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The following article appeared in Left Business Observer #72, April 1996. It was written by Doug Henwood, editor and publisher. It retains its copyright and may not be reprinted or redistributed in any form - print, electronic, facsimile, anything - without the permission of LBO.

Globalization revisited

A follow-up to last issue's piece on globalization.

Tompkins protests

A few days before sending #71 to press, I faxed Doug Tompkins, the Esprit clothing tycoon turned deeply ecological philanthropist, a letter asking how he reconciled his fortune made in sweatshop labor with his current activities on behalf of the earth and its poor. His response, which arrived too late for inclusion: "Maybe you've mixed me up with someone else."



As staff reporter J.W. Mason points out, one virtue of the greenish postmodern critique of modern capitalism is that it does pose questions about the organization of production and work, even if it doesn't come up with the right answers, a critique that has receded on the more canonical left. Sure, technology has allowed some of us to publish radical newsletters on a shoestring, but it's created deadening shitwork for lots more. Since so many people are grateful just to have a job now, the dehumanizing aspects - boredom, danger, surveillance - of too many jobs are barely mentioned. It may seem utopian to bring up the matter, but utopianism has its place, another point often lost on the canonical left, hotly in pursuit of respectability.

Also, a couple of readers objected to the characterization of Earth First! as the folks who spiked trees in the 1980s, pointing to their activism as proof that this was cruelly inaccurate. OK, point conceded; they do do things like sit in trees to stop clear-cutting. But the law and the timber industry can always pick them out of the trees and get to cutting; changing the law and the timber industry requires politics, and EF!'s political theory is fundamentally appalling. Deep Ecologists believe humans themselves are the problem, and politics is just another human institution.

Here's a recent burst of EF! thinking, posted to the Internet by theoretician Kelpie Wilson (supplied by Jeff St. Clair): "I want greedy, scumbag corporations to be cut down to size and I want all men sterilized at birth with an operation that is only reversible if a man can pass comprehensive tests for social and environmental responsibility, gentleness and nurturing ability!"



In a neglected passage in his famous 1991 memo, in which he argued that Africa was "vastly under-polluted," former World Bank chief economist Lawrence Summers also said this, in commenting on a draft of a Bank report:

What's new? Throughout the outline I struggle with the evidence showing what exactly the proclaimed revolution [in production] has revolutionized. FDI [foreign direct investment - i.e., multinational business] has always existed and many of the world's largest firms have been transnational from birth. The "globalization" of production has happened sure, but has the telecommunications revolution really had a major impact? I would guess the invention of relatively simple things, like steamship transport, did more for world trade than digitalized data transmission through fiber optic cables. How exactly has the nature of manufacturing been "fundamentally altered"? Aren't people just incrementally better at doing things they've always done, like locate production in the lowest cost location for delivery to markets (now "globalization of production"), like manage inventories in a least cost way (now "just-in-time inventory management"), like choose the appropriate level of vertical integration depending on the production process (now "critical buyer-seller links"), like match production to demand (now "short product cycles"). Is a "revolution" really the appropriate metaphor for these changes? I think the detailed evidence from the US about the very small impact on productivity from the large investment in information technology should convince us to hold off on the breathless tone about technology.

Summers, despite his political piggishness, is as smart as mainstream economists come, and his point -- especially since it was written for an intimate audience -- should be taken seriously. "Globalization," like "technology," is often held up as the reason things can't get any better; it's the excuse for cutting wages, firing thousands, hacking budgets, and poisoning rivers. It deflects attention from the causes of globalization and technical change in the first place, the quest for higher profits and stock prices. They also seem conveniently like outside forces, like gravity, rather than products of human agency. Globalization is real, but maybe Summers is right, and the revolution is merely incremental, and not something all so fundamentally new.

One measure of internationalization is exports as a share of GDP. By that measure, Britain was only a bit more globalized in 1992 than it was in 1913, and the U.S. today is no match for either. Mexico was more internationalized 1913 it was in 1992. Exports are just one indicator, for sure, but by this measure, the distance between now and 1870 or 1913 isn't as great as it might seem.

A difference now from then is, admittedly, the growth in cross-border investment - the proliferation of multinational corporations (MNCs). But even this must be viewed in perspective. It's often said in documents from the World Bank, the UN, and the antiglobalization crowd that production is now organized globally, and proof of this is that a third of world trade consists of intrafirm transfers - from one national branch of an MNC to another, parts transferred, say, from IBM Ireland to IBM Italy for further assembly. LBO has retailed this assertion several times.

This image of a global assembly line is extrapolated from U.S. Commerce Department data on multinationals, which is the best in the world. Recent figures from that department suggest that this may be a bit overdone. While a third of U.S. trade is intrafirm, this is "largely accounted for" by transfers of finished or near-finished products from U.S. makers to their foreign sales affiliates, or foreign makers to their U.S. sales operations. Intrafirm trade of components, the kind on which images of the global assembly line depend, accounted for a bit over 10% of U.S. trade, and saw no significant rise between 1982 and 1993. The foreign branches of MNCs buy most of what they sell in the region of the products' final sale, rather than transferring it from home base: foreign branches of U.S. MNCs obtain 90% of their inputs abroad, and over 80% of the sales of U.S. affiliates of foreign MNCs originates in the U.S. Of course, these numbers don't count contracting relations -- like The Limited's manufacturing arrangements with dollar-an-hour operations in El Salvador -- but they do support Summers' skepticism about radical transformations.

There's a political point lurking behind a consideration of these numbers. "Globalization" is typically cited to disarm any opposition to almighty capital. If capital is in part playing a confidence trick with this incantation, then maybe labor and the nation-state aren't as powerless as they're said to be. In public, Summers never counsels against the breathless tone.

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