Global trade hierarchies across two eras of globalization
During the first era of globalization (1870–1913), the global division of labor was stark. Britain and other Western nations largely produced manufactured goods, but they also exported a whole range of temperate agricultural goods like wheat, beef and barley. Elsewhere in the European colonial empires, products like cotton, cocoa and coffee were exported, often at very low prices and sometimes with forced labor, to sate a growing demand in the global economic core for tropical luxuries. More than a century has passed since World War I heralded the collapse of this world order. Today, the globalization wave that has shaped the world since the 1980s is ebbing.
What is the legacy of the First Globalization of the late nineteenth- and early twentieth-centuries on the economic fortunes of countries during the Second Globalization? To what extent have countries’ positions in the international economic order been persistent across the two globalizations, with some trapped at the bottom and others comfortably on top?
Amid the global Covid-19 vaccination campaign, adebate has emerged around intellectual property (IP) and stark inequalities in vaccine distribution. Wealthier nations have opposed a petition to waive the 1995 Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement, which imposes a 20-year monopoly for pharmaceuticals among other global IP standards.
In her 2008 book, CAROLYN DEERE turns to the domestic implementation of the TRIPS agreement across developing countries, finding large variations in new IP governance structures and enforcement.
From the introduction:
"Amidst growing debates on globalization and inequality, TRIPS became a symbol of the vulnerability of developing countries to coercive pressures from the most powerful developed countries and galvanized critics of the influence of multinational corporations on global economic rules. While IP advocates insisted that stronger IP protection could serve as a ‘power tool for development’, a host of prominent international economists, such as Jagdish Bhagwati and Joseph Stiglitz, questioned the place of TRIPS in the WTO system (and continue to do so). Cambridge economist Ha-Joon Chang, among others, emphasized the costs to developing countries of introducing ‘irrelevant or unsuitable laws’ that restrict access to technologies and knowledge. Developing countries argued that TRIPS ignores the diversity of national needs and forces them to sacrifice the ‘policy space’ that richer countries harnessed in early stages of their growth.
Given the vocal concern expressed by developing countries during the TRIPS negotiations and after it came into force, one would reasonably expect them to have taken full advantage of the possibilities the Agreement provides to tailor implementation to respond to national economic and social priorities. Careful examination of the empirical evidence from 1995 to 2007, however, reveals a more complex picture of how developing countries responded to this room for maneuver. There was striking diversity in the approach developing countries took to the implementation of TRIPS rights and obligations. Most notably, developing countries took varying advantage of the legal safeguards, options, and ambiguities in TRIPS, now commonly referred to as the TRIPS ‘flexibilities’. Further, a surprising number of developing country WTO members implemented even higher IP standards than those required by TRIPS. By contrast, some developing countries took advantage of a range of TRIPS flexibilities, but their approaches varied according to the type of IP (e.g. copyright or industrial property). Further, many developing countries missed their deadlines for bringing their laws into conformity with TRIPS, thus effectively claiming more flexibility than provided for in the Agreement. Across the developing world, governments struggled to upgrade institutional capacity and resources to effectively administer and enforce their IP laws."
François Morin was technical adviser to Jean le Garrec at the State Secretary for Public Sector Expansion from 1981–1982 and an adviser to Prime Minister Pierre Mauroy.
Maya Adereth: What kind of society did you envision when you first became politically active?
François Morin: When I was finishing my PhD thesis in Algeria, I spent two years reading Capital. And to this day, I think Marx has many insights into the nature of power relations in contemporary society. But when I returned to France, my supervisor, Henri Bartoli, encouraged me to situate Marx’s insights within a practical framework. I went to the Chambre Syndicale des Agents de Change, where I began studying the shareholder structure of large banking and financial enterprises. To my surprise, I understood nothing of what was in the files. So I spent years learning to penetrate this world of accounting and finance. In 1974, I published my first book, The Financial Structure of French Capitalism, which allowed me to participate in ideological debates surrounding the left’s Common Program. When the left gained power in 1981, I was asked to advise Pierre Mauroy on bank nationalizations, and from 1985 to 1994, I served as an adviser and member of the Council of the Banque de France. In my new book, I recount the unique period between May and September of 1981 and the internal government debates which took place. On the one side were hardliners who advocated a strong break with liberal globalization and a nationalized French economy. On the other hand were reformists who argued that it was necessary to account for the changing global context in which policies were being made. The reformists were more cautious about expanding the public sector through nationalizations.
MA: What were the characteristics of the French economy that you outlined, and how did they shape the contours of this early debate?
FM: The debate within the left was hardly rooted in the realities of the French economy. Structurally, the French economy had undergone significant transformations in the 1960s and 70s, primarily through the consolidation of large corporations. For some, this corporate consolidation represented an alliance of domestic capital that was necessary to prevent the advance of foreign capital, particularly from the United States. The employers alliance consisted of Paris-Bas and its allies in banking, industry, and nationalized insurance companies. On the other side was the Suez Group, also composed of banking and industry, which saw the prospect of an alliance with American capital as an enormous opportunity. This was the position of Giscard d’Estaing, then President of the Republic. The conflict between the Gaulish RPR and Giscard Re- publicans represented the divisions between the banking and financial elites in the country.
On the left, the issue was less about globalization, and more about increasing state influence over these consolidated corporations. These companies significantly shaped public life, and yet the public had no influence on them. This was the motivation behind nationalizations.
The Control Data Corporation and global value chains
In March 1976, Deputy Secretary of the Department of Defense (DOD), William “Bill” Clements invited William “Bill” C. Norris, CEO and Chairman of the supercomputer producer Control Data Corporation (CDC) to a closed-door meeting at the Pentagon. Secretaries and undersecretaries from the United States Army, Navy, and Air Force were to attend, as well as a selection of spokespersons from the public university system and private sector. Clements requested Norris come prepared with “any important aspect of Defense management or posture that… warrants perspective” and to be candid in his comments.
Preparing for the meeting, Norris wrote a note. The subject was “East-West trade.” The DOD was not giving enough “attention” to export administration, Norris penned. The fact that the Department was “inconsistent” in reviewing export applications for computer technology to Central and Eastern European countries created an “unhealthy,” “adversarial” relationship between industry and the military, he continued.
Richard Westra is University Professor at the Institute of Political Science, University of Opole, Poland and international Adjunct Professor of the Center for Macau Studies, University of Macau. His research focuses on the philosophical underpinnings of economic phenomena, with an emphasis on financialization, globalization, and neoliberalism. His many writings also consider the politics of states of exception, legalization of politics, and the study of global apartheid.
Alongside Robert Albritton, Makoto Itoh, and Thomas Sekine, Westra traces his intellectual lineage to Japanese political economist Kozo Uno (1887–1977). Arising largely out of debates about the nature of the transition from feudalism to capitalism in Japan, Uno’s thought responds to a need to comprehend social-economic forms displaying “mixed” characteristics—mixed modes of production (i.e. feudal societies with capitalist characteristics or vice versa) and mixed economies (i.e. socialistic economic forms internal to capitalist economies or vice versa), as well as “capitalist” economic activity in pre-capitalist societies. Both Uno and Westra’s work is therefore concerned with reconciling the “law-like” aspects of economic phenomena with the contingency of empirical history. The task of analytically articulating these mixes necessitates a theoretical understanding of capitalism in its most pure and general form.
Her latest book is Sinews of War and Trade. In it, she connects the themes of war making in the Middle East found in her earlier work with an examination of the contested role of capital, labor and the state in the region—via the infrastructure of maritime logistics.
Breathtaking in ambition, Khalili's analysis draws on a wide range of materials to provide long-view historical perspective on the economic and political development of the Arabian peninsula through the unequal playing field of global maritime trade. Through thematically-organized chapters on the region, Khalili examines the emergence of maritime routes; the development of landside port, road and rail infrastructure; the role of the law in structuring and securing international investment and ownership; the making of economic and political elites; the working conditions and modes of resistance by both seafarers and landside laborers; and the ways in which all of the above are tangled up with war making.
In her 2007 book, Against the Law: Labor Protests in China's Rustbelt and Sunbelt, sociologist CHING KWAN LEE paints an intricate portrait of the two segments of the Chinese working class that have most acutely experienced the country's changing political economy: laid-off and retired workers in China’s industrial rustbelt, and young migrant factory workers in the export-oriented sunbelt.
From the preface:
"Although unemployment and exploitation can be found in many places and at different times, peculiarities of China’s postsocialist conditions have engendered features of labor politics that defy conventional categorization. First, the law, fledgling legal institutions, and the rhetoric of legal rights are central to labor protests throughout China, even though very few workers actually believe in the effectiveness of the regime’s ideology of law-based government. Second, leading to the formation of neither a national labor movement nor representative organizations, the several thousand worker protests that erupted every year throughout the 1990s took the prevailing form of localized, workplace-based cellular activism. With workers blocking traffic in the streets, lying on railroads, or staging sit ins in front of government buildings, these demonstrations presented a palpable threat to social stability, at least in the eyes of the national leadership. What must be emphasized, however, is that workers’ cellular activism has thus far rarely escalated into large-scale, coordinated, cross-regional unrest.
What, then, is the nature of working-class agitation in this period of marketization and globalization? Above all, I have found that the communist regime’s strategy of accumulation, in the form of what I term 'decentralized legal authoritarianism,' both generates the impetus for and places limits on working-class protests in this period of market reform. This larger political economic context of reform shapes not only collective mobilization by workers but also popular rebellion in general, and therefore is a key to understanding the institutional foundations of China’s economic dynamism and sociopolitical tensions."
"Labour strikes in China are always launched by unorganized workers rather than by trade unions." Feng Chen on China's quadripartite wage setting system. Link.
"This chapter investigates the role of social networks during China's most dynamic period of urban protest (1919–1927) in Shanghai." A 2007 book chapter by Elizabeth Perry. Link. See also: Perry's groundbreaking 1993 book on Chinese labor politics in the early 20th century, and her 1980 analysis of peasant rebellions in Huaipei from 1845–1945. Link and link. ht Julian G.
Meg Rithmire reviews regional approaches to Chinese political economy, asking: "How have local governments differently interpreted and implemented national reform policies? What explains different decision-making regarding investments and growth strategies? And how have different local growth strategies beget different socioeconomic consequences?" Link.
At present it's difficult to think of much else beyond the fragility of our global economic infrastructure. A 2012 discussion paper by RICHARD BALDWIN looks at global supply chains: their history, future, and policy implications.
From the paper:
"Globalization’s second unbundling and the global supply chains it spawned have produced and continue to produce changes that alter all aspects of international relations: economic, political and even military. Supply chain fractionalization—the functional unbundling of production processes—is governed by a fundamental trade-off between specialization and coordination costs. Supply chain dispersion—the geographical unbundling of stages of production—is governed by a balance between dispersion forces and agglomeration forces.
The future of global supply chains will be influenced by four key determinants: 1) improvements in coordination technology that lowers the cost of functional and geographical unbundling, 2) improvements in computer integrated manufacturing that lowers the benefits of specialization and shifts stages toward greater skill-, capital, and technology-intensity, 3) narrowing of wage gaps that reduces the benefit of North-South offshoring to nations like China, and 4) the price of oil that raises the cost of unbundling."
"If the virus continues to spread at the same rate, supply chains will inevitably break apart and factories will start to close." From February, the FT editorial board on the "decoupling of global trade." Link.
A paper from the Institute for Global Law and Policy "asserts the centrality of legal regimes and private ordering mechanisms to the creation, structure, geography, distributive effects and governance of global value chains." Link. See also: a LPE Blog symposium based on the paper. Link.
"Capital is thoroughly globalized. Could it now be labor’s turn?" Peter Evans on a global strategy for organized labor. Link. And a new paper by Adrien Thomas "looks at strategies adopted by trade unions to unionize migrant workers, and discusses tensions related to the diversification of trade union policies and organizational structures in response to labor migration." Link.
Standard theories of development have been predicated on the goal of an industrialized economy with the potential for full and regularized employment. Such a view necessitates a host of statistical categories to define and measure labor markets. In a 2000 paper, PAUL E. BANGASSER writes an institutional history of the International Labor Organization's (ILO) evolving attempts to understand and quantify the category of the "informal sector"—by now a permanent feature of the global workforce.
From the paper:
"Over the past three decades, the ILO has been both the midwife and the principal international institutional home for the concept of the informal sector. While the phrase 'informal sector' came onto the development scene in 1972, its roots reach back into the economic development efforts of the 1950s and 1960s. With the surprisingly successful rebuilding of Europe and Japan following the Second World War, there seemed no reason why a similar sort of deliberate economy-building effort could not also be applied to the newly emerging countries in the Third World. This technical ethos towards development was especially strong in UN Specialized Agencies like the ILO. It allowed them a measure of protection from Cold War political crossfire without undercutting either their raison d’être nor their universality.
Attention to the informal sector crescendoed in the early 1990s. The 1991 Director General’s Report, The dilemma of the informal sector, notes that 'Contrary to earlier beliefs, the informal sector is not going to disappear spontaneously with economic growth. It is, on the contrary, likely to grow in the years to come, and with it the problems of urban poverty and congestion will also grow.' A growing urbanization is consistent with the developmental expectations of the 1950s and 1960s. However, that this trend towards urbanization would represent a nexus of seemingly unsolvable problems of grinding urban poverty is quite different from that earlier thinking. The upward spiraling dynamics of 'modernization' which were supposed to accompany urbanization, and lead to economic 'takeoff,' didn’t kick in; there wasn’t any trickle-down of any significance, nor should any be expected, at least not within any reasonable time frame. This is an important conclusion, with fundamental implications for the conventional development paradigm."
Keith Hart's 1973 paper "Informal Income Opportunities and Urban Employment in Ghana" coined the phrase "informal sector." From the paper: "The distinction between formal and informal income opportunities is based essentially on that between wage-earning and self-employment. The key variable is the degree of rationalization of work—that is to say, whether or not labour is recruited on a permanent and regular basis for fixed rewards." Link.
A 2019 paper by Aaron Benanav (previously shared here) critically appraises the ILO's attempts at defining informality, situating the emergence of the "informal sector" as tied to the mid-century efforts to "generate a globally operational concept of unemployment for use in the 'developing world.'" Link. (For a broader, less empirical take along similar lines, see Michael Denning's 2006 article "Wageless Life." Link.)
A new IZA paper by Andrea Brandolini and Eliana Viviano looks at contemporary employment statistics and proposes supplemental indices that "account for people's experience in labor market states (e.g. work intensity for the employed and search intensity or unemployment duration for the unemployed)." Link.
"All the materials and human instruments of production are present in abundance, nay in excess. But their normal collaboration is impossible, because they cannot market the goods they could produce, so as to cover even the barest costs of the production." From 1924, The Economics of Unemployment by J. A. Hobson. Link.