Who Competes?
Changing Landscapes of Corporate Control

by Nicholas Hildyard

first published 1 July 1996


In the drive to become “competitive”, companies are restructuring their operations on a global scale. It is not companies which are competing, however, but workers and communities, pitted against each other as companies relocate from one country to another in search of new markets, the weakest trade unions, the most flexible rules on working conditions and the largest subsidies. None of the major “solutions” to the resulting job insecurity hold many prospects for workers. It is time to question the notion that export-led growth and enhanced corporate competitiveness is the route to employment and to press instead for an economy that protects people and the commons rather than corporations.



In the drive to become "competitive", companies are restructuring their operations on a global scale. It is not companies which are competing, however, but workers and communities. New technologies, new management techniques and a new freedom of capital to move across national borders have drastically undermined the bargaining power of labour, whilst strengthening that of corporations. Workers are being pitted against workers and communities against communities as companies relocate from one country to another in search of new markets, the weakest trade unions, the most flexible rules on working conditions and the largest subsidies. None of the major "solutions" to the resulting job insecurity, however, hold many prospects for workers. The time has come to question the very notion of export-led growth and enhanced corporate competitiveness as a route to employment and to press instead for an economy that protects people and the commons rather than corporations.

"The reason [handloom weavers] are attached to [the locale of their work] is that they carry out their work under their own roof, beside their relatives and also more or less when they feel like it. They have an unsuperable horror of the barracks-room called 'common workshop', and would rather give up their trade altogether than submit to factory enrolment".

Contemporary observer of French handloom weavers, late 18th century.1

"From the age of seven, children in factories had to work 12 to 15 hours a day (or night), six days a week, 'at best in monotonous toil, at worst in a hell of human cruelty'. 'The tale never ended of fingers cut off and limbs crushed in the wheels'."

Description of factory conditions in mid-19th century.2

"The range of consultations between ministers and both sides of industry has considerably increased and the machinery of joint consultation has enormously improved. We expect of this government that they will maintain to the full this practice of consultation."

General Council of the UK Trades Union Congress after the election of the Conservative government, 1951.3

"Shirley is 49 and has worked as a machinist for a year. She works 39 hours a week. She gets 15 minutes as morning break and 30 minutes for lunch, which consists of sausage rolls. There is no afternoon break unless it is a heat break when the factory gets just too hot. In a normal day, she machine stitches 300 children's garments. For this she takes home £113 -- before tax. £16 a day to live on ... Down the road at the Job Centre a backstreet clothing factory is advertising vacancies. Great news, but the advert shows that 16-year old trainee machinists can get £59 for a 39-hour week. Overlocking, flat-stitching and cover-stitching should take about six months to train on a proper scheme. But at this factory wages are frozen for two years."

Contemporary report on factory work, 1996.4

Two centuries and four different forms of industrial organization separate these tales of working life and industrial power relations in Europe.

Handloomers in the 1790s worked at home, weaving cloth under contract to a local "putter out", who supplied them with raw materials for final manufacture. It was not a system that suited industry, because it was the outworkers (mainly women) who regulated the pace of work rather than the "putter out".5 Interspersing their weaving with other "jobs", they worked by and large when they wanted, moving from one task to another "on a schedule set by sunlight, weather and season".6 One day they might weave, another they might go to market. One morning they might be at home, another in the fields. Although these homeworkers were dependent on the outputter for work and had little say over what they received in payment, the outputter was also dependent on them as to when the cloth could be collected. The relationship was certainly unequal, but denying putters out full control over the production process brought an independence to the cottagers which they clung to tenaciously.7 As long as such homeworkers had access to land (in the form of the commons), few were willing to submit themselves to the discipline of working in a factory, where their labour could be supervised.

It was only in the early nineteenth century -- by which time landowners had enclosed most of the commons in Britain and thrown millions of their tenants off the land in order to "relocate" production from subsistence to industrial crops (mainly wool)8 -- that industrialists were able to gain access to a labour force sufficiently downtrodden and desperate for work, even under the regime of the factory floor.9

As the factory began to replace the home as the dominant site of production, so it imposed a new way of life on labour regimented not by the workers nor the seasons or hours of daylight but by the factory bosses. Physical abuse, deprivation and the close eye of overseers kept young children and women (both "locked together in a category of worker that was 'naturally' subordinate")10 working day and night at a pace set by the "tireless, inanimate equipment"11 of the factory floor. Despite the workers' continual resistance, the relative autonomy they used to enjoy was gradually eroded and eventually lost as factory managers strove to control every detail of their performance, down to the amount of time they were permitted to spend in the lavatory.12 The factory, in the words of a contemporary pamphlet, became "the workers' prison and the foremen their jailers."13

The TUC statement, issued at the start of the "never-had-it-so-good" 1950s and 1960s, belongs to another era. The grinding repetitive work of the factory has not changed -- if anything it required less skill -- but a century and a half of lockouts, strikes and worker organizing has established a rough equity in the bargaining powers of labour and industry.14 Workers were no longer viewed by management simply as a pair of hands to be used and discarded. Instead, they were also regarded as consumers whose wages had to be high enough to enable them to buy the goods that "Fordist" mass production techniques were churning out faster and cheaper than ever.15 Better working conditions were thus part of the industrial landscape.

Moreover, management effectively agreed to treat labour as a "protected" commodity, with regularized collective bargaining replacing competitive labour markets as the means by which wage levels were set.16 The rules of the game were well established: as long as productivity kept pace with wage pressures, management was prepared to provide job security, higher wages and better working conditions. Central to that bargain, however, was the need to increase exports, since the domestic market alone could not absorb the increased output needed to maintain steadily rising wages. An export-led economy was thus viewed by labour and management alike as key to "full employment" and decent living standards. From the 1950s to the mid-1970s, in almost every industrial country, real wages rose as exports grew.

Thirty years later, that uneasy compromise between labour and industry has been shattered. In Shirley's Britain of today, as in other industrialized countries, real wages are declining even though the productivity of workers is increasing; the unionized workplace has been replaced by the aggressively non-unionized work world of the fast food chain and the discount store; millions are being laid off as businesses "downsize" their workforce; and, in workplace after workplace, "management's rights have been strengthened, work rules tightened, job security reduced and wages hover as close as possible to the minimum set by law."17 Outworking is back with a vengeance, only this time, the outworkers' labour is supervised and controlled. The majority of outworkers are women and immigrants and they tend to be the lowest paid of a low-paid flexible labour force, their conditions reflecting the double discrimination heaped upon them as wives and mothers who "shouldn't be working" and as foreigners who "shouldn't be here". They are also almost entirely unprotected by labour laws.18

Work Without Jobs

In the new industrial landscape which has emerged, the bargaining power of labour has been drastically undermined compared with earlier this century, whilst that of capital has been strengthened.

In Britain, "loose-change pay and hire 'em, fire 'em management has become the order of the day." Since 1992, there has been no increase in full-time jobs, while those "jobs" which have been created increasingly fail to provide the security that people used to associate with the word. Instead, the "jobs" on offer tend to involve poorly-paid, casual work -- three out of every ten new jobs are part-time.19 In Liverpool, a 16-year-old sales assistant is lucky to get £1.98 an hour; a skilled waiter is unlikely to make more than £3. In 1990, it was estimated that there were some ten million workers in the UK whose wages were below the European Union's "decency threshold". These included 4.4 million part-time workers, of whom 65 per cent were women.20 Some 40 per cent of Britons now qualify for assistance under EU programmes for industrially depressed regions; in France, the figure is 30 per cent.21 In 1993, "the poorest 10 per cent of male workers in the United Kingdom received lower pay as a proportion of the average wage than at any time since records began in 1886."22

It is not only "blue collar" workers who have been affected. For the first time since the Great Depression of the 1930s, the middle-classes are experiencing the insecurity that has been a permanent feature of working class communities since industrialization. The development of new technologies and management structures have permitted manufacturers to restructure radically their relationship to -- and reliance on -- office workers as much as shop-floor workers. Companies are eliminating whole strata of middle management to make corporate structures more "computer friendly" by flattening organizational pyramids and creating work teams. Such re-engineering can result in more than 40 per cent of middle management losing their jobs.26

Meanwhile, income disparities are growing. Thirty years ago, the combined incomes of the richest fifth of the world's population were 30 times greater than that of the poorest fifth. Today, their incomes are over 60 times greater. With joint assets of $762 billion, just 358 billionaires now own more than the combined annual income of the world's poorest two billion people.27 The gap between rich and poor is widening as unemployment continues to rise. In 1995, the International Labour Organization announced that one third of the world's willing-to-work population was either unemployed or underemployed, the worst situation since the 1930s. In Britain, eight million people have experienced unemployment since the last general election in 1992.28 In France, average unemployment between 1969 and 1973 was 2.6 per cent; today, one in five adults are unemployed -- and one in four of those under 25 years old.29 Across the Atlantic, things are no better. Manufacturing employment in the US fell by 1.4 million between 1978 and 1990 and the numbers out of work are increasing despite economic recovery.

Lean and Mean

Labour's weakened position results in part from the imposition of new technologies and management structures; in part from the means used to overcome opposition to those new structures; and in part from the liberalization of world markets. Whatever the cause, the net result has been to strip away the limited protection from market forces that Fordist regimes afforded workers in the North and to create a new division of labour, both nationally and internationally.

Although companies generally "explain" the introduction of new technologies by citing the need to be competitive, the use of automation to undercut labour has long been a key motivation behind the "modernization" of industrial practices. As early as the 1940s, Ford and other large US manufacturers sought to automate as a means of containing labour's encroachment into areas (such as hiring and firing, disciplinary action and safety) which management viewed as its traditional terrain. "Menaced by the increasing intensity of labour's demands and determined to maintain its long-standing control over the means of production", notes trends analyst Jeremy Rifkin, "America's industrial giants turned to the new technology of automation as much to rid itself of rebellious workers as to enhance its productivity and profit."27

Fierce resistance by labour unions ensured that it took many years of patient manoeuvring and opportunism on the part of management before the first automated production lines came on stream. Initial moves came in the 1950s when companies began to take advantage of cheap land and tax breaks to relocate inner city manufacturing plants to suburban industrial parks. Relocation not only weakened the unions by separating plants from city centres where unions were strongest, it also pitted white workers against black workers. Unskilled (predominantly black) labour bore the brunt of the redundancies while skilled (predominantly white) workers were retained.28

Relocating abroad (or threatening to) has also been a favoured industry tactic for forcing domestic labour into accepting new technologies and other working practices. Initially, US companies shifted production to their subsidiaries in Europe and Canada, but in the 1970s, South-East Asia and Latin America became favoured sites for relocation, not least because of the generous package of tax breaks and other subsidies offered by host governments. A similar strategy was pursued by European manufacturing companies -- in particular, those involved with labour-intensive industries such as textiles, shoe production and electronics assembly.29

Extensive cross-border networking (often with rival companies) has also enabled management to outflank labour. Beginning in 1971, for example, General Motors (GM) began to forge a variety of alliances with Japanese and Korean car manufacturers, including Isuzu Motors, Suzuki, Toyota, Daewoo and Nihon Radiator.30 The deals enabled GM to source many of its parts from Japanese and Korean factories, enhancing the company's bargaining position with US unions without having to relocate final production abroad. By reducing its reliance on in-house and external US suppliers, General Motors made it more difficult for unions to spread strike action into other industries. When GM announced in 1983 that it would be building a new compact car called Saturn, the United Auto Workers not only agreed to adopt Japanese-style team working practices -- previously fiercely resisted -- but to adopt a more collaborative relationship with management.31 The factory where the Saturn was to be built was automated.

Elsewhere, military-style planning has forced through new technologies. In 1985, when print unions in the British newspaper industry refused to accept huge redundancies and new working practices (in particular, the use of computers to replace traditional typesetting), News International, (owned by Australian media magnate Rupert Murdoch), decided to force the issue. Saddled with a new £60 million computerized print plant at Wapping in East London in which the unions refused to work. News International made plans to start production without them. As Andrew Neil, then editor of The Sunday Times and a "company man", recalls:

"Secret contacts were made with the electricians' union to provide a trained workforce: equally secretly, Wapping was made ready for the typesetting and production of all four News International titles -- something it had never been built to do. And the government was squared: there would be enough police when things turned nasty."32

The company provoked a strike starting in late 1986 by announcing that a new paper would be produced at Wapping under conditions which it knew (and hoped) the unions would not accept. Unable to stop News International from producing its papers, the print workers were eventually forced to climb down: 6,000 of them lost their jobs.33 The unions were broken.

New Forms of Control

The net effect of the introduction of new technologies has been to weaken labour's bargaining position drastically whilst strengthening that of capital. Thousands of workers made redundant have been added to the growing pool of unemployed "surplus labour", fuelling the domestic pressure on jobs. For those who remain in work, the implications are clear: "Keep a low profile or swap places with someone in the dole queue". In Germany, new technologies enabled manufacturers to eliminate more than 500,000 jobs in a single 12-month period between early 1992 and 1993.34

Equally important, the new technologies have facilitated new forms of management which are inherently unfriendly to labour. Since the 1980s, for example, US and European companies have increasingly moved towards the "flexible" methods production first pioneered by Toyota and other Japanese companies in the 1960s and 1970s.

Toyota does not seek to manufacture all the parts and components it needs "in house". Instead, it subcontracts to smaller firms, which then deliver the parts to order for final assembly in highly-automated plants owned and operated by the company. Workers in these "core" plants enjoy full-time, year-round employment and (until recently) considerable job security, with healthcare, pensions and paid holidays. But they make up only a small percentage of the "workforce" that manufactures Toyota's products; the vast majority are "contingent workers" employed by Toyota's 168 first-tier subcontractors, 4,700 second-tier subcontractors and 31,600 suppliers.35 For these workers, job security recedes by tier: firms in the first tier are specialized enough to warrant support and firm contracts from Toyota; those in the second less so; while for those in the third, contracts are both unpredictable and intensely fought for. The further one moves from the core to the periphery, the lower the wages, the fewer the work-related benefits, the more contingent the work and the more frequent the redundancies.

For companies, such "lean" production methods offer access to labour as and when it is needed without the overheads of a permanent workforce. Moreover, by sourcing parts from as many different subcontractors as possible, companies are able to play one subcontractor off against another, driving down the price of components and ultimately the wages of the workers who produce them.

For example, Nike, the US sports shoe manufacturer, splits its first tier of subcontractors into "developed partners" and "developing sources", both of which are involved in the final assembly of the shoes. The "developed partners" are located mainly in Taiwan and South Korea and work closely with Nike's R&D personnel in Oregon in manufacturing the top-end of Nike's range of running shoes, whilst the "developing sources" are located mainly in China, Malaysia, Indonesia and Thailand, where they produce the company's mass-market shoes, using low-wage, semi-skilled labour. It is company policy to upgrade the "developing sources" gradually so that they become "developed partners" -- an arrangement which, according to Nike managers, "keeps pressure on the first tier producers to keep production costs low as developing sources mature into full-blown partners."36

Nor is it only the large industrial complexes that are taking advantage of lean production techniques. Subcontractors, too, are fragmenting their labour processes, in some cases taking work out of the factory altogether -- shedding their legal obligations as employers in the process.

In the mid-1980s, The Middle Company (TMC), a US contractor to General Motors, redesigned the assembly process of a variety of small auto parts so that the subcomponents could be shipped off to rural families for assembly and then returned to GM for final assembly on cars and trucks. Women make up the majority of the new homeworker labour force, with children supplementing their labour, either by doing the household chores or through helping out with the assembly work itself. The homeworkers are subject to deadlines imposed by TMC, cannot negotiate the piece rate, and sign a lease for equipment provided by TMC. Substantial aid from the state government of Wisconsin helped the company (already one of the richest in the US) to finance its relocation, including the costs of warehouse construction. The costs of labour were also effectively subsidized because although the homeworkers are in reality waged workers for TMC, they are as classed as "independent contractors" and the company is thus able to avoid paying unemployment tax or benefits such as health and life insurance or pension plans.

The mayor of Riverton, one of the towns to which TMC "relocated", is candid as to the motivation behind the move:

"A lotta [companies like TMC] chose to come out to the rural areas because they felt they could get by with paying lower wages, which they did ... And of course, the companies came out here to get away from the unions and union wages ... [The company] said the fastest way they'd pull out of Riverton would be if they unionized."37

Going "Glocal"

The downward pressure on wages and job security nationally has been exacerbated as economic globalization forces labour to compete internationally.

As companies become -- or seek to become -- players in the global market, so their investment strategies are increasingly dictated by the "logic of globalization".38 The traditional route for labour-intensive industries has been to relocate most production to cheap labour countries whilst retaining overall control, research and development in their home countries. This trend is being modified by the need to develop a strong presence within the major trading blocs -- the so-called "Triad" of Europe, the US and the Pacific Rim. This has led to companies investing heavily in those blocs where they are not already established in order to win market share and build the political infrastructure they need to compete.

Companies are doing more, however, than simply setting up "outposts" in each new country of operation. Learning from the experience of the most successful transnational corporations, they are seeking to enter the new markets as insiders -- a strategy which the Japan Machinery Exporters' Association aptly terms "glocalization".39 Companies are limiting the number of countries they enter but "penetrating each of them more deeply."40 German multinationals, for example, were until recently organized as "export platforms" under which production was centralized in Germany and goods then exported abroad. Today, the strategy has changed. In the words of a corporate planner for the pharmaceutical giant, Hoechst, the goal is to achieve "integrated production in core markets overseas."41

One powerful motive for glocalizing lies in the need to understand local tastes and customs (and how they are changing) so as to compete successfully within new markets. In Japan, for example, the distribution system for cars is so different from that in the US that transplanting a US-style marketing system to Japan would be courting financial failure. As Kenichi Ohmae, a guru of global company management, explains:

"In the United States, you go to a dealer's showroom. In Japan, salespersons come to your door, as if they were selling Avon products. These home sales visits are becoming less efficient, however, because more and more Japanese women are leaving the house to go to work. No one is home during the day. At the same time, most Japanese adults ... already drive cars. They do not need salespeople to visit them at home with brochures and pictures, because they see all the new models on the streets ... This has meant a shift in the business system from an emphasis on sales to an emphasis on service. Dealers now call up their customers to ask if their car is behaving well or to remind them that it is time to get their car serviced or inspected ... Maintaining the customer relationship through good service is now the key to success."42

Above all, glocalization is a political strategy. It is rooted in the recognition that truly effective global reach can only be secured through capturing the local economy. It recognizes that in many spheres the national economy remains as important for any country as it once did.43 And it builds on that recognition to protect against the "risks of being treated as an "outsider" or being hit by trade or investment barriers and thus losing market share.

As such, glocalization differs from strategies aimed at simply sourcing products and supplies from a variety of different countries. Rather, as authors Winifred Ruigrok and Rob van Tuder point out:

"Glocalization is ultimately linked to the Toyotist concept of control. Manufacturers striving for glocalization try to build their competitive advantage on a combination of vertical de-integration of production to local suppliers and subcontractors, and structural control over local suppliers, dealers, workers and governments ... Glocalization pertains to a company's attempt to become accepted as a 'local citizen' in a different trade bloc, while transferring as little control as possible over its areas of strategic concern."44

Webs of Influence

Central to the strategy of benefiting from globalization is the recognition that large as TNCs such as Coca -Cola, Monsanto, Bechtel, Mobil and Ford may be, they are unable by themselves to open up the sites of production and consumption which they seek to exploit. They have always needed allies, and there is thus a long history of TNCs joining with others (even their rivals) when they perceive they can gain from doing so -- be it to share research costs, to monopolize markets, to increase their clout within international fora or to place pressure on an individual national government. The alliances that emerge are always contingent, fragile and eminently pragmatic.

During the colonial era, it made sense for TNCs to develop strong links with the treasury and military in their home countries. As the end of the colonial era loomed, links with the colonial authorities were played down and the transnationals began to seek out new allies within the independence movements. When newly-independent countries began to place restrictions on foreign ownership, the wiliest TNCs went underground, working through associate companies, whilst simultaneously lobbying and supporting those -- not least their own home governments -- who would impose a more "sympathetic" policy environment. With the debt crisis, still other allies have been cultivated -- not only among Southern elites but also within the multinational development banks -- in order to exploit the weak position of Southern governments and push through programmes that open Southern economies further to Northern capital.

It is the webs created by these numerous, ad hoc and constantly changing alliances -- at the national, international and local level -- that give TNCs their external organizational advantage over other companies, enabling them to fashion the political infrastructure that permits them to operate across the globe, capture subsidies, manage demand, create new markets, centralize power, enclose new environments, and "evade, digest and regulate resistance".45

And where existing networks do not exist to tackle the problem at hand, transnationals (like any other interest group) are adept at creating new ones. In the early 1980s, when the project for greater economic integration in Europe appeared to be faltering, key figures in the European Commission and in the largest European-based multinationals combined to set up a lobbying group called the European Round Table (ERT) to speed up the process. In at the start of the process, the ERT gave Europe's corporate giants a key opportunity to shape the process of economic integration. Indeed, the group's co-founders, Wisse Dekker of Philips and Umberto Agnelli of FIAT, actually drafted the original proposal for a Single Market. Not surprisingly, the European Union that has emerged from the Single Market is driven by business interests. And not just any business interests. The interests that it promotes are those which aspire to pan-European and, ultimately, global reach. Right at the centre of the European Union remains the ERT, still working behind the scenes to ensure that business interests are listened to and taken seriously. When it brings out a new report, whole passages are simply reproduced in subsequent Commission policy papers. It is a group that few in government can ignore. And that alone ensures what the ERT most seeks -- "access".46

But having access to politicians -- whilst undoubtedly useful -- does not guarantee that the politicians will implement the policies which the TNCs wish to see implemented nor that the public will buy their goods. Hence, the constant preoccupation of transnationals is to try to extend their networks out of the restricted circles of institutional power and into the streets, fields, factories, housing estates, tenements and villages where people live. They know full well that to operate effectively at the national and international level, they must capture the local. For to lose control over the local is to become an outsider. It is to be bereft of allies and insiders who can help master and manipulate local patterns of control in ways that are friendly to transnational interests. As Daniel Drache of York University, Toronto, notes,

"companies can outsource; they can decentralize operations; they can relocate. But when all is said and done, even multinationals giants have to put down roots and build strong ties with communities if they expect to excel."47

Borderless World

Mergers, acquisitions, joint ventures and cross-border alliances are currently the main mechanisms by which companies are seeking to glocalize. Out of the 4,200 interfirm strategic co-operation agreements that were signed by companies in the period 1980-1989, 92 per cent were between enterprises from Japan, Western Europe and North America. Moreover, "during the 1980s, the Triad accounted for around four-fifths of all international capital flows."48

As Harvie Ramsay of the University of Strathclyde reports for European companies,

"[The trend] is most visible in industries with established global markets, such as electronics, chemicals or motor vehicles. However ... examples can now be found in all sectoral directions. In the food industry, for instance, expansion by acquisition is the route being taken by all the major European players. Unilever made twenty-two acquisitions worth £300 million in 1992 and, with Nestl_, has led the way for European food companies, but Grand Metropolitan, Allied-Domecq, United Biscuits and, most aggressively, Cadbury Schweppes have all sought expansion in North America and Pacific Rim as well as in Europe in order to keep pace. In retail, too, the desire for expansion has been global rather than merely European among the larger players. Marks & Spencer, Dixon's, Benetton, Sainsbury and Ratner's have all sought to move into the North American markets, though not without setbacks, and many chains are looking to the Far East also. Ikea and the Body Shop have been particularly successful in their internationalisation efforts, the former trading from 100 stores in twenty countries by 1993, while the latter had 1,053 shops in forty-five countries ... In the vehicle sector, Mercedes-Benz has caused a stir by announcing a decision to shift further commercial production out of Germany, increasing activities in Latin America, the US and Asia, and establishing its first passenger car production facility outside Germany in Alabama."49

Indeed, much of what passes for globalization today would be better described as "Triadization", as companies seek out the alliances they need to become embedded as insiders in the major trading blocs of Japan, the US and Europe. Once established, they are able to work through their new acquired allies to secure the policy environment, the insider knowledge of tastes and cultures, the state backing and the political infrastructure they require to protect and expand their economy wherever they seek to produce. But as insiders who are also outsiders, they can maintain close links with their "home" base, allowing still further subsidies to be garnered.

Hit for Six

For labour, the consequent restructuring has a number of implications:

  • First, the mergers and acquisitions that companies have undertaken in the pursuit of global reach are causing major job losses.

    In Europe, Tomkins' 1991 acquisition of the food conglomerate Rank Hovis McDougall led to 22 operations being closed and the workforce cut by 11 per cent; the electronics giant Philips has cut jobs by 68,000 (22 per cent) in five years since 1989; and, in heavy engineering, "the much feted joint venture between GEC and Alsthom has cut its workforce by 6,500 to 73,000 over 4 years to 1994."50

    Meanwhile, in the US, where merger mania in the 1980s led to massive job losses, a new round of acquisitions appears to be underway. In the defence industry, the 1995 merger of aircraft makers North--rop, Grumman and Vought led to 14,000 job losses from a workforce of 53,000. The Lockhead Martin merger resulted in the closing of 12 factories and 12,000 redundancies out of a workforce of 170,000. Both these merged groups are involved in still further amalgamations, with more job losses expected.51

    Banks too are losing jobs to mergers: the 1995 merger between Chase Manhattan and Chemical Bank (to create the US's largest bank with $300 billion in assets) is expected to eliminate 12,000 jobs over the next three years, about 4,000 in New York City alone. According to a study by Deloitte and Touche, a major accounting firm, as many as half a million bank employees in the US could lose their jobs in the next decade as the industry consolidates.52 In the UK, the current wave of building society and bank mergers suggests a similar pattern.

  • Second, existing regional inequalities are widening as job creation becomes increasingly reliant on inward investment.

    Little of the outward investment made by companies brings new work to those in their "home" countries. It does, however, reduce the availability of "domestic" capital for new investments "at home", a deficiency that must be made up by encouraging inward investment if jobs are to maintained or created. The pattern of inward investment is thus increasingly key to whether or not people have jobs and what kind of jobs are on offer. For firms seeking to reduce labour costs, their objective is to relocate to those areas where labour is cheapest; for those seeking to establish retail outlets, to those areas where incomes are highest; and for those seeking to set up service industries, such as advertising or banking, to wherever other service industries are already concentrated, personal contacts over coffee or lunch being vital to business.53

    One result is that inward investment is reinforcing existing regional disparities. In Europe, for example, high-technology sectors, such as electronics, are favoured over more "traditional" industrial sectors; areas of cheap or unorganized labour preferred over areas where wages are high or where trade unions are strong. A new division of labour is emerging as the EU workforce fragments into:

    "a slimmed down, highly-trained and skilled core of workers for electronics, research and 'sunrise' industries, and a mass of 'flexible' unskilled workers in, for example, building and construction, service industries, garment manufacture and food processing, who can be taken on, laid off, employed part-time and moved around ... as required."54

    The result is not one Europe but several. Running from southern Britain though eastern France and western Germany to northern Italy lies the Europe of the service industries, of banking and administration -- the so-called "golden banana" stretching from London through Brussels to Milan. Outside those areas (and also within them) lies Peripheral Europe: run down, economically-depressed regions whose industries are "not competitive" and which are deemed fit only to supply cheap labour to the commercial interests that dominate the core.

  • Third, workers -- and the communities in which they live -- are forced to compete against each other to attract the inward investment that will create jobs.

    As unemployment rises and jobs become more insecure, communities seeking to ensure that new jobs are available and to retain old ones are vulnerable to what has been termed "regulatory arbitrage". To attract new investment, they must bid and counterbid against each other as companies with capital to invest play one regional government off against another in order to gain the best overall package -- "the lowest corporate taxes, the weakest unions, the most 'flexible' rules on working conditions, the most lax health and safety regulations."55

    For example, when US microprocessor chip manufacturer Intel sought to expand in 1992, a site selection team visited six sites, all adjacent to current plants, in California, Oregon, Arizona, New Mexico, Utah and Texas. The new fabrication plant went to New Mexico after an auction in which the six states tried to "out-incentive" each other. New Mexico's winning offer consisted of a package of grants and tax concessions which officials estimated totalled $114 million -- $114,000 per job. However, that figure excludes lost revenues due to tax concessions granted to Intel and other incentives such as roads built out of public funds. Taking these into account, the true subsidy, according to a local citizens's group, is closer to $250 million. Moreover, microprocessing is developing so fast that the new fabrication plant is likely to be out of date within six years -- at which point Intel will no doubt be looking to rebuild again, putting the local community under intense pressure to come up with new "incentives" to retain the company and the work it provides.56

    National governments -- both North and South -- are engaged in the same "race to the bottom". In the UK, it is national economic policy to offer the country as a low wage, deregulated "enterprise zone" with relatively pliant workforces. In a brochure aimed at attracting foreign investment, the government's Invest in Britain Bureau (IBB) highlights Britain's "pro-business environment" and its "liberal and undemanding labour regulations".57 In addition, the IBB advertises "labour costs significantly below other European countries", a "commitment to reduce the burdens on business", "no exchange on repatriated profits". The brochure continues:

    "The UK has the least onerous labour regulations in Europe, with few restrictions on working hours, overtime and holidays ... There is no legal requirement to recognize a trade union. Many industries operate shift work, and 24-hour, seven days-a-week production for both men and women."

    The IBB assures potential investors that "no new laws or regulations may be introduced without ascertaining and minimizing the costs to business." The UK government is also committed to cutting back regulations that it deems to restrict enterprise. Since 1993, 605 regulations have been identified for the axe; these include measures covering health and safety, biotechnology, advertising in sensitive areas, hedgerow preservation, food standards and energy efficiency.58 This world of work has long been familiar to workers in the South, where governments (under the tutelage of the IMF) have been deregulating industry and setting up "free trade zones" since the early 1970s in an attempt to provide "a favourable climate" for private sector investment. The rights of workers to organize and strike have been restricted; environmental regulations weakened; foreign ownership restrictions watered down or abolished; and TNCs granted freedom from planning and environmental controls and permission to repatriate profits without restriction.59

    With ratification of the latest GATT agreement in 1994, these deregulated regimes -- North and South -- have the protection of international law. More--over, as journalist Alexander Goldsmith notes, "Under the rules by which countries can initiate challenges to other countries' trading practices or their environmental or consumer laws, an alarming process of mutual deregulation is underway."60 US corporations lobby the US government to target EU regulations under GATT, whilst their subsidiaries and partners in Europe (with their connivance) lobby the EU to target US regulations. North American interests, for instance, is seeking to overturn European bans on the use of Bovine Somatotropin (BST), a genetically-engineered growth hormone for cattle, and on the sale of furs caught with steel leg-hold traps. Meanwhile, the EU is challenging US fuel consumption standards in cars; food safety laws, including the Delaney Amendment which bans carcinogenic chemicals from food; limitations on lead in consumer products; state recycling laws; and restrictions on driftnet fishing and whaling. "It is a very neat arrangement", comment Ralph Nader and Lori Wallach of Public Citizen, a US consumer watchdog.

    "European corporations target US laws they do not like. US corporations target European laws they do not like. Then European and US corporations attack Japanese laws and vice versa -- the process can go on until all laws protecting people and their environment have either been reversed or replaced by weaker laws that do not interfere with the immediate interests of the corporation."61

  • Fourth, with capital and companies free to move across borders, the scope for playing workers and communities off against each other in order to gain concessions on wages and conditions has greatly expanded.

    Worldwide, capital and companies are on the move. What began as a one-way dribble of relocations in the 1950s (as Northern companies moved their manufacturing to the South) is now an eddying flow, "with new locations endlessly replacing old as new demands and new advantages emerge".62 Demands for higher wages in one country are met with threats to transfer production out of the country altogether. In some cases, the threats are real; in others, they are a bluff. Either way, the bargaining position of labour is further squeezed.

    South to North relocations, once unheard of, are now increasingly common as companies from South Korea and Taiwan, for example, move to North America and Europe in search of markets or lower labour costs. Fourteen Korean companies have moved to the UK alone in the last six years, investing a total of $2.6 billion. Most recently, Wales won out over Scotland as the site for a new electronics plant. Direct labour costs (at an average of £4 a hour -- well below the European "decency threshold") are below those in Korea.63 The companies benefit in addition from lower indirect labour costs: whereas in Korea, they are responsible for the housing and welfare costs of their workers, in Europe and the US, such costs are paid for by workers themselves or subsidized by the state. The opportunity to reduce these "indirect" costs by moving to the North is a growing factor behind South Korean relocations.

    Conversely, and more typically, European, US and Japanese companies are moving South. Recently, British Polythene Industries (BPI) dismantled a hi-tech plastic bag factory near the Welsh border and shipped the entire plant to China, with the loss of 150 jobs: in future, the cost of plastic supermarket bags produced by the company will be reduced from £15 per thousand to £12 a thousand. Commenting on the move, BPI's management said, "98 per cent of our production is still here. But if this is successful, we might look at other moves. We have to compete."64

    Likewise, IBM is moving its disk-drive business from the US and Western Europe to low labour-cost countries in Asia and Eastern Europe. European companies, such as the National Westminster Bank, Abbey National, British Telecom, Proctor and Gamble, London Transport, Citicorp and Singapore Airlines, turn to India for their computer programming where programmers earn less than $3,000 a year. New Electronic Export Zones are being set up near New Delhi, Bombay, Calcutta, Cochin, Kandia and Madras offering high quality and high-tech services for vastly lower wages than Europe can offer.

    Similarly, "the translation of three million criminal records for England and Wales into computer format" was carried out "by 200 touch typists in the Philippines (organized for the British police force by an Australian company, Saztec)".65 A 1993 survey of 10,000 large- and medium-sized western German companies found that one in three intended to transfer part of their production to Eastern Europe or Asia, because of lower wages and laxer environmental standards.66 Meanwhile, Italian sportswear and shoe maker Fila has, in the words of one commentator, "found one way of coping with a fundamental problem of European manufacturing. It is trying not to have any."67 Reports such as this merely add to the disciplining of labour.

    Other Northern companies are keeping their production within the North (often because their marketing strategies or industrial organization demand it), but are taking advantage of regional differences in wages or subsidies to play workers off against each other by relocating (or threatening to relocate) from one country to another. In 1993, Nestl_, the Swiss food group, closed its chocolate bar factory in Glasgow, Scotland, and transferred production to Dijon in France; Digital Equipment, the US computer firm, transferred a slice of operations from Galway in Eire to Ayr in Scotland;68 and Hoover, the US-based consumer goods manufacturer, told workers at its plant at Cambuslang near Glasgow that they would lose their jobs to the firm's plant in Dijon, France, if they refused to accept limited period contracts for new employees, constraints on the right to strike, cuts in overtime, a year-long freeze in wages, flexible working time and the introduction of video cameras on the shop floor.69 By the time it emerged that the company actually had no intention of moving to Dijon, the Glasgow workers had agreed to the company's conditions.70

    South to South relocation is on the increase, as companies seek cheaper labour, new markets or, in the case of those involved in agriculture, forestry or mining, more land. In South-East Asia, for example, Thai, Malaysian, US, Australian and other companies are shifting from country to country as wages rise and markets mature (see pp.167ff). Thai manufacturers, for instance, are using new inflows of foreign capital to upgrade their domestic plants and "to relocate their lower-skill operations to even lower wage countries" such as Vietnam, Laos and China.71 Likewise, Nike, the US sports shoe manufacturer, which closed its last factory in Maine in the 1980s, has shifted production from South Korea, where it first established its new factories, to several dozen factories around the world, including six in Indonesia. The move followed strikes in Korea over wages and union rights.72 High wages and land prices have led other Korean companies, particularly in the garment and toy industry, to move to China.73 Similarly, VTECH Holdings Ltd, a Hong Kong company with a 70 per cent share of the US market for computer-based educational toys now employs between 11,000 and 13,000 people in China.

  • Fifth, as free market policies create a pool of "surplus labour", so increasing numbers of people are forced to migrate in search of work, pricing other workers out of the market and creating yet more downward pressure on wages.

    Migrant workers have long been used by capital as a source of cheap labour and a tool for driving down the rates of pay. Britain, for example, has traditionally drawn on migrants from Ireland and the Commonwealth to take up jobs as poorly-paid construction workers, hospital staff, hotel staff and the like. In France, it has predominantly been Belgians, Italians, Poles and Spaniards, as well as workers from the colonies, who have furnished the labour for the dirtiest and most poorly-paid industries.

    As free market policies undermine job security and add to already high levels of unemployment, the use of migrant labour is increasing, particularly in those jobs considered "dirty" or "demeaning". In Germany, half the country's refuse collectors are migrants as are half the miners.74 For industries which cannot relocate to low wage countries (agriculture, construction, hotels and restaurants, and services such as hospitals), migrant labour offers capital a cheap and readily-accessible means of driving down wages. In Germany, tens of thousands of Britons and Irish are labouring on Europe's largest building site, Potsdamer Platz and the surrounding areas where the Berlin Wall used to stand. As The Independent comments: "Driven from home by unemployment or low wages, the foreign workers must abide by the rules: no paid holidays, no sick leave, no social security and not even a guarantee that they will get paid at the end of the week." Prepared to accept what by German standards are "slave wages", they are pricing German workers out of the market or forcing them to work at below the expected national rate for the job.75 The German government is now introducing measures in an attempt to deal with this.

    As the demand for cheap labour intensifies, so increasingly sophisticated networks of "labour brokers" have emerged to supply migrant workers. As author Nigel Harris reports:

    "In Japan, the Yakuza (Japan's mafia) have clearly been a key force -- in collaboration with gangsters in the sending country -- in bringing illegals to the country, often to work in gangster-run enterprises... The Yakuza are said to take half of the daily pay of the illegal workers under their control."76

    In the Middle East, where migrant labour has been used to supply cheap construction workers, the recruiting networks include the companies undertaking the building work. Korean companies, for example, typically bring their own labour force.77

    Doubly discriminated against as "aliens" and as the lowest paid of workers, migrants frequently work and live in atrocious conditions and are invariably subject to racist scapegoating, especially during times of high unemployment. As Harris remarks:

    "The misery of the unemployed and the low-skilled in the developed countries is painfully visible in the great cities, nearly as painful now as the poverty of the developing countries ... The political establishments need easy targets in order to deflect any anger that might be directed against them ... and few governments can resist the temptation to blame the immigrant."78

  • Sixth, full employment has been abandoned as a goal of governments. Instead, to satisfy the demands of the global financial markets, macroeconomic policy is directed to controlling inflation, regardless of the costs in terms of jobs and social welfare.

    As Daniel Drache notes:

    "With capital free to roam the world, a new orthodoxy is in the making. Full employment is no longer the goal of government, but creating inflation-free money is the task that imposes itself on all nations ... Wealth creation is now regarded as the principal responsibility of the private sector ... Price stability is made the number one goal because it provides the largest incentive to unleash the 'animal spirits' of private investors."79

    Low taxation and low government borrowing (which in turn means cutting public spending) are thus the priorities of government.

    The need to curb deficit spending is dictated both by narrow free market ideology and by the globalization of financial markets. With capital free to move across national boundaries in search of the highest rates of return, "current real interest rates for long-term government debt are two to three times higher than their average over the last decade."80 Borrowing money is thus more expensive and requires high taxes if the interest charges are to be met without fuelling inflation by increasing the money supply. To keep taxes as low as possible (and thus attract inward investment), government borrowing for social expenditure has been targeted for cuts.

    Austerity programmes have therefore become the order of the day. Yet even though government spending has been dramatically reduced in most countries, "revenues from taxes continue to fall faster than spending cuts", not least because of the tax concessions that governments have made to business in order to attract inward investment. Corporation tax, for example, has been falling in Europe since 1975. The problem is compounded by companies using off-shore tax havens and intra-company trade to minimize the taxes they pay to their host countries. In the US, a 1990 Congressional Committee calculated that just 36 TNCs had used "transfer pricing"81 to avoid paying $100 billion in US taxes in the 1980s. Similarly, it has been estimated that, in 1992, the 12 major Japanese TNCs manufacturing in the UK avoided paying some £380 million in taxes to the UK exchequer through transfer pricing.82 Tax revenues are also declining due to high unemployment and the casualization of labour.

    Still more stringent austerity measures are in the offing throughout the North if budgets are to be balanced. In the run-up to European Monetary Union (EMU) in 1999, for example, EU countries wishing to participate in the single currency are required to keep their public borrowing deficit below three per cent of annual GDP. If Britain (currently running a six per cent deficit) is to meet that criterion today, government spending will have to be cut by about £18 billion.83 Moreover, once the single currency has been adopted, excess deficit spending will only be permitted on approval of the European Commission which will assess, among other factors, whether or not the excess constitutes "investment expenditure".84 The implication is that governments will only be able to borrow money for "productive" spending, such as infrastructure programmes; borrowing money for social programmes which supposedly do not yield a financial return -- health programmes or higher pensions and welfare benefits for the unemployed -- is unlikely to be permitted. In cases where a member state persistently fails to reduce its excess deficit, the European Council of Ministers, acting on the recommendation of a soon-to-be-created European Central Bank, will have the power to impose structural adjustment programmes and to fine the offending state.

    For workers, the prospects are grim. What remains of the public sector in Western countries is likely to be sold off or cut back, with dire consequences for jobs. In France alone, thousands of workers in the public sector are predicted to lose their jobs as France attempts to meet the criteria for EMU. In Germany, unemployment is already around 4.25 million and rising. The social programmes envisaged by the EU under the Maastricht Treaty are not likely to bring much comfort. Maastricht's much vaunted "Social Chapter" offers limited rights to those lucky enough to have a job, but none to those who are out of work. It offers vocational training, but no right to education; health facilities within the workplace but no right to them outside of work; work councils but no guaranteed right to organize.85

Box 1: Migrant Labour in the Global Economy

The social upheaval caused by the spread of the market economy has long forced people to move in search of livelihoods. In nineteenth century Europe, massive demographic movements to the United States and Australia were fuelled by European industrialization and the enclosure of commons-based agricultural societies.

Today, globalization is exacerbating the same migratory forces as capital washes around the world in search of the lowest wages and the highest returns on investment.

In China, the introduction of market reforms has driven an estimated 100 million people from the land, creating what the World Bank describes as a "floating population" of "relatively mobile, low-cost labour." Tens of millions have trekked into the cities in search of jobs. As The Independent on Sunday reports:

"For some, the arduous journey has secured employed and wages previously unimaginable; for others, it has meant sweat shop factory conditions, the squalor of urban unemployment or an empty-handed trek back home."

The story is similar throughout the South, and increasingly in the North too, as people are evicted by the "wealth-creating economy" from what they thought were settled ways of living. Forced to migrate in search of work, many have no option but to move to the richer enclaves of their own countries or, if they have the right connections (and the courage), to other countries in search of jobs.

In Mexico, where the "liberalization" of agriculture is expected to displace millions of small-scale farmers, thousands have already moved to urban areas such as Mexico City, whilst others have made the often hazardous journey to the US -- "El Norte" -- in the hope of finding work. Remittances from migrants in the US -- an estimated $3 billion per year -- are now one of Mexico's largest sources of foreign exchange and critical for the survival of poorer households.

While displacement due to the market economy is a "push factor", employers' demand for cheap labour is a "pull factor", fuelling migration both within countries and between them. As a source of cheap workers, migrant labour is used to plug "labour shortages" and to defuse wage demands from domestic workers. Agri--business interests in the Southwest of the US have long relied on cheap Mexican labour. As researcher Peter Andreas reports:

"By the early 1990s, two out of five farmworkers in the US were migrants, a majority of them Mexican. In California, Mexican farm workers comprise an estimated 40 per cent of the agricultural labour force. The use of migrant labour has now spread from California and Texas across the country. One Michigan farmer provides a telephone number which one village in Mexico's Michoacán province can call toll free to find out when to turn up for work."

In San Francisco's Silicon Valley electronic assembly industries, labour costs were kept down, first by recruiting women, then by recruiting foreign-born workers, then by sub-contracting to outworkers (to escape social security and other payments), then by relocating to the South, and now, in some instances, by relocating back to the States.

Of the European countries, Britain, France and West Germany have long histories of recruiting migrant labour from other countries both within Europe and further afield. Since 1955, as Nigel Harris, Professor of Development Studies at London University, notes, Germany has signed agreements "to obtain workers from Italy (1955 and 1965), Greece and Spain (1964), Morocco (1963), Portugal and Turkey (1964), Tunisia (1965), Yugoslavia (1968) and even Korea (1962)." Turkish miners were brought to Belgium's Borinage area and then "wooed by German employers to desert for the Rhur"; 12,000 Moroccans were promised housing to leave France for Belgium, The Netherlands and Germany.

"Knock-on effects were experienced in the immigrants home countries. Malians and Senegalese went to work in Sicily as Sicilians moved north, and in Spain as Spaniards moved to France. Egyptians and Pakistanis migrated to Greece and Greeks went to work in Germany, Scandinavia and Britain, while Russians and Ukranians took jobs in Poland. Egyptians worked on Jordanian farms, and Jordan's Palestinians worked in the Gulf."

Blaming Migrants

The trauma of migration cannot be underestimated. "Contrary to all the prejudices of the rich that the poor go to the big cities solely in search of 'bright lights' or an 'easy life', it is necessity that drives them there", observes writer Jeremy Seabrook after interviewing Keralan immigrants in Britain. Seabrook points out that many of those from rural societies who are drawn half way around the world to Western Europe "for the privilege of work as domestic servant or factory worker" in Western Europe undergo "a violent reshaping of the sensibility" as they learn to adapt and to become working class.

"The passing of the years makes the hope of return burn the more keenly, even as it becomes less and less likely, for the money gets all used up in the survival from day to day. British factory life, the culture of the pub, The Sun and racism is not seen as a liberation by those who are expected to adapt to it."

Indeed, racism is a daily fact of life for the vast majority of migrants, particularly in times of economic recession.

Migrants often work in groups with living expenses shared between a number of adults, enabling them to survive on wages that nuclear families in the Northern industrialized countries could not live on. "In this way, the multinationals have been able to draw upon older family traditions of people from the Third World in order to 'pioneer' new low wages in non-unionized forms in Western Europe," observes Sea--brook. If migrants take low-paid jobs, it is not, as the myth runs, so much because native people are unwilling to do them as because they cannot afford to do so. Nonetheless, in times of high unemployment, migrants are blamed, not the low wages nor the pitting of workers against each other, nationally and internationally.

Selective Immigration

Rather than address the push and pull factors of what is, in effect, forced migration, many countries have instituted immigration controls in an attempt to regulate the flow of migrants. But unable to operate their economies without access to migrant labour -- whether that be a West Indian nurse or a roving TNC company executive -- governments have sought to keep the door open for "selected categories of labour" whilst excluding others. Who is allowed in depends to a large extent on their wealth, skin colour and the relative state of the economy. When demand for labour is high, restrictions are eased to admit the entry of, say, maids, nurses, agricultural workers, sweatshop seamstresses and other sources of cheap labour. When times are hard, however, the portcullises come down.

Under European Union rules, for instance, there has been free mobility of nurses within Europe since 1979. Britain also makes special provision for nurses entering from outside the EU under a "working holidays" scheme. This provision has permitted a continuous inflow of nurses from Nigeria, Australia, New Zealand, South Africa and Hong Kong. Some hospitals are now recruiting abroad, advertising directly in the West Indian press, for example. In the US, where nursing pay is well below national norms, 20 to 30 per cent of nursing staff are foreign temporary workers.

But at all times, governments make special exceptions for the highly-skilled and the rich. As Harris notes:

"They cannot afford to impede the activity of multinational corporations and the increasing numbers of their staff who are required to move for extended periods between countries or the armies of consultants and other businessmen who constantly cross borders."

Highly-discriminatory immigration laws are the result. Worldwide, some 25 million employees of transnational companies (mostly middle- and upper-management) are estimated to have postings abroad, moving across borders with few impediments. Other workers, however, are only permitted entry to countries if their skills (and willingness to work for low wages) are needed at any one particular time.

In the US, some 2.5 million business people were permitted temporary entry to work in 1989; approximately 2.3 million Mexicans also entered the country that year for temporary work, but were forced to do so illegally. In Britain, partners and children are invariably granted permission to join executives working for multinational companies; dependants wishing to join poorer migrants, however, are excluded.

Creating New "Untouchables"

Restrictions on legal immigration have not stemmed migration; they have merely classified more migrants as illegal.

Moreover, despite the rhetoric of conservatives and liberals alike in Britain that "strict immigration control" is necessary to ensure "good race relations" within the country, it generally has the opposite effect. The increased authority given to teachers, doctors, social security officials and employers in Britain, for instance, (as well as immigration officials and police) to check up on illegal immigrants has been described as a carte blanche to harrass still further any non-white person -- the immigrant, almost by definition, is assumed to be "black".

In the end, "the issue is not about immigration at all". Rather, it is, among other things, about maintaining state boundaries (many of which divide existing cultural groups) whilst simultaneously regulating the global labour market necessary to maintain a global economy. The "cultural identity" that immigration laws seek to protect is a national identity created and sustained by the state for the state. It is not an identity rooted in any local community; nor are such laws concerned with maintaining local identities. As Nigel Harris notes,

"Every major state [has] endeavoured to instil social homogeneity in its people, to force their unruly shape into a predetermined corset of national identity -- as witnessed in the social marginal-ization of languages and accents not recognized as socially accept-able. The French revolutionaries set out to destroy regional languages. The Prussian monarchs endeavoured to Germanize the Polish inhabitants of their eastern domains ... The Austro-Hungarian emperors found themselves trying to Germanise the empire, while the Magyr gentry attempted to Hungarianize their southern Slav dependencies."

Inevitably, the enterprise created minorities -- "those who were excluded on one or other ground from the newly-invented national identity. Jews, gypsies and others, who had been no more than a component in the social mosaic of Europe, suddenly found themselves isolated as foreigners."

If the concern were really about defusing nativism or protecting local cultures, the thrust of policy would be towards building livelihoods that are not dependent on people being forced to migrate; towards ceding control of resources and decision-making to local communities; towards allowing communities to define themselves rather than be defined by others; and to addressing the power structures, both within communities and between them, that permit and encourage discrimination and scapegoating.

Today, globalization and statism are combining to create a new class of "untouchables". Focusing attention on those classified as "foreign", "alien" or "other" is not only diverting attention from the political and economic forces that are driving forced migration; it is also enabling a new world order to be built "on the back of the lowly immigrant."

Nicholas Hildyard

Sources: Harris, N., The New Untouchables, I.B. Tauris, 1995; Sea--brook, J., The Race for Riches: The Human Cost of Wealth, Greenprint/Marshall Pickering, 1988; Baldwin-Edwards & Schain, M.A., The Politics of Immigration in Western Europe, Frank Cass, 1994.

Dream Time

Some Northern advocates of market liberalization acknowledge that deregulation, relocation and the removal of tariff barriers is "causing pain throughout the industrialized West"86 -- the pain being caused in the South is rarely mentioned -- but they insist that it is a temporary phenomenon. As industry adjusts to a more competitive world economy, they argue, the "structural rigidities" of Fordist labour regimes will be stripped away and market forces will restore prosperity.87

The view from the World Bank, for example, is that the next century will see a slow convergence of incomes as free market policies begin to lower "the ratio between the wages of the richest and poorest groups in the international wage hierarchy".88 According to the Bank,

"Opening up to trade increases the price of labour-intensive goods in poor, labour-rich countries, which, as a consequence, shift their resources to the production of labour-intensive goods. This, in turn, raises demand for labour in poor countries, and hence raises relative wages."89

Moreover, as currently low-paid workers in the South earn more, the logic goes, new markets will be opened up for the North, thus ensuring that Northern jobs are not lost through internationally freer trade. Whether eventually wages converge upwards or downwards is, says the Bank, of little concern, since increased trade will bring the price of goods down; even if wages are lower, their purchasing power will therefore increase. The result, predicts the Bank, will be a "win-win" outcome for labour and capital alike.

The Bank's reasoning -- like that of other free traders -- rests largely on the concept of "comparative advantage", a theory first developed by the British economist Adam Smith in the late eighteenth century and refined by David Ricardo in 1817. According to Smith and Ricardo, nations do best from international trade when their industries specialize. By mass producing those goods where they can make maximum use of the factors of production (whether land, climate, natural resources or labour) which are in most abundance locally, countries are able to gain a price advantage over their competitors. Thus, a nation should narrow its focus of activity, abandoning certain industries while developing those in which it has the largest "comparative advantage". If a country has a significant amount of low-cost labour, for instance, it should export labour-intensive products; if it has a rich endowment of natural resources, it should export resource-intensive products.90 By exporting what they can produce most cheaply and importing what others can produce cheaper than they could, international trade, according to the theory, would grow as nations export their surpluses and import the products that they no longer manufacture. As a result, efficiency and productivity would increase in line with economies of scale and the prosperity would be enhanced.

Ricardo used a semi-fictitious example to illustrate how the theory of comparative advantage works to everyone's advantage. Say Portugal is capable of producing both wine and cloth with less labour (hence less cost) than England. However, Portugal can make the most money by transferring all efforts to the production of its most profitable commodity, wine, and importing cloth from England. This comparative advantage would be large enough to overcome the fact that Portugal can produce cloth more cheaply than England can. From England's perspective, the cost differences between the two products internally compared with the cost advantage of ceasing wine production and just trading cloth mean that England also enjoys a "comparative advantage" by engaging in this trade. Both countries appear to gain.

On this view, the World Bank argues, Latin America should "extend its lead in mining and agriculture and move quickly into the production of technologically-intensive goods"; East Asia in labour-intensive "low skill products"; the "transition economies" of South-East Asia in "medium- and high-technology goods"; the Northern industrialized economies are "expected to continue to shift from producing low- and medium-skill products to high-technology goods and services; and Africa should stick with basic commodities.91 A new global division of labour will thus be instituted, with the developed economies investing in high-tech industries, whilst the "less developed" economies keep to the less developed industries.

Box 2: A Woman's Work Is Never Done

More and more women are now joining the paid labour force worldwide. They represent the majority of the workforce in all the sectors which are expanding as a result of globa--lization and trade liberalization -- the informal sector, including subcontracting; export processing or free trade zones; homeworking; service industries; and the "flexible", part-time, temporary, low-paid labour force. Even in countries which have low levels of women paid workers, such as the Arab countries, employment is rising.

In many countries in the North, women now account for nearly half the paid labour force. Nearly 60 per cent of these women workers provide half or more of the household income. The highest earners are in France and Germany where more than one woman worker in three brings in the total household income, whereas in Britain, where women are concentrated in low-paid, part-time jobs, they provide the lowest contribution. In the industrialized countries (except the US), there is a clear correlation between the increase in part-time work and in women's employment.

In South-East Asia, women represent up to 80 per cent of the workforce in the export processing zones, working mainly in the labour-intensive textile, toy, shoe and electronic sectors. In Latin America and the Caribbean, 70 per cent of economically active women are employed in services. Many women in South-East Asia are moving from manufacturing into services.

Long excluded from many paid jobs and thus economically dependent on husbands or fathers, paid employment has undoubtedly brought economic and social gains to many women. For many previously inexperienced young women, the opportunity to gain financial independence, albeit limited and possibly temporary, has helped to break down some of the taboos of their societies and proscriptions on women's behaviour. The growing numbers of women in paid employment in Bangladesh, for instance, has led to more young unchaperoned women travelling on buses, walking on the streets and going to cinemas in Dhaka. For women with children, part-time and home work can be a way of juggling earning money and family responsibilities.

Any gains, however, should be seen in a wider context. Declining economic and social conditions both North and South, in particular declining household incomes, have compelled many women to take any kind of paid work to meet their basic needs and those of their families. The jobs available to them are, in the main, insecure and low-paid with irregular hours, high levels of intensity, little protection from health and safety hazards and few opportunities for promotion.

Women's high participation in informal employment is partly due to the fact that many jobs in the formal economy are not open to them: they are actively excluded from certain kinds of work or lack access to education and training or have domestic commitments. The increase of women's participation in the informal sector has been most marked in the countries of Sub-Saharan Africa where sharp economic decline and structural adjustment policies have reduced the official job market drastically.

Job gains for some women has meant losses for others. Female employment in export production is increasing in Bangladesh, Vietnam and El Salvador, for instance, while women in South Korea, Taiwan and Hong Kong are faced with redundancies as the industries which have relied on their labour for three decades (textile, cloth--ing, shoe and electronics) relocate elsewhere. (In South Korea, industries which tend to employ men -- steel, petrochemicals, electricity, automobiles, shipbuilding, machinery -- have received government subsidies to stay put.)

As domestic markets are opened up to international competition and quotas which restricted the quantity of imports from any one country are abandoned, cheap, subsidized foreign imports are threatening the livelihoods of many women small producers and entrepreneurs in "cottage industries". In countries such as India and Bangladesh, for instance, more than 90 per cent of economically-active women work in the informal sector at jobs such as hand loom weaving.

Far from escaping patriarchal control, the industrial setting invariably replicates it, the head of the factory taking the place of husband or father. To attract investors, some Asian countries such as Malaysia and Thailand emphasize the "dexterity of the small hands of the Oriental women and traditional attitude of submission". Women workers are particularly exposed to sexual harassment, a form of violence which reflects the subordination they have to submit to be allowed to work. Complaints often lead to dismissal.

In general, women are paid less than men, and women's jobs pay less than men's jobs. On average, most women earn 50 to 80 per cent of men's pay, but there are considerable variations. In Tanzania, which ranks first in the world for pay equality, women earn 92 per cent of what men earn; in Bangladesh, they earn 42 per cent. Women also have less job security and fewer opportunities for promotion. Higher status jobs, even in industries which employ mostly women, tend to be filled by men.

In addition, women usually have to continue their unpaid domestic and caring work, such as of children, the sick and the elderly, which is often regarded as women's "natural" and exclusive responsibility. Even when they have full-time jobs outside the home, women take care of most household tasks, particularly the preparation of meals, cleaning and childcare. When women become mothers, they often have no option other than to work part-time or accept home work.

In developing countries, women's share of unpaid work is even greater. In India, for example, women and girls spend more time than men on unpaid subsistence tasks such as carrying water and wood, and cultivating and processing agricultural crops for their families, and 20 hours more per week than men on unpaid household tasks. As a result of structural adjustment policies, public expenditure on education and health has been slashed. Households, particularly women, have absorbed a disproportionate amount of the costs of adjustment by tightly budgeting household finances and caring for the children, the elderly and the infirm for whom the state used to provide some support.

The spread of service industries internationally is contributing to a massive increase in female migration, particularly in Asia. Most Asian women migrate within the region, for example, from South-East Asia to the Gulf States or from the Philippines to Japan. Female migrants from the Philippines now outnumber male migrants by 12 to 1. They typically work as housemaids, nurses, shop assistants and entertainers. As immigrant, possibly illegal, workers, they are particularly open to exploitation and abuse, even though their earnings are crucial to the economic survival of their families. Trafficking of women for prostitution is also on the rise, particularly in Asia and Eastern Europe.

Sources: Angela Hale, World Trade is a Women's Issue, Briefing Paper, Women Working Worldwide, July 1996.

Unnatural Advantages

Even on its own terms, the Bank's prognosis is little short of fantasy -- and a deeply imperialist fantasy at that. The simple dualisms dreamed up in Washington fit nowhere. The high-tech production systems that are supposed to be "reserved" for the North, for example, are already well-established in many labour-rich countries of the South. Moreover, the notion that specializing in labour-intensive production will raise wages in labour-rich countries ignores the reality of labour markets in the South. In China, for example, market reforms have driven 100 million people off the land, creating what the Bank itself describes as "a relatively mobile, low-cost source of labour [which] must find their own jobs and have no tenure beyond their contract period." With such a huge pool of "surplus labour" at their disposal, companies are under little pressure to agree to wage rises. Nor is there much prospect of enough of China's "floating population" (the Bank's description) finding the sort of jobs which would enable them to afford western imports: many of the factories where they queue in search of work are automated.

What is entirely absent from the Bank's view of the world -- and from Adam Smith's and David Ricardo's original theory of comparative advantage -- is any notion of bargaining power. Traders, for example, are assumed to be equal partners, making rational decisions based on objective evaluations of the productive factors available to them and others. Within a market economy, however, there are no transactions amongst equals: some traders enjoy the backing of huge military machines, others access to subsidies not enjoyed by their competitors. Moreover, their bargaining power is largely determined by their past histories. The demise of Portugal's cloth industry in the nineteenth century, for example, had less to do with "comparative advantage" than with Britain's use of its political power to stifle the growth of the textile industries of Portugal in the eighteenth century, thus leaving the market open to British manufacturers. Likewise, Britain's dominant position in world trade during the nineteenth century rested to a large extent on its victorious wars against the Spanish in the sixteenth century, the Dutch in the seventeenth century and the French in the eighteenth century -- wars that "helped to ensure that British ships would be free to trade where and when they pleased."92

Competitiveness is thus less a reflection of the "natural advantages" enjoyed by traders as of the historical, geopolitical and organizational advantages they enjoy -- and, in particular, their ability to exploit those social and political forces that distort markets: state power, subsidies, cartels, externalized costs and political favours. As the political economist William Lazonick points out:

"History shows that the driving force of successful capitalist development is not the perfection of the market mechanism but the building of organizational capabilities ... What mainstream economists view as 'market failures', I view as 'organizational successes'."93

Success in the marketplace, nationally and internationally, rests primarily on a firm's ability to organize an external and internal political infrastructure that enables it to control labour, ensure access to raw materials, markets and subsidies, manage resistance, and mould a regulatory environment favourable to its expansion.

During the nineteenth century, such organizational advantage rested with the small, specialized, regionally-concentrated, "proprietary" firms that grew and prospered during Britain's industrial revolution. Their "competitiveness" derived not only from their ability to control labour through the factory system, but also from the military and financial backing they received from the British government. Abroad, they could rely on British military power to prise open new markets and then to deny those markets to others by bringing them under direct colonial rule. Within Britain itself, state power was critical to the enclosure of common land (and thus the creation of a labour force for the factories) and to the opening up of internal markets through the construction of canals, waterways and railways, all of which were heavily subsidized by government. Backed by the considerable resources of the British state, and with protected access to the resources and markets of Britain's colonies, British firms enjoyed a "comparative advantage" that, to many contemporaries abroad, seemed virtually unassailable.94

By the early twentieth century, however, the "proprietary capitalism" that had made Britain the workshop of the world was proving inadequate to the task of dealing with the complexities of mass production. Organizationally, comparative advantage passed from the specialized, family-financed and managed firm to the vertically-integrated, multi-divisional and professionally-managed corporations that were emerging in the US. Critically, these industrial giants relied upon planned coordination rather than market relations to ensure the supply of inputs, on the one hand, and the sale of products, on the other. Instead of relying on outside suppliers, the new "managerial capitalists" gained control over inputs by integrating the suppliers into their own organization; instead of simply responding to market demand as it arose, they set about using their own resources to create demand; and by creating (and regulating) demand, they were able to take advantage of the low unit costs made possible through mass production techniques to undercut competitors and dominate markets.95 As with Britain's proprietary firms in the nineteenth century, the comparative advantage enjoyed by such firms rested not only on their internal organization but also on their ability to ensure a favourable "policy environment" at home and abroad.

Initially, the market power enjoyed by the huge industrial corporations that emerged through "managerial capitalism" enabled them to ward off competition from Japan and, more recently, South-East Asia. Thus, in the 1950s, when Toyota and Nissan first tried to export cars to the United States, for example, US car makers "used their market power ... lowering their prices and accepting temporary losses, to crush demand for the ... Japanese cars."96 Today, the logic of competition has changed. The vertically-integrated firm is, in most areas of production, giving way to de-integrated, "flexible" production systems epitomized by "Toyotism". Organizational advantage belongs to those firms that can minimize their fixed costs (particularly the enormous costs of researching and developing new products) through alliances with other companies; that can introduce new technologies and management structures to shed labour; that can move swiftly from one niche market to another; and that can speed new products to the market and take advantage of "just-in-time" deliveries to minimize warehousing and inventory costs.

Protecting Whom?

Supporters of the "comparative advantage bringing welfare to workers" thesis ignore this changing institutional environment. For workers, however, the implications are clear. Comparative advantage rests not with employee-friendly firms but with firms that are able to operate with the minimum number of flexible and disposable employees. Such firms are increasingly well-established in all the major markets. Far from offering a route to higher employment, the partioned global economy envisioned by the World Bank for the twentieth century will condemn labour to a world of lean production, contingent work, low wages and decreasing job security; a world that does not require workers on a permanent basis but in which companies use people only as they need them; a world of "just-in-time" employment.97

Combine automation with deregulation and the imposition of a global "free market" in which protective barriers, such as tariffs and quotas, are striped away and the prospects for workers are worse still. In a recent study of Japan, McKinsey Consultants calculated that, if all protectionist measures were removed and the consumer could chose to buy products from anywhere in the world, Japan's rate of unemployment would soar from 2.5 per cent to over 40 per cent.98 Nonetheless, guaranteeing such "openness" is the root idea behind instruments such as NAFTA, the EU and GATT.

Unsurprisingly, protectionist sentiment is on the increase in the North. Its most prominent exponents, however, such as the US Republican Pat Buchanan, do not reject export-led growth as the route to new jobs, higher wages and greater job security, nor do they criticize the organizational form that has brought competitiveness to lean firms at the expense of labour. Rather, they argue for a larger economy, in which a free market "fortress US" and a "fortress Europe" shield their industries behind protective barriers, whilst sallying abroad for new markets in Eastern Europe and the Far East. Meanwhile, the economic and political power of the North will be used to deny the South access to Northern markets, thereby "protecting" northern jobs.

Such "Might-Is-Right Protectionism" (actually a neo-mercantilism) has little to offer those seeking a better overall deal for labour. The major economic actors have long established the means to hedge against currency changes99 (and hence devaluation as a means of national economic protection). In addition, inter-company trade allows them to circumvent protectionist barriers. Twenty-five per cent of world trade, for example, takes place within companies and thus escapes national tariffs (it is not even governed by GATT). Other strategies, such as the use of "screwdriver assembly plants" have been used to overcome import duties on products that do not have a minimum local content, have also been employed by TNCs seeking to circumvent protectionist barriers. Tariffs can also be overcome through barter agreements, which make up another 25 per cent of world trade (mineral rich companies exchanging goods for a turn-key contract to build a new factory, for example). Constructing a fortress around the economies of the US or Europe or the Pacific Rim whilst simultaneously permitting the free movement of goods and capital between the fortresses would do little to protect jobs against "foreign competition".

Critically, it would also leave intact the political infrastructure that glocalized companies have built up to give them competitive advantage within Europe, Pacific Rim and North America, and which they are rapidly developing within other potential trade blocs (such as Mercosur in South America). A fortress Europe, in which capital was free to flow between the member states of the EU, would not stop the relocation of companies between peripheral regions, or address the growing polarization between the core and the periphery. Likewise, a fortress America that left intact the corporate structures that currently enjoy comparative advantage would do little to redress the imbalance of bargaining power between labour and capital in an age of flexible production or the relocation of companies within the US. Moreover, the continued commitment to export-led growth would require the reproduction of those very national and international power structures that enable companies to operate beyond their national borders -- to the detriment of other economies.

Protecting People

Neither of the major "solutions" on offer -- "free trade" or "Might-Is-Right protection" -- hold many prospects for labour and the communities they live in. Indeed, the time has come to question the very notion of export-led growth and enhanced corporate competitiveness as the routes to jobs and to find new ways of pressing for a different economy, one that seeks to move from specialization to diversification; that prioritizes self-reliance over trade; that adequately safeguards the environment; that produces for use rather than profit; that protects the economy of the commons rather than the economy of the corporation; and that insists on the right to protect itself precisely because it does not seek to infringe on the rights of others to protect themselves.

Throughout the world, workers and the communities where they live are resisting the new forms of corporate control that are driving globalization, just as they have previously resisted former structures of control. In Korea, China, Russia, Indonesia and other low-wage economies, restive workers are proving a growing problem for local elites and multinationals alike: strikes are increasingly common and new alliances are being formed with other groups, from students to farmers, who are struggling for greater democracy. Cross-border alliances between workers are also emerging: workers at Ford's Ranger Pick-Up plant in Minnesota recently sent money to support striking workers at the Ford plant in Cuatitlan, just North of Mexico City.

Likewise, alliances between Northern and Southern activists have arisen to support local groups resisting the depredations of multinationals such as Cargill, Kentucky Fried Chicken, Shell and Rio Tinto Zinc. New tactics are also emerging as companies prove vulnerable to share-holder actions, consumer boycotts and direct action.

Governments, too, are under pressure as increasing numbers of their citizens begin to resist the "transnationalization of sovereignty". Within Europe, a movement is emerging to challenge the Maastricht Treaty and the European Union's plans for monetary union from the perspective of local rights.

In some cases, the alliances challenging globalization are simply alliances of the disaffected. But in others, a common agenda, based on a commitment to greater local control of local resources, is beginning to emerge. The demand, in the words of Indian activist Vandana Shiva, is for an economy that "protects people not corporations". More specifically, the appeal is for citizens from groupings of countries:

  • to organize to dismantle corporate control over their individual economies and workplaces;
  • to restrict capital flows -- an "invest here to prosper here" policy;
  • to localize markets, with long distance trade an option of the last resort -- a "site here to sell here" approach -- and
  • to challenge those power structures, at the local, national and international level, which deny local communities democratic control over their livelihoods.100

No one blueprint exists for achieving such change. Indeed, the very nature of "relocalization" implies a variety of responses. Within the European context, however, a number of measures suggest themselves.

  • Firstly, the subsidies currently used to entice TNCs into locating their automated, "lean and mean", export-oriented enterprises within Europe could be redirected towards subsidizing local production for local use. Subsidizing the local economy, rather than transnational capital, could help to create huge numbers of jobs through the renewal of cities, towns and rural areas and face-to-face caring work in health, education and community support.
  • Secondly, pressure could be brought at national levels and within the EU to apply existing competition policies (laws intended to prevent companies from establishing monopolies) in order to break up the amalgamated corporate giants that now dominate the European economy and to encourage more independent producers. If a market is defined in a consumer-friendly way, for example, in terms of the distance a shopper might need to travel to shop, then many food retailers would be defined as holding local monopolies.101 Because markets are defined nationally (and, increasingly, internationally), however, companies are able to claim that they have a small market share when in reality they have massive local or regional control. Contesting that position may prove a fruitful avenue for resisting corporate concentration.
  • Thirdly, measures could be introduced to tax capital flows and encourage banks, pension, insurance and investment funds to invest their funds in the locality where they are generated. As a first step to controlling footloose money, for example, governments could be pressured to join with others in adopting the so-called Tobin Tax (named after Nobel prize-winning economist James Tobin who recently proposed it), which would tax all international capital transactions, raising considerable funds for national and regional exchequers in the process. Resource taxes and increased energy efficiency could also be employed to encourage and fund the use of long-lasting goods and as a disincentive against resource-intensive long distance trade.

Above all, now is the time for debate, experimentation and some heresy.

Notes and References

1 Quoted in Seccombe, Weathering the Storm: Working Class Families from the Industrial Revolution to the Fertility Decline, Verso, London, 1993, p.30.

2 Hill, C., Reformation to Industrial Revolution, Penguin, Harmondsworth, 1967, p.264.

3 Statement by Trades Union Congress, London, 1951, cited in Pelling, H., History of British Trade Unionism, Penguin, Harmondsworth, 1974.

4 From Edmonds, J., "Victorian Values", The Guardian, 11 June 1996.

5 As William Lazonick records, "With the production process carried out in the homes, workers had the power to tie up the capital, primarily raw materials, supplied by the putters out, as well as to appropriate some of that capital as their own. Putters-out sought to use the force of law to speed up the flow of work and reduce embezzlement of materials. But especially in good times, the control of work remained with the workers." Lazonick, W., Business Organization and the Myth of the Market Economy, Cambridge University Press, Cambridge, 1992, p.138.

6 In pre-industrial Britain, the word "job" meant no more than a "a small compact portion of some substance: a piece, a lump, a mouthful". Later, its meaning was expanded first to embrace larger "lumps" (such as forkloads of hay or piles of farmyard manure) and then to refer to the act of transporting the "job" in a cart. Only in the 19th century did the word come to mean having waged employment: before then "people worked hard, -- very hard -- but they did not have jobs to frame and contain their activities." Under such circumstances, mustering a workforce for full-time labour on a specific task was no easy matter. See Bridges, W., "The Death of the Job", The Independent on Sunday, 5 February 1995. See also Bridges, W., Jobshift: How to Prosper Without Jobs, Nicholas Brealey, 1996.

7 Valenze, D., The First Industrial Woman, OUP, Oxford, 1995, p.114 and pp.122-123. As Valenze notes, "[C]ottagers had no say over the terms of their work or the payments they recieved. Manufacturers strove to maximise profits through ... arbitary wage cutting, seasonal and partial employment, and the withholding of commodities in order to release them at advantageous times." Nonetheless, "cottagers's work arrangements left them free to determine their own pace of work and encouraged attitudes that seemed insubordinate to contemporaries." Indeed "a staunch independence remained central to the social world of laborers in cottage industries", partly because such industries frequently grew up in localities free from the rigid control of large landowners. The income from cottage industry also gave young people, particularly women, a freedom from parental authority.

8 For a discussion of the historical process of enclosure, see Hildyard, N., Lohmann, L., Sexton, S. and Fairlie, S., Whose Common Future? Reclaiming the Commons, Earthscan, London, 1993.

9 Even then, it took almost half a century before the factory replaced the home as the dominant site of production; such was the resistance of workers to factory discipline that many preferred to accept lower wages in order to work at home, sutaining the old outputting system well into the nineteenth century. See Lazonick, W., op. cit. 5. Those unfortunate enough to end up in the workhouse were often transfered straight to factories, regardless of their own wishes. See Valenze, D., op. cit. 7, p.98.

10 Valenze, D., op. cit. 7. Valenze also notes, "Employers did not offer a 'living wage' to the female or the child since they assumed that she was dependent upon a household headed by a male and therefore did not depend only on her wages for subsistence."

11 Landes, D.S., Revolution in Time: Clocks and the Making of the Modern World, Harvard University Press, Cambridge, Mass., quoted in Lazonick, W., op. cit. 5, p.139.

12 Seccombe, W., op. cit. 1, pp.86-87.

13 Perrot, M., "The Three Ages of Industrial Discipline in 19th Century France", in J.M. Merriman, (ed.), Consciousness and Class Experience in 19th Century Europe, New York, 1979, p.161.

14 Although the factory system enabled industrialists to "solve" the uncertainties associated with the outputting system, by bringing labour together in one place, it created another form of uncertainty by making it easier for workers to organize, further increasing the need for direct management control over the labour process. See Braverman, H., Labour and Monopoly Capital, New York, Monthly Review Press, New York, 1974, pp.57-58, cited in Ruigrok W., and van Tulder, R., The Logic of International Restructuring, Routledge, London, 1995, p.38.

15 As Henry Ford, founder of the Ford Motor company famously put it, "If you cut wages, you just cut the number of your customers."

16 Drache, D, "From Keynes to K-Mart" in Boyer, R. and Drache, D., (eds.), Boyer, R. and Drache, D., States Against Markets, Routledge, 1996, pp.41-42.

17 Ibid., p.45.

18 Boris, E and Prÿgl, E., "Introduction" in Boris, E and Prÿgl, E., (eds.), Homeworkers in Global Perspective: Invisible No More, Routledge, London, 1996, p.6.

19 Edmonds, J., op. cit. 4, 1996.

20 Harris, N., The New Untouchables: Immigration and the New World Order, I.B. Taurus, London, 1995, p.33.

21 Drache, D., op. cit. 16, p.43. Drache notes, "The deterioration in living standards [has] forced the EU to revive its structural aid to industries in industrially depressed regions. Eligibility for Objective 2 aid requires an unemployment rate higher than the EU average, a higher percentage of industrial employment than the EC and a decline specificaly in industrial employment."

22 Harris, N., op. cit. 20, p.26.

23 Rifkin, J., The End of Work: The Decline of the Global Labour Fource an the Dawn of the Post-Market Era, G.P. Putnam's Sons, New York, 1995.

24 Cavanagh, J. and Broad, R., Understanding North-South Political Economy in the 1990s, Institute for Policy Studies, Washington DC, November 1994.

25 Edmonds, J., op. cit. 4.

26 Kapstein, E.B., "'Workers and the World Economy", Foreign Affairs, May/June 1996, p.22. In Germany, the unemployment rate between 1969 and 1973 was below one per cent; today, at four million unemployed, it is approaching 10 per cent -- the highest it has been since the 1930s. In Belgium, the unemployment rate has quadrupled over the past 20 years.

27 Rifkin, J., op. cit. 23.

28 Ibid.

29 Ruigrok, W. and van Tulder, R., op. cit. 14 pp.125,129,281.

30 Harrison, B., Lean and Mean: The Changing Landscape of Corporate Power in an Age of Flexibility, Basic Books, New York, 1994, p.180.

31 Ibid.

32 Neil, A. "The Guts and Glory", The Guardian, 8 January 1996.

33 Sutton, K., "Sound of the Last Post", The Guardian, 8 January 1996.

34 Rifkin, J., op. cit. 23.

35 The figures are for 1980. See Harrison, B., op. cit. 30, p.156. In Japan as a shole, only about 30 per cent of the labour force has permanent employment. See Lazonick, W., op. cit. 5, p.41.

36 Donaghu, M.T. and Barff, R., "Nike just did it: International subcontracting and flexibility in athletic footwear production", Regional Studies 24, December 1990, pp.537-552. See also Brookes, B. and Madden, P., The Globe-Trotting Sports Shoe, Christian Aid, December 1995.

37 Gringeri, C., Making Cadillacs and Buicks for General Motors, in Boris, E. and Prÿgl, E. (eds.), op. cit. 18, p.181,183.

38 Amin, A. and Tomaney, J., "The Challenge of Cohesion" in Amin, A. and Tomaney, J. (eds.), Behind the Myth of European Union: Prospects for Cohesion, Routledge, London, 1995, p.22.

39 Ruigrok, W. and van Tulder, R., op. cit. 14, p.178. Akio Morita of Sony uses the term "global localization" (see Ohmae, K., The Borderless World: Power and Strategy in the Interlinked Economy, Fontana, 1990, p.10.). Anita Roddick of the Body Shop refers to "multilocalism".

40 Ohmae, K., op. cit. 39, p.38.

41 Quoted in Sally, R., States and Firms: Multinational Enterprises in Institutional Competition, Routledge, London, 1995, p.49.

42 Ohmae, K., op. cit. 39, p.74.

43 Petrella, R., "Globalisation and Internationalisation: The Dynamics of the Emerging World Order" in Boyer, R. and Drache, D., op. cit. 16, p.67.

44 Ruigrok, W. and van Tulder, R., op. cit. 14, pp.179,188.

45 Lohmann, L., "Pulp, Paper and Power: How an Industry Reshapes its Social Environment", July 1995.

46 Hoedeman, O. and Doherty, "Misshaping Europe: The European Round Table of Industrialists", The Ecologist, Vol. 24, No. 4, July/August 1994, pp.135-141. Access is defined by the ERT's secretary as "being able to 'phone Helmut Kohl and recommend that he read a report." It means "John Major 'phoning to thank the ERT for its viewpoints." It means "having lunch with the Swedish Prime Minister just prior to the Swedish decision to apply for EC membership."

47 Drache, D., op. cit. 16, p.57.

48 Petrella, R., op. cit. 43, p.77.

49 Ramsay, H., "Le D_fi Europ_n", in Amin, A. and Tomaney, J. op. cit. 38, p.183. See also Harrison, B., op. cit. 30, p.164. Harrison notes: "The merger wave in Europe began in ernest during the mid-1980s ... One accounting firm counted 1,200 mergers and aquisitions amongt major corporations in 1988 alone ... In 1992, France's Elf-Aquitaine, a petroleum giant, acquired a chain of refineries and gasoline stations in eastern Germany, Switzerland's Nestl_ aquired the manufacturer of France's famous Perrier water, Germany's Lufthansa and Air France merged their four-star hotel chains, and Italy's state-owned cement giant, Italcementi, aquired a 45 per cent share of what had been France's largest cement producer, making Italcementi a $4-billion multinational corporation overnight."

50 Ramsay, H., op. cit. 49, p.184-185.

51 The Financial Times, 9 January 1996.

52 Lewis, J, "The Making of Banking Behemoths", Multinational Monitor, June 1996, pp.8,11.

53 Sheppley, S. and Wilmot, J., "Core Vs. Periphery", in Amin. A and Tomaney, J., op. cit. 38, p.56. See also The Economist, "Single Market, Single Minded", 4 May 1996.

54 David, K.A., Europe 92: Reflections from the Underside, The Challenge to Community Organizing, World Council of Churches, Geneva 1992, p.17.

55 Leys, C., "On top of the World", Red Pepper, No. 25, June 1996, 1996.

56 SouthWest Organizing Project, Intel Inside New Mexico: A Case Study of Environmental and Economic Injustice, SouthWest Organizing Project, New Mexico, 1995, pp.36,45.

57 Invest in Britain Bureau, Britain The Preferred Location: An Introduction for Investors, Dept. of Trade and Industry, London, 1993, p.7.

58 Goldsmith, A, "Seeds of Exploitation: Free Trade Zones in the Global Economy" in Mander, J. and Goldsmith, E. (eds.), The Case Against the Gloal Economy and For a Turn Toward the Local, Sierra Club Books, San Fransisco, 1996, pp.267-273.

59 Lang, T. and Hines, C., The New Protectionism, Earthscan, London, 1993, p.81.

60 Goldsmith, A, op. cit. 58, p.272.

61 Nader, R. and Wallach, L., "GATT, NAFTA and the Subversion of the Democratic Process" in Mander, J. and Goldsmith, E., op. cit. 58, p.98. Wallach and Nader also note, "Laws of other nations -- such as Canadian cigarette packaging requirements, Thai cigarette sales limitations, Danish bottle recycling laws and Canadian reforestation requirements -- have been formally challenged as nontariff barriers under existing free trade agreements or threatened with future challenges under the Uruguay Round rules."

62 Harris, N., op. cit. 20, p.57. Harris notes "The system appears to change continuously ... The manufacturing location -- as opposed to particular companies (which are created and destroyed as relocation occurs) -- might start in Hong Kong in the 1950s, move on to Taiwan and Korea in the early and mid-1960s, to parts of Latin America, to Israel and Portugal, and to Sigapore in the late 1960s, to Malaysia and Thailand in the 1970s, to China, Bangladesh, Sri Lanka, Mauritius in the 1980s. In the 1980s particularly, the geography became even more scrambled, as Hong Kong firms moved manufacturing capacity to southern China: Japanese, Korean and Taiwanese capital opened capacity in both China and southeast Asia, in Sri Lanka, the Caribbean and the United States (in search of technology and markets). Activities which began on the Mexican border moved on to the interior, to the Caribbean and to East and Southeast Asia -- and might easily return if the conditions are favourable."

63 Dobson, R., "Asian Tigers Lured by Low Pay in the Valleys", Independent on Sunday, 26 May 1996.

64 "Another kind of export", Independent on Sunday, 7 May 1995.

65 Harris, N., op. cit. 20, p.63.

66 Genillard, A., "German Plans to Shift Production Abroad", Financial Times, 31 May 1994.

67 "Can Europe Compete?", The Financial Times, 7 March 1994. See also "Labour price falls offshore", The Financial Times, 25 February 1994.

68 Ramsay, H., "A Capital Idea: Multinationals, Labour and Europe's Single Market, Global Labour, No.1, May 1993, p.9. Ramsay notes, "The decsion followed fierce lobbying between the British and Irish governments. The decision to transfer to Ayr led to accusations of illegal inducements from 'Locate in Scotland', a government agency."

69 Buchan, D., "French Promise to make Hoover pay dear", The Financial Times, 4 February 1993. See also Ramsey, H. op. cit. 68.

70 Ramsay, H., op. cit. 68, p.9.

71 Robinson, R. and Goodman, D.S.G., The New Rich in Asia: Mobile Phones, McDonalds and Middle Class Revolution, Routledge, London, 1996, p.154. See also Mallet, V. "Success brings problems", Financial Times, 24 September 1993. Thailand's Charoen Pokphand group is now one of the largest investors in China and has stakes there in everything from motorcycle factories to feedmills.

72 An Indonesian shoe worker's pay rate is US$1.03 per day, well below the US shoe industry average of $6.94 per hour. This wage is less than the Indonesian goverment's figure for minimum physical need. The labour costs to manufacture a pair of Nike shoes that sell for $80 in the US, according to one estimate, is approximately 12 cents.

73 Harris, N., op. cit. 20, p.68.

74 Ibid.

75 Karacs, I., "Berlin rebuilt by low-wage British labour", The Independent, 7 June 1996.

76 Harris, N., op. cit. 20. See also Financial Times, 10 July 1989.

77 See also Andreas, P., "Border Troubles: Free Trade, Immigration and Cheap Labour", The Ecologist, Vol. 24, No. 6, Nov/Dec 1994, pp.230-234.

78 Harris, N., op. cit. 20.

79 Drache, D, op. cit.16, p.47.

80 Ibid., p.49.

81 Transfer pricing is the price used for internal sales of goods and services between the divisions of a business enterprise. Transnationals use this to make their profits appear minimal in countries where taxation is high in order to maximize the after-tax profitability worldwide. TNCs also make use of over 30 international off-shore financial centres where taxation in real terms is low or non-existent. It is estimated that over half the world's financial transactions by value involve an off-shore centre, either directly or indirectly. While sections of the business world maintain pressure to cut social welfare, they are apparently blind to this "corporate welfare

82 Breverton, T.D., "Rules Under Different Vision of Economy and Society -- The Economic Vision", paper presented at "The Evolution of Rules for a Single European Market", Exeter University, 8-11 September 1994. See also Keegan, W., Laurance, B. and Wintour, P., "Our Missing £17 billion", The Observer, 14 July 1996.

83 People's Europe Campaign, The Single Currency -- Axing Labour's Programme, House of Commons, London, 1996.

84 L'Union Europ_enne: Les Trait_s de Rome at de Maastricht, Textes Compares, Article 104C and Protocol on The Excessive Deficit Proceedure, La Documentation Fran_aise, Paris, 1995, pp.63 and 210. Article 104c, para. 3 states: "If a Member State does not fulfil the requirements [to keep public borrowing below 3 per cent of GDP] the Commission shall prepare a report. The report of the Commission shall ... take into account whether the government deficit exceeds government investment expenditure ..." (emphasis added). The inclusion of the word "investment" legitimizes a distinction between "productive" and "non-productive" expenditure.

85 These criticisms are drawn from Weber, F., "Impact of the Social Charter", Europe 1992: The Challenge to Urban Organizing, Dublin 1991, pp.34, 37. Webber made the criticisms with reference to the European Social Charter, the predecessor to Maastricht's social chapter. However, they can be applied equally to the Social Chpater.

86 Employment Policy Institute, "Introduction", Economic Report, Vol. 9, No. 5, June 1995. Two senior economists at the World Bank have also acknowledged the role that economic liberalization has played in creating unemployment in the North: "There is no doubt that part of the rise [in unemployment in the North] is due to increased competition from developing country imports. Most analyses conclude that trade with developing countries can explain only 10 to 30 per cent of the industrial countries labour market difficulties ... [Other calculations] suggest that trade with developing countries during the past two decades reduced the demand for unskilled workers by between 3 million and 9 million, or 1 per cent and 3 per cent of total employment. See Diwan, I and Revenga, A., "Wages, Inequality and International Integration", Finance and Development, September 1995, pp.10-11. See also Wood, A., North-South Trade, Employment and Inequality: Changing Fortunes in a Skill-Driven World, Clarendon Press, Oxford, 1994.

87 Prÿgl, E., "Home-based Producers in Development Discourse" in Boris, E. and Prÿgl, E., op. cit. 18, p.45.

88 See, for example, Diwan, I and Revenga, A., op. cit. 86, pp.10-11. The authors stress, however, that "international inequality will change only slowly under any realistic scenario." Indeed, at best, the "ratio between the wages of the richest and the poorest groups in the international wage hierachy ... could fall from an estimated 60 to 1 in 1992 to 50 to 1 by 2010." If free market policies are not adopted, says the Bank, the ratio of labour incomes could "rise to about 70 to 1".

89 Ibid., p.8. The Bank predicts that, by 2020, Africans will nonetheless still earn 50 times less than North Americans.

90 Drache, D, op. cit.16, p.36.

91 Diwan, I and Revenga, A., op. cit. 86, p.11.

92 Lazonick, W., op. cit. 5, p.3. The nineteenth century German protectionist, Freidrich List, went as far as to accuse Adam Smith of "writing as if the nations of the world did not exist". See Cowen, M.P. and Shenton, R.W., Doctrines of Development, Routledge, London, 1996, p.163.

93 Lazonick, W., op. cit. 5, p.8.

94 Friedrich List warned that, without unless the state protected German industry, Britain's industrial advance would leave the German people with nothing to do other than furnish an English world with "children's toys, wooden clocks, philosophical writings, and sometimes an auxillary corps, who might sacrifice themselves to pine away in the deserts of Asia or Africa, for the sake of extending the manufacturing and commercial supremacy, the literature and language of England." Cited in Cowen, M.P. and Shenton, R.W., op. cit. 92, p.163.

95 Lazonick, W., op. cit. 5, p.27.

96 Ruigrok, W. and van Tulder, R., op. cit. 14, p.42

97 Nancy Hutchens, a human resources consultant, draws an analogy between the new contingent workforce emerging in the 1990s and the just-in-time inventory revolution that swept the business community in the 1980s. "The revolution in the 1990s", says Hutchens "is toward just-in-time employment ... companies will use people only as they need them." Cited in Rifkin, J., op. cit. 23.

98 Ohmae, K., Address to the Japan Society, Toronto, 2 December 1993, cited in Drache, D., op. cit. 16 p.52.

99 As the global management guru Kenichi Ohmae notes, "By becoming, in effect, an insider in key markets, a global corporation can make its costs independent of home-country currency -- that is, at a par with those of domestic competitors in each of its markets. But it can also pull off the trick of using cheaper sources of inputs from elsewhere in the world, something local players cannot easily duplicate..." See Ohmae, K., op. cit. 39, p.109.

100Hines, C. and Lang, T., op. cit. 59.

101See Lang, T. and Raven, H., "From Market to Hypermarket: Food Retailing in Britain", The Ecologist, Vol. 24, No. 4, July/August 1994, pp.124-129