Globalization and the End of the Labor Aristocracy, Part 3

This is Part 3 of a four-part article by Jayati Ghosh, published in the March/April 2017 special “Costs of Empire” issue of Dollars & Sense magazine. Parts 1 and 2 are available here and here, respectively. The final part will appear on Triple Crisis next week. In this section, Prof. Ghosh focuses on the current structure of globalized production and its implications for the distribution of income within and between countries.

Jayati Ghosh

Structures of Global Production and Trade

It is often argued that the rise of new powers—especially China, but also India, Brazil and others—means that the concept of “imperialism” is no longer valid. Yet the imperialist phase of capitalism has always been characterised by the emergence of “new kids on the block,” some of which have gone on to become neighborhood bullies. At the time when Lenin wrote his famous pamphlet Imperialism: The Highest Stage of Capitalism, a century ago, the emergence of the United States as the dominant global power was far from evident. Lenin’s claim that, during the imperialist phase of capitalism, “the territorial division of the whole world among the biggest capitalist powers is completed” is the weakest link in his argument, and one which was belied almost immediately. The United States, which was then only a minor player compared to the major European powers, emerged to dominate the world scene from the second half of the 20th century on. The rise of Japan in the second half of the 20th century by no means signified a weakening of imperialist power generally; it merely necessitated a more complicated assessment of such power.

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Casting Away Despair

Triple Crisis blogger Liz Stanton delivered the following talk at a Brookline (MA) Climate Week event on April 1. Stanton is the founder and director of the Applied Economics Clinic at the Global Development and Environment Institute (GDAE), Tufts University, described as follows on its website:

“The Applied Economics Clinic provides technical expertise to public service organizations working on topics related to the environment, consumer rights, the energy sector, and community equity. Founded by GDAE Senior Research Fellow Liz Stanton in February 2017, the Clinic is a non-profit consulting group offering low-cost and pro bono expert services from seasoned professionals, while also providing on-the-job training to the next generation of technical experts on public interest issues.”

Liz Stanton

It’s been a hard week for hope. It’s been a hard six months for hope. And I say that as someone who’s spent a career dedicated to building our societal knowledge regarding climate change. It’s easy to despair, and I know that I’m not the only person here today who feels that: Our hope has been trampled on quite a bit, and it’s looking a little worse for wear.

It is easy to despair. But I want to do something harder. And I’m guessing there are folks in the audience that feel the same way. I don’t want to despair. I want to fight.

I’ve been thinking a lot about what it is I’m fighting against. The root of the problem. And here’s what I’ve got for you.

Selfishness.

A set of values currently espoused by our nation’s elected representatives that boil down to nothing more or less than selfishness. The foxes are guarding the hen house, and they are desperately short-sighted. Concerned with nothing but lining their little fox pockets in this minute, this theft, this deal.

Well to me the values that have taken over in Washington—in word and in deed—look a whole lot like the values of toddlers and sociopaths:

  1. Me, Me, Me: It’s all about me. A cult of individualism.
  2. More, More, More: More stuff means I’m more powerful.
  3. Mine, Mine, Mine: Do unto others before they can do anything unto you.

Those are the values behind the policies to end climate regulation, strip access to healthcare, and defund Sesame Street.

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Dispute Settlement Becomes Speculative Financial Asset

Jomo Kwame Sundaram

Investor-state dispute settlement (ISDS) provisions in bilateral investment treaties (BITs) and free trade agreements (FTAs) have effectively created a powerful and privileged system of protections for foreign investors that undermines national law and institutions.

ISDS allows foreign corporations to sue host governments for supposedly causing them losses due to policy or regulatory changes that reduce the expected profitability of their investments. Very significantly, ISDS provisions have been and can be invoked, even when rules are non-discriminatory, or profits come from causing public harm. ISDS will thus strengthen perverse incentives for foreign investors at the expense of local businesses and the public interest.

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Reading Capital 150 Years Hence

Erinç Yeldan

Karl Marx published the first volume of Capital one hundred and fifty years ago. The writing of Capital was aimed at uncovering the operational laws of capitalism, as well as providing a theoretical weapon for the working class in its historical struggle for freedom and equality against the bourgeoisie. We have to remember that the main motivation behind this Herculean theoretical effort was not limited only to a realistic depiction of the conditions of the working class under capitalist accumulation, but to unearth the intrinsic elements of these iron laws in their sheer brutality.

If we are to read Capital once again hundred and fifty years after its publication, we ought to distinguish between Marx’s efforts to understand the logic of capital in its abstract form and his efforts concerning the realization of this logic in terms of class struggle. In other words, if we were to interpret Marx’s writings in a deterministic and mechanical fashion, we would not be able to understand the dynamics of the evolving “new international division of labor” between different countries, different geographies, and the new forms of capital and working classes.

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Globalization and the End of the Labor Aristocracy, Part 2

This is Part 2 of a four-part article by Jayati Ghosh, published in the March/April 2017 special “Costs of Empire” issue of Dollars & Sense magazine. Part 1 is available here. Subsequent parts will appear on Triple Crisis over the next two weeks. In this section, Prof. Ghosh focuses on the new international economic architecture for trade, investment, and property rights.

Jayati Ghosh

International Economic Agreements

The past two decades have witnessed an explosion in the treaties, agreements, and other mechanisms whereby global capital imposes it rules upon governments and their citizenries. Unlike the conditions imposed on developing countries by the IMF and the World Bank, these rules apply even to countries that are not debtor-supplicants to international financial institutions. They require all countries to restrict their policies, though these restrictions are especially damaging to the prospects of autonomous economic development in the “periphery” of the world capitalist economy.

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Securing Land Rights in Zambia

Timothy A. Wise

Chief Ndake received us in the community land rights office of the small compound that constitutes his “palace.” As one of Zambia’s traditional authorities, he reigns over a swath of Nyimba District in the country’s Eastern Province, and he is working with the Zambia Land Alliance to improve land rights and tenure security for his subjects.

The only thing traditional about Chief Ndake was the formal greeting we were expected to offer, on one knee. He greeted us casually and warmly, smiling from beneath his glasses. Perhaps in his forties, the chief wore a polo shirt emblazoned with the slogan-of-the-day: “We use a toilet—do you?” The chief explained that they had just installed a lot of toilets across his kingdom, a major public health advance.

Chief Ndake is one of a number of traditional leaders trying to bring order and tenure security to those who live without land titles on customary land, which covers more than half of Zambia and is home to the vast majority of its small-scale farmers. These leaders are seeking to construct a middle ground in a battle over Zambia’s new land policy, one that rejects efforts to privatize customary land through formal titling but improves tenure security by granting villagers traditional landholding certificates.

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Reflections on World Health Day

Martin Khor

What is the most precious thing in the world which unfortunately we take for granted and realise its true value when it is impaired? Good health, of course.

In the last Global Trends, I wrote about the importance of water on World Water Day.

On April 7 we celebrated World Health Day. Water and health are the most critical things in our daily life.

In the 1980s, the World Health Organisation’s director-general Half­dan Mahler steered through a declaration with the popular slogan “Health for all by the year 2000”.

We crossed into the 21st century without realising that noble goal. Although health has improved in most countries, due mainly to cleaner water and sanitation and also better treatment, much remains to be done.

In recent years, the slogan “Health for All” has been strengthened by the recognition in the United Nations of health as a human right. It has been further boosted by the adoption of the principle of universal healthcare.

This means that no one should be deprived of healthcare, even if he is too poor to afford it.

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Globalization and the End of the Labor Aristocracy, Part 1

This is part one of a four-part article, first published in the March/April 2017 special “Costs of Empire” issue of Dollars & Sense magazine. Subsequent parts will appear on Triple Crisis over the next three weeks.

Economist and Triple Crisis contributor Jayati Ghosh argues that imperialism has not disappeared, but changed shape. The direct military conquest and control of economic territory by the great powers has given way (at least some of the time) to control through multilateral agreements and international institutions. Economic territory may still mean the seizure of land, mines, or oil fields—but it also may mean privatization of public assets and services, or the extension of intellectual property rights to new realms. Where the “labor aristocracy” of the imperialist countries once shared in the bounty of empire, the new incarnation of empire as “globalization” has helped grind away the incomes and status they once enjoyed.

Jayati Ghosh

Twenty-first century imperialism has changed its form. In the 19th century and the first half of the 20th century, it was explicitly related to colonial control; in the second half of the 20th century it relied on a combination of geopolitical and economic control deriving also from the clear dominance of the United States as the global hegemon and leader of the capitalist world dealing with the potential threat from the Communist world. It now relies more and more on an international legal and regulatory architecture—fortified by various multilateral and bilateral agreements—to establish the power of capital over labor. This has involved a “grand bargain,” no less potent for being implicit, between different segments of capital. Capitalist firms in the developing world gained some market access (typically intermediated by multinational capital) and, in return, large capital in highly developed countries got much greater protection and monopoly power, through tighter enforcement of intellectual property rights and greater investment protections.

These measures dramatically increased the bargaining power of capital relative to labor, globally and in every country. In the high-income countries, this eliminated the “labor aristocracy” first theorized by the German Marxist theorist Karl Kautsky in the early 20th century. The concept of the labor aristocracy derived from the idea that the developed capitalist countries, or the “core” of global capitalism, could extract superprofits from impoverished workers in the less developed “periphery.” These surpluses could be used to reward workers in the core, relative to those in the periphery, and thereby achieve greater social and political stability in the core countries. This enabled northern capitalism to look like a win-win economic system for capital and labor (in the United States, labor relations between the late 1940s and the 1970s, for example, were widely termed a “capital-labor accord”). Today, the increased bargaining power of capital and the elimination of the labor aristocracy has delegitimated the capitalist system in the rich countries of the global North.

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