ly peo ple who succumb to
their incapacity f o r adaptatio n, an incapacity that arises f ro m the divisio n o f labo ur; peo ple who have lived
beyo nd the wo rker ’s average lif e- span; and the victims o f industry who se number increases with the gro wth o f
dangero us machinery, o f mines, chemical wo rkers, etc., the mutilated, the sickly, the wido ws, etc.” Such
pauperism was a creatio n o f capitalism itself , “but capital usually kno ws ho w to transf er these [so cial co sts]
f ro m its o wn sho ulders to tho se o f the wo rking class and the petty bo urgeo isie.”28
T he f ull extent o f the glo bal reserve army was evident in perio ds o f eco no mic pro sperity, when much larger
numbers o f wo rkers were tempo rarily drawn into emplo yment. T his included f o reign wo rkers. In additio n to the
sectio ns o f the reserve armies mentio ned abo ve, Marx no ted that Irish wo rkers were drawn into emplo yment in
English industry in perio ds o f peak pro ductio n—such that they co nstituted part o f the relative surplus
po pulatio n f o r English pro ductio n.29 T he tempo rary reductio n in the size o f the reserve army in co mpariso n to
the active labo r army at the peak o f the business cycle had the ef f ect o f pulling up wages abo ve their average
value and squeezing pro f its—tho ugh Marx repeatedly indicated that such increases in real wages were no t the
principal cause o f crises in pro f itability, and never threatened the system itself .30
During an eco no mic crisis, many o f the wo rkers in the active labo r army wo uld themselves be made
“redundant,” thereby increasing the numbers o f unemplo yed o n to p o f the no rmal reserve army. In such
perio ds, the eno rmo us weight o f the relative surplus po pulatio n wo uld tend to pull wages do wn belo w their
average value (i.e., the histo rically determined value o f labo r po wer). As Marx himself put it: “Stagnatio n in
pro ductio n makes part o f the wo rking class idle and hence places the emplo yed wo rkers in co nditio ns where
they have to accept a f all in wages, even belo w the average.”31 Hence, in times o f eco no mic crisis, the wo rking
class as an o rganic who le, enco mpassing the active labo r army and the reserve army, was placed in dire
co nditio ns, with a multitude o f peo ple succumbing to hunger and disease.
Marx was unable to co mplete his critique o f po litical eco no my, and co nsequently never wro te his pro jected
vo lume o n wo rld trade. Nevertheless, it is clear that he saw the general law o f accumulatio n as extending
eventually to the wo rld level. Capital lo cated in the rich co untries, he believed, wo uld take advantage o f cheaper
labo r abro ad—and o f the higher levels o f explo itatio n in the underdevelo ped parts o f the wo rld made po ssible
by the existence o f vast surplus labo r po o ls (and no n- capitalist mo des o f pro ductio n). In his speech to the
Lausanne Co ngress o f the First Internatio nal in 1867 (the year o f the publicatio n o f the f irst vo lume o f Capital)
he declared: “A study o f the struggle waged by the English wo rking class reveals that, in o rder to o ppo se their
wo rkers, the emplo yers either bring in wo rkers f ro m abro ad o r else transf er manuf acture to co untries where
there is a cheap labo r f o rce. Given this state o f af f airs, if the wo rking class wishes to co ntinue its struggle
with so me chance o f success, the natio nal o rganisatio ns must beco me internatio nal.”32
T he reality o f unequal exchange, whereby, in Marx’s wo rds, “the richer co untry explo its the po o rer, even where
the latter gains by the exchange,” was a basic, scientif ic po stulate o f classical eco no my, to be f o und in bo th
Ricardo and J.S. Mill. T hese higher pro f its were tied to the cheapness o f labo r in po o r co untries—attributable
in turn to underdevelo pment, and a seemingly unlimited labo r supply (albeit much o f it f o rced labo r). “T he pro f it
rate,” Marx o bserved, “is generally higher there [in the co lo nies] o n acco unt o f the lo wer degree o f
develo pment, and so to o is the explo itatio n o f labo ur, thro ugh the use o f slaves, co o lies, etc.” In all trade
relatio ns, the richer co untry was in a po sitio n to extract what were in ef f ect “mo no po ly pro f its” (o r imperial
rents) since “the privileged co untry receives mo re labo ur in exchange f o r less,” while inversely, “the po o rer
co untry gives mo re o bjectif ied labo ur in kind than it receives.” Hence, as o ppo sed to a single co untry where
gains and lo sses evened o ut, it was quite po ssible and indeed co mmo n, Marx argued, f o r o ne natio n to “cheat”
ano ther. T he gro wth o f the relative surplus po pulatio n, particularly at the glo bal level, represented such a
po werf ul inf luence in raising the rate o f explo itatio n, in Marx’s co nceptio n, that it co uld be seen as a majo r
“co unterweight” to the tendency o f the rate o f pro f it to f all, “and in part even paralyse[s] it.”33
T he o ne classical Marxist theo rist who made usef ul additio ns to Marx’s reserve army analysis with respect to
imperialism was Ro sa Luxemburg. In The Accumulation of Capital she argued that in o rder f o r accumulatio n to
pro ceed “capital must be able to mo bilise wo rld labo ur po wer witho ut restrictio n.” Acco rding to Luxemburg, Marx
had been to o “inf luenced by English co nditio ns invo lving a high level o f capitalist develo pment.” Altho ugh he
had addressed the latent reserve in agriculture, he had no t dealt with the drawing o f surplus labo r f ro m no n-
capitalist mo des o f pro ductio n (e.g., the peasantry) in his descriptio n o f the reserve army. Ho wever, it was
mainly here that the surplus labo r f o r glo bal accumulatio n was to be f o und. It was true, Luxemburg
ackno wledged, that Marx discussed the expro priatio n o f the peasantry in his treatment o f “so – called primitive
accumulatio n,” in the chapter o f Capital immediately f o llo wing his discussio n o f the general law. But that
argument was co ncerned primarily with the “genesis o f capital” and no t with its co ntempo rary f o rms. Hence, the
reserve army analysis had to be extended in a glo bal co ntext to take into acco unt the eno rmo us “so cial
reservo ir” o f no n- capitalist labo r.34
Glo bal Labo r Arbitrage
T he pursuit o f “an ever extended market” Marx co ntended, is an “inner necessity” o f the capitalist mo de o f
pro ductio n.35 T his inner necessity to o k o n a new signif icance, ho wever, with the rise o f mo no po ly capitalism in
the late nineteenth and early twentieth centuries. T he emergence o f multinatio nal co rpo ratio ns, f irst in the
giant o il co mpanies and a handf ul o f o ther f irms in the early twentieth century, and then beco ming a much mo re
general pheno meno n in the po st- Seco nd Wo rld War years, was a pro duct o f the co ncentratio n and
centralizatio n o f capital o n a wo rld scale; but equally invo lved the transf o rmatio n o f wo rld labo r and
pro ductio n.
It was the increasing multinatio nal co rpo rate do minance o ver the wo rld eco no my, in f act, that led to the mo dern
co ncept o f “glo balizatio n,” which aro se in the early 1970s as eco no mists, particularly tho se o n the lef t, tried to
understand the way in which the giant f irms were reo rganizing wo rld pro ductio n and labo r co nditio ns.36 T his
was clearly evident by the early 1970s—no t o nly in Hymer ’s wo rk, but also in Richard Barnet and Ro nald
Müller ’s inf luential 1974 wo rk, Global Reach, in which they argued: “T he rise o f the glo bal co rpo ratio n
represents the glo balizatio n o f o ligo po ly capitalism.” T his was “the culminatio n o f a pro cess o f co ncentratio n
and internatio nalizatio n that has put the wo rld eco no my under the substantial co ntro l o f a f ew hundred
business enterprises which do no t co mpete with o ne ano ther acco rding to the traditio nal rules o f the market.”
Mo reo ver, the implicatio ns f o r labo r were eno rmo us. Explaining ho w o ligo po listic rivalry no w meant searching
f o r the lo west unit labo r co sts wo rldwide, Barnet and Müller argued that this had generated “the ‘runaway sho p’
which beco mes the ‘expo rt platf o rm’ in an underdevelo ped co untry,” and which had beco me a necessity o f
business f o r U.S. co mpanies, just like their Euro pean and Japanese co mpetito rs.37
Over the past half century, these glo bal o ligo po lies have been o f f sho ring who le secto rs o f pro ductio n f ro m
the rich/high- wage to the po o r/lo w- wage co untries, transf o rming glo bal labo r co nditio ns in their search f o r
the rich/high- wage to the po o r/lo w- wage co untries, transf o rming glo bal labo r co nditio ns in their search f o r
glo bal lo w- co st po sitio n, and in a divide and rule appro ach to wo rld labo r. Leading U.S. multinatio nals, such as
General Electric, Exxo n, Chevro n, Fo rd, General Mo to rs, Pro cto r and Gamble, IBM, Hewlett Packard, United
Techno lo gies, Jo hnso n and Jo hnso n, Alco a, Kraf t, and Co ca Co la no w emplo y mo re wo rkers abro ad than they
do in the United States—even witho ut co nsidering the vast number o f wo rkers they emplo y thro ugh
subco ntracto rs. So me majo r co rpo ratio ns, such as Nike and Reebo k, rely o n third wo rld subco ntracto rs f o r
100 percent o f their pro ductio n wo rkf o rce—with do mestic emplo yees co nf ined simply to managerial, pro duct
develo pment, marketing, and distributio n activities.38 T he result has been the pro letarianizatio n, o f ten under
precario us co nditio ns, o f much o f the po pulatio n o f the underdevelo ped co untries, wo rking in massive expo rt
zo nes under co nditio ns dictated by f o reign multinatio nals.
Two realities do minate labo r at the wo rld level to day. One is glo bal labo r arbitrage o r the system o f imperial
rent. T he o ther is the existence o f a massive glo bal reserve army, which makes this wo rld system o f extreme
explo itatio n po ssible. “Labo ur arbitrage” is def ined quite simply by The Economist as “taking advantage o f lo wer
wages abro ad, especially in po o r co untries.” It is thus an unequal exchange pro cess in which o ne co untry, as
Marx said, is able to “cheat” ano ther due to the much higher explo itatio n o f labo r in the po o rer co untry.39 A
study o f pro ductio n in China’s industrialized Pearl River Delta regio n (enco mpassing Guangzho u, Shenzhen,
and Ho ng Ko ng) f o und in 2005 that so me wo rkers were co mpelled to wo rk up to sixteen ho urs co ntinuo usly,
and that co rpo ral punishment was ro utinely emplo yed as a means o f wo rker discipline. So me 200 millio n
Chinese are said to wo rk in hazardo us co nditio ns, claiming o ver a 100,000 lives a year.40
It is such superexploitation that lies behind much o f the expansio n o f pro ductio n in the glo bal So uth.41 T he
f act that this has been the basis o f rapid eco no mic gro wth f o r so me emerging eco no mies do es no t alter the
reality that it has generated eno rmo us imperial rents f o r multinatio nal co rpo ratio ns and capital at the center o f
the system. As labo r eco no mist Charles Whalen has written, “T he prime mo tivatio n behind o f f sho ring is the
desire to reduce labo r co sts…a U.S.- based f acto ry wo rker hired f o r $21 an ho ur can be replaced by a Chinese
f acto ry wo rker who is paid 64 cents an ho ur…. T he main reaso n o f f sho ring is happening no w is because it
can.”42
Ho w this system o f glo bal labo r arbitrage o ccurs by way o f glo bal supply chains, ho wever, is eno rmo usly
co mplex. Dell, the PC assembler, purchases so me 4,500 parts f ro m 300 dif f erent suppliers in multiple co untries
aro und the wo rld.43 As the Asian Develo pment Bank Institute indicated in a 2010 study o f iPho ne pro ductio n: “It
is almo st impo ssible [to day] to def ine clearly where a manuf actured pro duct is made in the glo bal market. T his
is why o n the back o f iPho nes o ne can read ‘Designed by Apple in Calif o rnia, Assembled in China.’” Altho ugh
bo th statements o n the back o f the iPho nes are literally co rrect, neither answers the questio n o f where the
real pro ductio n takes place. Apple do es no t itself manuf acture the iPho ne. Rather the actual manuf acture (that
is, everything but its so f tware and design) takes place primarily o utside the United States. T he pro ductio n o f
iPho ne parts and co mpo nents is carried o ut principally by eight co rpo ratio ns (To shiba, Samsung, Inf ineo n,
Bro adco m, Numo nyx, Murata, Dialo g Semico nducto r, and Cirrus Lo gic), which are lo cated in Japan, So uth
Ko rea, Germany, and the United States. All o f the majo r parts and co mpo nents o f the iPho ne are then shipped
to the Shenzhen, China plants o f Fo xco nn (a co mpany headquartered in Taipei) f o r assembly and expo rt to the
United States.
Apple’s eno rmo us, co mplex glo bal supply chain f o r iPo d pro ductio n is aimed at o btaining the lo west unit labo r
co sts (taking into co nsideratio n labo r co sts, techno lo gy, etc.), appro priate f o r each co mpo nent, with the f inal
assembly taking place in China, where pro ductio n o ccurs o n a massive scale, under eno rmo us intensity, and
with ultra- lo w wages. In Fo xco nn’s Lo nghu, Shenzhen f acto ry 300,000 to 400,000 wo rkers eat, wo rk, and sleep
under ho rrendo us co nditio ns, with wo rkers, who are co mpelled to do rapid hand mo vements f o r lo ng ho urs f o r
mo nths o n end, f inding themselves twitching co nstantly at night. Fo xco nn wo rkers in 2009 were paid the
minimum mo nthly wage in Shenzhen, o r abo ut 83 cents an ho ur. (Overall in China in 2008 manuf acturing
wo rkers were paid $1.36 an ho ur, acco rding to U.S. Bureau o f Labo r Statistics data.)
Despite the massive labo r input o f Chinese wo rkers in assembling the f inal pro duct, their lo w pay means that
their wo rk o nly amo unts to 3.6 percent o f the to tal manuf acturing co st (shipping price) o f the iPho ne. T he
o verall pro f it margin o n iPho nes in 2009 was 64 percent. If iPho nes were assembled in the United States—
assuming labo r co sts ten times that in China, equal pro ductivity, and co nstant co mpo nent co sts—Apple wo uld
still have an ample pro f it margin, but it wo uld dro p f ro m 64 percent to 50 percent. In ef f ect, Apple makes 22
percent o f its pro f it margin o n iPho ne pro ductio n f ro m the much higher rate o f explo itatio n o f Chinese labo r.44
Of co urse in stipulating a mere tenf o ld dif f erence in wages between the United States and China, in its
calculatio n o f the lo wer pro f it margins to be gained with United States as o ppo sed to Chinese assembly, the
Asian Develo pment Bank Institute was ado pting a very co nservative assumptio n. Overall Chinese
manuf acturing wo rkers in 2008, acco rding to the U.S. Bureau o f Labo r Statistics, received o nly 4 percent o f the
co mpensatio n f o r co mparable wo rk in the United States, and 3 percent o f that in the Euro pean Unio n.45 In
co mpariso n, ho urly manuf acturing wages in Mexico in 2008 were abo ut 16 percent o f the U.S. level.46
In spite o f the lo w- wage “advantage” o f China, so me areas o f Asia, such as Cambo dia, Vietnam, and
Bangladesh, have ho urly co mpensatio n levels still lo wer, leading to a divide and rule tendency f o r multinatio nal
co rpo ratio ns—co mmo nly acting thro ugh subco ntracto rs—to lo cate so me secto rs o f pro ductio n, such as light
industrial textile pro ductio n, primarily in these still lo wer wage co untries. T hus the New York Times indicated in
July 2010, that Li & Fung, a Ho ng Ko ng- based co mpany “that handles so urcing and apparel manuf acturing f o r
co mpanies like Wal- Mart and Liz Claibo rne” increased its pro ductio n in Bangladesh by 20 percent in 2010, while
China, its biggest supplier, slid 5 percent. Garment wo rkers in Bangladesh earned aro und $64 a mo nth,
co mpared “to minimum wages in China’s co astal industrial pro vinces ranging f ro m $117 to $147 a mo nth.”47
Fo r multinatio nal co rpo ratio ns there is a clear lo gic to all o f this. As General Electric CEO Jef f rey Immelt stated,
the “mo st successf ul China strategy”—with China here clearly standing f o r glo bal labo r arbitrage in general
—“is to capitalize o n its market gro wth while expo rting its def latio nary po wer.” T his “def latio nary po wer” has to
do o f co urse with lo wer labo r co sts (and lo wer co sts o f repro ductio n o f labo r in the No rth thro ugh the
lo wering o f the co sts o f wage- co nsumptio n go o ds). It thus represents a glo bal strategy f o r raising the rate o f
surplus value (widening pro f it margins).48
To day Marx’s reserve army analysis is the basis, directly and indirectly (even in co rpo rate circles) f o r
ascertaining ho w lo ng the extreme explo itatio n o f lo w- wage wo rkers in the underdevelo ped wo rld will persist. In
1997 Jannik Lindbaek, executive vice president o f the Internatio nal Finance Co rpo ratio n, presented an
inf luential paper entitled “Emerging Eco no mies: Ho w Lo ng Will the Lo w- Wage Advantage Last?” He po inted o ut
that internatio nal wage dif f erentials were eno rmo us, with labo r co sts f o r spinning and weaving in rich co untries
exceeding that o f the lo west wage co untries (Pakistan, Madagascar, Kenya, Indo nesia, and China) by a f acto r
o f seventy- to – o ne in straight do llar terms, and ten- to – o ne in terms o f purchasing po wer parity (taking into
acco unt the lo cal co st o f living).
T he central issue f ro m the standpo int o f glo bal capital, Lindbaek indicated, was China, which had emerged as
an eno rmo us platf o rm f o r pro ductio n, due to its ultra- lo w wages and seemingly unlimited supply o f labo r. T he
key strategic questio n then was, “Ho w lo ng will China’s lo w wage advantage last?” His answer was that China’s
“eno rmo us ‘reserve army o f labo r ’…will be released gradually as agricultural pro ductivity impro ves and jo bs are
created in the cities.” Lo o king at vario us demo graphic f acto rs, including the expected do wnward shif t in the
number o f wo rking- age individuals beginning in the seco nd decade o f the twenty- f irst century, Lindbaek
indicated that real wages in China wo uld eventually rise abo ve subsistence. But when?49
In mainstream eco no mics, the analysis o f the ro le o f surplus labo r in ho lding do wn wages in the glo bal So uth
draws primarily o n W. Arthur Lewis’s f amo us article “Eco no mic Develo pment with Unlimited Supplies o f Labo ur,”
published in 1954. Basing his argument o n the classical eco no mics o f Adam Smith and Marx (relying in f act
primarily o n the latter), Lewis argued that in third wo rld co untries with vast, seemingly “unlimited” supplies o f
labo r, capital accumulatio n co uld o ccur at a high rate while wages remained co nstant and at subsistence level.
T his was due to the very high reserve army o f labo r, including “the f armers, the casuals, the petty traders, the
retainers (do mestic and co mmercial), wo men in the ho useho ld, and po pulatio n gro wth.” Altho ugh Lewis (in his
o riginal article o n the subject) erro neo usly co nf ined Marx’s o wn reserve army co ncept to the narro w questio n
o f techno lo gical unemplo yment—claiming o n this basis that Marx was wro ng o n empirical gro unds—he in f act
ado pted the bro ader f ramewo rk o f Marx’s reserve army analysis as his o wn. T hus he po inted to the eno rmo us
latent surplus po pulatio n in agriculture. He also turned to Marx’s no tio n o f primitive accumulatio n, to indicate
ho w the depeasantizatio n o f the no n- capitalist secto r might take place.
Lewis, ho wever, is best kno wn within mainstream eco no mics f o r having argued that eventually a turning point
wo uld o ccur. At so me po int capital accumulatio n wo uld exceed the supply o f surplus labo r (primarily f ro m a
slo wdo wn in internal migratio n f ro m the co untryside) resulting in a rise in the real wages o f wo rkers in industry.
As he put it, “the pro cess” o f accumulatio n with “unlimited labo r” and hence co nstant real wages must
eventually sto p “when capital accumulatio n has caught up with the labo ur supply.”50
To day the Lewisian f ramewo rk, o verlapping with Marx’s reserve army theo ry and in f act derived f ro m it—but
pro po unding the view (which Marx did no t) that the reserve army o f labo r will ultimately be transcended in po o r
co untries as part o f a smo o th path o f capitalist develo pment—is the primary basis o n which establishment
eco no mics raises the issue o f ho w lo ng glo bal labo r arbitrage can last, particularly in relatio n to China. T he
co ncern is whether the huge imperial rents no w being received f ro m the superexplo itatio n o f labo r in the po o r
co untries will rapidly shrink o r even disappear. The Economist magazine, f o r example, wo rries that a Lewisian
turning po int, co mbined with gro wing labo r revo lts in China, will so o n bring to an end the huge surplus pro f its
f ro m the China trade. Chinese wo rkers “in the cities at least,” it co mplains, “are no w as expensive as their T hai
o r Filipino peers.” “T he end o f surplus labo r,” The Economist declares, “is no t an event, but a pro cess. And that
pro cess may already be under way.” A who le ho st o f f acto rs, such as demo graphy, the stability o f Chinese rural
labo r with its f amily plo ts, and the gro wing o rganizatio n o f wo rkers, may cause labo r co nstraints to co me into
play earlier than had been expected. At the very least, The Economist suggests, the eno rmo us gains o f capital
in the No rth that o ccurred “between 1997 and 2005 [when] the price o f Chinese expo rts to America f ell by mo re
than 12%” are unlikely to be repeated. And if wages in China rise, cutting into imperial rents, where will
multinatio nal co rpo ratio ns turn? “Vietnam is cheap: its inco me per perso n is less than a third o f China’s. But its
po o l o f wo rkers is no t that deep.”51
Writing in Monthly Review, eco no mist Minqi Li no tes that since the early 1980s 150 millio n wo rkers in China
have migrated f ro m rural to urban areas. China thus experienced a 13 percentage- po int dro p (f ro m 50 percent
to 37 percent) in the share o f wages in GDP between 1990 and 2005. No w “af ter many years o f rapid
accumulatio n, the massive reserve army o f cheap labo r in China’s rural areas is starting to beco me depleted.” Li
f o cuses mainly o n demo graphic analysis, indicating that China’s to tal wo rkf o rce is expected to peak at 970
millio n by 2012, and then decline by 30 millio n by 2020, with the decline o ccurring mo re rapidly amo ng the prime
age wo rking po pulatio n. T his he believes will impro ve the bargaining po wer o f wo rkers and strengthen industrial
strif e in China, raising issues o f radical transf o rmatio n. Such industrial strif e will inevitably mo unt if China’s
no n- agricultural po pulatio n passes “the critical thresho ld o f 70 percent by aro und 2020.”52
Others think that glo bal labo r arbitrage with respect to China is f ar f ro m o ver. Yang Yao , an eco no mist at
Peking University, argues that “the co untryside still has 45% o f China’s labo ur f o rce,” a huge reserve army o f
hundreds o f millio ns, much o f which will beco me available to industry as mechanizatio n pro ceeds. Stephen
Ro ach has o bserved that with Chinese wages at 4 percent o f U.S. wages, there is “barely…a dent in narro wing
the arbitrage with majo r industrial eco no mies”—while China’s “ho urly co mpensatio n in manuf acturing” is “less
than 15% o f that elsewhere in East Asia” (excluding Japan), and well belo w that o f Mexico .53
T he Glo bal Reserve Army
In o rder to develo p a f irmer grasp o f this issue it is crucial to lo o k bo th empirically and theo retically at the
glo bal reserve army as it appears in the current histo rical co ntext—and then bring to bear the entire Marxian
critique o f imperialism. Witho ut such a co mprehensive critique, analyses o f such pro blems as the glo bal shif t in
pro ductio n, the glo bal labo r arbitrage, deindustrializatio n, etc., are mere partial o bservatio ns suspended in mid-
air.
T he data o n the glo bal wo rkf o rce co mpiled by the ILO co nf o rms clo sely to Marx’s main distinctio ns with regard
to the active labo r army and the reserve army o f labo r. In the ILO picture o f the wo rld wo rkf o rce in 2011, 1.4
billio n wo rkers are wage wo rkers—many o f who m are precario usly emplo yed, and o nly part- time wo rkers. In
co ntrast, the number o f tho se co unted as unemplo yed wo rldwide in 2009 co nsisted o f o nly 218 millio n
wo rkers. (In o rder to be classif ied as unemplo yed, wo rkers need to have actively pursued jo b searches in the
previo us f ew weeks). T he unemplo yed, in this sense, can be seen as co nf o rming ro ughly to Marx’s “f lo ating”
po rtio n o f the reserve army.
A f urther 1.7 billio n wo rkers are classif ied to day as “vulnerably emplo yed.” T his is a residual catego ry o f the
“eco no mically active po pulatio n,” co nsisting o f all tho se who wo rk but are no t wage wo rkers—o r part o f the
active labo r army in Marx’s termino lo gy. It includes two catego ries o f wo rkers: “o wn– acco unt wo rkers” and
“co ntributing f amily wo rkers.”
“Own- acco unt wo rkers,” acco rding to the ILO, enco mpasses wo rkers engaged in a co mbinatio n o f
“subsistence and entrepreneurial activities.” T he urban co mpo nent o f the “o wn- acco unt wo rkers” in third- wo rld
co untries is primarily made up o f wo rkers in the inf o rmal secto r, i.e. street wo rkers o f vario us kinds, while the
agricultural co mpo nent co nsists largely o f subsistence agriculture. “T he glo bal inf o rmal wo rking class,” Mike
Davis o bserved in Planet of the Slums, “is abo ut o ne billio n stro ng, making it the f astest- gro wing, and mo st
unprecedented, so cial class o n earth.”54
T he seco nd catego ry o f the vulnerably emplo yed, “co ntributing f amily wo rkers,” co nsists o f unpaid f amily
wo rkers. Fo r example, in Pakistan “mo re than two – thirds o f the f emale wo rkers that entered emplo yment during
1999/00 to 2005/06 co nsisted o f co ntributing f amily wo rkers.”55
T he “vulnerably emplo yed” thus includes the greater part o f the vast po o ls o f underemplo yed o utside o f f icial
unemplo yment ro lls, in po o r co untries in particular. It ref lects the f act that, as Michael Yates writes, “In mo st o f
the wo rld, o pen unemplo yment is no t an o ptio n; there is no saf ety net o f unemplo yment co mpensatio n and
o ther so cial welf are pro grams. Unemplo yment means death, so peo ple must f ind wo rk, no matter ho w o nero us
the co nditio ns.”56 T he vario us co mpo nents o f vulnerably emplo yed wo rkers co rrespo nd to what Marx
described as the “stagnant” and “latent” po rtio ns o f the reserve army.
Additio nally, many individuals o f wo rking age are classif ied as no t belo nging to the eco no mically active
po pulatio n, and thus as eco no mically inactive. Fo r the prime wo rking ages o f 25– 54 years this adds up,
glo bally, to 538 millio n peo ple in 2011. T his is a very hetero geneo us gro uping including university students,
primarily in wealthier co untries; the criminal element engendered at the bo tto m o f the capitalist eco no my (what
Marx called the lumpenpro letariat); disco uraged and disabled wo rkers, who have been marginalized by the
system; and in general what Marx called the pauperized po rtio n o f the wo rking class—that po rtio n o f wo rking
age individuals, “the demo ralized, the ragged,” and the disabled, who have been almo st co mpletely shut o ut o f
the labo r f o rce. It is here, he argued, that o ne f inds the mo st “precario us…co nditio n o f existence.” Of f icially
designated “disco uraged wo rkers” are a signif icant number o f wo uld- be wo rkers. Acco rding to the ILO, if
disco uraged wo rkers are included in Bo tswana’s unemplo yment rate in 2006 it nearly do ubles f ro m 17.5 percent
to 31.6 percent.57
If we take the catego ries o f the unemplo yed, the vulnerably emplo yed, and the eco no mically inactive po pulatio n
in prime wo rking ages (25– 54) and add them to gether, we co me up with what might be called the maximum size
of the global reserve army in 2011: so me 2.4 billio n peo ple, co mpared to 1.4 billio n in the active labo r army. It is
the existence o f a reserve army that in its maximum extent is mo re than 70 percent larger than the active labo r
army that serves to restrain wages glo bally, and particularly in the po o rer co untries. Indeed, mo st o f this
reserve army is lo cated in the underdevelo ped co untries o f the wo rld, tho ugh its gro wth can be seen to day in
the rich co untries as well. T he breakdo wn in percentages o f its vario us co mpo nents can be seen in Chart 2.
Chart 2. T he Glo bal Wo rkf o rce and the Glo bal Reserve Army
No tes: T he Pro po rtio n o f “vulnerably emplo yed” and “unemplo yed” were estimated based o n percentages f ro m
the “Glo bal Emplo yment Trends” repo rts cited belo w. T he chart includes to tal wo rld po pulatio n (15 years and
o ver) excluding the eco no mically inactive po pulatio n less than 25- and greater than 54- years o f age.
So urces: Internatio nal Labo ur Of f ice (ILO), “Eco no mically Active Po pulatio n Estimates and Pro jectio ns (5th
editio n, revisio n 2009),” LABORSTA Internet (Geneva: Internatio nal Labo ur Organisatio n, 2009); ILO “Glo bal
Emplo yment Trends,” 2009, 2010 and 2011 (Geneva: Internatio nal Labo ur Of f ice).
T he eno rmo us reserve army o f labo r depicted in Chart 2 is meant to capture its maximum extent. So me will no
do ubt be inclined to argue that many o f the wo rkers in the vulnerably emplo yed do no t belo ng to the reserve
army, since they are peasant pro ducers, traditio nally tho ught o f as belo nging to no n- capitalist pro ductio n—
including subsistence wo rkers who have no relatio n to the market. It might be co ntended that these
po pulatio ns are alto gether o utside the capitalist market. Yet, this is hardly the viewpo int o f the system itself .
T he ILO classif ies them generally, alo ng with inf o rmal wo rkers, as “vulnerably emplo yed,” reco gnizing they are
eco no mically active and emplo yed, but no t wage wo rkers. Fro m capital’s develo pmental standpo int, the
vulnerably emplo yed are all potential wage wo rkers—grist f o r the mill o f capitalist develo pment. Wo rkers
engaged in peasant pro ductio n are viewed as f uture pro letarians, to be drawn mo re deeply into the capitalist
mo de.
In f act, the f igures we pro vide f o r the maximum extent o f glo bal reserve army, in an attempt to understand the
really- existing relative surplus po pulatio n, might be seen in so me ways as underestimates. In Marx’s
co nceptio n, the reserve army also included part- time wo rkers. Yet, due to lack o f data, it is impo ssible to
include this element in o ur glo bal reserve army estimates. Further, f igures o n the eco no mically inactive
po pulatio n’s share o f the reserve army include o nly prime age wo rkers between 24 and 54 years o f age witho ut
wo rk, and exclude all o f tho se ages 16– 23 and 55– 65. Yet, f ro m a practical standpo int, in mo st co untries,
tho se in these ages to o need and have a right to emplo yment.
Despite uncertainties related to the ILO data, there can be no do ubt abo ut the eno rmo us size o f the glo bal
reserve army. We can understand the implicatio ns o f this mo re f ully by lo o king at Samir Amin’s analysis o f
“Wo rld Po verty, Pauperizatio n, and Capital Accumulatio n” in Monthly Review in 2003. Amin argued that “Mo dern
capitalist agriculture—enco mpassing bo th rich, large- scale f amily f arming and agribusiness co rpo ratio ns—is
no w engaged in a massive attack o n third wo rld peasant pro ductio n.” Acco rding to the co re capitalist view
pro po unded by the WT O, the Wo rld Bank, and the IMF, rural (mo stly peasant) pro ductio n is destined to be
transf o rmed into advanced capitalist agriculture o n the mo del o f the rich co untries. T he 3 billio n plus rural
wo rkers wo uld be replaced in the ideal capitalist scenario , as Amin puts it, by so me “twenty millio n new mo dern
f armers.”
In the do minant view, these wo rkers wo uld then be abso rbed by industry, primarily in urban centers, o n the
mo del o f the develo ped capitalist co untries. But Britain and the o ther Euro pean eco no mies, as Amin and Indian
eco no mist Prabhat Patnaik po int o ut, were no t themselves able to abso rb their entire peasant po pulatio n
within industry. Rather, their surplus po pulatio n emigrated in great numbers to the Americas and to vario us
co lo nies. In 1820 Britain had a po pulatio n o f 12 millio n, while between 1820 and 1915 emigratio n was 16 millio n.
Put dif f erently, mo re than half the increase in British po pulatio n emigrated each year during this perio d. T he
to tal emigratio n f ro m Euro pe as a who le to the “new wo rld” (o f “temperate regio ns o f white settlement”) o ver
this perio d was 50 millio n.
While such mass emigratio n was a po ssibility f o r the early capitalist po wers, which mo ved o ut to seize large
parts o f the planet, it is no t po ssible f o r co untries o f the glo bal So uth to day. Co nsequently, the kind o f
reductio n in peasant po pulatio n currently pushed by the system po ints, if it were ef f ected f ully, to mass
geno cide. An unimaginable 7 percent annual rate o f gro wth f o r f if ty years acro ss the entire glo bal So uth, Amin
po ints o ut, co uld no t abso rb even a third o f this vast surplus agricultural po pulatio n. “No amo unt o f eco no mic
gro wth,” Yates adds, will “abso rb” the billio ns o f peasants in the wo rld to day “into the traditio nal pro letariat,
much less better classes o f wo rk.”
T he pro blem o f the abso rptio n o f the massive relative surplus po pulatio n in these co untries beco mes even
mo re apparent if o ne lo o ks at the urban po pulatio n. T here are 3 billio n plus peo ple who live in urban areas
glo bally, co ncentrated in the massive cities o f the glo bal So uth, in which peo ple are cro wded to gether under
increasingly ho rrendo us, slum co nditio ns. As the UN Human Settlements Pro gramme declared in The Challenge
of the Slums: “Instead o f being a f o cus o f gro wth and pro sperity, the cities have beco me a dumping gro und f o r
a surplus po pulatio n wo rking in unskilled, unpro tected and lo w- wage inf o rmal service industries and trade.”
Fo r Amin, all o f this is tied to an o verall theo ry o f unequal exchange/imperialist rent. T he “co nditio ns go verning
accumulatio n o n a wo rld scale…repro duce unequal develo pment. T hey make clear that underdevelo ped
co untries are so because they are superexplo ited and no t because they are backward.” T he system o f
imperialist rent asso ciated with such superexplo itatio n, reaches its mature f o rm and is universalized with the
develo pment o f “the later capitalism o f the generalized, f inancialized, and glo balized o ligo po lies.”58
Prabhat Patnaik has develo ped a clo sely related perspective, f o cusing o n the reserve army o f labo r in The
Value of Money and o ther recent wo rks. He begins by questio ning the standard eco no mic view that it is lo w
labo r pro ductivity rather than the existence o f eno rmo us labo r reserves that best explains the impo verishment
o f co untries in the glo bal So uth. Even in eco no mies that have experienced accelerated gro wth and rising
pro ductivity, such as India and China, he argues, “labo ur reserves co ntinue to remain no n- exhausted.” T his is
because with the high rate o f pro ductivity gro wth (and labo r displacement) asso ciated with the shif t to ward
pro ductio n o f high- techno lo gy go o ds, “the rate o f gro wth o f labo ur demand…do es no t adequately exceed the
rate o f gro wth o f labo r supply”—adequately enough, that is, to draw do wn the labo r reserves suf f iciently, and
thus to pull wages up abo ve the subsistence level. An illustratio n o f the pro ductivity dynamic and ho w it af f ects
labo r abso rptio n can be seen in the f act that, despite ro ck- bo tto m wages in China, Fo xco nn is planning to
intro duce a millio n ro bo ts in its plants within three years as part o f its strategy o f displacing wo rkers in simple
assembly o peratio ns. Fo xco nn currently emplo ys a millio n wo rkers in mainland China, many o f who m assemble
assembly o peratio ns. Fo xco nn currently emplo ys a millio n wo rkers in mainland China, many o f who m assemble
iPho nes and iPads.
Patnaik’s argument is clarif ied by his use o f a dual reserve army mo del: the “precapitalist- secto r reserve army”
(inspired by Luxemburg’s analysis) and the “internal reserve army.” In essence, capitalism in China and India is
basing its expo rts mo re and mo re o n high- pro ductivity, high- techno lo gy pro ductio n, which means the
displacement o f labo r, and the creatio n o f an expanding internal reserve army. Even at rapid rates o f gro wth
theref o re it is impo ssible to abso rb the precapitalist- secto r reserve army, the o utward f lo w o f which is itself
accelerated by mechanizatio n.59
Aside f ro m the direct benef its o f eno rmo usly high rates o f explo itatio n, which f eed the eco no mic surplus
f lo wing into the advanced capitalist co untries, the intro ductio n o f lo w- co st impo rts f ro m “f eeder eco no mies” in
Asia and o ther parts o f the glo bal So uth by multinatio nal co rpo ratio ns has a def latio nary ef f ect. T his pro tects
the value o f mo ney, particularly the do llar as the hegemo nic currency, and thus the f inancial assets o f the
capitalist class. T he existence o f an eno rmo us glo bal reserve army o f labo r thus f o rces inco me def latio n o n
the wo rld’s wo rkers, beginning in the glo bal So uth, but also af f ecting the wo rkers o f the glo bal No rth, who are
increasingly subjected to neo liberal “labo ur market f lexibility.”
In to day’s phase o f imperialism—which Patnaik identif ies with the develo pment o f internatio nal f inance capital
—“wages in the advanced co untries canno t rise, and if anything tend to f all in o rder to make their pro ducts
mo re co mpetitive” in relatio n to the wage “levels that prevail in the third wo rld.” In the latter, wage levels are no
higher, “than tho se needed to satisf y so me histo rically- determined subsistence requirements,” due to the
existence o f large labo r reserves. T his lo gic o f wo rld explo itatio n is made mo re vicio us by the f act that “even
as wages in the advanced co untries f all, at the prevailing levels o f labo r pro ductivity, labo r pro ductivity in third
wo rld co untries mo ves up, at the prevailing level o f wages, to wards the level reached in the advanced
co untries. T his is because the wage dif f erences that still co ntinue to exist induce a dif f usio n o f activities f ro m
the f o rmer to the latter. This double movement means that the share of wages in total world output decreases,”
while the rate o f explo itatio n wo rldwide rises.60
What Patnaik has called “the parado x o f capitalism” is traceable to Marx’s general law o f accumulatio n: the
tendency o f the system to co ncentrate wealth while expanding relative (and even abso lute) po verty. “In India,
precisely during the perio d o f neo liberal ref o rms when o utput gro wth rates have been high,” Patnaik no tes,
there has been an increase in the pro po rtio n o f the rural po pulatio n accessing less than 2400 calo ries per
perso n per day (the f igure f o r 2004 is 87 percent). T his is also the perio d when hundreds o f tho usands o f
peasants, unable to carry o n even simple repro ductio n, have co mmitted suicide. T he unemplo yment rate has
increased, no twithstanding a massive jump in the rate o f capital accumulatio n; and the real wage rate, even o f
the wo rkers in the o rganized secto r, has at best stagnated, no twithstanding massive increases in labo r
pro ductivity. In sho rt o ur o wn experience belies Keynesian o ptimism abo ut the f uture o f mankind under
capitalism.61
In the advanced capitalist co untries, the no tio n o f “precario usness,” which Marx in his reserve army discussio n
emplo yed to describe the mo st pauperized secto r o f the wo rking class, has been redisco vered, as co nditio ns
o nce tho ught to be co nf ined to the third wo rld, are reappearing in the rich co untries. T his has led to ref erences
to the emergence o f a “new class”—tho ugh in reality it is the gro wing pauperized secto r o f the wo rking class—
termed the “precariat.”62
At the bo tto m o f this precariat develo ping in the rich co untries are so – called “guest wo rkers.” As Marx no ted, in
the nineteenth century, capital in the wealthy centers is able to take advantage o f lo wer- wage labo r abro ad
either thro ugh capital migratio n to lo w- wage co untries, o r thro ugh the migratio n o f lo w- wage labo r into rich
co untries. Altho ugh migrant labo r po pulatio ns f ro m po o r co untries have served to restrain wages in rich
co untries, particularly the United States, f ro m a glo bal perspective the mo st signif icant f act with respect to
wo rkers migrating f ro m So uth to No rth is their lo w numbers in relatio n to the po pulatio n o f the glo bal So uth.
Overall the share o f migrants in to tal wo rld po pulatio n has sho wn no appreciable change since the 1960s.
Acco rding to the ILO, there was o nly “a very small rise” in the migratio n f ro m develo ping to develo ped co untries
“in the 1990s, and…this is acco unted f o r basically by increased migratio n f ro m Central American and Caribbean
co untries to the United States.” T he percentage o f adult migrants f ro m develo ping to develo ped co untries in
2000 was a mere 1 percent o f the adult po pulatio n o f develo ping co untries. Mo reo ver, tho se migrants were
co ncentrated amo ng the mo re highly skilled so that “the ef f ect o f internatio nal migratio n o n the lo w- skilled
labo ur f o rce” in develo ping co untries themselves “has been negligible f o r the mo st part…. Migratio n f ro m
develo ping to develo ped co untries has largely meant brain drain…. In sho rt,” the ILO co ncludes, “limited as it
was, internatio nal migratio n” in the decade o f the 1990s “served to restrain the gro wth o f skill intensity o f the
labo ur f o rce in quite a large number o f develo ping co untries, and particularly in the least develo ped co untries.”
All o f this drives ho me the key po int that capital is internatio nally mo bile, while labo r is no t.63
If the new imperialism has its basis in the superexplo itatio n o f wo rkers in the glo bal So uth, it is a phase o f
imperialism that in no way can be said to benef it the wo rkers o f the glo bal No rth, who se co nditio ns are also
being dragged do wn—bo th by the disastro us glo bal wage co mpetitio n intro duced by multinatio nals, and, mo re
f undamentally, by the o veraccumulatio n tendencies in the capitalist co re, enhancing stagnatio n, and
unemplo yment.64
Indeed, the wealthy co untries o f the triad (the United States, Euro pe, and Japan) are all bo gged do wn in
co nditio ns o f deepening stagnatio n, resulting f ro m their incapacity to abso rb all o f the surplus capital that they
are generating internally and pulling in f ro m abro ad—a co ntradictio n which is manif ested in weakening
investment and emplo yment. Financializatio n, which helped to bo o st these eco no mies f o r decades, is no w
arrested by its o wn co ntradictio ns, with the result that the ro o t pro blems o f pro ductio n, which f inancial bubbles
served to co ver up f o r a time, are no w surf acing. T his is manif esting itself no t o nly in diminishing gro wth rates,
but also rising levels o f excess capacity and unemplo yment. In an era o f glo balizatio n, f inancializatio n, and
neo liberal eco no mic po licy, the state is unable ef f ectively to mo ve in to co rrect the pro blem, and is increasingly
geared simply to bailing o ut capital, at the expense o f the rest o f so ciety
T he imperial rent that these co untries appro priate f ro m the rest o f the wo rld o nly makes the pro blems o f
surplus abso rptio n o r o veraccumulatio n at the center o f the wo rld system wo rse. “Fo reign investment, f ar f ro m
being an o utlet f o r do mestically generated surplus,” Baran and Sweezy f amo usly wro te in Monopoly Capital, “is
a mo st ef f icient pro cess f o r transf erring surplus generated f ro m abro ad to the investing co untry. Under these
circumstances, it is o f co urse o bvio us that f o reign investment aggravates rather than helps to so lve the
surplus abso rptio n pro blem.”65
T he New Imperialism
As we have seen, there can be no do ubt abo ut the sheer scale o f the relative shif t o f wo rld manuf acturing to
the glo bal So uth in the perio d o f the internatio nalizatio n o f mo no po ly capital since the Seco nd Wo rld War—and
accelerating in recent decades. Altho ugh this is o f ten seen as a po st- 1974 o r a po st- 1989 pheno meno n,
Hymer, Magdo f f , Sweezy, and Amin captured the general parameters o f this bro ad mo vement in accumulatio n
and imperialism, asso ciated with the develo pment o f multinatio nal co rpo ratio ns (the internatio nalizatio n o f
mo no po ly capital) as early as the 1970s. Largely as a result o f this epo chal shif t in the center o f gravity o f
wo rld manuf acturing pro ductio n to ward the So uth, abo ut a do zen emerging eco no mies have experienced
pheno menal gro wth rates o f 7 percent o r mo re f o r a quarter century.
Mo st impo rtant amo ng these o f co urse is China, which is no t o nly the mo st po pulo us co untry but has
experienced the f astest gro wth rates, reputedly 9 percent o r abo ve. At a 7 percent rate o f gro wth an eco no my
do ubles in size every ten years; at 9 percent every eight years. Yet, the pro cess is no t, as mainstream
eco no mics o f ten suggests, a smo o th o ne. T he Chinese eco no my has do ubled in size three times since 1978,
but wages remain at o r near subsistence levels, due to an internal reserve army in the hundreds o f millio ns.
China may be emerging as a wo rld eco no mic po wer, due to its sheer size and rate o f gro wth, but wages remain
amo ng the lo west in the wo rld. India’s per capita inco me, meanwhile, is o ne- third o f China’s. China’s rural
po pulatio n is estimated at 45– 50 percent, while India’s is aro und 70 percent.66
Ortho do x eco no mic theo rists rely o n an abstract mo del o f develo pment that assumes all co untries pass
thro ugh the same phases, and eventually mo ve up f ro m labo r- intensive manuf acturing to capital- intensive,
kno wledge- intensive pro ductio n. T his raises the issue o f the so – called “middle- inco me transitio n” that is
suppo sed to o ccur at a per capita inco me o f so mewhere between $5,000 and $10,000 (China’s per capita
inco me at current exchange rates is abo ut $3,500). Co untries in the middle- inco me transitio n have higher wage
rates and are f aced with unco mpetitiveness unless they can mo ve to pro ducts that capture mo re value and are
less labo r- intensive. Mo st co untries f ail to make the transitio n and the middle- inco me level ends up being a
develo pmental trap. Based o n this f ramewo rk, New Yo rk University eco no mist Michael Spence argues in The
Next Convergence that China’s “labo r- intensive expo rt secto rs that have been a majo r co ntributo r to gro wth
are lo sing co mpetiveness and have to be allo wed to decline o r mo ve inland and then eventually decline. T hey
will be replaced by secto rs that are mo re capital, human- capital, and kno wledge intensive.”67
Spence’s o rtho do x argument, ho wever, denies the reality o f co ntempo rary China, where the latent reserve
army in agriculture alo ne amo unts to hundreds o f millio ns o f peo ple. Mo ving to ward a less labo r- intensive
system under capitalism means higher rates o f pro ductivity and techno lo gical displacement o f labo r, requiring
that the eco no my abso rb a mo unting reserve army by co nquering ever- larger, high- value- capture markets. T he
o nly cases where anything resembling this has taken place—aside f ro m Japan, which f irst emerged as a rapidly
expanding, militarized- imperialist eco no my in the early twentieth century—were the Asian tigers (So uth Ko rea,
Taiwan, Singapo re, and Ho ng Ko ng), which were able to expand their external expo rt markets f o r high value-
capture pro ductio n in the glo bal No rth during a perio d o f wo rld eco no mic expansio n (no t the deepening
stagnatio n o f to day). T his is unlikely to pro ve po ssible f o r China and India, which must f ind emplo yment
between them f o r so me 40 percent o f the wo rld’s labo r f o rce—and to a mo unting degree in the urban industrial
secto r. Unlike Euro pe during its co lo nial perio d the emigratio n o f large po o ls o f surplus labo r as an escape
valve is no t po ssible: they have no where to go . China’s capacity to pro mo te internal- based accumulatio n (no t
relying primarily o n expo rt markets), meanwhile, is hindered under to day’s capitalist co nditio ns by this same
reserve army o f lo w- paid labo r, and by rapidly rising inequality.
All o f this suggests that at so me po int the co ntradictio ns o f China’s unprecedented accumulatio n rates
co mbined with massive labo r reserves that canno t readily be abso rbed by the accumulatio n pro cess—
particularly with the gro wing shif t to high- techno lo gy, high- pro ductivity pro ductio n—are bo und to co me to a
head.
Meanwhile, internatio nal mo no po ly capital uses its co mbined mo no po lies o ver techno lo gy, co mmunicatio ns,
f inance, military, and the planet’s natural reso urces to co ntro l (o r at least co nstrain) the directio n o f
develo pment in the So uth.68
As the co ntradictio ns between No rth and So uth o f the wo rld system intensif y, so do the internal co ntradictio ns
within them—with class dif f erences widening everywhere. T he relative “deindustrializatio n” in the glo bal No rth
is no w to o clear a tendency to be alto gether denied. T hus the share o f manuf acturing in U.S. GDP has dro pped
f ro m aro und 28 percent in the 1950s to 12 percent in 2010, acco mpanied by a dramatic decrease in its share
(alo ng with that o f the OECD as a who le) in wo rld manuf acturing.69 Yet, it is impo rtant to understand that this
is o nly the tip o f the iceberg where the gro wing wo rldwide destabilizatio n and o verexplo itatio n o f labo r is
co ncerned.
Indeed, o ne sho uld never f o rget the mo ral barbarism o f a system that in 1992 paid Michael Jo rdan $20 millio n
to market Nikes—an amo unt equal to the to tal payro ll o f the f o ur Indo nesian f acto ries invo lved in the
pro ductio n o f the sho es, with wo men in these f acto ries earning o nly 15 cents an ho ur and wo rking eleven- ho ur
days.70 Behind this lies the internatio nal “so urcing” strategies o f increasingly mo no po listic multinatio nal
co rpo ratio ns. T he f ield o f o peratio n o f Marx’s general law o f accumulatio n is no w truly glo bal, and labo r
everywhere is o n the def ensive.
T he answer to the challenges f acing wo rld labo r that Marx gave at the Lausanne Co ngress in 1867 remains the
o nly po ssible o ne: “If the wo rking class wishes to co ntinue its struggle with so me chance o f success the
natio nal o rganisatio ns must beco me internatio nal.” It is time f o r a new Internatio nal.71
No tes
1. ↩ Stephen Herbert Hymer, The Multinational Corporation (Cambridge: Cambridge University Press, 1979),
41, 75, 183.
2. ↩ Hymer, The Multinational Corporation, 81, 86, 161, 262– 69.
3. ↩ Gary Geref f i, The New Offshoring of Jobs and Global Development, ILO So cial Po licy Lectures,
Jamaica, December 2005 (Geneva: Internatio nal Institute f o r Labo ur Studies, 2006), http://ilo .o rg, 1; Peter
Dicken, Global Shift (New Yo rk: Guilf o rd Press, 1998), 26– 28.
4. ↩ T ho rstein Veblen already understo o d this in the 1920s. See his Absentee Ownership and Business
Enterprise in Recent Times (New Yo rk: Augustus M. Kelley, 1964), 287.
5. ↩ See Paul M. Sweezy, Four Lectures on Marxism (New Yo rk: Mo nthly Review Press, 1981), 64– 65;
Michael E. Po rter, Competitive Strategy (New Yo rk: T he Free Press, 1980), 35– 36.
6. ↩ Ajit K. Gho se, No maan Maji, and Christo ph Ernst, The Global Employment Challenge (Geneva:
Internatio nal Labo ur Organisatio n, 2008), 9– 10. On depeasantizatio n see Farshad Araghi, “T he Great
Glo bal Enclo sure o f Our Times,” in Fred Magdo f f , Jo hn Bellamy Fo ster, and Frederick H. Buttel, eds.,
Hungry for Profit (New Yo rk: Mo nthly Review Press, 2000), 145– 60.
7. ↩ Jo hn Smith, Imperialism and the Globalisation of Production (Ph.D. T hesis, University o f Shef f ield, July
2010), 224.
8. ↩ Stephen Ro ach, “Ho w Glo bal Labo r Arbitrage Will Shape the Wo rld Eco no my,” Global Agenda
Magazine, 2004,http://eco critique.f ree.f r; Jo hn Bellamy Fo ster, Harry Magdo f f , and Ro bert W.
McChesney, “T he Stagnatio n o f Emplo yment,” Monthly Review, 55, no . 11 (April 2004): 9– 11.
9. ↩ See Jo hn Bellamy Fo ster, Ro bert W. McChesney, and R. Jamil Jo nna, “T he Internatio nalizatio n o f
Mo no po ly Capital,” Monthly Review 63, no . 2 (June 2011): 1– 23.
10. ↩ T ho mas L. Friedman, The World is Flat (New Yo rk: Farrar, Straus, and Giro ux, 2005). Friedman wro ngly
claims that his “f lat wo rld hypo thesis” was f irst advanced by Marx. See 234– 37.
11. ↩ Paul Krugman, Pop Internationalism (Cambridge, Massachusetts: MIT Press, 1996), 66– 67. On the
absurdity o f expecting wage dif f erences between natio ns simply to ref lect pro ductivity trends see Marx,
Capital, vo l. 1, (Lo ndo n: Penguin, 1976), 705.
12. ↩ On f ears o f an end to glo bal labo r arbitrage see “Mo ving Back to America ,” The Economist, May 12,
2011, http://eco no mist.co m.
13. ↩ Karl Marx, Capital, vo l. 1, 798. Immediately af ter the quo ted passage Marx added the f o llo wing
qualif icatio n: “Like all o ther laws, it is mo dif ied in its wo rkings by circumstances, the analysis o f which
do es no t co ncern us here.” It sho uld be added that Marx used “abso lute” here in the Hegelian sense, i.e.,
in terms o f abstract.
14. ↩ Harry Magdo f f and Paul M. Sweezy, Stagnation and the Financial Explosion (New Yo rk: Mo nthly Review
Press, 1987), 204. By 2010, OECD unemplo yment had gro wn by 38 percent, reaching 48.5 millio n
perso ns. (“Unemplo yment, Emplo yment, Labo ur Fo rce and Po pulatio n o f Wo rking Age [15- 64],”
OECD.StatExtracts, [OECD, Geneva, 2011], retrieved September 24, 2011.)
15. ↩ T he co ncept o f “imperialist rent” is develo ped by Samir Amin in The Law of Worldwide Value (New Yo rk:
http://www.ilo.org/inst/lang–en/index.htm
http://ecocritique.free.fr/roachglo
http://www.economist.com/node/18682182
Mo nthly Review Press, 2011) and is discussed f urther belo w.
16. ↩ See, f o r example, the discussio n in Antho ny Giddens, Capitalism and Modern Social Theory
(Cambridge: Cambridge University Press, 1971), 55– 58. Giddens o f f ers a half – hearted and co nf used
def ense o f Marx which is f ull o f misco nceptio ns.
17. ↩ Jo hn Strachey, Contemporary Capitalism, 101; Marx, Capital, vo l. 1, 929. Strachey also quo tes o n the
same page the passage f ro m The Communist Manifesto where Marx and Engels write, “T he mo dern
labo urers…instead o f rising with the pro gress o f industry, sinks deeper and deeper belo w the
co nditio ns o f existence o f his o wn class. He beco mes a pauper, and pauperism develo ps mo re rapidly
than po pulatio n and wealth.” Karl Marx and Frederick Engels, The Communist Manifesto (New Yo rk:
Mo nthly Review Press, 1964), 23. At f irst sight this seems to suppo rt Strachey’s po int (tho ugh taken
f ro m an early and no n- eco no mic wo rk). Ho wever, as Hal Draper po ints o ut: “T his may so und as if the
class o f pro letarians, as such, is inevitably pauperized. T his language ref lected the so cialistic
pro paganda o f the day; later in Capital I (Chap. 25), Marx made clear that the pauper layer is ‘the lo west
sediment o f the relative surplus po pulatio n.’” Hal Draper, The Adventures of the Communist Manifesto
(Berkeley: Center f o r So cialist Histo ry, 1998), 233.
18. ↩ Ro man Ro sdo lsky, The Making of Marx’s ‘Capital’ (Lo ndo n: Pluto Press, 1977), 307.
19. ↩ Fredric Jameso n, Representing Capital (New Yo rk: Verso , 2011), 71.
20. ↩ Marx, Capital, vo l. 1, 799.
21. ↩ Marx, Capital, vo l. 1, 764, 772, 781– 94; Marx and Engels, The Communist Manifesto, 7; Paul M. Sweezy,
The Theory of Capitalist Development (New Yo rk: Mo nthly Review Press, 1970), 87– 92.
22. ↩ Marx, Capital, vo l. 1, 792.
23. ↩ Karl Marx, “Wage- Labo ur and Capital,” in Wage-Labour and Capital/Value, Price and Profit (New Yo rk:
Internatio nal Publishers, 1935), 45; Sweezy, The Theory of Capitalist Development, 89.
24. ↩ Marx, Capital, vo l. 1, 763, 776– 81, 929.
25. ↩ Marx, Capital, vo l. 1, 794– 95; David Harvey, A Companion to Marx’s Capital (Lo ndo n: Verso , 2010), 278,
318.
26. ↩ Marx, Capital, vo l. 1, 795– 96.
27. ↩ Marx, Capital, vo l. 1, 590– 99, 793– 77.
28. ↩ Marx, Capital, vo l. 1, 797– 98.
29. ↩ Engels deserves credit f o r having intro duced the reserve army co ncept into Marxian theo ry, and
makes it clear that what demo nstrates the reserve- army o r relative surplus- po pulatio n status o f wo rkers
is the f act that the eco no my draws them into emplo yment at business cycle peaks. See Frederick Engels,
The Condition of the Working Class in England (Chicago : Academy Chicago Publishers, 1984), 117– 22,
and Engels on Capital (New Yo rk: Internatio nal Publishers, 1937), 19.
30. ↩ Karl Marx, Capital, vo l. 3 (Lo ndo n: Penguin, 1981), Capital, vo l. 2 (Lo ndo n: Penguin, 1978), 486– 87, and
Capital, vo l. 1, 769– 70; Ro sa Luxemburg, The Accumulation of Capital—An Anti-Critique , and Niko lai
Bukharin, Imperialism and the Accumulation of Capital (New Yo rk: Mo nthly Review Press, 1972), 121.
31. ↩ Marx, Capital, vo l. 3, 363.
32. ↩ Karl Marx and Frederick Engels, Collected Works (New Yo rk: Internatio nal Publishers, 1975), 422.
33. ↩ Karl Marx, Theories of Surplus Value, (Mo sco w: Pro gress Publishers, 1971), part 3, 105– 6; Capital, vo l.
3, 344– 46; David Ricardo , On the Principles of Political Economy and Taxation (Cambridge: Cambridge
University Press, 1951), 135– 36; Jo hn Stuart Mill, Essays on Some Unsettled Questions in Political
Economy (Lo ndo n: Lo ngmans, Green, and Co ., 1877), 1– 46: Ro sdo lsky, The Making of Marx’s ‘Capital’,
307– 12. A wide- ranging analysis/debate regarding unequal exchange o ccurred within Marxism in the
1970s. See Arghiri Emmanuel, Unequal Exchange (New Yo rk: Mo nthly Review Press, 172); Samir Amin,
Imperialism and Unequal Development (New Yo rk: Mo nthly Review Press, 1977), 181– 252. So me Marxist
theo rists still deny that the rate o f surplus value is higher in the periphery than in the center. See Alex
Callinico s, Imperialism and Global Political Economy (Lo ndo n: Po lity, 2009), 179– 81; and Jo seph
Cho o nara, Unraveling Capitalism (Lo ndo n: Bo o kmarks Publicatio ns, 2009), 34– 35. Fo r a co ntrary view,
see Sweezy, Four Lectures on Marxism, 76– 77.
34. ↩ Ro sa Luxemburg, The Accumulation of Capital (New Yo rk: Mo nthly Review Press, 1951), 361– 65.
35. ↩ Marx, Capital, vo l. 3, 344.
36. ↩ T he term “glo balizatio n” was f irst co ined in the 1930s. But the f irst article to use the co ncept in its
mo dern eco no mic sense, acco rding to the Oxford English Dictionary, was Fo uad Ajami, “Co rpo rate
Giants: So me Glo bal So cial Co sts,” International Studies Quarterly 16 , no . 4 (December 1972): 513. Ajami
intro duced the term in a paragraph in which he was addressing Marxian no tio ns o f “co ncentratio n and
centralizatio n”—and in particular Paul Baran and Paul Sweezy’s Monopoly Capital (New Yo rk: Mo nthly
Review Press, 1966), which had po inted to the multinatio nal co rpo ratio n as a manif estatio n o f the
gro wth o f mo no po listic pro ductio n at the wo rld level. Altho ugh critical o f Baran and Sweezy’s analysis
f o r its Marxian basis, Ajami (a mainstream po litical scientist no w af f iliated with the Ho o ver Institutio n and
the Co uncil o n Fo reign Relatio ns) nevertheless saw what he called “the do minatio n o f multinatio nal
giants and the glo balizatio n o f markets” as emerging o ut o f the same kinds o f develo pments—with
respect to the tendency to internatio nal o ligo po ly—that Baran and Sweezy had raised. Iro nically, Ajami
f ailed to no tice that o ther theo rists he drew upo n in his article in co ntradistinctio n to Baran and Sweezy
—Stephen Hymer, Michael Tanzer, Bo b Ro wtho rn, and Herbert Schiller—were also Marxian and radical
po litical eco no mists, and in the case o f the f irst two , autho rs o f articles in Monthly Review.
37. ↩ Richard J. Barnet and Ro nald E. Müller, Global Reach (New Yo rk: Simo n and Schuster, 1974), 213– 14,
306.
38. ↩ Fo ster, McChesney, and Jo nna, “T he Internatio nalizatio n o f Mo no po ly Capital,” 5– 9.
39. ↩ “Mo ving Back to America.”
40. ↩ Dale Wen, China Copes with Globalization (Internatio nal Fo rum o n Glo balizatio n, 2005), http://if g.o rg;
Martin Hart- Landsberg, “T he Chinese Ref o rm Experience,” The Review of Radical Political Economics 43,
no . 1 (March 2011): 56– 76; Minqi Li, “T he Rise o f the Wo rking Class and the Future o f the Chinese
Revo lutio n,” Monthly Review 63, no . 2 (June 2011): 40.
41. ↩ It sho uld be no ted that the term “superexplo ited” appears to have two clo sely related, o verlapping
meanings in Marxist theo ry: (1) wo rkers who receive less than the histo rically determined value o f labo r
po wer, as it is def ined here; and (2) wo rkers who are subjected to unequal exchange and o verexplo ited,
primarily in the glo bal So uth. In Amin’s f ramewo rk, ho wever, the two meanings are united. T his is because
the value o f labo r po wer is determined glo bally, while actual wage rates are determined natio nally, and
are hierarchically o rdered due to imperialism. In the glo bal So uth theref o re wo rkers normally receive
wages that are less than the value o f labo r po wer. T his is the basis o f imperial rent. See Amin, The Law
of Value and Historical Materialism, 11, 84. Jo hn Smith and Andy Higginbo tto m have develo ped a similar
appro ach to superexplo itatio n based o n Marx. See Jo hn Smith “Imperialism and the Law o f Value,” Global
Discourse, 2, no . 1 (2011), http://glo bal- disco urse.co m.
42. ↩ Charles J. Whalen, “Sending Jo bs Of f sho re f ro m the United States,” Intervention: A Journal of
Economics 2, no . 2 (2005): 35. Quo ted in Smith, The Internationalisation of Globalisation, 94.
43. ↩ William Millberg, “Shif ting So urces and Uses o f Pro f its,” Economy and Society 37, no . 3 (August 2008):
439; Judith Banister and Geo rge Co o k, “China’s Emplo yment and Co mpensatio n Co sts in Manuf acturing
T hro ugh 2008,” U.S. Bureau o f Labo r Statistics, Monthly Labor Review (March 2011): 44. It is co mmo n f o r
co mmentato rs to ref er to glo bal supply chains as glo bal value chains, based o n the co ncept o f value
http://www.ifg.org/pdf/FinalChinaReport
added. (See, f o r example, Michael Spence and Sandile Hlatshwayo , The Evolving Structure of the
American Economy and the Employment Challenge, Co uncil o n Fo reign Relatio ns Wo rking Paper, March
2011, http://cf r.o rg). T his leads to the no tio n that the value added is much higher in high techno lo gy
pro ductio n engaged in the No rth than in the labo r- intensive pro ductio n no w increasingly lo cated in the
So uth. Ho wever, mo re value- added in this sense simply means higher relative prices and higher inco me. It
do es no t tell us where the value is pro duced but simply who gets it (via mo no po ly po wer, imperial rent,
etc.). We theref o re avo id the value chain termino lo gy in this paper, and we ref er, when necessary, to
“high- value- capture” rather than “high- value” links in the glo bal supply chain. T he “value capture” term
and a general critique o f value- chain theo ry are presented in Jo hn Smith, Imperialism and the
Globalisation of Production, 254– 60, and “Imperialism and the Law o f Value.”
44. ↩ Yuqing Xing and Neal Detert, How the iPhone Widens the United States Trade Deficit with the People’s
Republic of China, ADBI Wo rking Paper, Asian Develo pment Bank Institute (December 2010; paper revised
May 2011); David Barbo za, “Af ter Spate o f Suicides, Techno lo gy Firm in China Raises Wo rkers’ Salaries ,”
New York Times, June 2, 2010, http://nytimes.co m; Fo ster, McChesney, and Jo nna, “T he
Internatio nalizatio n o f Mo no po ly Capital,” 17. It sho uld be no ted that the assembly in China o f iPho ne
parts and co mpo nents that are pro duced elsewhere (heavily in o ther East Asian co untries) is actually the
do minant pattern o f East Asian pro ductio n. Acco rding to the Asian Develo pment Bank, China is “the
assembly hub f o r f inal pro ducts in Asian pro ductio n netwo rks.” Asian Develo pment Bank, Asian
Development Outlook, 2008 (Manila, Philippines), http://adb.o rg, 22; Martin Hart- Landsberg, “T he U.S
Eco no my and China,” Monthly Review 61, no . 9 (February 2010): 18.
45. ↩ Banister and Co o k, “China’s Emplo yment and Co mpensatio n,” 49.
46. ↩ U.S. Bureau o f Labo r Statistics, “Internatio nal Co mpariso ns o f Ho urly Co mpensatio n Co sts in
Manuf acturing,” Table I, last updated March 8, 2011, http://bls.go v.
47. ↩ Vikas Bajaj, “Bangladesh, With Lo w Pay, Mo ves In o n China,” New York Times, July 16, 2010,
http://nytimes.co m.
48. ↩ Immelt quo ted in Millberg, “Shif ting So urces and Uses o f Pro f its,” 433. Fo r a po werf ul theo retical
analysis in Marxian terms o f glo bal labo r arbitrage see Smith, Imperialism and the Globalisation of
Production.
49. ↩ Jannik Lindbaek, “Emerging Eco no mies: Ho w Lo ng Will the Lo w- Wage Advantage Last?” Octo ber 3,
1997, http://actrav.itcilo .o rg.
50. ↩ W. Arthur Lewis, Selected Economic Writings (New Yo rk: New Yo rk University Press, 1983), 316– 17,
321, 348, 387– 90.
51. ↩ “T he Next China,” The Economist, July 29, 2010, http://eco no mist.co m.
52. ↩ Li, “T he Rise o f the Wo rking Class and the Future o f the Chinese Revo lutio n,” 40– 41, and The Rise of
China and the Demise of the Capitalist World Economy (New Yo rk: Mo nthly Review Press, 2008), 87– 92.
53. ↩ Yang Yao , “No , the Lewisian Turning Po int Has No t Yet Arrived,” Economist.com, July 16, 2010,
http://eco no mist.co m; Stephen Ro ach, “Chinese Wage Co nvergence Has a Lo ng Way To Go ,”
Economist.com, July 18, 2010, http://eco no mist.co m.
54. ↩ T heo Sparrebo o m and Michael P.F. de Gier, “Assessing Vulnerable Emplo yment,” Employment Sector
Working Paper, no . 13 (Geneva: ILO, 2008), 7; James Petras and Henry Veltmeyer, Multinationals on Trial
(Burlingto n, Vermo nt: Ashgate, 2007), 70; Mike Davis, Planet of Slums (Lo ndo n: Verso , 2006), 178.
55. ↩ Internatio nal Labo r Organizatio n, Key Indicators of the Labour Market (Geneva: ILO, 2009), chapter 3- 3;
Sparrebo o m and de Gier, “Assessing Vulnerable Emplo yment,” 11.
56. ↩ Michael Yates, “Wo rk is Hell,” May 21, 2009, http://blo g.cheapmo telsandaho tplate.o rg.
57. ↩ ILO, Key Indicators, chapter 1- C, and chapter 5.
https://myaccount.nytimes.com/auth/login?URI=/2010/06/03/business/global/03foxconn.html&OQ=_rQ3D5&REFUSE_COOKIE_ERROR=SHOW_ERROR
http://www.economist.com/economics/by-invitation/guest-contributions/chinese_wage_convergence_has_long_way_go
58. ↩ Samir Amin, “Wo rld Po verty, Pauperizatio n and Capital Accumulatio n,” Monthly Review 55, no . 5
(Octo ber 2003): 1– 9, and The Law of Worldwide Value, 14, 89, 134; Prabhat Patnaik, “T he Myths o f
Capitalism,” MRzine, July 4, 2011, http://mrzine.mo nthlyreview.o rg; United Natio ns, World Economic and
Social Survey (New Yo rk: UN, 2004), 3; Yates, “Wo rk is Hell”; Davis, Planet of Slums, 179; United Natio ns
Human Settlements Pro gramme, The Challenge of the Slums (Lo ndo n: Earthscan, 2003), 40, 46.
59. ↩ Prabhat Patnaik, The Value of Money (New Yo rk: Co lumbia University Press, 2009), 212– 15; “A
Perspective o n the Gro wth Pro cess in India and China,” International Development Economics Associates,
T he IDEAs as Wo rking Paper Series, Paper no . 05/2009, http://netwo rkideas.o rg, abstract, 4; Lee Chyen
Yee and Clare Jim, “Fo xco nn to Rely Mo re o n Ro bo ts; Co uld Use 1 Millio n in 3 Years,” Reuters, August 1,
2011, http://reuters.co m.
60. ↩ Prabhat Patnaik, “No tes o n Co ntempo rary Imperialism,” MRzine, December 20, 2010,
http://mrzine.mo nthlyreview.o rg; “Capitalism and Imperialism,” MRzine, June 19, 2011,
http://mrzine.mo nthlyreview.o rg; “Labo ur Market Flexibility,” MRzine, May 9, 2011,
http://mrzine.mo nthlyreview.o rg; and “Co ntempo rary Imperialism and the Wo rld’s Labo ur Reserves,” Social
Scientist 35, no . 5/6 (May- June 2007): 13.
61. ↩ Prabhat Patnaik, “T he Parado x o f Capitalism,” MRzine, Octo ber 22, 2010,
http://mrzine.mo nthlyreview.o rg.
62. ↩ Fo r example, Guy Standing, The Precariat: The New Dangerous Class (New Yo rk: Blo o msbury
Academic, 2011). On the current ro le o f the reserve army o f labo r at the center o f the capitalist system
see Fred Magdo f f and Harry Magdo f f , “Dispo sable Wo rkers; To day’s Reserve Army o f Labo r,” Monthly
Review 55, no . 11 (April 2004): 18– 35.
63. ↩ Gho se, et. al., The Global Employment Challenge, 45– 49.
64. ↩ On the interrelatio n o f these two negative elements af f ecting emplo yment in the advanced capitalist
co untries see Fo ster, “T he Stagnatio n o f Emplo yment.”
65. ↩ Baran and Sweezy, Monopoly Capital, 107– 8.
66. ↩ Michael Spence, The Next Convergence (New Yo rk: Farrar, Straus, and Giro ux, 2011), 19– 23, 48, 53–
54, 85– 86, 107.
67. ↩ Spence, The Next Convergence, 100– 3, 194– 98.
68. ↩ Samir Amin, Capitalism in the Age of Globalization (New Yo rk: Z ed, 1977), 4– 5.
69. ↩ Lo uis Uchitelle, “Is Manuf acturing Falling Of f the Radar?” New York Times, September 11, 2011,
http://nytimes.co m.
70. ↩ Walter LaFeber, Michael Jordan and the New Global Capitalism (New Yo rk: W.W. No rto n, 1999), 106– 7,
14– 48.
71. ↩ Samir Amin, “T he Demo cratic Fraud and the Universalist Alternative,” Monthly Review 63, no . 5
(Octo ber 2011): 44– 45, The World We Wish to See (New Yo rk: Mo nthly Review Press, 2008).
http://www.networkideas.org/working/jun2009/wp17_05_2009.htm
http://mrzine.monthlyreview.org/2010/patnaik221010.html
- The Global Reserve Army of Labor and the New Imperialism :: Monthly Review
