Friday 16 March 2012

Capitalism's Astonishing Victory

Last Line Of Defence: Western Leftists used to believe it was the Soviet Union's tanks and missiles that kept their capitalist masters in line. They were wrong. When the governments of "actually existing socialism" opened their cash-strapped economies to Western investors, the post-war security and affluence of the Western working-classes' were doomed. Between 1970 and 2000 the global workforce more than doubled, creating a buyers' market in labour that Western unions and their political parties were powerless to resist.

I’M NOT OFTEN ASTONISHED, but on Monday, Nigel Haworth, Professor of Human Resource Development at the University of Auckland, managed it. Speaking to Radio New Zealand’s Nine-to-Noon host, Kathryn Ryan, Professor Haworth set in historical context the unrelenting downward pressure on wages and conditions that has made the last three decades such a struggle for ordinary working people.

“When China and Eastern Europe, and Russia and India, joined the global economy; basically from the 1970s onwards”, Professor Haworth explained, “the global workforce doubled.

“It’s the most astonishing figure. The global workforce doubled, and the per capita level of capitalisation of that workforce halved. In other words, we moved into a massive international process of cheaper labour – which is what has allowed contracting-out and off-shoring to develop.

“We are now competing in a global market where cheaper labour is available, and it’s increasingly skilled cheaper labour in places like China and India. And you’re going to see that sort of pressure brought into our labour market. Which is why, I think, a country like New Zealand has to have a very clear strategy for high performance, high productivity workplaces, to counteract that tendency for lower and lower wages.”

Viewed from this perspective, the “opening” to capitalism of the old Soviet Empire, the People’s Republic of China and Nehru’s socialist India, has brought nothing but misfortune to the working-classes of the West. While that vast swathe of humanity remained inaccessible to the Western capitalist powers, Western workers were able to take full advantage of a sellers’ market in scarce human labour. But the moment the markets of the Soviet Empire, China and India were declared open to the investors (i.e. finance capitalists) of the West; not only were workers living under actually existing socialism doomed, but so were the prime beneficiaries of the post-war Keynesian settlement: the “free” workers of the West. Us.

What other outcome could there be? When, as Professor Haworth points out, the size of the labour force available to Western capitalists was expanding exponentially? How could trade unions mount a credible defence of their members’ incomes when all an employer had to do was threaten to (or actually) shift his factory off-shore to countries where labour could be hired, at a fraction of prevailing wage-rates, to do the same job?

Western Leftists used to believe that it was the Soviet Union’s tanks and nuclear warheads that kept their capitalist masters in line. That any attempt to destroy the unions, dismantle the welfare state, and generally immiserate the working-classes of the West would cause them to fling open the gates to the Reds. There was, of course, a grain of truth in this geopolitical speculation. What the Western Left failed to grasp, however, was that the cost of maintaining all those tanks and missiles was profoundly distorting the socialist economies. When Soviet citizens looked to the West they saw blue-jeans and stereos – consumer goods conspicuously absent from their own retail shelves. You can’t wear a tank, or dance to a missile.

Keynesianism had made the West wealthy enough to provide its workers with guns and butter, and its capitalists with investment funds too tempting for the cash-strapped economies of Eastern Europe to ignore. In the end, it wasn’t the immiserated workers of the West who flung open the fortress gates, it was the impoverished governments of the East.

The results are all around us. As the average living standards of the Third World have risen, those of the First and Second Worlds have fallen. If the dramatic increase in global wealth was being distributed equitably this would be a good thing. Unfortunately, it’s not.

Look at the Ports of Auckland, AFFCO’s meat-works, Oceania’s rest-homes – and  remember Professor Haworth’s remarkable facts and figures. This is what a buyers’ labour market makes inevitable.

It’s what unfettered Capitalism looks like. Those with readily marketable skills live inside it. Most of us live under it. An astonishingly tiny number call it their own.

This essay was originally published in The Dominion Post, The Otago Daily Times, The Waikato Times, The Taranaki Daily News, The Timaru Herald and The Greymouth Star of Friday, 16 March 2012.


Anonymous said...

Hardly surprising.

Marxism requires an already industrialised society for class war to exist.

Neither Russia or China were that when the so called "revolutions" occurred.

They were never communist states.

They were (are) totalitarian oligarchies perpetuating a ruling structure that created mediaeval societies.

The rampant capitalism of the last few decades is actually leading to the realisation of Marx's projections.

The ever widening gap between the rich and poor are marginalising more and more "middle class" aspirants.

Tiger Mountain said...

Anyone with a marxist world view and many others know this has been an issue for decades. The race to the bottom.

Certain anti communists, should I be petty, yes for once, (Lew for instance) eschew the imperialist pressure on the fledgling socialist states and cite lack of basic democratic forms for their ultimate downfall.

However, I have long thought that if the soviets had somehow diverted some SS20 funds and developed the apple mac, skinny jeans and a bit of commodity fetishism taking a gamble on MAD basically, things may have been much different. We are all somewhat prisoners of our own times.

Historical and dialectical materialism take on a freshness in the digital era for obvious reasons of immediacy. But bodies are still required at the jaffa city port to get a win there.

The capitalists squiggle about, but not forever, when the BRIC working class get organised lookout. Where are they gonna go? Solidarity forever. Don’t be swayed too much by Mr Nigel “Hi performance Work” Harworth an original “Nissan Way ” supporter.

Brendan McNeill said...

Chris, Nigel Haworth is correct in his assessment of the impact of an expanding global labour market placing downward pressure on wages and conditions here in the West.

There are a couple of other observations worth noting.

First, it is arguable, that it is more equitable for the West to provide meaningful employment to the impoverished poor of Asia and Eastern Europe in order to raise their standard of living, than simply to provide cash handouts to their rogue Governments.

For example, the USA 'donates' USD $1.0B per annum to Egypt's ruling class (to coin your phraseology) which ironically they have first borrowed from the Chinese, and none of that trickles down to the workers in Egypt.

Second, it's not just the workers whose livelihoods are at risk. Have you seen what has happened to manufacturing in the USA, and most Western countries? Sure, a lot of Western manufacturers have set up off shore to take advantage of cheap labour, but the Chinese and Indians are also into this game in a big way themselves.

Remember when the phrase 'made in Japan' guaranteed poor quality? That's not the case today, and in 10 years time, 'Made in China' will carry the same resonance that 'Made in Japan' does today.

Western governments are borrowing their way to oblivion in order to keep up the illusion that all is well at home, and that our historical standards of living can be maintained.

All is not well, and they cannot be maintained.

The good news for New Zealanders is that we are a protein producing nation, and people have to eat. Hopefully our government(s) will ensure the ownership of farmland and the means of supply will remain in our control in order that we benefit now and in future generations.

I don't agree with Labour on very much, but this is one issue that we cannot ignore, and I believe they are on the right side. (or should that be the left side).

Anonymous said...

An astonishingly tiny number call it their own.

Ae, pono, but here's the thing: an astonishingly large number don't.

China's on the cusp of another, historical, almighty "inny": and any fool who thinks the West will survive it intact is deluded.

It's a jungle out there. But the scum who dragged us back to it inadvertantly provided compasses and wirelesses.

Those seeds of their own destruction are busy tweatering, teetering, clittoring, wittering, hemailing-shemailing, wiki-licki-nose-flicki, sexty-wexty-texty, facetube-rateme, TradeMe, RAPEME! in an unprecedented orgasm of communication and information as we SPEAK! (fig.)

It's why 50,000 innocent, nicotine-free kiwis took to the streets to save a pin-prick of a vast ignored area into which they would ordinarily never have ventured a toe: but which, thanks to years of bucolic fellation from the mass-media tools of the sons and beneficiaries of raupatu they had come to revere. An ironic manifestation of the inherent contradiction.

But they've yet to revere the poor. The churches and iwi elite still bow to Murdoch; the obscenity as clear as diseased canine testicles to the young, yet still they cling to crumbling piles of dust.

It's the orient's turn, me old Chinas, we blew it. And thanks to the stinking judas Douglas and Dunnes, godzone won't be spared: weep only for your exile mokopuna, and pray for a free press.


Scott said...

'Marxism requires an already industrialised society for class war to exist.'

This statement alludes to a common misconception and contains an egregious untruth. The common misconception is that Marx thought socialism could only be built in an industrial society. That certainly was his view when he was younger, but in later works, composed after intensive studies of the situation of pre- and semi-capitalist societies like Russia, he came to a different conclusion. Go to the Marxists Internet Archive at and check out texts like his last preface to the Communist Manifesto and his letters to Vera Zasulich.

The reasons for the failure to build socialism in the Soviet Union are complex, but the very low estimation of the peasantry held by the Bolsheviks - an estimation which owed a lot to the early Marx - was probably a factor.

The egregious piece of silliness is the claim that 'class war' only exists in an industrial society. The first sentence of The Communist Manifesto is 'The history of all previously existing societies is the history of class struggle'. That's a tad reductionist, but it does make pretty clear Marx's view that class struggle is not a modern phenomenon.

Anonymous said...

This is one of those rare times, Brendan, when I am in complete agreement with you.

Don't do it too often or I might start calling you comrade.

Anonymous said...

Das Kapital says it all.

Paulus said...

Having been to China recently it is an astonishing tabeloid of mixture between City and Country.
The Country appear to be held in place at present (except the Far West), because that is all they know -State Control.
The Cities are astonishing in that the population, mainly youngster we noted -say under 28 are not going to be held back by ideology. Communication is their key with modern technology, which every youngster we saw had, along with the latest American gear and attitudes.
We were very concerned (almost frightened) that being youngsters of today with overseas access to information, that the Governmen of China should be very concerned as to how they slow what we believe is a tsunami. I am sure they can see this.
Inflation is creeping rapidy and their GDP is reducing, not yet drastically. As America slows down its imports this will reflect on the overall Chinese economy.
Other Asian countries are ready to pick up from Chinese manufacturers at a lower rate for the job, as the demand for higher wages grows, but unemployment will increase.

guerilla surgeon said...

As soon as the Chinese and indians start putting as much energy into R&D as they did into manufacturing (as they are now beginning to) the west is fucked :-).

Andy C said...

guerilla surgeon said...
As soon as the Chinese and indians start putting as much energy into R&D as they did into manufacturing (as they are now beginning to) the west is fucked :-).

Well yes, but mainly no. R&D costs shiploads of cash. The Chinese will continue to do what they have done for ages, take other peoples ideas and modify them to their own ends. If they can't come on their own, they are certainly not afraid to steal or reverse engineer what they want.
Helicopter engines are the piece du-jour with both Pratt and Whitney and Honeywell creating a stink that engines supposed to be for civilian use only, what with the post Tiannamen Square arms embargo in place, turned up in military models and copies being sold into Asian sub continent.

China will buy (license) technology when it can, but because China is a police state, and often acts like one, most Western military technology is unavailable for license. So China steals it, or buys it in secret.

Jeremy Bowen said...

This has always seemed obvious but these are clear words to lay it out. Nixon wasn't in Peking for fun that's for sure. The interesting thing for me is that cheap wages hold up capital investment in labour saving equipment, automation and such and leave more profit available for shareholders. A good example of this is the freezing works where hirer tham average wages has led to many automated systems which I'm sure would not exist if Chinese or other cheap labour was allowed in to do the work.