Global Restructuring and the Power of Labour (International Political Economy)

Global Restructuring and the Power of Labour Bill Dunn

International Political Economy Series General Editor: Timothy M. Shaw, Professor of Commonwealth Governance and Development, and Director of the Institute of Commonwealth Studies, School of Advanced Study, University of London Titles include: Hans Abrahamsson UNDERSTANDING WORLD ORDER AND STRUCTURAL CHANGE Poverty, Conflict and the Global Arena Preet S. Aulakh and Michael G. Shcechter (editors) RETHINKING GLOBALIZATION(S) From Corporate Transnationalism to Local Interventions Sandra Braman (editor) THE EMERGENT GLOBAL INFORMATION POLICY REGIME James Busumtwi-Sam and Laurent Dobuzinskis TURBULENCE AND NEW DIRECTION IN GLOBAL POLITICAL ECONOMY Elizabeth De Boer-Ashworth THE GLOBAL POLITICAL ECONOMY AND POST-1989 CHANGE The Place of the Central European Transition Bill Dunn GLOBAL RESTRUCTURING AND THE POWER OF LABOUR Myron J. Frankman WORLD DEMOCRATIC FEDERALISM Peace and Justice Indivisible Helen A. Garten US FINANCIAL REGULATION AND THE LEVEL PLAYING FIELD Randall D. Germain (editor) GLOBALIZATION AND ITS CRITICS Perspectives from Political Economy Barry K. Gills (editor) GLOBALIZATION AND THE POLITICS OF RESISTANCE Richard Grant and John Rennie Short (editors) GLOBALIZATION AND THE MARGINS Axel Hülsemeyer (editor) GLOBALIZATION IN THE TWENTY-FIRST CENTURY Convergence or Divergence? Helge Hveem and Kristen Nordhaug (editors) PUBLIC POLICY IN THE AGE OF GLOBALIZATION Responses to Environmental and Economic Crises

Takashi Inoguchi GLOBAL CHANGE A Japanese Perspective Jomo K.S. and Shyamala Nagaraj (editors) GLOBALIZATION VERSUS DEVELOPMENT Craig N. Murphy (editor) EGALITARIAN POLITICS IN THE AGE OF GLOBALIZATION Michael Niemann A SPATIAL APPROACH TO REGIONALISM IN THE GLOBAL ECONOMY Morten Ougaard THE GLOBALIZATION OF POLITICS Power, Social Forces and Governance Markus Perkmann and Ngai-Ling Sum GLOBALIZATION, REGIONALIZATION AND CROSS-BORDER REGIONS Leonard Seabrooke US POWER IN INTERNATIONAL FINANCE The Victory of Dividends Timothy J. Sinclair and Kenneth P. Thomas (editors) STRUCTURE AND AGENCY IN INTERNATIONAL CAPITAL MOBILITY Fredrik Söderbaum and Timothy M. Shaw (editors) THEORIES OF NEW REGIONALISM A Palgrave Reader Kendall Stiles (editor) GLOBAL INSTITUTIONS AND LOCAL EMPOWERMENT Competing Theoretical Perspectives Amy Verdun EUROPEAN RESPONSES TO GLOBALIZATION AND FINANCIAL MARKET INTEGRATION Perceptions of Economic and Monetary Union in Britain, France and Germany International Political Economy Series Series Standing Order ISBN 0–333–71708–2 hardcover Series Standing Order ISBN 0–333–71110–6 paperback (outside North America only) You can receive future titles in this series as they are published by placing a standing order. Please contact your bookseller or, in case of difficulty, write to us at the address below with your name and address, the title of the series and one of the ISBNs quoted above. Customer Services Department, Macmillan Distribution Ltd, Houndmills, Basingstoke, Hampshire RG21 6XS, England

Global Restructuring and the Power of Labour Bill Dunn University of the West of England, UK

© Bill Dunn 2004 All rights reserved. No reproduction, copy or transmission of this publication may be made without written permission. No paragraph of this publication may be reproduced, copied or transmitted save with written permission or in accordance with the provisions of the Copyright, Designs and Patents Act 1988, or under the terms of any licence permitting limited copying issued by the Copyright Licensing Agency, 90 Tottenham Court Road, London W1T 4LP. Any person who does any unauthorised act in relation to this publication may be liable to criminal prosecution and civil claims for damages. The author has asserted his right to be identified as the author of this work in accordance with the Copyright, Designs and Patents Act 1988. First published 2004 by PALGRAVE MACMILLAN Houndmills, Basingstoke, Hampshire RG21 6XS and 175 Fifth Avenue, New York, N.Y. 10010 Companies and representatives throughout the world PALGRAVE MACMILLAN is the global academic imprint of the Palgrave Macmillan division of St. Martin’s Press, LLC and of Palgrave Macmillan Ltd. Macmillan® is a registered trademark in the United States, United Kingdom and other countries. Palgrave is a registered trademark in the European Union and other countries. ISBN 1–4039–3261–1 This book is printed on paper suitable for recycling and made from fully managed and sustained forest sources. A catalogue record for this book is available from the British Library. Library of Congress Cataloging-in-Publication Data Dunn, Bill, 1963– Global restructuring and the power of labour / Bill Dunn. p. cm. — (International political economy series) Includes bibliographical references and index. ISBN 1–4039–3261–1 (cloth) 1. Foreign trade and employment. 2. Labor unions. 3. Labor market. 4. Working class—Economic conditions. 5. Industries. 6. Structural adjustment (Economic policy) 7. Globalization—Economic aspects. 8. Industrial relations. I. Title. II. International political economy series (Palgrave Macmillan (Firm)) HD5710.7.D86 2004 331—dc22 10 13

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Contents vi

List of Tables

vii

List of Abbreviations

Part I Perspectives of Labour and Global Change 1 2 3 4 5

Introduction: Bringing Labour Back In Globalisation, the State and Labour Globalisation: The Spatial Dispersal of Labour? Post-Fordism: The Social Dispersal of Labour? Investigating the Claims of Globalisation and Post-Fordism

Part II 6 7 8 9

10 11

52

Evidence of Labour’s Condition

Automobiles Construction Semiconductors Finance

Part III

3 13 24 41

61 90 114 137

Reconsidering the Power of Labour

Assessing Restructuring and Labour’s Situation From the Critique of Globalisation and Post-Fordism to Strategic Research for Labour

169 194

References

213

Index

237

v

List of Tables 4.1

Schematic characterisation of Fordist and post-Fordist modes of accumulation 6.1 Correlation between GDP per capita and automobile industry growth in major producing countries, 1960–99 6.2 Automobile output by headquarters and production location, in thousands, 1999 6.3 Average distances and number of major UK import markets, 1979 and 1999 6.4 Average GDP per capita of major UK import markets, 1979 and 1999 7.1 Foreign direct investment inflows and construction revenues, 1990–96 (US$ millions) 7.2 Trade in construction materials and equipment, 1980–2000 8.1 World semiconductor workforce by production and firm ownership location, 1999 9.1 Bank assets to GDP, selected major countries, 1980–2000 9.2 Foreign to domestic bank assets, 1980–2000, as percentages 9.3(a) Overseas banks in New York by country of origin, 1979–99 (in per cent) 9.3(b) Overseas banks in London by country of origin, 1979–99 (in per cent)

vi

44

70 71 80 81 100 101 122 142 143 146 147

List of Abbreviations AFL/CIO AIC AMD AT&T ATM BIS BL BMW CAW CPE CTM CV CWA EU Fab FDI FIRE G7 G10

GDP GM HP IBM IC ICFTU ILO IMF IPE IT ITS

American Federation of Labor/Congress of Industrial Unions Advanced Industrialised Country Advanced Micro Devices Inc. AT&T Corp. Automatic Telling Machine Bank of International Settlements former British auto-firm (previously British Leyland) Bayerische Motorwerke AG Canadian Autoworkers union Comparative Political Economy Confederación de Tabajadores de México Commercial Vehicle Communications Workers of America European Union Semiconductor wafer fabrication factory Foreign Direct Investment Finance, Insurance and Real Estate United States, Japan, Germany, United Kingdom, France, Italy and Canada United States, Japan, Germany, United Kingdom, France, Italy, Canada, Netherlands, Sweden, Belgium and (as an honorary member) Switzerland Gross Domestic Product General Motors Corp. Hewlett-Packard Co. International Business Machines Corp. Integrated Circuit International Confederation of Free Trade Unions International Labour Organization International Monetary Fund International Political Economy Information Technology International Trade Secretariats vii

viii

List of Abbreviations

JIT LDC

LOSC M&A MES MITI MNC

NAFTA NCA NEC NIC NIDL NTT NUVB OECD OFC R&D SMMT ST TGWU TI Triad UAW UBS UN UNIDO USAF VW

Just-in-Time Less Developed Country (unless otherwise specified follows the UN usage to denote all except Advanced Industrialised Countries) Labour only Subcontracting Merger and Acquisition Minimum Efficiency of Scale Ministry of International Trade and Industry (Japan) Multinational Corporation (used generally to refer to firms operating in more than one country, including those sometimes designated ‘transnational’, ‘post-national’, ‘stateless’ or ‘global’) North American Free Trade Agreement National Constructors Association (US) NEC Corp. (formerly Nippon Electric Company) Newly Industrialising Country New International Division of Labour Nippon Telegraph and Telephone Corp. National Union of Vehicle Builders (UK) Organization for Economic Cooperation and Development Offshore Financial Centre Research and Development Society of Motor Manufacturers and Traders Ltd (UK) ST Microelectronics NV Transport and General Workers Union (UK) Texas Instruments Inc. Japan, North America (the United States and Canada) and Western Europe Automobile, Aerospace, and Agricultural Implement Workers of America Union Bank of Switzerland United Nations United Nations Industrial Development Organization United States Air Force Volkswagen AG

Part I Perspectives of Labour and Global Change

1 Introduction: Bringing Labour Back In

Bringing labour back in It has become something of a commonplace that global restructuring in the late 20th century had disastrous consequences for workers. There has been, as Munck writes, ‘a huge structural transformation of the position of labour worldwide over the last twenty years’ (1998: 1). However, this has more often been asserted than investigated. There have been diverse accounts of economic transformation. However, where these consider workers at all it is usually as more or less passive victims; globalisation and post-Fordism being understood to have deleterious if not ‘shattering consequences for the economic well being of the working class’ (Piven, 1995: 108). Optimism in labour as the agency of social progress has been replaced by a pessimism that sees little prospect of workers acting on their own behalf. Indeed, ‘the labor movement seems to be historically superseded’ (Castells, 1997: 360). Numerous authors describe at least some degree of disempowerment, noting falling union densities and levels of industrial action, weakening links between unions and social democratic parties and diminishing influence on government policy (Gray, 1998; Strange, 1998; Ross, 2000). Such evidence is important, if sometimes overstated, but this book will argue that it does not establish their cause and that the case for writing off labour remains unproven. Some authors do contest labour’s decline. Kapstein, for example, maintains that ‘many if not most economists would argue that globalization has had only a small net impact on the fortunes of the 3

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world’s workers, for either good or ill’ (1999: 31). Nevertheless, Hirst and Thompson describe how according to mainstream theories both ‘[n]ational governments and organized labour are powerless when faced with international marketization, neo-liberal deregulation and global economic integration’ (1999a: 36). Substantial studies, including Hirst and Thompson’s own work (1999b), have considered and contested claims of state retreat. ‘Bringing the state back in’ as one important collection describes (Evans et al., 1985) has a certain academic respectability. For the realist and neo-realist traditions of International Political Economy (IPE) the state never went away. But labour has largely remained beyond the pale and rigorous enquiry into its situation has been comparatively rare. This book hopes to initiate such investigations. It considers claims of a fundamental transformation of capitalism in the late 20th century and questions whether the economic changes worsened the conditions and weakened the material capabilities of workers. Adopting an anti-determinist but historical materialist perspective, it contests the way in which stronger versions of globalisation and post-Fordism characterise restructuring. In particular it seeks to question or to problematise their claims of a causal link between global economic change and negative outcomes for labour and attempts to challenge the exclusion of workers as effective social actors.

Writing labour off Accounts of restructuring, describing a more liberal or plural world, have become pervasive; influential within academic social science and beyond. Many workers and trade union representatives themselves have, to a greater or lesser extent, acknowledged that the bases of their conditions and potential have shifted. Indeed, a new discipline of International Labour Studies has emerged which usually takes globalisation as its premise and debates appropriate responses. However, any such practice requires an adequate understanding of labour’s altered circumstances. Characterisations of the world may more or less accurately describe social practices. Conversely, beliefs about the state of the world may actively condition our actions. The mental and material may simply reinforce each other as suggested by Waters’ definition of globalisation as ‘a social process in which the constraints of geography on social

Introduction: Bringing Labour Back In

5

and cultural arrangements recede and in which people become increasingly aware that they are receding’ (2001: 5). It seems reasonable to propose that ‘[f]or a representation to have any purchase it must have some reference to material social relations’ (Kelly, 1999: 381). We might, however, be able to offer material, social explanations for narratives while rejecting their descriptions of the world. Interdependence of thought and being is not necessarily congruence. Distinguishing between item and theory and interrogating them together might uncover discrepancies between the two, reveal problems with existing conceptualisations and provide grounds for further fruitful investigations and improved understandings of the world (MacLean, 2000). The literature on globalisation, for example, has suggested that cultural forms of interrelation are the most directly perceived (Held et al., 1999). Yet cultural cosmopolitanism may exceed, and so exaggerate perceptions of, other aspects of economic transformation. Similarly, the greater mobility of consumer goods than machinery and the spread of home Internet access have been linked to misconceptions about general levels of capital mobility and overestimates of economic weightlessness (Sutcliffe and Glyn, 1999; Gordon, 2000). Misunderstandings may be more obviously ideological. Discourses may be successful despite poor intellectual foundations because they have powerful advocates. Accounts of global restructuring and their negative implications for workers might then be seen primarily as political and ideological phenomena, naturalising capitalism, making it seem to be necessary and inevitable, or legitimising change and new forms of organisation (Kelly, 1997; Leyshon, 1997). If workers believe threats of plant closure, relocation, downsizing and global competition are the ineluctable products of economic change, they may become more willing to make concessions on pay, conditions and redundancies. As Du Gay writes, although the nature of change is contested, with many scholars doubting whether ‘globalisation’ is meaningful as economic description ‘an awful lot of things are being done in its name’ (1999: 79). Of course, their potential (mis)use is insufficient reason to reject, as neo-liberal ideology, depictions of economic restructuring (Caygill, 1999). However, because understandings of social change are of practical importance, likely to inform strategies of resistance, the anti-labour implications of mainstream accounts suggest their careful and critical evaluation.

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Perspectives of Labour and Global Change

Investigating restructuring and its implications for labour All too often, accounts merely presume labour’s weakness or its causation by economic transformation. However, two substantive clusters of argument attempt to theorise relations between changing economic structure and labour’s situation (Cox, 1997c; Crouch, 1998). Chapter 2 considers the first of these: claims that economic change undermines labour because weaker nation states can no longer protect ‘their’ workers, with national institutions governing industrial relations and the labour market and the state’s powers of macroeconomic manipulation becoming less effective. Conventional social democratic politics are rendered obsolete. These expositions have been extensively, if from labour’s perspective usually indirectly, addressed by the ‘sceptical’ critiques of globalisation, which suggest characterisations of ‘state retreat’ cannot be taken as straightforwardly true. However, the situation of labour cannot be reduced to identity with ‘its’ nation state nor its condition wholly understood within national contexts. Therefore, while they continue to refer to state intervention, the subsequent chapters concentrate on the second type of argument: that changes in the organisation of capitalism undermine labour and its institutions more directly. Chapters 3 and 4 consider respectively, claims of spatial and social dispersal; or of globalisation and postFordism. The former suggests that labour is weakened as more mobile capital increases its power in relation to immobile workers and as production moves to low-wage locations. The latter depicts a transformation of relations between and within firms, understood to create an increasingly fragmented or polarised working class. Such changes, if they do not absolutely preclude resistance, imply radical reorientations for any anti-capitalist strategies. These chapters challenge the most abstract of such presentations and identify critiques that indicate changes to be uneven and contested processes with, amongst other things, substantial inter-industry variation. However, the book argues that careful consideration should be given to more specific claims. It is at least plausible that economic restructuring might have negative implications for labour. Nevertheless, the claims of labour’s weakening have neither been adequately established not critically investigated. Chapter 5 reviews how such studies might be initiated and points towards the comparative empirical surveys undertaken in the second part of this book.

Introduction: Bringing Labour Back In

7

This accordingly considers and compares changes in the structure of four major industries in the late 20th century. Complementing existing nationally based accounts, it examines restructuring in automobiles, construction, semiconductors and finance. The sectoral studies compare different ‘segments’ of labour, contrasting two ‘old’ and two ‘new economy’ industries, but also those of dissimilar size, mobility and pre-existing social relations of production. They also contrast producer and consumer manufacturing and these with services. The research relies on secondary sources, seeking to offer insights through their treatment, particularly by means of the comparison between sectors, rather than providing new information to specialists of the specific industries. Comprehensive information, of workers in every country or sub-sector of each industry, is seldom available but there does appear to be sufficient evidence to provide a significant test of the claims made by more extreme versions of globalisation and post-Fordism. While the selection of sectors inevitably leaves grounds for potential counter claims, this study aims to begin a process of systematic enquiry where too often there has been silence or casual assumption. Although global in scope, its critical focus is directed towards arguments that economic restructuring undermined labour in developed countries. Chapters 6 to 9 discuss the four sectors in turn, considering the extent and direction of structural changes and reviewing their relationship to the situation of workers. Chapter 10 attempts a synthesis and summary, suggesting it may be inappropriate to depict a fundamentally ‘new paradigm’ or altered situation of labour. It concludes that while production locations continued to change there was little evidence to support assertions of a race to the bottom, of the systematic replacement of developed country production by that in less developed countries or of generally increased capital mobility. Rather, each sector experienced continuing processes, which produced varying but simultaneous centripetal and centrifugal pressures. However, there were structural shifts. Amongst other things these did, in several instances, reduce average firm and workplace sizes although there was little evidence of a return to genuinely small-scale production of the sort that might preclude trade unionism. Other developments of ‘post-Fordism’ seemed both equivocal in their extent and more closely associated with alternative methods of labour control than with fundamental changes in work or production processes. They are

8

Perspectives of Labour and Global Change

more plausibly interpreted as the results of defeats of labour than their cause. Finally, Chapter 11 reviews the results of the research and considers its implications for pro-labour strategies. It concludes that global restructuring is frequently overstated and that this undermines claims for the way in which economic change has been taken to weaken labour. It suggests that workers may have retained the material capacity to organise in their own interests. It nevertheless argues that, alongside a discussion of changing structure, more attention needs to be paid to the adequacy of labour’s own institutions and ideas to understand any decline and inform strategies to reverse it.

Writing about and for labour Although published as a work of IPE, I hope the arguments here are convincing – or at least comprehensible – to specialists in other areas and to non-specialist readers. The basic claims the book seeks to investigate are probably clear enough, despite the widely different understandings of global restructuring and of labour that pervade both journalistic accounts and much of academic social science. However, I should add something about the book’s theoretical and political perspective. Different outlooks are likely to produce different investigations, prognoses and proposals. In particular, the identification with Marxism or historical materialism seems likely to be misunderstood. I will offer nothing approaching a rigorous defence, only a brief clarification of what is meant, and perhaps particularly what is not meant, by the term as it is employed here. First, Marxism is understood as an avowedly pro-labour perspective. It seeks not only to analyse the world but to change it. This fulfils the condition set by Cox, widely reported within IPE if seldom followed, that contests claims for rational ‘scientism’ detached from social power and insists that theory is always for someone and for some purpose (1986: 207). He therefore insists on the open affirmation of the dialectical relationship between subjects and objects (1992: 135). This points to a certain pragmatism. Rather than purporting to seek some absolute or ‘objective’ truth, it directs theory towards the development of what Poulantzas describes as ‘concepts of strategy’ (1978: 24), and research towards identifying labour’s strengths so

Introduction: Bringing Labour Back In

9

that they may be utilised and its weaknesses, so that they may be overcome. Stronger versions of claims that economic restructuring undermined labour suggest class no longer matters. Marxism loses its subject and is thus rendered obsolete. The critical investigation of such claims is therefore, in a sense, a precondition for such strategic research, and the critique might itself begin to more adequately map the shifting terrain on which labour fights. The emphasis on class struggle should also warn against interpretations of Marxism as a form of reductionism in which ‘superstructure’ can simply be read off from developments in the economic ‘base’. Without attempting to resolve ancient and fundamental debates about the nature of the relationship between structure and agency, simply recognising the interrelation provides a vital analytical starting point. For Marx people ‘make their own history, but they do not make it just as they please; they do not make it under circumstances chosen by themselves’ (1977: 300). An absolute determinism is both implausible and strategically useless. If structure pre-determines social action there is no need to intervene; people simply become passive spectators or perhaps slavish bearers of social change. The charge of determinism is, of course, frequently levelled against Marxism. There are undoubtedly unfortunate phrases in Marx but sufficient counter examples to question whether we should identify as ‘orthodoxy’ a strand of thought now rare beyond the caricatures of Marxism’s opponents. Indeed, a thoroughgoing determinism is philosophically deeply problematic, flipping all too readily into idealism. As Anderson asks ‘if structures alone obtain in a world beyond all subjects, what secures their objectivity’ (1983: 52). Rejected by most contemporary Marxists it is often in more mainstream accounts of globalisation that a rather strong determinism resurfaces with labour’s situation all too readily read off as the inevitable result of structural change and the triumph of liberal capitalism. Some theorists move incautiously from empirical evidence of contemporary difficulties to conclusions that it is the consequence of economic restructuring and even that it demonstrates the end of class. Leisink and his co-authors warn how similar predictions were made in the 1960s only for ‘all hell’ to break loose and for conflicts to erupt all over the place (1996: 11). A more sceptical approach might not only seek to qualify the claims of labour’s retreat, but especially to reflect on its causes.

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Perspectives of Labour and Global Change

On the other hand people are not free to act irrespective of the conditions in which they find themselves. Social structures impose numerous constraints on the range of possible actions while also actively conditioning our thoughts and behaviour in all sorts of ways. This may hardly seem a radical claim but it contrasts with the rather strong indeterminism that has become highly fashionable within academia, with post-modernist or post-Marxist accounts suggesting, amongst other things, that social structures are of little relevance in formulating strategies of resistance (Laclau and Mouffe, 1985). The ‘autonomy of the subject’ and the re-emphasis on the vitality of discourse has some rather obvious attractions compared with a rigid determinism. However, it is unlikely to be of much use in formulating appropriate pro-worker strategies. If we suggest that the prehistoric troglodyte is as likely to be a socialist as a contemporary worker, ‘provided only that he comes within hailing distance of the appropriate discourse’ as Wood (1986: 61) criticises, the nuances of industrial restructuring are unlikely to be of much interest. Anyone who has bothered to pick up this book presumably thinks it at least possible that structural change might have made a difference to labour’s power. So a naïve realism that presumes causation in observing correlation between economic change and declining union densities or levels of militancy is inadequate but economic change might plausibly have significant impacts on labour. Claims of structural weakness need to be critically evaluated. Approaches that suggest it is not, or is no longer, necessary to consider economic structures, that ideas and institutions can be completely detached from material circumstances, simply assert a facile idealism. As Giddens writes, notions of agency and structure ‘presuppose one another’ (1979: 53). Or, as Cox’s antideterminist formula suggests, we should triangulate the mutual interaction of ideas, institutions and material capabilities (1986: 218). The effects of any structural change are likely to be strongly mediated rather than direct. Evaluating labour’s power as distinct from its achievements might not be straightforward, difficulties might lie, at least in part, in ideological and institutional weakness rather than simply with changes in its material capacities. The recognition of interdependence between structure and agency is therefore an indispensable starting point, an aspect of the way in which, in Lukacs’ (1971) phrase, Marxism emphasises the ‘methodological primacy of the totality’.

Introduction: Bringing Labour Back In

11

However, rejecting the extremes of determinism and indeterminism leaves open a wide range of possibilities. Descriptions of mutual interaction can slip into cycles of reciprocity and circularity, where we end up with a ‘dialectical balancing of concepts, and not grasping the real relations’ (Marx, 1973: 90). ‘Interdependence’ has become a watchword of liberal IPE, understating inequalities of wealth and power, and pluralism is the characteristic of Weberian rather than Marxist social science. A live historical materialist tradition must seek to engage with and to incorporate insights from other schools of thought and Marx himself used many methods, rejecting the notion of a royal road to science (Smith, 1993). Such engagement, along with a commitment to an anti-determinist historical materialism has particularly been emphasised by a small but influential group of ‘neo-Gramscian’ scholars. They have done much to challenge interdisciplinary schism, the orthodoxies of both neo-classical economics and neo-realist International Relations theory and to put ‘social forces’ in general and labour in particular, back on academic agendas. Nevertheless, there remain some significant tensions between different approaches. In particular, Marxism distinguishes itself from liberal pluralism by rejecting any inherent ‘democracy of determinants’ (Foley, 1986). Rather it attempts to identify prior, or determining moments. Social life is infinitely complex and varied and resists immediate presentation. Yet analysis has to begin somewhere. Marxism, as it is understood here, does afford a certain priority to social labour as the key abstract determinant from which to progress to more concrete and specific analyses. Social being and the social relations of production are ceded a certain analytical precedence over consciousness or agents own conceptions of their social situation, however important the latter might be. So, although much contested, class is understood here in terms of relations of exploitation, as an objective social relation. Labour, or the working class, is constituted through relations entered into involuntarily, not primarily through the adoption of particular ideas or forms of class organisation. An evaluation of labour’s potential to adopt particular ideas or organisation requires an understanding of such ‘objective’ relations. A strategy for labour needs to consider its capabilities, whether the potential for action is present, without requiring this to have already been acted upon. It is not sufficient to apply an inductive method simply ‘reading back’ from extant achievements.

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Finally, there is also a temporal aspect to interdependence. Historical materialism emphasises change, in contrast to theories of stasis or the elevation of capitalist principles to universal human laws. However, there need be no ontological priority of change over continuity (Lawson, 1997). The stress on the transformation of social life appears to have prompted several IPE historical materialists to concur with mainstream characterisations of radical disjuncture (Overbeek, 2000). They may prove to be right, but evaluating the relative importance of change and continuity is an empirical rather than theoretical matter. At least in certain circumstances, as Marxists have long insisted, the past can inform the present. None of the foregoing is necessarily exclusively Marxist, simply suggesting that an adequate assessment of structural economic changes is a vital precondition for appropriate pro-labour theory and politics (Gramsci, 1971: 52). We need to begin with a critical study of changing global structure and labour’s strengths and weaknesses, its potentialities and problems.

2 Globalisation, the State and Labour

The decline of the state Many authors see the altered role of nation states as crucial to any attempt to theorise the roots of labour’s problems. Indeed, the diminution of state powers is perhaps the most widely perceived characteristic of contemporary capitalism. According to the International Labour Organization (ILO) ‘[e]conomic globalization and technological innovation appear to have considerably reduced the manoeuvrability of states [producing] an unquestionable decline in national policy autonomy’ (1997: 69). Consequently, according to Burnham, the globalisation thesis has at its core claims of a fundamental shift in the relationships between states, capital and class. The loss of state power means labour ‘must adjust to a new flexible insecurity and can no longer rely on an increasingly powerless “democratic government” to fight its corner’ (1997: 157). There have been numerous formulations of state decline or retreat and more or less sophisticated expositions of why this loss of power occurred. Any lack of consensus should not be surprising given the different ways in which the state is understood. For centuries scholars have offered diverse conceptualisations. At its most extreme a Hobbesian tradition of political science sees society as essentially framed by nation states. Human progress is only conceivable through national state development. Weberian sociology similarly emphasises the necessary territoriality of legitimate authority. Yet globalisation overrides national boundaries and territorial jurisdiction, reducing state power with accordingly serious social consequences. 13

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Technological change, or its accelerating rate, is often the key independent variable explaining why such transformations occurred. For Castells, ‘[t]he new techno-economic paradigm imposes the space of flows as the irreversible spatial logic of economic and functional organizations’ (1989: 350). Even in relatively careful and critical presentations of globalisation, for which technological change is not a sufficient explanation, it usually remains a necessary ingredient. Giddens’ account both of globalisation and of how this precludes conventional social democratic policies (Giddens, 1990, 1998) involves a relatively complex, theoretical and abstract argument, drawing on a variety of social and psychological theories. Minimally, however, in his (1990) characterisation of ‘time-space distanciation’, he emphasises how in contemporary, radicalised or late modernity, information can flow instantly and without regard to distance. Such flows undermine the national, or bordered, basis on which societies were constituted. Specialised knowledge increasingly becomes the source of differential power as ‘expert systems’ and ‘symbolic tokens’ produce a ‘disembedding’ of the economy and of social relations in general from immediate contexts and from political control. Scholte emphasises regulatory change and altered structures of knowledge and production as well as technological innovation and depicts governance as having become more multilayered rather than simply state decline. Nevertheless, globalisation is a process of deterritorialisation in which ‘social space is no longer wholly mapped in terms of territorial places, territorial distances and territorial borders’ (2000: 16). Crudely, and some descriptions are very crude, with technological change, a new economic logic overrides geography and with it the bounded bases upon which both states and societies had been constituted. Slightly more concretely, but emphasising the primacy of increased capital mobility in inducing changes in state behaviour, Thomas (1997) sees the power of Multinational Corporations (MNCs), in particular, as having risen relative to immobile territorial government. They are able to win greater concessions, for example subsidies and tax breaks. In terms of its consequences, Hyman (1998) distinguishes two strands of argument according to which state retreat weakens labour. The first emphasises changing patterns of industrial location, investment and trade. The national embeddedness of industrial relations systems becomes a source of weakness as immobile states cease to be

Globalisation, the State and Labour 15

able to offer protection to ‘their’ workers. The labour movement was built, over the past 100 years and more, predominantly on a national basis. Attempts to extend worker’s internationalism beyond rhetoric and organisation beyond borders remained relatively weak and ineffective. Rowley and Benson describe how capital moves ‘taking jobs and incomes with it, and leaving adjustment and welfare costs in its wake’ (2000: 7). States have fewer resources with which to influence markets and social expenditures come increasingly under pressure. Meanwhile the tax burden shifts from the more to the less mobile, including from capital to labour. Lacking state support ‘groups of workers in different countries compete with each other for employment, offering employers the lowest price at a given level of labour productivity’ (Harris, 1987: 198). This is reinforced, according to the second strand of argument, as hypermobile financial capital, able to cross borders effortlessly and instantly, ‘steals a march’ on governments, eroding national management. In the face of global finance, state powers are weak and ineffective. Sassen sees new technologies facilitating a rate and volume of transactions, for example in foreign currency markets, which overwhelm attempts at regulation. ‘Electronic space overrides all existing territorial jurisdictions’ (1996: 5). Thus, for Strange technological and financial change weakened the authority of all states, irrespective of size or political complexion, ‘and accelerated integration of national economies into one single global market economy’ (1996: 13–14). States’ macroeconomic powers are diminished: they must abandon counter-cyclical spending, undermining the welfare state and pro-labour policies. Instead, policies of price stability and austerity cut consumption and production, increase unemployment, weaken unions and produce increasing inequality (Leisink, 1999). States therefore cease to be able to discharge their most basic democratic functions, reduced to the role of ‘transmission belts’ or filtering devices from the global to the national level (Cox, 1993; Cerny, 1996, 2000). If governments do intervene, for Castells, it now appears to be merely as midwives of history. ‘When necessary, politically induced offensive strategies helped the historical/structural trends working against the unions (for example, Reagan and the air traffic controllers, Thatcher and the coal miners)’ (2000: 301). Other scholars are more cautious, and convey a less even retreat. Swyngedouw, for example,

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describes how the state may remain a site of struggle and medium of regulation but its role is nevertheless ‘rescaled’, leading to ‘more autocratic, undemocratic and authoritarian (quasi-) state apparatuses’ (1997: 172).

Beyond social democracy? Even relatively strong versions of restructuring might leave room for resistance. For Giddens, globalisation is a juggernaut but one on which it is possible to ride. He has advocated the ‘Third Way’ as an attempt to steer a path between neo-liberalism and traditional state socialism. Influential amongst European Socialist and Labour parties, the Third Way project suggests that national strategies cannot challenge but are able to adapt to the dictates of the global market economy. Nevertheless, social democracy as it had previously been understood is impossible and ‘the very idea of socialism, as Marx conceived it at any rate, has been shown to be something of a historical dead-end’ (1995: 20). ‘The left has to get comfortable with markets, with the role of business in the creation of wealth, and the fact that private capital is essential for social investment’ (2000: 34). Other scholars are less prepared to accept the premise of a global market economy and see a potential to redress the loss of national policy autonomy in projects reclaiming control at higher, supranational, levels. For Scholte (2000) ‘deterritorialisation’ suggests the reconstitution of civil society at the global level. Other writers, as will be discussed in more detail in the next chapter, explore the prospects within this for labour and trade union internationalism. However, if declining state powers leave a democratic deficit, many scholars advocate rectifying this through international institutions. Some stress the possibilities of regional governance, in particular the potential of the EU (Strange, 2002). For others, raising horizons requires a global orientation. Social clauses or at least ‘core labour standards’ may be put on the agenda of existing institutions such as the UN or WTO or won through extending the power of organisations such as the ILO (Boswell and Stevis, 1997; Lee, 1997; Mazur, 2000; O’Brien, 2000; Wilkinson and Hughes, 2000; Haworth, 2002; Hughes, 2002). Although critics highlight the potential for labour standards to be used as a protectionist measure by richer countries against the comparative advantage – low wages – of poorer parts of the world, advocates

Globalisation, the State and Labour 17

indicate ways in which standards might be linked to per capita income and how raising wages potentially provides a more successful ‘high road’ of capitalist development. However, there appear to remain substantial obstacles in the way of any global reform or internationally co-ordinated Keynesian reconstruction. Others doubt the effectiveness or possibilities for transforming various international institutions, often identifying their association with powerful states and liberalising agendas. Making globalisation ‘work’ for capital by offering higher productivity or tying labour rights to free trade treaties and institutions again suggests that the dictats of the market ultimately remain unchallenged and leaves the prospects for labour independence rather severely limited (Mahnkopf and Altvatar, 1995; Bacon, 2000; Panitch, 2001).

The ‘sceptical’ critique of state retreat Many authors challenge depictions of state ‘retreat’ or ‘transformation’, stimulating an extensive debate that cannot be adequately reviewed here. The next chapter will discuss claims of a transformation of capital mobility and potential problems of technological determinism – seeing technology as an independent force for change beyond the social processes through which it is introduced and upon which it is supposed to impact. This section will also qualify claims of radical change, often stressing historical precedent and how territoriality and national practices remain vital. Navarro describes how internationalisation grew more rapidly in the 1960s than subsequently without then appearing to undermine labour or social democratic policies (2000: 233). Several ‘sceptical’ accounts put recent financial changes into historical perspective and at least qualify many of the bolder empirical claims. They stress precedents in the relaxation of geographical constraints, emphasising particularly the role of global finance in the period before and after the First World War. Money is always universalising, exemplified by gold and the role of the gold standard. Globalised finance and restrictive national policies, speculative capital movements and hot money flows that overwhelmed the resources of central banks were also a characteristic of the 1920s and 1930s. Pollin sees financial expansions as a consequence of crises in regimes of accumulation. ‘But the financial expansion will then also create destabilizing feedback effects to the

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extent, as Keynes put it, enterprise becomes a bubble on a whirlwind of speculation’ (1996: 114). So, for Sassen, Keynes was responding to ‘the same type of inversion’, in the dominance of financial markets occurring in the modern era (1996: 42). The truly global corporation has been described as a myth, while several accounts describe a strong territorial concentration of crucial functions, dependence on national governments, and ‘glocalization’ as a common strategy (Ruigrok and van Tulder, 1995; Doremus et al., 1998). Rosenberg (2000) points out that in Scholte’s exemplification of deterritorialisation we merely see one type of territorialism superseding another, costs of transport and cross-border movement falling relative to differences in labour costs, regulation and taxation. Similarly, numerous sceptical critiques describe various ways in which social practices remain ‘embedded’ and often distinctly national. Several writers describe how territory remains vital to social life, labour and capital in Leyshon’s phrase ‘locked into places through all manner of social and cultural ties’ (1997: 142). States remain active competitors in multifaceted relations and ‘complex hedge plays’ (Greider, 1997) both with firms and each other. Among the factors influencing these, Baker and his co-authors suggest, ‘robust domestic markets, a well-trained workforce, and well functioning infrastructure’ may be at least as important as cheap labour (1998: 25). Moran, arguing that growth rates remain largely nationally determined, writes that ‘in place of the vision of highly mobile capital circling the globe in search of transient and easily discarded production sites there is, at least, ambiguity’ (1998: 66). Governments retain many resources with which they can influence capital flows (Barnet and Cavenagh, 1994) and vital functions, including legal systems governing industrial relations, remain largely national (O’Brien, 2000). Some writers also suggest the contemporary power of finance to discipline government and constrain macroeconomic policy is overstated. Government spending as a proportion of GDP continued to increase steadily from 1960 to 1996 across the developed world (Moody, 1997; Vernon, 1998). According to Garrett, there was little evidence that countries that expanded their public economies ‘suffered the dire macroeconomic consequences predicted by most analysts’ (2000: 140). Weiss also disputes macroeconomic convergence and argues ‘[g]lobal finance is able to impact on states only in the manner

Globalisation, the State and Labour 19

that, and inasmuch as, states – as a result of their basic orientations and institutional capacities – enable or invite such impacts’ (1999: 139). The monies traded around the world remained in an ineliminable sense ‘national’ and states vital as lenders of last resort. Winters writes that although ‘more fluid and mobile than other forms . . . the state tends to play an exaggerated role in mobilizing and controlling finance capital’ (1994: 421–2). States too had access to new technologies that might be used to enforce regulations (Helleiner, 1994; Henwood, 1998). Other authors emphasise differences between states; for example, several appeared powerless in the 1997 ‘Asian crisis’. However, with hedge funds betting against the currencies with money borrowed from US banks, Gowan (1999) insists Congress could easily have banned such practices had they chosen to do so. Meanwhile, both investors and creditors could continue to take excessive risks, confident that state ‘bail-outs’ would avert catastrophe (Haufler, 1997c; Griffith-Jones with Kimmis, 1999). Moran, argues ‘[t]he story of the financial services revolution is, to put is simply, a tale of the way crises of mesocorporatist regulation have compelled growing state intervention in the regulatory system’ (1991: 15). Rather than achieving independence from nation states and social relations, finance, according to such critics, remained in dynamic relation with them. Thus universalist paradigms, presenting a straightforward retreat of the state in the face of inexorable forces of economic change, may underestimate the resilience of diverse national institutions and practices. A strength of sceptical accounts, according to Rupert is ‘a reluctance to embrace facile claims that the universal is negating the particular’ (2000: 43). The neo-realist tradition within IPE, amongst others, continues to reject the notion that economic change is undermining politics. Many authors see markets as the product of political power rather than the reverse. For Gray ‘[t]he truth is that free markets are creatures of state power, and persist only so long as the state is able to prevent human needs for security and control of economic risk from finding political expression’ (1998: 17). Thus a substantial literature, if usually indirectly and implicitly, challenges interpretations of state retreat as the cause of labour’s weakening. Although shaped by complex relations with international capital, states may act, as Panitch describes, ‘in ways that still reflect the specific features of class struggle and political and ideological forms that remain distinctively national’ (2001: 18). Garrett (2000) insists

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on the enduring influence of both states and nationally based labour movements. This suggests that rather than dismissing workers along with their nation states, labour be included amongst ‘behind the border players’ considered in theorisations that attempt to extend ‘two-level games’ between firms and states (Cerny, 2000: 134). This is not to deny that labour may suffer as the welfare state is pared back and anti-union laws enforced. It does, however, suggest that we should be careful about accepting the line of causation, the argument that globalisation weakens the state and that this in turn weakens labour. For Boyer the transformation in class relations, or what he describes as the ‘wage labour nexus’, since the 1960s ‘is attributed to (and legitimized by) the statement that nation-states are no longer autonomous and must comply with international competition and the globalization of finance’ (1998: 37). With emphases on state retreat, Panitch writes of ‘a remarkable silence . . . regarding state attacks on trade unions over the past two decades’ (2001: 1). Rather than being a ‘bulwark’ against globalisation, several states actively engaged in producing change. For example, Tussie and Woods (2000) describe how the leap in Foreign Direct Investment (FDI) flows dates from the beginning of the Reagan and Thatcher era, facilitated amongst other things, by privatisations of state-owned companies. Such asset sales, involving the replacement of public sector employment by private contracts and market relations as well as more direct political offensives, were targeted more or less directly against labour (Boyer, 1998: 42). Governments, in general, did not appear to simply acquiesce but to actively favour neo-liberal redesign of labour relations (Leisink, 1999). We cannot, perhaps, discount arguments for the increased relative power of capital, which do not necessarily rely on showing that it did, in fact, move. Threats of relocation may have become more plausible and sufficient to wring concessions from reluctant governments. But there must remain difficulties in evaluating mobility with any degree of confidence in the absence of actual movement. The perception of greater mobility may itself be economically important (Goodman and Pauly, 1993) but cannot, perhaps be accepted uncritically. Herod identifies a ‘corporate surplus’ in the concessions won ‘above and beyond what is strictly necessary to attract new investment’ (1991: 391). This might also indicate that the national level remains important for labour strategies. Stackhouse notes how Mexican workers’ wages fell despite the predictions of free trade theory, continuing that it is

Globalisation, the State and Labour 21

little surprise if ‘they blame their own government’s attacks on trade unions rather than the World Trade Organization or even the free-trade agreement’ (cited in Tabb, 2000: 35). Conversely, failures to organise across divisions at national level bode ill for internationalism. Such experiences might appear to provide few grounds for optimism but if the diminution of state power is exaggerated or misinterpreted it becomes appropriate to consider alternative explanations for any decline of labour while failures of the left may have domestic rather than global causes. Labour’s problems may stem from neo-liberal deregulation rather than globalisation per se (Hirst and Thompon, 1999a; Michie, 1999; Scholte, 2000). Walker, for example, addressing the sources of labour’s apparent weakness ‘points the finger of blame away from the economic failings of workers and successes of capital to the worldwide political defeat of the working class and global economic failures of capitalism’ (1999: 263). Navarro disputes a general process of union decline but similarly argues that where it ‘has occurred, it has been due more to political causes than to globalization’ (2000: 237–8). However, the sceptical commentaries have themselves been subjected to vigorous criticisms. A common refrain is that their approach is too economistic, and that globalisation involves social, political and cultural dimensions, which remain unchallenged (see Held et al., 1999; Waters, 2001). The re-emphasis on the subjective may often be apt. Yet while such criticism may identify limits to sceptics’ ability to positively describe the world, it is indeed upon technological and economic change that many accounts of the ‘new paradigm’ are based. Just such changes are supposed to herald a new era of social, political and cultural autonomy (see Lash and Urry, 1994; Castells, 2000). Economic change remains a necessary if not sufficient ingredient, one that the sceptical critique suggests is of unproven quality. However, another, and in an important sense alternative, critique of the orthodoxy suggests that socio-economic space has at least for centuries existed at different levels – sub-national and supranational as well as national. Indeed, in contrast to Scholte’s description of contemporary globalisation, Harvey argued more than 30 years ago against a geometric reduction of social science (1973: 29, 30). Society could never be wholly mapped in terms of places, distances and borders. A view of societies existing because they were national has never been universally accepted. This line of critique also challenges

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the state centrism of sceptical accounts, suggesting they mirror the fallacies of globalisation theory. A neo-realist political determinism may suffer from the same superficiality as the economistic readings of globalisation it contests. Sceptical state-centred accounts may share many of their opponents’ methodological assumptions and a states versus markets dualism which sees one as wholly dependent upon the other. Several authors similarly criticise formulations posing the state and capital as alternatives and changes in their power as zero-sum (Kapstein, 1994; Haggard and Maxfield, 1996; Wood, 2002).

Labour strategies beyond the sceptical critique This alternative critique, of long provenance within, but not exclusive to, the Marxist tradition, instead begins by rejecting notions of the state as the embodiment of public interest and reasserting that political space be seen as global to begin with. Descriptions of contemporary state retreat may therefore exaggerate the extent to which it was, at least formerly, representative of some general interest or ‘some sort of super-individual, making choices to maximize utility’ (Atkinson, 1997: 389). The ideology of sovereignty and modern statehood, as Krasner acknowledges, may seldom have been realised in practice (1995, 1999). Strange and Tooze, who agree complete state control was ‘always something of a fiction – or at least a convenient exaggeration’, continue by recalling accounts according to which ‘outcomes are as much determined by the economic . . . as by the political structure’ (1981: 5, 9). The point has been made particularly forcefully in contesting the achievements of Keynesianism and the extent to which nation states could ever fully control capital (Burnham, 1997). Notermans maintains ‘countercyclical demand management policies were only pursued in Germany during 1926, and on a broader scale, during the 1970s. Such policies generally proved to be unsuccessful and short lived’ (1997: 206). For Callinicos ‘[t]he tale of reformist governments defeated by economic constraints imposed notably through the flight of capital on the financial markets is almost as old as social democracy itself’ (2001: 27). Presumptions of the state as a ‘public good’ or acting in the interests of society ‘as a whole’ have long been challenged.

Globalisation, the State and Labour 23

Neo-Gramscian accounts’ emphasis on reciprocity and interrelation rather than determinism suggests that we seek to understand forms of the state alongside and mediated by both social forces and world order (Cox, 1986: 221). We should see states as ‘historically embedded in, and internally related to, capitalist social relations’ (Rupert, 1993: 84) and ‘think of the boundaries of states more as strategies in social struggles than as preordained facts’ (Augelli and Murphy, 1993: 139). In a sense this is, or should be, almost trivial. It is a truism that all aspects of social life are interrelated. Certainly few contemporary students of IPE see the world as wholly determined by either political or socio-economic causes or seek explanations that are wholly domestic on the one hand or international on the other. Nevertheless, once we accept, with Radice (2000), that there is nothing either intrinsically national or international about capitalism the problems of labour strategies that suggest, alternatively, either exclusively national or only international or antinational orientations becomes clear. While their relative importance may shift – capitalism is an anarchic system that continually subverts established relations – an a priori proscription of particular scales of action artificially delimits labour’s possible responses. In terms of analysis too, the foregoing suggests, at least, that claims of economic change need to be critically evaluated, we cannot assume a stateless, fully globalised world but neither can state capacities and national contexts provide a wholly adequate basis for investigating labour’s condition. There have been numerous useful studies comparing industrial relations on an international level and these usually reinforce the conclusions that distinct national systems continue to make a difference. However, and partly at least because of such conclusions, they struggle to explain whether global economic restructuring in fact lies at the root of labour’s difficulties. An approach that directly considers changing social relations of production might offer rather more critical purchase. Many analyses similar to those depicting a diminution of state powers, particularly concerning increased capital mobility, reappear in discussions of the spatial and social dispersal of labour to be considered in the following chapters. However, for many, these more direct transformations in class relations lie at the heart of labour’s difficulties.

3 Globalisation: The Spatial Dispersal of Labour?

The qualitative transformation of social relations through revolutions in the mobility of capital, information technology and the role of finance As the previous chapters suggested, even amongst those who use the term ‘globalisation’ there is little consensus as to how it should be understood. For many authors it is a centuries long process of increasingly extensive and intensive interconnections. However, perhaps more typically and more problematically, it is used to emphasise a radical disjuncture and transformation of social relations in the late 20th century. This chapter will briefly consider the more abstract presentations of change before looking at some of the more specific claims of spatial reorganisation. Characterisations of ‘disembedding’ or ‘deterritorialisation’ of social relations were mentioned in the discussions of state retreat and may also inform descriptions of more direct transformations of class relations. Again, many authors emphasise increases in capital mobility and a concomitant death of distance or ‘compression of the world’ (Robertson, 1992). Less preoccupied than most with the fate of states, Harvey’s (1990) concept of ‘time-space compression’, in particular, has become a cornerstone of mainstream theories of contemporary globalisation (Waters, 2001). Harvey stresses historical precedent and is more aware of the ambiguous social construction of change than many who have relied upon his formulation. The late 20th century nevertheless represents a distinctly new phase. We experience dramatic changes with ‘time-space 24

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compression’ signalling processes that revolutionise our representations of the world. Harvey begins with Marx’s ‘annihilation of space by time’ and innovations induced by capitals’ needs to get goods to and from distant markets. However, he adds a significant twist, also describing how a competitive imperative to accelerate their turnover times has a similar effect of annihilating time itself. Spatial barriers collapse and the pace of life accelerates so ‘time horizons shorten to the point where the present is all there is (the world of the schizophrenic), so we have to learn how to cope with an overwhelming sense of compression of our spatial and temporal worlds’ (Harvey, 1990: 24). In Castells’ interpretation, alongside an economic arena governed by the space of flows we now have ‘timeless time’. ‘Compressing time to the limit is tantamount to make time sequence, and thus disappear.’ This establishes ‘[c]apital’s freedom from time’ (2000: 464). More prosaically, Harvey and other writers describe how times and costs of surface and air travel, and especially of telecommunications fell rapidly, greatly increasing capital’s options and its power in relation to less mobile workers. Such transformations are based on new technologies, in particular in microelectronics, and through these, for some authors, the ‘new economy’ becomes ‘weightless’. Thus the ‘economic revolution’ dates from the invention of the silicon chip or integrated circuit but is understood to have accelerated from the mid-1970s (Greider, 1997; Yaghmaian, 1998; Castells, 2000; Went, 2000). Others concur that increased capital mobility, in particular relative to the immobility of labour, is the defining characteristic of globalisation and cause of workers’ predicament. While differential mobility is not new, they suggest the disparity grew dramatically in the late 20th century (Barnet and Cavenagh, 1994; Talalay, 2000; Blyton et al., 2001). Different high-tech industries and communications media may be important in the ‘new economy’ but in many accounts finance is the crucial arena of abstract knowledge manipulation. Giddens suggests that where once manufacture dominated a triangular relation with finance and knowledge, now it becomes subservient (2000: 72–3). However, taking the compression of time and ‘growing irrelevance of distance’ as merely ‘descriptively true’, argues Hodkinson, may camouflage ‘the actual qualitative transformation of global class relations through the compression of time and space in production and finance capital mobility’ (2001: 4).

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Authors develop this general perspective to suggest two slightly different routes to labour’s downfall. First, in a world of hypermobile and disembedded capital, labour’s economic role is displaced by the possession of knowledge and technology which become the essential forces of change and wealth creation (Talalay, 2000). Leadbeater writes, ‘[w]e’re all in the thin air business these days . . . the real assets of the modern economy come out of our heads not out of the ground: ideas, knowledge, skills, talent and creativity’ (cited in Callinicos, 2001: 29). For Castells ‘[v]alue making, under informational capitalism, is essentially a product of the financial market’ (2000: 160). The ‘real’ and ‘unreal’ economy are inverted, ‘since in the age of networked capitalism the fundamental reality, where money is made and lost, invested or saved, is in the financial sphere’ (Castells, 2000: 503). Finance structures the rest of the economy, establishing asymmetric relations of power over other less mobile forms of capital (Strange, 1986; Frieden, 1991; Pryke and Lee, 1995). But in particular it accentuates the inequalities between capital and labour. Some skilled workers or ‘symbolic analysts’ (Reich, 1991) may remain important in such accounts but as individuals not collectively as a class. The second strand of argument sees contemporary capitalism as so speeded up that disintegration and the transitory become the norm, the condition of postmodernity. For Harvey this implies disorienting and disruptive impacts on all areas of social life; on politics, economics, class forces and on culture (1990: 284). Similarly, the institutional developments of what Giddens alternatively calls ‘radicalised modernity’ ‘create a sense of fragmentation and dispersal’ (1990: 150). Castells describes the development of a corresponding ‘patchwork of experiences and interests, rather than a charter of rights and obligations’ (2000: 214). Workers continue to exist and (in some tension with his alternative characterisation): Never was labour more central to the process of value-making. But never were the workers (regardless of their skills) more vulnerable to the organization, since they had become lean individuals, farmed out in a flexible network whose whereabouts were unknown to the network itself (Castells, 2000: 302). While capital is networked, labour remains ‘switched off’. It ‘loses its collective identity, becomes increasingly individualized in its

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capacities, in its working conditions, and in its interests and projects’ (Castells, 2000: 505–6). Any politics of resistance is more likely to be based around diverse subjective identities than around class. Some of the ways in which this social fragmentation is described more concretely will be discussed in the next chapter, while this chapter will consider some of the problems of more abstract globalisation theories and concentrate on the more specific claims of spatial or geographical change.

Ambiguities of theorising labour’s dispersal Critics offer various objections to these most abstract presentations, suggesting they might provide insufficient grounds for writing off labour. Characterisations of temporal transformation, of timeless time or a universal schizophrenia seem particularly problematic. In the early 1950s Robinson warned of the difficulties of ‘a space metaphor applied to time’. While distances are of the same order of magnitude, in time there is only ‘one way traffic’ (1978: 82). ‘Even in a post-modern and globalized world’ writes Germain, ‘time refuses to be compressed: its impact upon thought and action is multilayered, uneven and complex’ (2000: 87). The implications for the annihilation of space by a time itself annihilated appear philosophically awkward and practical outcomes at least somewhat indeterminate. In contrast, the compression of space and depictions of a shrinking world may have at least a certain verisimilitude but are hardly less troublesome. Several commentators discern the presence, despite many formal disclaimers, of technological determinism in conceptions of disembodied technology and knowledge networks. In moving beyond a reiteration of the social construction of space and time, they suggest it now appears to reconstruct society. As Bromley writes of Castells: ‘[p]ower is no longer possessed by actors rooted in particular places but becomes a property of the flows between spaces’ (1999: 14). Globalisation theory thus evacuates social relations in general and class in particular, only intermittently, suggests Rosenberg, ‘re-inject[ing] a human content into an analysis otherwise peopled increasingly by impersonal forces and entities which appear to take on a life of their own’ (2000: 89–90). The enduring and intricate territoriality of social relations, as briefly discussed above, suggest that while relations

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between place and movement may shift, the significance of the latter need not require the supersession of the former. Critics point out that technological innovation and diffusion occurred in complex ways without necessarily sweeping aside class relations, governments or national characteristics (Burnham, 1997; Winston, 1998; Marcuse, 2000). Furthermore, rather than escaping materiality, Smith writes how the ‘information-intensive activities require information technologies, and these, of course, must be produced in an industrial sector’ (2000: 9). Chapter 9 makes a more detailed investigation of claims made for contemporary finance and its workers. Few doubt the sector’s importance, yet the extent of its independence from production is more questionable, while financial flows remained ‘rooted’ and ‘organised’. As Smith writes, they ‘must come from somewhere and be en route to somewhere’ else in the wider economy (cited in Moody, 1997: 68). The volumes exchanged were huge but net financial transfers were comparatively small and concentrated in a few rich countries. Financial centres remained important places of dynamic production and reproduction, with socially and culturally complex processes maintaining a continuing pertinence of place (Pryke and Lee, 1995; Sassen, 2001). Even the briefest historical comparison also qualifies the bolder claims of transformation. Notermans recalls a ‘long lineage’ to the analysis that the monetary and financial system determines the development of the ‘real economy’ (1997: 209). Gordon (2000) offers a trenchant challenge to claims of the significance of the space and time transforming properties of recent innovations, comparing them unfavourably with those of the 19th and early 20th century. More recent space transcending technologies did facilitate falling times and costs of various means of transport and communication. However, each followed a distinct trajectory, with the spectacular improvements in telecommunications in the late 20th century not matched by the rather halting progress on the roads, railways or at sea. Transit times were often reduced without being rendered negligible while human labour remained necessary for the movements of both weightless commodities and the numerous physically massive goods that remained vital in contemporary economies (Huws, 1999). Storper and Walker (1989) suggest differences in competition, class struggle and capital accumulation lead industries down different paths. Whether

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the outcomes of innovation were towards geographical dispersal or clustering and agglomeration were hard to predict. Some authors also highlight that labour stasis was not absolute. Mobility was constrained in many ways – by immigration laws and diverse other social ties – but workers did move on a vast scale, with differences, for example according to skill, gender, age and the scale and sense considered (Herod, 1995). Ironically, at the level of international migration, some take this movement as itself at least a contributory factor in labour’s weakened position (Wood, 1998; Slaughter, 1999). Workers (indeed in increasing numbers) were also mobile in the sense of retaining the double freedom, from property and from the compulsion to particular employment, famously described by Marx (1976). Labour, too, can act at a distance with solidarity never entirely dependent on physical proximity (Herod, 1995, 1997b, 2001; Swynegdouw, 1997). Nevertheless, information and communications technologies might also afford labour new mobilities (Waterman, 1998; Hyman, 1999). Such qualifications need not discount significant changes in the organisation of capitalism, the role of nation states and the fate of labour. The net effects of contemporary changes may have been increased capital co-ordination, allowing rapid comparisons between places, and of still relatively immobile workers (Crotty et al., 1998; Mahnkopf and Altvatar, 1995; Pryke and Lee, 1995). Consequently as Ross argues ‘labor was always obliged to play catch-up’ but globalisation represents ‘a dramatic new manifestation of a chronic problem’ (2000: 79). According to Swynegdouw (1997), capital-labour regulation and bargaining increasingly shifted to local levels, making union organisation at national or sectoral levels harder to sustain. Meanwhile, with labour markets remaining predominantly national, workers’ relative mobility may in many respects have declined. Advocates of a new labour internationalism admit inequalities in access to new enabling technologies and that costs of air transport, for example, could be prohibitive even for many western trade unionists (Lee, 1997). Nevertheless, the criticisms seem sufficiently pertinent to qualify the more abstract presentations of time-space transformation and its impacts on labour and to be cautious about what Jameson has labelled ‘totalizing judgements’ (2000: 49). For example, as Gertler argues, the extraordinary movements of finance cannot be ‘extrapolated, without a second thought, to cover all forms of capital’ (1997: 45).

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Changes in economic structure and increased capital mobility may have weakened labour in various ways but these would appear to require description and empirically investigation rather than categorical assertion. The next section considers accounts that have attempted such a more concrete exposition of capitalism’s spatial reorganisation. These depict many of the characteristics that dominate popular presentations of globalisation and of its negative implications for labour.

Internationalised production systems For many writers increased physical interdependence, changes in the geography and organisation of production and new freedoms and patterns of trade characterise economic globalisation (Gray, 1998). Most authors are careful to stress historical precedents but nevertheless often identify a watershed in the post-war period and particularly in the early or mid-1970s (Strange, 1986; Amin and Thrift, 1997; Kelly, 1999). Trade expanded far quicker than output. Its content also changed. In the immediate post-war period manufactured goods were exported from the ‘core’ to the ‘periphery’ while primary products went the other way. Increasingly over the second half of the 20th century, trade in manufactures dominated, latterly along with rising services trade. Developing countries’ share of world manufactures and the proportion of manufactures within their exports increased rapidly. Their share of the world’s workforce, and of skilled workers, jumped as FDI now incorporated poorer countries, marking a shift from shallow to deep integration (Dunning, 1993, 2000; Haggard, 1995; World Bank, 1995; Dicken, 1998; Held et al., 1999; Castells, 2000). The logic of capital relocation is not new but its options increased. The influential work of Fröbel and his colleagues depicts a New International Division of Labour (NIDL). New techniques of transport and communication created the possibility to locate anywhere in the world – ‘a possibility no longer ruled out by technical, organisational and cost factors’ (1980: 13). Their empirical evidence began with the garments and textile industry but was thought to involve an unstoppable structural logic which other sectors would follow (Strange, 1985). Durables production, for example, through which the American economy achieved pre-eminence, went elsewhere (Barnet and Cavenagh, 1994; Palley, 1999). ‘Global-factories’ combined different stages of production processes at scattered locations. Trade in semi-finished

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manufactures and components as well as finished goods increased with one-third or more of the total estimated to be within individual corporations (Held et al., 1999; Perraton, 2000). Moreover, firms could now move from one cheap location to another. Reich cites one company president describing how they went ‘hopping and skipping and jumping to everywhere we can find a competitive labor market’ (1991: 121). At the same time ‘[t]he language shifted from multinational or transnational to postnational, stateless, or global enterprises’ (Mair, 1997: 65) and from internationalisation to globalisation (Dicken et al., 1997). Domestic firms came into direct competition with foreign producers reinforcing the dynamic of global competition and the evolution of global markets. We are apparently at least approaching what Ohmae (1994) describes as a ‘borderless world’ in which firms shed national identities to locate, and relocate, wherever the market dictates. This produces a trend towards homogenisation and universalisation. With globalisation ‘spatial variation simply provides a mosaic of diverse but converging containers for disembodied flows of capital, images, etc’ (Kelly, 1999: 382). Strange is particularly unambiguous, ‘the litmus test is . . . whether there is, or is not change. Are there, or are there not signs that convergence is winning out over divergence?’ (1998: 709). Reich (1991) bluntly predicts that national economies may become indistinguishable. The negative implications for labour of such change seem clear. With national labour markets no longer protected and transport costs no longer a barrier, workers are continually undercut by cheaper rates elsewhere. In a truly global economy there is one price for each ‘factor’ of production. Sassen (1996) writes how global competition and hyper-mobile capital cause a race to the bottom. Jobs disappear as firms cut production in developed countries while extending their operations in lower wage economies but also as they innovate in response to heightened competition. Multinationals’ sales mushroomed while their employment barely increased, with the amount of human labour for each unit of output falling dramatically (Greider, 1997; George, 2001). Neo-classical theories of comparative advantage suggest that national economies as a whole, both rich and poor, should benefit from increasing trade. The economy, including the labour market and wages, adjusts frictionlessly to changes in manufacturing locations.

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However, even the text book analyses acknowledge that ‘appropriate’ skills and capital may be in short supply and that ‘adjustment’ might not be smooth (Krugman and Obstfeld, 2003). Orthodoxy also suggests that while there may be absolute gains from free trade, in ‘capital rich’ countries capital gains while labour loses. So in the developed countries ‘[u]nemployment has burgeoned as countless companies relocate and ‘downsize’ in response to global competition’ (Scholte, 2000: 28). This produces the lean world described by Moody where intensified competition and deepening integration cause a job crisis, which ‘in turn, is lowering the wage levels of labor markets across the industrial world’ (1997: 191). Deteriorating pay and conditions, as experienced in the US, or high levels of structural unemployment as in continental Europe appear to confirm predictions of convergence. The influential accounts of Reich (1991) and Wood (1994) and Heckscher-Ohlin models of trade distinguish between workers of different abilities, arguing that within a single world market only low skilled workers in the ‘North’ suffer as they compete in larger numbers for fewer jobs. The fate of the unskilled receives most attention but conversely, skilled workers in the North, according to Reich and Wood, become increasingly valuable in the knowledge economy while also reaping the benefits of the cheaper goods that new production methods and development in the South facilitate (see also World Bank, 1995). Nevertheless, restructuring for Cox ‘means fewer reasonably secure and high-income core workers and a larger proportion of precariously employed lower-income peripheral workers, the latter weakened by being divided by locations around the world, by ethnicity and religion and by gender’ (1996: 31). Workers in different parts of the world and with different attributes are played off against each other rendering quaint notions of common interest and solidarity. The best labour can do is to fight around specific sectional issues (Rubery, 1999). The process for Leyshon is not necessarily one of deterritorialisation because, for example, ‘the USA contains a number of inherent comparative advantages that favour it as a[n] economic space in a more integrated global economy’ and its ‘workforce holds a place-based comparative advantage through its possession of high-level “valueadding” skills’ (1997: 141, 143). Thus a ‘high-road’ policy, criticised as ‘cultural egotism’, or ‘global neo-mercantilism’, may be available (Greider, 1997: 74; Gowan, 1999: 77). Some writers, however, contest

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even this possibility. For May, ‘informational labour is just as amenable to task migration as manufacturing work’ while processes of automation and computerisation destroy previously valued jobs (2000b: 399). Lower waged Indian computer scientists, for example, compete with their American counterparts (Wolman and Colamosca, 1997). In the US, even as skills rose, wages fell or stagnated. Reich acknowledges this but, continues, ‘[w]hile a college degree does not guarantee you a much higher income than it did years ago, without a college degree you are not even in the running’ (1991: 206). Wood (1998) maintains that increasing relative wages can be explained by North–South trade and the defensive innovation it induces. Some accounts thus allow for difference and a selective pattern of diffusion rather than homogenisation (Castells, 1989, 2000; Kelly, 1997). Dicken recalls Storper and Walker’s description of ‘a mosaic of unevenness in a continuous state of flux’ (1998: 68) while for Giddens globalisation ‘is a process of uneven development that fragments as it coordinates’ (1990: 175). Dissimilarities may occur both between spaces and across industrial sectors (Storper and Walker, 1989; Lowe and Kenney, 1999). So, while there are clearly tensions between different perspectives, as Waters suggests, structures of wealth and poverty do not disappear. But, typically for globalisation theory, they do become detached from territory so ‘[e]xploitation and disadvantage would be without political organization’ (2001: 61). Or, as Castells writes, ‘[p]ower still exists, but it is randomly exercised’ (2000: 210).

Uneven development: qualifying claims of globalisation However, alternative understandings of ‘uneven development’ see it as not merely reflecting the impossibility of even development but as structurally inherent in the dynamic of capitalism (Herod, 1997a). So, while usually acknowledging important changes, more sceptical accounts question their novelty and implications. As discussed in Chapter 2, several authors suggest at least comparable levels of internationalisation of global finance in previous eras. Of trade, while there are controversies over how it should be measured, Boyer (1998) maintains that after 1973 the trade to GDP ratio was relatively stable in developed Western countries. Contrary to neo-classical models of comparative advantage, intra-industry trade increased with an enduring

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or even rising concentration between the advanced countries. From 1980 the rich country share of both manufacturing output and merchandise exports rose (Dicken, 1998; Waters, 2001). Rather than finding cheap labour locations ‘the average wage of US trading partners in 1990 was 88 per cent of the American wage’ (Walker, 1999: 269). Some Less Developed Countries (LDCs), in particular several in East Asia, increased their exports but the overall share from the poorest countries fell substantially. In terms of FDI, figures are again disputed. Funding from local sources may understate levels, and chronic inflation understate stocks (Strange, 1998), while spending on mergers and acquisitions (M&As) and the purchase of privatised state assets can conceptually, if empirically only with some difficulty, be distinguished from new ‘greenfield’ investment (Moody, 1997; Gowan, 1999). The nature of investments in developing countries undoubtedly changed, with an increase in manufacturing rather than primary products. Nevertheless, while in 1939 developing countries were host to about two-thirds of all FDI, by the end of the century investment was overwhelmingly concentrated in developed countries and a few rapidly developing Newly Industrialising Countries (NICs) (Dicken, 1998; Hirst and Thompson, 1999b). Dunning (2000) sees the average degree of multinationality of US corporations as having changed very little from the late 1970s to late 1990s. Capital can be moved around the globe and buildings constructed anywhere but as Wood acknowledges, some goods are ‘too heavy or bulky to be worth shipping’ (1994: 30). Moody (1997) maintains that although more than a third of the accumulated assets of the 100 largest multinationals were outside their ‘home’ country, 95 per cent of the world’s fixed capital formation remained national and that the value of assets per employee in US manufacturing grew substantially. Cox emphasises that cost minimisation is only one strategy and others such as patent laws protecting proprietary knowledge may not see advantages evaporate so quickly. He concludes: the contingent effects of deskilling and transportation change on geographies of production are either overstated, contradictory, or both. This means that labour in the heartlands of Western industrialisation is not necessarily placed at a disadvantage (1997c: 180).

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Some of the ways in which capital remained embedded in particular places and reliant on nation states in various respects were noted in the previous chapter. Thus interpretations of uneven development should, at least, be critically evaluated. Rather than convergence, many authors report increasing national inequalities (World Bank, 1995; Weeks, 1997; Hurrell and Woods, 1999; Arrighi, 2001). Investments were concentrated in the industrial world and rare enclaves in poorer countries. Even Strange, who posed convergence as a criterion of globalisation, is emphatic. ‘The gap between rich countries and very poor ones is widening, and so is the gap between the rich and poor in the poor countries and the rich and poor in the rich countries’ (1999: 351–2). This rather qualifies the explanation of the problems of ‘Northern’ workers. Corollaries to the arguments about workers in the ‘North’ suggest either that workers in general in capital-poor countries or at least low-skilled workers in the ‘South’ (according to Wood) should benefit. While there were increasing numbers of industrial workers in many poorer countries, levels of poverty also often grew. With the exception of a few NICs and China, Barnet and Cavenagh (1994) compare the situation in Asia, Africa and Latin America unfavourably even with that in Europe, Japan and United States in the Great Depression. The plight of workers in poorer countries undermines at least one interpretation of the predicament of those in Advanced Industrialised Countries (AICs). Consequently some authors see globalisation more as a process of westernisation, modernisation, Americanisation or simply the latest phase of imperialism (Spybey, 1996; Moody, 1997; Scholte, 2000; Panitch, 2001). For Castells too (his depictions of network society as a rather depersonalised space of flows wherein power is randomly exercised notwithstanding) ‘[m]ost of the developing world, as well as the transition economies, became an economic protectorate under the IMF – which ultimately meant the US Treasury Department’ (2000: 141). So although sceptical commentators often acknowledge the power of neo-classical economic models and the strength of Wood’s and others’ arguments, they maintain imports from low-wage countries were too small to significantly affect overall wage rates or to account for more than a small proportion of unemployment. ‘The evidence,’ conclude Hirst and Thompson, ‘flatly contradicts the notion of a massive flight of capital from the advanced nations to low-wage

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countries in the Third World since the early 1980s’ (1999a: 39–40). Rupert suggests that by the end of the century ‘the process of shifting world market production overseas from the US appear[ed] to have slowed down somewhat relative to earlier decades’, and that if it had adverse effects upon American workers they were at least being magnified by other factors (2000: 66). There were many examples of factory relocation but the aggregate effect of changing patterns of production and trade was more ambiguous. Their extent seemed insufficient to account for labour’s experiences. Navarro writes, ‘the thesis that unemployment is a result of globalization cannot be sustained: it is plainly wrong’ (2000: 241). Several authors identify enduring pressures towards spatial clustering, including familiarity and, amongst other things, advantages in issues of quality control in the production of components and subassemblies (Amin and Thrift 1997; Cox, 1997c; Held et al., 1999). Agglomeration effects have been well documented even in finance and several of the most ‘knowledge intensive’ and high-tech of industries (Storper and Walker, 1989; Saxenian, 1994; McCann and Fingleton, 1996; Clark and O’Connor, 1997; Cox, 1997a; Sassen, 2001). Cox (1997b) criticises predictions of smooth dispersal, the product, he suggests, of a stress on exchange relations that privilege input-costs over intra-workplace relations. He suggests that rather than dispersal, increasing productivity through upgrading and innovation tends to be spatially embedding. This would imply at least some stability and question the readiness of capital flight. Thus for Germain, even presenting ‘globalisation’ as a process rather than an established end state may obscure ‘both the entrenched obstacles which globalization has been confronted with historically and the possible instability of globalized social practices today’ (2000: 70). This seems particularly significant for workers if, as Storper and Walker argue, ‘[t]erritorial pattern effects raise labor’s share of sectoral and national income. They tend to reduce differences between high- and low-waged industries and between high- and lowwage occupations within industries’ (1989: 217). The enduring pertinence of place need not, however, contradict theses of labour disempowerment. Cox describes a ‘contested reconstruction of scales that are more global than national on the one hand and more local on the other’ (1997a: 11). Similarly, for Swyngedouw ‘[t]he insertion of networked global companies into the particularities of regional production milieux is part and parcel of a strategy of

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globalization and global integration’ (1997: 171). This suggests capital circulation is ‘upscaled’ but production and consumption are ‘downscaled’ with polarising consequences. However, any such strategy’s realisation would appear to have been uneven; spatial constraints varying across sectors according to the concrete content of the products within the networks, with differences in costs, speeds and ‘timeliness’ of transportation (Storper and Walker, 1989; Cox, 1997b; Beukema and Coenen, 1999). Tellingly, in the US boom of the late 1990s, hailed as proof of the ‘New Economy’, the increases in productivity occurred only in durables production, the sector often presumed to have moved offshore (Gordon, 2000). Herod (1995) identifies variations according to capital intensity while Dunning (2000) notes inter-sectoral and firm-specific differences in multinationality. Chang (1998) argues that capital is footloose in sectors such as garments, shoes and toys but less so in other industries such as chemicals with heavy sunk costs. Even in the paradigm case of the garments industry most of the world’s employment remained in the North ‘albeit largely because of protection offered by the Multi-Fiber Agreement’ (Moody, 1997: 169). Carnoy notes the largest MNCs were concentrated in just four sectors – oil, autos, electronics/ high tech and banking (1993: 48). Crouch sees some areas of goods production and large areas of service provision as relatively untouched by globalisation. He concludes, ‘the simple argument that globalization pits workers in the advanced countries into direct competition with those in countries with low or non-existent levels of industrial action or even general citizenship is false, or relevant to only a small number of industries’ (1998: 163). It may be that only a small proportion of capital moves but that market mechanisms through the ‘invisible hand’ produce disproportionate effects on formerly protected labour markets. Economies, argues Castells ‘depend on the performance of their globalized core’ (2000: 101). The impact of capital mobility need not then be experienced directly and primarily in sectors where capital moves to the greatest extent. At least in the US, the fall in wages was sharpest in areas such as retail sales and construction where workers experienced less direct international competition than in manufacturing (Linder, 1994; Greider, 1997; Brenner, 1998). However, the contingent nature of such change is confirmed by Campbell (1998) who suggests the evidence of correspondence between workers’ experiences, labour market regulation

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and labour market performance appears to be more thoroughly ‘chequered’ than would be predicted by theory. Brenner (1998) stresses the enduring uncertainty and economic turbulence and that nowhere escaped the long downturn despite the ability of capital to move and the fact that labour movements were not strong everywhere. Fixed capital was replaced, often many times over, without producing a straightforward pattern of dispersal. ‘Capital moves’ as Holloway writes (1995). Whether it did so in radically new ways in the late 20th century and the extent to which it changes the conditions and presents labour with fundamentally different tasks, is more open to debate.

Resisting capital through labour’s globalisation The different interpretations of economic change may have fairly direct implications for labour strategy. As described above, for some, globalisation renders anachronistic the notion of collective class based action. For several less pessimistic authors, globalisation does not preclude resistance but implies that if it is to succeed it needs to be at the same scale, and organisation of the same kind, as global capital (Tilly, 1995; Mazur, 2000). Amongst those who still emphasise an independent role for labour within this ‘a transnational collective response’, as Radice describes it, may be seen as the only alternative to accepting the world market as ultimate arbiter (1999: 22). Some authors describe attempts to extend and deepen trade union internationalism, for example, through the European Trades Union Confederation, the International Confederation of Free Trade Unions (ICFTU) and the International Trade Secretariats (ITS) (Zoll, 1996; Moody, 1997; Stevis and Boswell, 1997; Weisband, 1999; Ross, 2000). Existing unions may then be regarded as an important resource for new transnational strategies, lobbying both firms and international institutions (Cornfield, 1997). This approach may also be compatible with ‘grass roots’ or rank-and-file internationalism or what Cox describes as ‘bottom up’ opposition (2002: 39, 40). Jordan of the ICFTU is quoted as saying ‘international solidarity must become a natural reflex throughout the union movement’ (Waterman, 2000: 5). Waterman (1998) advocates ‘a new international labour movement for (and against) a globalised, networked capitalism’ or social movement unionism (see also Moody, 1997; Munck, 1998).

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However, as mentioned in the previous chapter, different levels of action may be complementary rather than exclusionary alternatives. Some studies of labour disputes have suggested that even in the late 20th century not only the international but also national and (especially) local struggles remained crucial (Castree, 2000). Budd therefore criticises the priority ceded to internationalism and suggests ‘domestic struggles are the key to the development of a thoroughgoing internationalism, rather than vice versa’ (1998: 194). More worryingly, Panitch suggests that trade union internationalism may be used ‘to justify the abandonment of collective action locally, and even nationally, as effective or irrelevant’ (2001: 9). Unions, for example for fear of domestic labour law, have opposed local resistance, themselves ‘effectively removing power from workers and the community’ (Herod, 1991: 394). Sutcliffe and Glyn argue ‘changing global structures will tend to alter the political areas in which local or national autonomy exists. There is no reason to suppose that it will eliminate their importance’ (1999: 129). Possibilities for international action or for global reform warrant serious investigation and such perspectives have obvious attractions contrasted with a nationalist parochialism. In opposition to assumptions of stasis, prevalent for example in orthodox International Relations (IR), characterisations of change, of globalisation, and post-hegemonic world order (Cox, 1987) often appear radical. However, the comments in Chapter 1 on the possible ideological use of characterisations of comprehensive economic transformation suggest that a careful evaluation of the extent of structural change and its implications for labour should be a precondition of any such strategic reorientation. The emphasis on change may exaggerate the adequacy of past labour practices and institutions while overstating the contemporary impediments to action at local levels. Counterpoising the national and international rather starkly delimits the development of strategies of resistance and rejects action of lesser scope. With variations over time, in different social contexts and between industries there is again, at least, sufficient ambiguity to conclude that the spatial reorganisation of capital, in particular variations between industrial sectors and its implications for labour, should be critically investigated rather than assumed. Pro-labour theorists might perhaps be rather more cautious about accepting mainstream, and usually anti-labour,

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characterisations of economic change as the basis of proposed strategic reorientations. However, for many authors social rather than, or rather than simply, geographical reorganisation is the key aspect of contemporary economic change and labour’s disempowerment. This will be considered in the next chapter.

4 Post-Fordism: The Social Dispersal of Labour?

From Fordism to flexibility Various terms have been used to characterise novel forms of social organisation that developed in the late 20th century; including ‘network society’, ‘disorganised capitalism’, ‘lean production’, ‘flexible specialisation’ and ‘post-Fordism’. Again these are often thought to have strongly negative outcomes for labour. There are significant conceptual differences between the diverse accounts, with some writers, for example, using the term neo-Fordism to emphasise elements of continuity with previous practices. Nevertheless, most writers describe a transformation of relations between production and consumption and both between and within firms. New information technologies transform work and also break the link between size and efficiency, so production can be rapidly switched to meet customers’ changing needs. The giant corporations decline, superseded by networks of smaller firms as agents of innovation and growth. In several accounts, the sort of changes described in the previous chapter and these post-Fordist transformations are complementary moments, together working against labour. The network capitalism of Reich and Castells, for example, is almost synonymous with globalisation. Similarly, for Lash and Urry (1987) labour suffers interlinked social and spatial changes. Or, as Waterman writes: A geographically concentrated and socially homogenous industrial working class of semi-skilled factory labourers is being increasingly replaced by socially diverse and geographically dispersed labour 41

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forces – homeworkers, part-timers, sub-contractors, in towns, villages and distant countries (1999: 249). Elsewhere, however, the two processes are seen as being in some tension. New paradigms of production may themselves be widely introduced but flexible specialisation and technological innovation may be strategic alternatives to relocation (Leyshon, 1997; Cox, 1997a; Collins, 1998). The claims of spatial and social dispersal, or of globalisation and post-Fordism may, at least, be distinguished analytically. ‘Fordism’ itself is a contested term. It was initially applied to the production methods introduced at Ford Motors in the US in the early 20th century. A more detailed discussion, in relation to the autoindustry, will be undertaken in Chapter 6. The term was then reintroduced to social theory retrospectively as part of an attempt to understand the crisis of the mid-1970s and the collapse of ‘Keynesianism’. Its compass now extended to other industries and other countries and thence more generally to the social settlements between capital, labour and the state. Marxist influenced Regulation School theorists attempted to describe how a system that Marx saw as contradictory and crisis-ridden had been successfully regulated, and how this broke down. Aglietta concurs that technical progress is not automatically favourable to accumulation. He describes how ‘[t]he uneven development of the department producing means of production exercises a depressing influence on the rate of return to capital, despite the technical progress it engenders’ (1987: 60). Also stressing that markets are institutionally sustained, not self-equilibrating he argues, however, that in the post-war period, mass production and consumption offset falling profit rates. The value of consumption goods such as cars, and hence of labour power, fell more quickly than (or relative to) constant capital, the machinery and raw materials bought by firms. So real wages and rates of exploitation, and consequently rates of profit, could rise simultaneously. Balanced accumulation was achieved between the two departments of capital resolving the Keynesian ‘problem of effective demand’ (Aglietta, 1987: 99, 154). The logic of mass production cheapening the objects of mass consumption is clear, and recalls the image cultivated by Henry Ford. Empirically, US motor industry productivity grew rapidly by about 5 per cent per annum, double that of the rest of manufacturing until the mid-1960s (Hounshell, 1995).

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Aglietta’s interpretation, however, is problematic in several respects. Regulation theorists are accused of underestimating, to a greater or lesser extent, the role of agency and seeing capitalist development as a technical problem rather than the outcome of social struggle (Bonefeld, 1991; Jessop, 1995). However, the approach may also underestimate structural contradictions. The even development of accumulation of means of production and consumption is only a necessary condition of stable capitalist expansion. For most authors it is not sufficient. Crises, for Marx, are the product of complex interactions of the rising organic composition of capital and several counteracting factors (Fine and Harris, 1979). There are possibilities of dislocations in the circuit of capital reproduction within as much as between departments of capital; so wages may rise in line with productivity without demand for any particular commodity rising in line with supply (Clarke, 1992). It is also unclear how typical the auto industry was. Many other sectors neither employed similar production methods nor sustained the same levels of productivity increase. Nor can the auto industry straightforwardly exemplify means of consumption. A high proportion of the sector’s output, cars as well as explicitly Commercial Vehicles (CVs), was sold to other capitalists. Similar productivity rises in both departments would not offset any disproportionality. So although in principle opposition to functionalism is axiomatic, Aglietta describes how ‘the system reacts as a totality’ and even ruptures seem to help re-establish regulation (1987: 19, 20). Finally, and perhaps most fundamentally, Boyer suggests for Regulation theory ‘Fordism only makes sense at the level of the whole economy’ (Boyer, 1990: x). However, much theorising was at the national level with Aglietta explicitly focussing on the US rather than global experience. Yet patterns of production, consumption and accumulation varied between countries as well as sectors. Firms sought exports and made foreign investments to increase their markets and came into competition with each other. International authority remained weak and global development essentially unregulated. The ‘uneasy interface’ between national forms of regulation and global accumulation, which more recent Regulation research identifies in the contemporary period (Tickell and Peck, 1995), already existed. Both the implied connections to the practices of the auto industry and the interpretation of post-war boom seem open to criticism.

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There has been a great deal of speculation whether post-Fordist production can create a new period of sustained prosperity. However, the contested basis of the Fordist boom and enduring contemporary economic turbulence would suggest caution. Perhaps more pertinent here, are more limited and descriptive interpretations of Fordism and post-Fordism as ‘modes of accumulation’ (Esser and Hirsch, 1994). The suggestion is of significant shifts in the organisation of capitalism, in the relations between production and consumption and, in particular, in the relationships between capital and labour. Table 4.1 attempts to convey important aspects of the purported transformation. It should, nevertheless, be re-emphasised that even within descriptions of radical change, the nature of the ‘new paradigm’ is often contested. For example, it involves spatial dispersal and the end of mass production (Lash and Urry, 1987) or alternatively clustering, agglomeration (Swyngedouw, cited in Harvey, 1990) and a new technological constitution of mass production (Esser and Hirsch, 1994). Castells (2000) directly links labour’s decline with capitalist restructuring involving decentralisation and large firm decline and the contrasting emergence of networks of small and medium firms (2000: 1, 167). Other influential mainstream theorists maintain there is no implication of labour Table 4.1 Schematic characterisation of Fordist and post-Fordist modes of accumulation Fordism

Post-Fordism

Mass production of standardised goods Production or resource driven Dominance of large integrated firms Stable employment relations. Coupling of productivity with collectively bargained wage rises Workers perform simple, repetitive tasks, technical control and hierarchical supervision Labour homogeneity

Flexible small batch production of varied goods Demand driven Decline in plant and firm sizes ‘Flexible’, less secure jobs. Individualised, local or firm based wage negotiation Multitasking, workers co-responsibility

Labour fragmentation – heterogenisation of working relationships and increasing social division of labour

Sources: Harvey (1990), Esser and Hirsch (1994).

Post-Fordism: The Social Dispersal of Labour? 45

weakening. Indeed, Piore and Sabel (1984) associate industrial networks not only with agglomeration economies but also with the reinvigoration of craft traditions, which afford at least some workers considerable sectional strengths. Nevertheless, if ‘globalisation’ produces a spatial dispersal of labour, ‘post-Fordist’ accounts typically describe a social dispersal. The first three features of Table 4.1 describe a transformation of relations between production and consumption and in relations between firms. At its starkest, for some authors, consumer led production augurs not merely disorganisation but the end of class. For Vilrokx, management act as intermediaries, regulators between the interests of workers and clients, leading to a ‘blurring of the distinction of the opposition between manager and worker and consequently, the elimination of the opposition between capital and labour’ (1999: 72). Similarly for Lash and Urry (1994), in the smaller enterprises of disorganised capitalism, there is less hierarchy in the microsociology of work relations and so the outright decline in class based politics. Other writers, without necessarily seeing class (‘in-itself’) as eradicated, confirm a diminution of labour’s power to act collectively (its potential to act as a ‘class-for-itself’ declines). As smaller more agile firms in complex subcontracting networks supersede the behemoths of Fordism, the workers within them are isolated from each other and bases for solidarity decline. Aglietta in the 1970s already predicted deskilling, automation and the rapid transmission of information might mean a ‘far more advanced centralization of production becomes compatible with a decentralization of the operative units’ breaking up working-class concentrations and ‘minimiz[ing] convergence of struggle at the point of production’ (1987: 127). Scholars of more recent change have developed this theme, with varying emphases. However, Leisink and his co-authors also describe how ‘[n]ew technologies facilitate a delegation and decentralization of authority down the hierarchical line’ (1996: 8). Firms employ ‘distancing strategies’, subcontracting a greater proportion of their work. As Castells (2000) describes, articulated elites gain power over segmented and disorganised masses. Workers are confined to insecure jobs in small, isolated workplaces. A second, albeit often related, set of arguments, broadly corresponding to the last three transformations of Table 4.1, stress how new

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technologies transform work and increase intra-class differentiation. Atkinson’s (1985) model of the flexible firm depicts a polarisation between core and peripheral employees. With the development of more thoroughly consumer led production, flexible manufacturing systems on the one hand require multiskilled workers who offer ‘functional flexibility’ and for whom alienation at work diminishes, while their talents are well rewarded. Less vulnerable to the normal disciplining of labour, such highly skilled problem-solvers are reckoned less likely to respond to calls for collective action, their attitudes more thoroughly individualistic. Some authors alternatively suggest that new methods of production can be empowering and that loyalty, co-operation and the possibilities for unionism may all be increased (Piore and Sabel, 1984; Womack etal., 1990; Cumbers, 1996; Collins, 1998). However, being in ‘partnership’ with employers, identities and organisation are, at most, likely to develop along craft rather than class lines. On the other hand, peripheral employees, on part-time and temporary contracts, offer firms ‘numerical flexibility’. Unskilled workers compete for fewer, more casualised jobs. According to Hyman, such a ‘peripheral workforce has in most countries proved painfully difficult to organize’ (1999: 100). Amongst them, increased employment of women and of migrants, or more generally those from ethnic minorities, is often emphasised (Harrod, 1987; Cox, 2002; Parker, 2002). While the dualism may be too stark for some, the labour force nevertheless becomes more heterogeneous and workers behave in a more individualistic manner (Jacobi, 2000). Hyman therefore, depicts increased competition between workers and an increase in ‘the deviation from the mean, so to speak’ (1999: 99).

Criticising characterisations of flexibility As with the spatial transformations discussed above, depictions of drastic change have been vigorously criticised. First, describing an era of standardisation may contribute to an overstatement of contemporary diversity. Even the US auto industry was highly complex and differentiated while numerous industrial sectors had few characteristics of Fordism. Marxists have indeed long attached considerable weight to tendencies towards centralisation and concentration of production. However, already in the 19th century, Marx noted counter

Post-Fordism: The Social Dispersal of Labour? 47

tendencies – describing an increasing ‘roundaboutness’ in production, the separation of subordinate tasks and particular stages of manufacturing processes and their conversion into independent trades (Marx, 1976; May, 2000a). Even at the height of Fordism there were numerous small firms. Similarly, post-war Fordism may have been more ambiguous for workers than is sometimes imagined. It seems clear that the ‘institutional compromises’, including the manner and degree of incorporation of labour, varied considerably even between the developed countries. With different experiences for union bureaucracies and on the shop floor, the decline of the US unions began long before the processes of globalisation, the highpoint reached at mid-century (Reich, 1991; Walker, 1999). Even the term ‘working class’ withered away (Strobel and Peterson, 1997). In Europe, by contrast, union numbers continued to rise well into the 1970s. This involved, amongst other things, greater success in unionising new, formerly peripheral, workers (Ursell and Blyton, 1988; Smith, 1994). The enduring diversity of international institutions and of workers’ experience might also suggest that these were not simply being imposed by a restructured capitalism. There would also appear to remain tensions in narratives of contemporary networks; for example between the NIDL thesis involving vertically integrated MNCs and disintegration, possibly involving the spatial clustering of small firms. Many firms remained major powers while some formerly small businesses grew to join them. The largest MNCs expanded and continued to account for increasing proportions of FDI (Hirst and Thompson, 1999b; Went, 2000). ‘The irony here’ writes Moody ‘is that production systems have grown so large and complex over time that the giant facility of yesterday is not large enough to enclose more than a fraction of the overall process’ (1997: 151). Not simply a technical achievement, increased flexibility for Boyer ‘involves a groping toward and testing of alternative forms for the internal organization of firms and wage relations’ (1990: 83). Its results could be contradictory, for example, undermining firmspecific knowledge, morale and productivity while Beynon and Hudson suggest there remain ‘quite definite material and social limits to the extent of both flexible production and niche markets’ (1993: 186). Minimally, with even Atkinson (1985) maintaining that strategies of flexibility will vary between industries, rather than assuming

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any unilinear process of change, it would appear that the implications for labour need to be investigated more concretely. The association between union strength and large numbers of employees doing routine work is commonplace. But any correlation is far from exact, the relation between the conditions of work and organisation is strongly mediated. In the US it took unions 38 years to organise Ford. Similarly, workers in many of the largest modern factories – in China or Egypt for example – faced great obstacles to independent organisation. Conversely, some of labour’s most wellorganised sections, such as miners, historically worked in relatively small workplaces. They have also often used advanced technology, recalling a long tradition of arguments (in particular stimulated by Braverman’s (1974) study of deskilling and proletarianisation and the blurring of distinctions between manual and white-collar work) that changes in the labour process impact on workers’ consciousness and prospects for organisation. There are unresolved debates within industrial sociology about the utility of ‘technological implications thinking’ and how the content of work may effect class attitudes and abilities to organise (Burawoy, 1985; Watson, 1995). There is little consensus over the extent to which possession of greater skills is itself empowering (Wood, 1989) while generalisations of links between categories of worker and degrees of organisation at best follow a ‘rule of thumb’ (Ackers et al., 1996: 2). Wider labour movements and political economy, milieux beyond the workplace, have also long been important in shaping militancy and workplace relations (Storper and Walker, 1989). Accordingly, characterisations of contemporary developments in production and their implications for labour are contested while claims of less alienating conditions under lean production are disputed. Some authors see the promotion of ‘flexibility’ as a management strategy against labour (Parker and Slaughter, 1988; Pollert, 1988). The potential for labour to disrupt contemporary networks of interconnected relations of production also seemed considerable. Thelen and Kume stress demands for high quality production on a just-in-time basis may give labour organisation considerable power, ‘in both Germany and Japan, employers themselves are if anything more dependent than ever on the shop-floor peace and predictability that these institutions have traditionally generated’ (1999: 478–9).

Post-Fordism: The Social Dispersal of Labour? 49

Finally, power is an awkward and contested concept. However, if we understand it in relational terms, a discussion of labour’s power also needs to comment on that of capital. Here again there are at least ambiguities. Marxist theories of imperialism were already describing the co-ordinated character of capitalism in the early 20th century, on a national scale but also often involving numerous international cartels. For some theorists of globalisation the power and control of firms may indeed have increased, with capital becoming a ‘class-for-itself’ as never before (Sutcliffe, 2002). Other scholars have contrasted the networked character of capital with labour’s fragmentation (Castells, 2000). However, this does seem to be in some tension with presentations that suggest independent small firms have become increasingly important and with those depicting increasingly intense competition as a characteristic of the contemporary economy. For some characterisations of post-Fordism, describing a world of fragmentation and dispersal, power appears to be conceived less as a relation than as a property, something possessed rather like money, albeit in this case of rapidly depreciating currency. Labour lost power without any apparent greater co-ordination on the part of capital. Social life in general is increasingly chaotic, escaping our capacities for organisation, or at least suggesting that our actions can no longer be associated with economic structures. The problems of such an idealist or cultural turn were touched on in Chapter 1. Even for less radical characterisations, social change may indicate significantly different tasks.

Responding to diversity and differentiation As with claims of globalisation, the post-Fordist scenario also suggests reorientations of strategies of resistance. Those who accept more drastic versions of change typically suggest the most radical reorientations. Most drastically, changed social conditions are taken to have undermined the rationale for collective workers’ organisation and union influence is simply doomed to diminish. There is a substantial literature of ‘New Social Movements’, which suggests that new ‘non-class’ logics of collective action have superceded the outdated industrial-age priorities of labour. Class based responses become anachronistic. What is required, in Jones’ phrase, is ‘positive international

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fellowship’, facilitated perhaps by modern information technology and transport systems (2000: 256). In extremis, as noted above, theories of post-Fordism or disorganised capitalism suggest the demise of class and class conflict. Modern theorists, for example, in confirming a separation of wealth generation from human labour (Strange, 1999; Scholte, 2000) echo earlier advocates of a non-class, subjectively based politics or what Wood (1986) describes as the new ‘true’ socialism. Other scholars still argue for specifically labour strategies. Nevertheless, fragmentation is acknowledged to require new solidarities and labour ‘new strategic imagination’ to shift its focus away from industrial-age priorities such as wages and conditions (Hyman, 1999: 94). Where traditional trade unionism replicated the standardisation and differentiation of Fordism, adjustment and flexibility have become the order of the day; the aim a more inclusive ‘organic solidarity’, recognising and respecting differentiations and, accepting the vulnerability and temporary nature of jobs, seeking to make ‘employability’ central to trade union policy (Hyman, 1999: 110). Newland advises unions to take advantage of flexible labour markets and to ‘find willing partners in governments, civil society, and the private sector’ (1999: 64). More generally, for Schechter, resistance ‘is understood to be broad-based because globalization is seen to be contributing to new forms of subordination’ (1999: 38). A counterforce is sought in more diffuse democratic ‘new social’ or ‘civil society’ movements. Again, however, there are reasons to be cautious of such characterisations of restructuring as the basis for labour strategies. Mahnkopf and Altvatar write ‘if it is obvious in advance that the outcomes . . . must be consistent with world economic forces, unions lose all autonomy for policy determination’ (1995: 109). Divisions amongst workers including those between skilled and unskilled and the problems this presents to labour are hardly new. Thus as Hyman acknowledges, according to ‘many critics, the diagnosis of a crisis of interest aggregation is oversimplified, overgeneralized, and overdeterministic . . . unions as collective organizations are inevitably rooted in a heterogeneity of immediate, localized experiences and aspirations’ (1992: 158, 159). Pollert (1988) notes a possible circularity in definitions of core and periphery and that changes in legislation rather than labour processes may effectively alter employment contracts. New capitalist organisational forms have been commensurate with large numbers

Post-Fordism: The Social Dispersal of Labour? 51

of low waged casualised workers who are ununionised. But this does not demonstrate causation; that they are ununionised because they are low waged and casualised any more than that they are low waged and casualised because they are ununionised. The ‘peripherals’ of any moment need not be inherently beyond the ambit of trade unionism. Panitch (2001) takes a particularly optimistic view, seeing diversity as a source of strength and arguing that without heterogeneity notions of solidarity would lack meaning. Empirical studies from the US show that although they are indeed underrepresented, union organising achieved greater success, and attitudes were more pro-union, amongst women and people of colour (Bronfenbrenner and Juravich, 1998). Moody, in contrast to mainstream characterisations of ‘new social movements’, maintains that it is specifically their working-class nature that is genuinely novel (1997: 205). Few would insist that class is the only possible basis of resistance (Chin and Mittelman, 1997) but labour’s exclusion as even a potential social actor, or its assignment to a necessarily subordinate role is more questionable. The extent to which discourses of labour renewal and redirection take mainstream, neo-liberal characterisations of change as their premise also provides reasons to be cautious. It again seems necessary to re-examine the restructuring of capitalism, the purported basis for such strategic reorientations and to offer a more concrete description of labour’s potential.

5 Investigating the Claims of Globalisation and Post-Fordism

The previous two chapters have suggested that there are reasons to at least qualify the more abstract characterisations of contemporary socio-economic change. Nevertheless, many of the specific claims of spatial and social dispersal may have serious implications for workers. Capital does seek lower wages and to flee the insubordination of labour (Holloway, 1995). Greater mobility, at least in certain cases, may increase its options and its power (Frieden, 1991). Workers in new industries and smaller workplaces may have weaker traditions and face greater obstacles in building trade unionism. Significant changes in the structure of capitalism occurred in the late 20th century but their social and spatial unevenness, complexity and differences of interpretation again suggest that the evidence is insufficiently conclusive to take labour’s structural disempowerment as established. While it might not be the norm, case studies have shown that ‘despite their invisibility in the literature workers are indeed capable of confronting and beating globally organized capital “on the ground” ’ (Herod, 1995: 348). Asymmetry in its relationship with capital and the speed of recent change might mean this particular conjuncture renders labour more victim than active contestant. Nevertheless, workers and trade unions are not necessarily passive objects of processes of economic change and other possible causes of apparent weakness might be considered. As discussed in Chapter 1, writers from diverse traditions have stressed, in different ways, an interrelation between agency and structure. A more thoroughgoing investigation of restructuring, mapping the terrain on which 52

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contemporary class struggles are fought, seems a necessary prerequisite for radical reorientations of labour strategies.

A cross-sector, comparative method for studying economic restructuring and assessing its implications for labour Claims of economic restructuring made by theorists of globalisation and post-Fordism, it was argued above, need to be critically evaluated. Chapter 1 suggested that Marxism starts with the totality, that this involves avoiding any narrow disciplinary ghetto and suggests research that is both spatially and temporally broad. Nevertheless, while the methodological priority of the totality might be a useful signpost it is less easily operationalised. It is not possible to know everything all at once and practically necessary to limit the scope of enquiry. The totality, as Arthur suggests, resists immediate presentation, requiring investigations to start with some aspect of it (1997: 21). Marx stresses a method of progression from the abstract to the concrete. But it is sometimes necessary to pause at particular levels of abstraction. The critique of political economy and engagement with alternative presentations, may ‘clear the ground’ for more effective, fully adequate and subsequently more concrete theories. Albeit in a minor key, it is research of this type that this book proposes. There is, of course, already a massive literature, particularly on globalisation, yet the preceding chapters have suggested that too often authors have generalised too readily from too narrow a range of experiences and from changes over too short a timescale. This book attempts to overcome at least some of these difficulties through a comparative study of industrial sectors. Temporally, it proposes an evaluation of changes across a 20-year period at the end of the 20th century, whilst also seeking to contextualise these developments within a longer historical perspective. The comparative approach retains the focus on the global while attempting to provide constructive contrasts between suitably selected sectors. It seeks to critically investigate existing accounts that suggest structural economic changes have disempowered labour. It does so through a critical investigation of (the claims made for) socio-economic change. If we find the changes and their influences on labour to be different from those proposed, the hypotheses should be rejected or at least substantially modified. It may remain necessary to understand the reasons for labour’s apparent

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weakness, to investigate other factors, and to engage in more specific research of the interconnections, in Coxian language, between ideas, institutions and material capabilities. Comparative Political Economy (CPE) has become a widely accepted economic perspective or discipline. Hong (1997) explicitly invokes Mill’s (1967) method of comparative difference in his study of East Asian national economies. The social world is likely to be resistant to any inductive proof but historical comparative studies have been widely and effectively used in political science and political economy. The objectives of CPE are usually directed towards assessing economic ‘performance’ (Lane and Ersson, 1997). It might, however, also be suitable for evaluating the importance of different economic, institutional and ideological influences in shaping outcomes for labour. Indeed there has been a substantial literature comparing the international situation of labour (Cornfield, 1997; see for example, Upchurch, 1999; Traxler et al., 2001). Focussing, as with most CPE, on international comparisons, these studies offer considerable critical purchase, for example, on claims of labour disempowerment that focus on declining state powers, developing ‘democratic deficits’ and aggregate labour market effects. However, as argued above, labour’s situation cannot be wholly considered a subset of that of nation states and a state-centred approach seems, amongst other things, less able to offer a critical evaluation of geographical elements of dispersal. Uneven development, however, occurs not only on a state-by-state basis but also across industrial sectors (Weeks, 1981). Adapting the comparative approach to the study of suitably selected industries allows this project to affect the Marxist priority of the social relations of production over analyses of the state, international relations and the world market. It enables a fuller evaluation of claims for structural change and provides an alternative, but remaining sensitive to international variations within the sectors, also a complement to nationally based accounts. Inter-industry studies have a considerable pedigree. Surveys of particular sectors, especially Fröbel et al.’s (1980) text, have become important reference points, if also the basis of some overly hasty extrapolation. While even the most carefully chosen comparisons cannot capture the whole economy, broader studies might provide more nuanced conclusions and better situate capital, labour and states within developing social processes. Dicken’s (1998)

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study makes cross-sectoral comparisons* elaborating on what he sees as a triangular nexus of dynamic interactions comprising firm–firm, state–state and firm–state relations. Strange similarly sees the study of economic sectors as a potentially useful way to examine ‘the balance between political authority and market forces’ (1996: 41). More specifically, cross-industrial study provides a potentially effective means to evaluate the two key arguments identified in the previous chapters concerning spatial and social reorganisation and its implications for workers. While there are numerous examples of capital movement, effective comparisons might allow a more rigorous assessment of the extent and causes of reorganisation, to consider, for example, if there were systematic differences between sectors according to the specific products, markets or social relations of production. Similarly, theories of post-Fordism depict changes in the relations between and within firms and inter-industry comparisons might allow us to evaluate the extent of this in different situations. Furthermore, such studies might potentially illuminate whether, or to what extent, there is a correspondence between any social and spatial changes in economic structure and outcomes for labour. The method therefore appears to afford a relatively powerful means of systematically investigating pervasive claims of the effects of globalisation and post-Fordism on labour. However, the concept of industry is itself somewhat ‘slippery’ and the borders are unmarked (Storper and Walker, 1989; Strange, 1996). Selection inevitably involves some arbitrariness and compromise. Examples, at best, ‘cut a slice’ through the economy, biopsy without guaranteeing the absence of counter-indicators elsewhere. Rather than seeking extreme cases, which might be found, for example in toys and textile on the one hand or amongst public sector employees on the other, the selection of industries here aims to compare a sample reflecting a gradation of different attributes. Key variables in terms of the globalisation hypothesis include capital mobility and spatial concentration. In terms of claims of post-Fordism, questions of industrial concentration or disintegration and of the nature of the labour process seem vital. Important differences have also been described between production and consumption industries, and * Indeed the most recent (2003) edition, published as this manuscript was being completed brings the sectoral coverage very close to that here.

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between manufacturing and service sectors. Even prior to any restructuring in the last 20 years of the 20th century, levels of labour organisation and the degree and forms of state intervention varied widely between sectors. The sampling aims to reflect such variation. This study will compare four industries: automobiles, construction, semiconductors and finance. The first two are classic ‘old economy’ sectors, the latter two central to most depictions of the ‘new economy’ and globalisation. The auto industry not only provides the etymological root of ‘Fordism’ but has also often been seen as representative of manufacturing in general and to epitomise its transformation. Construction provides significant contrasts, involving material manufacturing processes but with its market-determined point of final assembly not susceptible to globalisation in the same way as other sectors. It has, however, long been characterised by complex subcontracting networks and more varied traditions of labour organisation. Semiconductor manufacturing has often been seen as the key technology of the high-tech revolution. The industry makes small, expensive and mobile products and has been thought particularly susceptible to globalisation and an international division of labour (Henderson, 1989). Finance, although an ancient industry, is often at the heart of depictions of the new economy. It represents perhaps the ultimate in abstract knowledge manipulation, its products almost infinitely mobile. Thus the mobility of the sectors varies; in terms of their products, from the near total to the fixed final locations of construction. The mobility of the fixed capital and spatial concentration varies across, but also within the sectors. Industrial organisation varies, from auto assembly, dominated by a few giant firms through to construction in which there are many large firms but also millions of small ones. Scholars also describe the disintegrated nature of semiconductor manufacturing, in contrast to Fordist models once typified by auto production. Any quantitative comparison by skill is particularly problematic but each sector is undoubtedly characterised by very different labour processes. The sectors reflect different types of industry and supply different markets. Levels and modes of state intervention and traditions of trade unionism vary considerably. The research relies on secondary sources; using information which will often be familiar to specialists of the particular industries. Any novel insights lie in the way this evidence is marshalled, synthesised and related to questions of labour’s potential.

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Each of the industry surveys provides some historical context before considering more recent changes in more detail. The specific histories of the sectors suggest slightly different time periods for this closer investigation but generally the chapters concentrate on the last two decades of the 20th century. While the scope is, in principle, global, the project also has a certain geographical unevenness. First, this reflects the non-homogeneous organisation of the industries themselves. Secondly, the book concentrates on the experiences of workers in the ‘North’. It is their situation that is most widely supposed to have deteriorated in the era of globalisation. Several authors take experiences in the US, in particular, as exemplars of the effects of both globalisation and the ‘new economy’ and the critical nature of this research engages with this emphasis. Thirdly, the availability of data is not even: it is often collected by ‘national’ agencies; with those in richer countries tending to be more prolific and access to UK and other English-language sources the most straightforward. Similarly there are intersectoral differences in the availability of evidence. Aggregate national data for finance and construction, given their own International Standard Industrial Classification (ISIC) codes, is often available from agencies such as the ILO, IMF, and UN, while automobiles and semiconductors are subsumed within manufacturing. The auto industry, however, is particularly well documented while there are fewer general accounts of the other sectors. Sometimes sector-wide information is not available but useful texts and statistical sources exist for various aspects or subsectors and for specific national industries. For example, car assembly is better accounted than commercial vehicle or auto-parts manufacture and banking than other aspects of finance. Use is also made of more local data and smaller comparative samples. In some instances the evidence is therefore indicative rather than systematic. This may limit any positive claims but such sources might, nevertheless, provide effective evidence for the critique of prevailing accounts. Even the most authoritative sources should be treated with caution. Perspectives and methodologies vary considerably. Other sources, such as newspaper reports, companies’ own accounts and information provided by national industry associations are often more obviously partial. All this qualifies any statistical evidence. However, attempts are made to corroborate data using multiple sources, while historical series might usefully indicate trends despite any quantitative

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shortcomings. Moreover, as these agencies typically promote accounts of change suggesting labour became weaker, their use here strengthens rather than detracts from conclusions that such hypotheses are unsustainable on the balance of evidence. It is hoped that the historical and comparative investigation of the claims made for fundamental restructuring may at least provide the foundations for more detailed positive assessments of the interactions of labour’s material capabilities, institutions and ideas. There can be no proof of labour’s power in the absence of effective practice. However, the comparisons offered here, with past experiences, between different places and across industrial sectors might offer some critical purchase on contemporary restructuring and thus also on the ways in which this is widely supposed to have affected workers and their institutions.

Part II Evidence of Labour’s Condition

6 Automobiles

Introduction Part I discussed arguments that economic restructuring undermined labour. Workers, it is suggested, suffer a geographical dispersal as capital mobility increases and a social dispersal as relations change between and within firms. Chapter 5 advocated a comparative, cross-sectoral investigation of these claims. This chapter begins this by looking at the auto industry. The next section puts recent changes in some historical context, briefly considering the earlier ‘Fordist’ period. The chapter then assesses the internationalisation of production and claims for globalisation in the late 20th century. Despite large increases in trade, it finds an enduring concentration of assembly close to major markets and the most significant shifts on a regional rather than global basis. There were also significant aggregate rises in components trade but only a relatively narrow range of components were substantially sourced from more distant and low waged economies. Pressures towards spatial agglomeration often remained quite strong. The chapter then examines changes in the relations between and within firms. It identifies an increasing use of ‘outsourcing’, and of cheaper labour in smaller firms in the components sector, but also that this coincides with tendencies towards organisational as well as spatial concentration. It investigates claims that lean production transformed work but suggests such changes neither produced less alienating working conditions nor precluded effective opposition. The chapter concludes that although significant innovations occurred 61

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they were uneven, with little evidence of an epochal or global shift. The situation of autoworkers did not appear to substantiate assumptions of labour’s overall structural weakening but requires critical comparison with other sectors.

Fordism in the automobile industry This section highlights the uneven and contested development of social relations within the motor industry in the pre-globalisation, Fordist, period. It suggests characterisations of post-Fordism tend to misread the contradictory diversity of the industry’s earlier social and spatial organisation. Pre-war Fordism First developed in Germany in the mid-1880s, by the turn of the century, numerous firms in Europe and America made cars; a luxury commodity, custom built by craft workers. Established in 1903, Ford was initially fairly typical. However, between 1908 and 1914, it introduced a series of changes, developing and integrating techniques used in other firms and industries, standardising products, subdividing work and using machinery to replace manual labour. Finally in 1914, it extended moving assembly lines throughout the Highland Park plant (Kinch, 1995). Some authors depict this as a unification of Taylorism with intensified mass production methods and question the extent to which it should be seen as a revolutionary transformation (Hounshell, 1995; Hsieh et al., 1997). Although high compared with earlier auto-manufacturing practices, Henry Ford and later commentators probably exaggerated the impression of standardisation. Williams and his co-authors (1994) identify the variety and development of products offered and flexibility in Ford’s rapid switch to wartime production in 1917. By then Ford had halved shipping and storage costs by dispersing final assembly to locations across the US. Similarly, with tariffs also usually lower than for finished cars, the firm established assembly operations in a total of 19 different countries as early as 1926 (Womack et al., 1990). However, at the same time, Ford reduced the proportion of bought components. Integration developed further at the River Rouge plant opened in Detroit in 1927 with 27 miles of conveyor belt and a peacetime peak employment of 80,000. Nevertheless, Ford still relied on external component plants

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and on numerous bought supplies while the Second World War conversion to armaments manufacture again demonstrated a considerable flexibility. Ford had aimed to increase management’s control over the content and pace of work, to give ‘every second necessary but not a single unnecessary second’ (Henry Ford, cited in Beynon, 1973: 19). ‘Slacking’ met intensified supervision. Ford also flattened the pay structure, radically reducing the proportion of skilled craft workers. By 1913 most employees earned an apparently frozen maximum pay of $2.34 per day, the standard rate for the area (Braverman, 1974). At these wages, Ford could recruit but the intensity of work made it hard to retain workers. Labour turnover ran at nearly 400 per cent and absenteeism at 10 per cent in 1913. Ford also feared the Industrial Workers of the World who the same year led a strike against Studebaker. In 1914, Ford responded. The $5 day cut turnover and absenteeism to 16 per cent and to 0.5 per cent respectively by 1915 (Braverman, 1974; Raff, 1988; Clarke, 1992). Ford also attempted to control the workforce through ‘paternalism’, involving amongst other things the promotion of family life, a more thorough exclusion of women and the preferential treatment of married over single men. Ford’s sociology department spied on his workers to enforce conformity outside as well as inside the factory and to keep out militants. However, at the time Ford did not offer continuous employment, for example closing factories during the post-war slump and when changing from Model T to A (Williams et al., 1994). Theorists of Fordism have depicted a virtuous cycle of mass production and consumption. Increasing economies of scale cut the costs of Model T from $950 to $290 between 1910 and 1924. While the $5 day was never available to all his employees, it became true, as Henry Ford indeed anticipated, that some American workers, including his own, could afford cars. However, at the time, pay rises were an expedient response. They worked because they were exceptional while Ford’s own workers alone could not have sustained demand. Gramsci, attributed with coining the term ‘Fordism’, thought it ‘an obvious reflection that so-called high wages are a transitory form of remuneration’ (1971: 310). As other firms copied Ford’s methods, especially when unemployment rose, workers had little option but to take any job available. The intensity of work increased but any pay premium was eroded. Having risen to $7 an hour in the late 1920s,

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as the boom ended, wages fell to $4 and then to $3 in the early 1930s (Braverman, 1974; Rubenstein, 1992; Lewchuk, 1995). By the 1920s, General Motors (GM) adopted an alternative strategy and business organisation. It kept manufacturing processes in dispersed sites, with component plants across the Great Lakes region, and subcontracted a higher proportion of its parts production. It retained the companies it incorporated as distinct operating entities and produced a broader and more rapidly changing range of models. It maintained a less flat pay structure, retaining workers with more general skills or ‘functional flexibility’ while paying piece rates and group bonuses rather than day wages. Workers were also more likely than those at Ford to be ‘numerically flexible’ subject, in particular, to seasonal layoffs. Thus GM, the leading US car firm, already incorporated in its practices elements that would come to characterise ‘post-Fordism’ at the end of the century. Market share rose at Ford’s expense, forcing the latter to retreat from extreme specialisation. Clarke argues, ‘if Fordism is identified narrowly with Henry Ford’s production philosophy it did not continue beyond the 1920s’ (1992: 18). The mass market was precarious and US production fell from 4.5 to 1.1 million between 1929 and 1932. Ford laid off 75,000 workers in 1931 alone (Williams et al., 1994; Mitchell, 1998b). The car firms attempted to disorganise labour and to reorganise it on terms favourable to capital. They assembled workers together in large numbers but at the time few commentators presumed the new car plants or labour processes to be particularly favourable to workers’ organisation. The assembly line and mechanisation were more characteristically thought to have a deadening impact. Opposition typically took ‘primitive’ forms such as absenteeism. Strikes at GM in 1930 and 1933 were defeated. Hunger marches against the car firms, notably in 1932 when four were shot dead and 23 seriously wounded outside the River Rouge, at best achieved propaganda victories (Beynon, 1973; Boyer and Morais, 1977). Eventual changes in the industry came, at least partly, from the outside; a product of broader socio-economic shifts within which car workers did not initially take the lead. However, they soon became an important and, through the sit down strikes at Flint, symbolic part of the rising militancy. Rather than mass production mechanically turning out recruits, the enduring heterogeneity of labour was evidenced in the important role of both skilled engineers and politically influenced militants in union

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organising. Nonetheless, the autoworkers’ union the Automobile, Aerospace, and Agricultural Implement Workers of America (UAW) finally won recognition and higher pay at GM and Chrysler in 1937. Ford continued to resist, only in 1941 after a ‘bloody but successful strike’ conceding a better deal than at GM and Chrysler (Hounshell, 1995). Unionisation finally restored relatively high wages to the industry. Outside the US, production was on a smaller scale. In the 1920s, 90 per cent of the world’s cars were made in America. In Europe, more firms built fewer cars for a more diverse elite market. Greater social polarisation and protectionist policies strengthened tendencies towards specialist niche production. Lamming argues that firms in other countries were nevertheless compelled to follow the American example to adopt ‘the deskilling process of mass production’ (1993: 11). European and Japanese car bosses visited Highland Park and River Rouge to learn from Ford. Nonetheless, important differences endured and volumes even of popular models like Citroen’s Type A and Fiat’s Topolina, were low compared with those in the US. The German firm, Brennabor, which attempted to introduce Fordist techniques collapsed in 1929 (Hsieh et al., 1997). Plans for ‘motors for the millions’ of Morris and Austin in England and of Volksautos in Germany were also frustrated by poor roads, expensive fuel and a shortage of repair facilities (Nelson, 1970). Conversely, with luxury production relatively less affected, the Depression also hit the French and British industries less severely than the American. Car firms also confronted different class relations, both in the craft traditions within engineering and in the wider labour movements. Most did not experience anything equivalent to the labour revolt of the US in the latter part of the 1930s. In France, already unionised and with a strong left presence, the car plants of Citroen and especially Renault were central within the 1936 general strikes. Again emphasising the connection with wider mobilisation, and their irreducibility to industrial structure, the May Day strike of that year was the first time in 20 years that unions closed Renault’s main Paris factory (Danos and Gibelin, 1986). Ford in Britain, as in America, and the British firms Austin and Morris were resolutely anti-union. More pragmatic, GM/Vauxhall ‘provided relatively high wages, a profitsharing scheme and greater job security, so that trade unions did not recruit many members’ (Mulvey, 1994: 18). The 1930 strike at Rover

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exemplifies some of the differences with the US. Rover resisted generalised pay in preference for piece rates and differential wages. Wary of the power of the unionised male engineers, Rover initially attempted to impose the ‘Bedaux’ time-motion system on lower paid, non-unionised women workers – who promptly struck. Ineligible for membership of the skilled National Union of Vehicle Builders (NUVB) they joined the Transport and General Workers Union (TGWU), already a mass union. Defying the NUVB leadership, male engineers joined the strike. Eventually the TGWU (against the women strikers’ wishes) conceded the system but asserted the longstanding labour movement demand of equal pay for equal work – which Bedaux could now quantify. The effect would have been to roughly double women workers’ pay. Rover, under pressure from the Coventry Engineering Employers Association, abandoned the plan. Labour unionised, avoided Bedauxism (for the time being) and the NUVB was persuaded to admit women members from the following year (Downes, 1990; Lewchuk, 1995). The development of standardisation, mass and integrated production in Ford and other car firms were at most processes or tendencies rather than an achieved end state. The condition of labour was not, or not only, established by economic organisation but through social struggles. Husan’s suggestion that automobiles ‘was the industry which in the U.S. and later in other countries gave rise to mass trade unions’ (1996: 1) seems hard to sustain. It is problematic in the US. In the UK, mass ‘general’ unions predate significant car production. More generally, outside the US, an industry with less standardisation confronted different social relations and pre-existing labour traditions. Post-war Fordism From being largely an American phenomenon, after the war, auto production became crucial in many national economies. Between 1950 and 1970 production in the four major western European economies increased nearly sixfold to over 10 million vehicles a year, in Japan from a few thousand to more than 5 million. Whether, or to what extent, Fordism, in Harvey’s (1990) phrase, became a ‘total way of life’ is more questionable. Understood as a set of institutional compromises between capital, labour and the state, it does some violence to the language given Henry Ford’s own antipathy towards

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the unions and the limited role of government within the US motor industry. It was only in the 1930s that the Wagner Act shifted the terrain between labour and capital in the auto industry as elsewhere. In the post-war period, labour conditions improved in many developed countries and states often intervened more directly. Characterisations of Fordism may, nevertheless, exaggerate the degree of generality and understate the ambiguities of labour’s situation. At Ford itself, despite formal union recognition in 1941, only further substantial pay rises in 1946 began to restore stable industrial relations. Only from this date can high wages and a conciliatory attitude towards labour plausibly be evidenced. The 1950 ‘Treaty of Detroit’ between GM and the UAW appeared even more substantial. A 5-year no-strike pledge, according to Davis ‘symbolized the end of the long . . . cycle of class struggle and established the model of collective bargaining that prevailed until the 1980s’ (1986: 52). Wage negotiations took a ritualised form of triennial pattern bargaining with occasional set piece strikes targeting Ford and Chrysler but avoiding GM until 1970 (Rubenstein, 1992). Industry wage rates rose relative to other workers, and in real terms by nearly 400 per cent, between 1948 and 1981. Wage structures were flat but, as commentators on Fordism acknowledge, the auto industry remained decidedly inegalitarian in recruitment and conditions of employment of women and black workers (Milkman, 1997). Some locals, in particular 600 at River Rouge, for a time remained militant but Walter Reuther and the UAW leadership co-operated with Taft-Hartley injunctions to act ‘responsibly’ and to eject radicals. Union incorporation thus involved the commensurate defeat of rank-and-file organisation. With officials absorbed in problems of management, a membership decline began that long pre-dated the era of globalisation and concerns with productivity allowed the further intensification of work and job cuts; for example of 75,000 between 1957 and 1963 (Turner et al., 1967; Aglietta, 1987; Rupert, 1995). The European firms’ structures and industrial relations developed differently, from each other and from US companies. The characterisation of Fordism as a system in which ‘any disagreement at work (or in general any demand) was characteristically resolved through wage increases’ (Durand, 1999: 6) is harder to sustain beyond the US. For example, the Volkswagen Beetle and Wolfsburg factory came closest to Ford’s early production methods but German wages

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remained very low in the immediate post-war period, with rises tied to productivity. However, management ceded ‘co-determination’ in running industry. British industrial relations were more varied than in the US. There was greater scope for shop stewards and negotiated plant level organisation but by the 1960s strike-liability had ‘withered away’ (Turner et al., 1967: 29). Japanese auto manufacture later inspired what is seen as a crucial transition from mass to lean production. The reorganisation of work and ‘co-operative’ labour relations were preceded by the defeat of labour, particularly of decisive strikes at Toyota in 1950 and Nissan in 1953. Although firms subsequently benefited from long hours and intense work, this did not imply a low cost, low capital strategy. Investments in R&D, technological innovation and levels of automation were high, particularly at the leading edge factories of Toyota and Nissan that produced the greatest variety of products (Shimokawa, 1994; Williams et al., 1994; Fujimoto, 1997; MacDuffie and Pil, 1997; Naitoh et al., 1997; Saga and Honada, 1999). Firms did take advantage of lower paid and less protected labour within the parts sector to a greater extent than most western firms, but levels of outsourcing, and conditions in component manufacturing firms, varied considerably. Thus the Japanese industry, model for ‘post-Fordism’, had much in common with earlier, western car production. Levels and forms of state intervention also varied widely, with a mixture of private and state owned firms, direct and indirect support. In short, although a period of increasing prosperity there remained inherent tensions both between capital and labour and between auto firms, the latter including competition between companies in different countries. Whether understood narrowly in terms of the organisation of work and its implications for labour in mass production factories, or more broadly (as discussed in Chapter 4) as a relatively harmonious social settlement, there are, at least, significant ambiguities in the concept of Fordism. Social relations were more deeply contradictory than suggested by caricatures of stable and well-ordered development. Rather than characterising the post-war period in terms of Fordism and regulation it might be more appropriate simply to note that economic boom gave capital in the richest countries some room to manoeuvre within which workers won real gains. However, these

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were neither uniform nor uncontested. When the boom faltered, firms sought new ways to reconstitute relations with labour.

The spatial reorganisation of automobile production Globalisation theorists claim labour was weakened by a fundamental change in industrial geography – plants closed in old industrial areas as trade and foreign investment accelerated. According to Waters: The automobile industry is . . . particularly susceptible to globalization because it assembles a large number of diverse components into a finished product. On the one hand, the manufacture of these components can be dispersed across space, and on the other, assembly systems are relatively easy to relocate (2001: 73). This section argues there was not a general relocation of auto assembly outside the Triad. Most growth in poorer countries needs to be understood in terms of local markets or at most regional integration, the latter exemplified by Mexican sales to the US. The situation with component manufacture is somewhat more complex, although overall, locations within the Triad continued to dominate production. Assembly The case for the globalisation of auto assembly seems strong. Between 1960 and 2000 production in the US fell from about half the world total to under a quarter while the British industry declined from 10.4 to 3.1 per cent. In Japan, France and Italy too, production fell duing the 1990s. Leading car firms became more multinational, expanding not merely beyond national boundaries but also beyond their ‘home’ regions (Womack et al., 1990; Dicken, 1998; OICA, 2001; SMMT, various years). Trade in motor vehicles and their parts more than doubled in real terms between 1980 and 2000 while production rose sluggishly by about 20 per cent. Triad shares of both production and trade fell while those of the ‘developing world’ increased. Several LDCs became major producers. In 1980 their exports were only $719 million, 1.1 per cent of the world total, by 2000, $39 billion, in real terms a 25-fold increase to 12.4 per cent of the world total. Moreover, while three-quarters of developing country

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Evidence of Labour’s Condition

exports in 1980 went to other developing countries, by 2000 the developed world bought a similar proportion (UNITSY, various years). Over a similar period, notably in the US but also to varying degrees in many developed countries, the pay and conditions of car workers deteriorated and labour organisation declined. Firms also used the threat of relocation to tell western workforces ‘shape up or be replaced by production in lower-cost regions’ (The Economist, 16.12.2000). While lean production, which will be discussed below, has been seen as an alternative to globalisation, such pressure may be an important aspect of its implementation. Moreover, firms, for example Volkswagen in Eastern Europe and Ford in Mexico, experimented with new production regimes in poorer countries with weaker labour organisation. Firms announced closures or mass layoffs from many western car plants, apparently confirming Lung’s observation of ‘stagnation of car production in the industrialised countries, and a concomitant increase in the emerging countries’ (2000: 17). However, the great majority of vehicle production continued to take place in the Triad, which maintained a trade surplus. Table 6.1 shows the correlation between GDP per capita and the growth of vehicle production for 44 auto producing countries over four decades between 1960 and 2000. In each, there was a low positive correlation. That is to say, overall, growth remained greater in richer countries than poorer. Although this became marginal in the 1990s the fall and rise of the correlation in the middle decades cautions against extrapolating too radically. The 1990s saw a decreasing divergence rather than convergence. Table 6.1 Correlation between GDP per capita and automobile industry growth in major producing countries, 1960–99 1960s 1970s 1980s 1990s

0.227 0.080 0.376 0.032

Notes: GDP per capita taken at the beginning of each decade; Sample of 44 countries from South America (6), North America (3), Europe (15), Asia (14) and Africa (6). Sources: Mitchell, 1998a,b,c; SMMT, various years; OICA, 2001; Penn World Tables, 2001.

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Even in 2001, 73 per cent of production occurred within the Triad, and levels of production continued to correlate positively with GDP per capita. For 56 countries for which data were available, the correlation was 0.61 (OICA, 2003; Euromonitor, 2003). Perhaps more significantly, production levels correlated particularly closely with home registrations. For a smaller group of 38 countries for which data were available the correlation was 0.90, and perhaps most significantly of all, amongst the 23 non-Triad auto producing countries in this sample the correlation was 0.96, indicating that the overwhelming majority of poorer country production was oriented towards home markets. This was particularly clear in China, where both production and markets grew rapidly at the turn of the century. Even Malaysia, which became a significant seller, remained a net importer. Meanwhile there were poorer countries on every continent, such as Venezuela, the Philippines and Nigeria as well as in the territories of the former USSR and Yugoslavia, where production fell steeply. The importance of (relatively) local markets is also evidenced in the strong regional bases of production. Table 6.2 shows global vehicle production by firm headquarters and regional assembly location in 1999. The most significant exceptions to intra-regional production were of investments in the richest areas, by US firms (largely GM and Ford) in Western Europe (as they had for most of the century), and by Japanese and European firms (the latter largely Volkswagen and the merged DaimlerChrysler) in North America. The US ‘Big Three’ bought, or bought stakes in, several European and

Table 6.2 Automobile output by headquarters and production location, in thousands, 1999

Firms from

Production in Western Eastern US/ Latin Japan Rest of Africa Europe Europe Canada America Asia

Western Europe Eastern Europe US/Canada Latin America Japan Rest of Asia Africa

12,076 0 4,129 0 942 0 0

Sources: SMMT, 2000; OICA, 2001.

1,364 1,359 158 0 430 158 0

2,866 0 9,755 16 3,000 0 0

2,170 0 1,278 0 407 0 0

0 500 0 0 0 334 0 0 9,322 1,781 0 5,638 0 0

154 0 0 0 144 0 287

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Evidence of Labour’s Condition

Japanese firms that sold cars in the US (and GM imported a few thousand Opels from Germany). Otherwise, there were few re-imports and little greenfield investment outside North America whose products were aimed at the US home market. So export growth from poorer countries was spectacular, but the absolute share at the end of the 20th century remained a relatively small proportion of the total. Moreover, this was not a global phenomenon or one of general dispersal. Just two countries, Korea and Mexico accounted for about three-fifths of all LDC exports. Korean production was the major exception to Triad dominance. Its state led developmental path has been widely reported. Particularly relevant here, Korean car-making was never simply export processing, with production initially aimed at protected local markets. Exports accelerated in the mid-1980s and, after stalling with the US recession at the end of the decade, continued to rise in the 1990s. However, the domestic market remained crucial. Sales halved with the 1997 crisis, devaluation and cheaper export prices notwithstanding. All the firms struggled. Even Hyundai, with a 75 per cent domestic market share, was weakened, selling a 10 per cent stake to DiamlerChrysler (Financial Times, 29.9.2000; The Economist, 1.7.2000). Despite such difficulties, by this time Korea had effectively become an industrialised country and it was through indigenous Korean firms that the industry had grown, various links with US and Japanese firms notwithstanding. Originally very low, wages subsequently rose substantially, albeit through sometimes violent confrontations. By contrast, the second largest LDC exporter, Mexico, is best understood in the context of North American regional integration and provides the single most significant example of MNC assembly for re-export to the developed world. GM opened the first auto ‘maquiladora’ in 1978. The earliest plants made basic components and these remained important but declined relative to assembly as the industry grew rapidly from the late 1980s. By 2000 vehicle exports were three times the value of parts (BEA, 8.8.01). Lung describes Mexico as a ‘very rare’ example within motor manufacture of ‘extroverted growth’ or the ‘scissors effect’ whereby ‘production and productivity grow at the same time as wages and local demand collapse’ (2000: 35–6). Firms did not simply take advantage of pre-existing low wages but created new labour relations. By the mid-1970s workers in five of seven car plants in the substantial domestically oriented industry

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had won democratic control from the conservative official union confederation, the CTM. These gains came under attack, particularly in the new plants with management, the CTM and the federal government collaborating to undermine collective bargaining and independent unionism. Wages fell. In the 1980s the debt crisis and collapse of the peso, and hence the falling relative cost of Mexican labour, made it even more attractive. By the 1990s, labour costs as a share of production were less than half the level of the previous decade (Middlebrook, 1996; Núñez, 1999). The conclusion of the NAFTA in 1994 further boosted exports. Japanese and European firms, principally Nissan and Volkswagen, also increased Mexican production. The view that the NAFTA would strengthen labour rights (Compa, 1999) does not appear to have been substantiated. Anderson (2002) argues complaints produced no significant results in its first 8 years ‘aside from a bit of publicity’. Mexican exports reached $16 billion by 2000. As substantial as Mexican growth was during the last two decades of the 20th century, greater overseas investments went not South but North of the border. The US and Canadian industries had been fully integrated during the 1960s and 1970s when the UAW also established wage parity. However, Canadian labour rejected concession bargaining and give-backs agreed by the UAW. Splitting to form the Canadian Autoworkers union (CAW) in 1985, it achieved, according to Holmes and Kumar, a ‘remarkable degree of success in building a strong union’ (1999: 276). Nevertheless, rising dollar values from 1990 and other factors including lower health care insurance costs re-established Canada as a cheaper location. Thus, this G7 country with one of the strongest traditions of auto trade unionism remained the largest US import market and maintained the world’s highest assembly to sales ratio. Canadian car exports rose from $3.9 billion in 1980 to $35 billion in 2000. In the 1970s Japanese firms had exported increasing numbers of small economical cars to the American market as fuel prices rose. They achieved over 20 per cent penetration by the early 1980s when bilateral agreements set quota limits. One response by Japanese car firms aimed at higher priced market segments, so sales values could still increase (and fortuitously fuel prices fell just as the cars got bigger). By the late 1990s, Japanese firms exported over 1.5 million cars and a total of $25 billion worth of motor vehicles and their parts to

74

Evidence of Labour’s Condition

the US. Yen revaluation, however, made Japanese exports dearer but also accelerated a second response of ‘reverse’ or ‘transplant’ investments within North America. These began in the early 1980s and by 1999 transplant car production, including that at joint ventures with US companies reached 2.3 million or 31 per cent of the total (SMMT, 2000). Japanese transplants tended to be sited in small towns outside but close to the heartlands of the US industry, clustering in the Midwest to maintain proximity to suppliers and to markets but away from organised labour’s strongholds. The UAW lost recognition ballots and by the late 1990s only three of sixteen foreign or joint owned car factories in the US were unionised (The Economist, 18.6.98). Japanese firms’ approaches to industrial relations, at the very least, presented new challenges to a union movement in retreat but such moves into the richest world market clearly contradict predictions of production moving towards cheap labour. The widely perceived effects of globalisation on US autoworkers would seem to be out of proportion to the extent of change. There is little evidence of an overall decline in US based motor manufacture. Greater commercial vehicle production more than offset falling car output. According to the Statistical Abstract of the United States the industry grew in the last two decades of the 20th century, as a share of manufacturing and of GDP and in the number of production workers it employed (SAUS, 1994, 2000). The largest volume of production and proportion of world trade took place within Western Europe. Again, production locations shifted. Ford and GM, established in Europe since before the war, developed continent-wide systems. The major European firms also increased their degree of multinationality (Dunning, 2000), mainly the result of intra-European sales and investments. Spain and Portugal became particularly significant sites of FDI. Initially gaining access to local markets, firms latterly gained entry to the EU and regional production networks through these relatively low wage locations. Investment nonetheless continued despite rising wages. As in the US, Japanese firms sought market access to Europe. Britain was attractive because the government was sympathetic, having little ‘domestic’ industry to defend, and labour organisation was declining. Unable to avoid unions altogether as they usually did in the US, Japanese MNCs typically established ‘sweetheart’ non-confrontational single union deals. With output aimed at European-wide rather than local

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markets, more than half the total UK production in 1999 was exported, over 80 per cent to the EU. Rising currency values in the late 1990s threatened to undermine the strategy although in the short term firms had limited options in terms of relocation. In contrast, Ford, with a much larger European network, ran down UK assembly. Meanwhile, the development of an anticipated European ‘maquiladora’ zone proved somewhat halting. Several firms established operations in Eastern Europe where they paid lower wages and experimented with new forms of lean and modular production (Humphrey and Salerno, 2000). Volkswagen’s acquisition of Skoda was the most significant investment but Fiat also integrated its Polish operations while building cheaper models there more likely to sell in the East. GM also incorporated its Hungarian engine production into its European structure. However, many other purchases were of old state owned operations rather than new facilities and appeared to be aimed primarily at local, or at least Central and Eastern European markets. Their slow growth largely disappointed car firms. GM abandoned assembly in Hungary in 1999 after 7 years and Russia in 1998 having made just 2000 cars in 2 years (Financial Times, 8.12.2000). Employment in each of the car producing countries of Eastern Europe fell substantially between 1989 and 1999 and, until imports slumped in 1998, the region maintained a significant trade deficit with the EU. Success in Eastern Europe may largely depend on the more general economic and political development, particularly in terms of relations with the EU (Humphrey et al., 2000). Markets might expand but Havas suggests ‘some of the attraction – especially differences in wages and labour legislation – might vanish as early as the next 5 to 10 years’ (2000: 259). There was also evidence of regionalisation in Latin America. Brazil became a major car producing and exporting country. In the 1970s and 1980s exports rose, at that time going mainly to the developed world, in particular, through Fiat’s involvement, to Italy. Subsequently, however, a greater regional division of labour developed as domestic and South American markets grew. Toyota, Honda, Mercedes and Renault all began producing alongside the established operations of Ford, GM, Volkswagen and Fiat. Production leapt from 900,000 to 1.7 million vehicles between 1990 and 1997 (Marx and Salerno, 1999; OICA, 2001). These markets, however, were more fragile and

76

Evidence of Labour’s Condition

sales and production slumped at the end of the decade (Humphrey and Oeter, 2000). If it appears problematic to describe these changes as ‘globalisation’, interpreting patterns of spatial reorganisation is far from straightforward. Thomas (1997) takes evidence of increasing subsidies as evidence of states’ declining power in relation to more mobile MNCs. Many governments also sold shareholdings, for example in Renault, BL and Volkswagen, apparently loosening geographical ties. However, state intervention appeared to remain an important immobilising factor, with municipal and state governments and international institutions (especially the EU) seeking to attract or maintain investments. States also remained vital, for example, in education, training and welfare provision, in controlling and supporting the conditions and costs of car use and in disciplining labour. Conversely, weaker states may also have been less able to support modern motor industries. State behaviour and social settlements varied, evidenced by the reaction of one Chrysler executive, that in Canada ‘the government lines up with the goddamed [sic] union’ (cited in Holmes and Rusonik, 1991: 22). In Germany, the enduring 18 per cent shareholding of Lower Saxony in Volkswagen, was seen as a bulwark against more substantial ‘restructuring’. Renault however, while still wholly state owned, made massive cuts and ‘overtly used the competition between its Spanish and French plants as a weapon in its battle to obtain a loosening of the social rigidities back in France’ (Layan, 2000: 132). The nature and consequences for labour of state intervention did not appear straightforward. Firms located production facilities in many poorer countries to gain access to markets, which, according to models of product life cycles, should rise. Many did, but low growth and enduring class polarisation often frustrated anticipated scale economies. Capitalexpensive technologies remained significant obstacles to geographically flexible auto production. Minimum efficiencies of scale (MES) tended to grow rather than decline (Thomas, 1997). Even lower MES estimates for assembly were large in relation to the total market in most poorer countries. In India and China, despite growth, Humphrey and Oeter describe producers as ‘struggling to achieve sufficient scale to bring down costs of local assembly and component manufacture’ (2000: 50). Model changes were typically prolonged, as firms attempted to achieve adequate returns on investments. This in turn

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tended to exacerbate technological divergence. Consequently ‘most emerging markets remain characterised by excessive fragmentation of demand across products and producers, and by overcapacity’ (Humphrey et al., 2000: 4). Productivity-raising automation in higher wage locations characteristically diminishes the relative attraction of low wages while low wages made physical productivity increases less important. ‘New entrant’ plants, for example, in Mexico, Brazil and Taiwan, had ‘minimal’ levels of automation (MacDuffie and Pil, 1997; The Economist, 18.6.98). Nevertheless, in the 1990s quality gaps narrowed compared with the mid-1980s (Freyssenet and Lung, 2000) and cars could be economically transported long distances. Overcapacity and failed high automation strategies in the 1970s and 1980s in the developed countries led to less investment in the 1990s. One effect of these less capital-intense strategies, a shift from the extraction of relative to absolute surplus value, may have been to reduce gaps between the developed and developing country producers. This may have contributed towards the declining correlation between wealth and auto industry investment detailed in Table 6.1, reasserting the importance of pay and making the removal of production to cheap labour locations more attractive. Nevertheless, developing country producers continued to struggle and the levels of production for re-import by western MNCs from most LDCs remained low. Patterns of industrial production changed without usually involving cheap labour locations. Ford, for example, relocated assembly from the UK to Germany where output continued to grow. But, other things being equal, the car firms clearly preferred low waged labour, and southward shifts of production in the US, and in Europe to Portugal, Spain and the UK all reflected this. ‘Northern’ car workers lost jobs but it appears, at best, a simplification to suggest their export to the ‘South’. Any levelling-up of workers’ conditions in LDCs was also equivocal. Historically the ‘catch-up’ of German and Japanese industries and later also that of Spain and Korea were indeed commensurate with rising wages. However, Mexican car workers’ conditions deteriorated. Czech workers, of whom it is perhaps a little early to tell, won some modest gains. Most industries did not catch up. The path of ‘development’ remained narrow. Economic volatility and enduring poverty undermined many poorer country markets. Lower sunk costs might make plants commensurately more

78

Evidence of Labour’s Condition

vulnerable to the threat of relocation if wages rose or in recessionary cutbacks. Alternatively, renewed capital investments might undermine the advantages of low wage locations. The mass relocation of auto assembly to the South, with all its attendant consequences for workers in the North simply did not take place. It cannot explain labour’s travails. Indeed, what are usually seen as the most significant reverses for labour occurred either before or at the beginning of this period. For example, unions lost strikes at British Leyland in 1977, Fiat in 1980 and Talbot in 1983–84. In the US, concession bargaining began in the early 1980s. However, as will be discussed in the next section, a version of the globalisation argument might accept a degree of continuity in final assembly whilst anticipating dispersal of production and of labour through splitting up the value chain and sourcing parts from around the world. Networks and global sourcing The diffusion of GM’s component sourcing and the concomitant impossibility of describing the final product as ‘American’ is Reich’s (1991) prime example of economic restructuring. Motor manufacturing is technically disarticulated and increasing subcontracting might mean smaller, leaner firms within which labour is weaker supersede giant corporations, but also that over time many processes may be relocated to cheaper labour locations. ‘Global sourcing’ write Freyssenet and Lung, ‘is becoming a leitmotiv’ (2000: 84). Few authors anticipate a general geographical dispersal. Some parts are more likely to be traded than others. Maxton and Wormald write the ‘effective “reach” of sourcing depends on the nature of what is supplied’ (1995: 133). Altschuler and his co-authors maintain mobility is limited by heavy initial investments, by the expense of shipping some bulky components and the need for others to fit specifications precisely. Only a third category of ‘minor mechanicals’ are thought well suited to low-wage sourcing (1984: 175–7). Other commentators suggest the logic of lean production and Just-in-Time ( JIT) means manufacturing as much as possible at, or as close as possible to, the point of final assembly (Womack et al., 1990; Van Tulder and Ruigrok, 1996). Empirically, the aggregate trade in parts increased rapidly but less so than that in assembled vehicles. In current dollar terms, trade in cars rose fivefold between 1980 and 2000, trade in parts by a factor of 4.3 (UNITSY, various years).

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In many geographical areas and in sectors of the production process industrial concentration remained the norm. Major assemblers encouraged ‘follow sourcing’ creating industrial parks or ‘condominiums’ around their operations. The Financial Times writes ‘[f]or the manufacturers the logic is compelling. They can achieve big savings on stocks and transport costs’ (29.2.2000). Reducing time was often crucial. The experiences of Japanese transplants in North America provide evidence of follow sourcing. Imports of Japanese parts rose from $5.9 to $14.5 billion during the 1990s but, contrary to predictions of rising deficits in parts imports (Williams et al., 1992), by the late 1980s parts suppliers accompanied the assemblers. Japanese imports fell as a share of the total, from 35.3 to 21.7 per cent. Meanwhile the Japanese firms bought $31.9 billion of US-made parts in 1999 (Japanauto, 2001). While intra-firm transfer pricing may understate the level of imports, the overall growth in US parts imports between 1980 and 2000 was again less than that of assembled cars and the trade balance in parts went positive in the early 1990s. More detailed evidence from the UK appears to verify predictions of increased international sourcing, but in particular the selective pattern suggested by Altschuler et al. (1984). Unlike the US and world average, parts imports rose faster than those of assembled cars during the 1980s and 1990s. Table 6.3 shows that whereas car and commercial vehicle imports came from closer sources in 1999 than in 1979, the average distance of component import markets increased both in aggregate and for most individual parts. For many components trade and the number of significant import markets both increased. There were, however, marked differences between parts. The value of trade in rear axles, for example, fell significantly. The greatest increase in components trade, more than 13-fold, was in brakes and their parts, but here imports continued to come from relatively nearby sources. Meanwhile (contrary to the predictions of Altschuler et al., 1984), trade levels and distances of import markets of engines rose substantially (SMMT, various years). Table 6.4 shows, with considerable and growing variation, the falling relative GDP per capita of import markets. Here there is little aggregate difference between parts and assembled vehicles but considerable differences between components. Already in 1979, the Far East supplied a significant proportion of some electrical goods and

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Evidence of Labour’s Condition

Table 6.3 Average distances and number of major UK import markets, 1979 and 1999 1979

Cars Commercial vehicles Parts Rubber tyres Petrol engines Apparatus to make circuits Starter motors Lighting and signalling equipment Radio and tape Gear boxes Rear axles Brakes and their parts Shock absorbers Wheels and their parts

1999

Distance

Number

Distance

Number

1929 1627 1502 1467 903 1776 3647 2015

10 7 12 18 6 8 11 8

1774 1237 2102 2880 3677 3572 4392 2103

12 9 11 17 9 18 11 12

6319 1210 1124 1405 818 1176

13 5 4 11 7 9

4772 4491 1796 1383 1271 2343

24 9 10 10 9 13

Notes: Distances in kilometres are calculated as the weighted average from the countries’ capital cities to London. Major markets are taken as those supplying 1 per cent or more of the total. Sources: SMMT, 1980, 2000; VSV, 2001.

some components were sourced in growing proportions from low wage economies. However, the major import markets remained developed Triad countries. Germany, with 33.8 per cent of the total remained the largest, followed by France (14.9), Japan (7.5), Spain (6.7), Italy (6.4), USA (5.8), Belgium/Luxembourg (5.3), Netherlands (2.8), Sweden (2.4) and Austria (1.8). Over three-quarters of the total came from within the EU. Of poorer countries only Hungary, from whence GM imported engines, took over 1 per cent. Over this period the same source of GDP data suggests relative German per capita income fell from 172 to 107 and French from 148 to 100, broadly parallel to the overall changes. Firms extended supply lines but for most components on a regional basis. As in the US, the Japanese share of parts imports rose, from 4.5 per cent in 1979 to 12.8 per cent in 1994 before falling back. The 1999 level of 7.5 per cent contrasts with the 31 per cent of UK car

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Table 6.4 Average GDP per capita of major UK import markets, 1979 and 1999 (UK = 100)

Cars Commercial vehicles Parts Rubber tyres Petrol engines Apparatus to make circuits Starter motors Lighting and signalling equipment Radio and tape Gear boxes Rear axles Brakes and their parts Shock absorbers Wheels and their parts

1979

1999

142 151 147 126 156 156 138 141 113 153 159 145 157 153

98 97 100 84 78 108 112 94 79 119 93 98 94 87

Note: GDP per capita is calculated as the weighted average relative to the UK of major import markets. Sources: SMMT, 1980, 2000; Penn World Tables, 2001.

assembly carried out by Honda, Toyota and Nissan. This again indicates a localisation; most parts came from more nearby sources. Thus, only with considerable caution can these figures be taken as reflecting a general spatial relocation of production to low income countries. The evidence appears to suggest that proximate agglomeration may not be the norm. But, along with falling distances of vehicle import markets, it confirms Maxton and Wormald’s prediction that ‘[t]he economics of just-in-time clearly dictate that vehicles be assembled close to end markets and that components be sourced primarily within mega-regions’ (1995: 132). The ‘primarily’ is important and significant exceptions including electrical equipment were often made further away. However, these exceptions were not the rule. There appeared to be straightforward patterns of neither dispersal nor agglomeration, but contradictory centripetal and centrifugal pressures. Their resolution depended on the specifics of the products, the processes of production and distribution and social relations within firms and countries. The experiences in the components sector appear to confirm those in assembly in indicating that some characterisations

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Evidence of Labour’s Condition

of globalisation exaggerate the shift of production to low wage economies. Apart from anything else, firms could often find cheap labour closer to home.

Post-Fordism in the automobile industry Increased subcontracting The auto industry is also often taken to typify changes in the relations between firms and in the labour process, with the Japanese industry often the model. Less integrated firms ‘outsourced’ a higher proportion of their work than did western counterparts. Lack of capacity in the 1950s, as the market grew, meant firms passed parts production to lowvolume, small-batch specialists. Although the conditions of capital scarcity no longer held by the 1960s, lower wages in that sector reinforced outsourcing. A minority of ‘core’ male workers within the major assemblers enjoyed lifetime (or at least relatively secure and long-time) employment and rising wages while ‘peripheral’ labour in various tiers of the components sector was casualised and lower paid. First-tier parts suppliers, in particular, were typically but never universally closely allied to assemblers within keiretsu. The system was characterised, or at least caricatured, as built on long-term trust and co-operation. Relations with the lead companies and state backed finance enabled parts makers to invest heavily both in research and production facilities. In the 1990s, western final assemblers increased their components sourcing. While vehicle sales grew only falteringly, the global value of the parts sector rose from $450 billion in the late 1980s to $950 billion (Financial Times, 29.2.2000). For western firms, subcontracting had a number of advantages. Vehicle manufacturers made in-house divisions compete with external suppliers or sold them off completely, raising useful revenues. Specialising in core activities of vehicle design and assembly, they avoided capital expenditures in component manufacture while passing on to competing suppliers the need for savings. Significantly, workers in the parts sector were usually less well organised and more poorly paid than in the assembly. Cost cutting and attempts to transfer the risks of capital expenditures in situations of increasing uncertainty did not portend stable relations. There were often sharp conflicts between assemblers and suppliers – for example over sharing proprietary knowledge. Cost

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cutting could restrict investment. Blum (1999) describes a threefold increase in the value added going to factors other than labour in US assembly, between 1981 and 1994, but only slight rises in components and even, in some areas, like stamping and trim, decline. The ability to deliver parts on time or in the quality required suffered. One consequence of component manufacturers’ weakness was a rapid consolidation. As the industry doubled in size the number of firms fell from 13,000 to 8000 in 10 years (Financial Times 29.2.2000). Assemblers attempted to overcome problems of reliability by awarding long-term contracts to fewer firms, often ‘sole sourcing’ particular components. The requirements of physical proximity and follow sourcing demanded by assemblers also made it hard for supplier firms to survive without themselves having global coverage. Independent component manufacturers were squeezed. In Brazil, for example, where in 1995, 12 of the top 25 component firms were wholly or majority Brazilian owned, 3 years later seven of these had been taken over by foreign MNCs (Humphrey and Salerno, 2000). So while the average size remained smaller than of the major assemblers, the components industry came to be dominated by large firms. The same need for economies of scale similarly challenged traditional Japanese supplier relations, initially in foreign markets but increasingly within domestic production. No longer able to depend on orders from a single manufacturer, mutual sourcing broke traditional keiretsu affiliations (Shimokawa, 1994; Guiheux and Lecler, 2000). However, increasing size threatened to change the relationships with the assemblers. By 2001, the largest 20 supplier firms each had annual turnovers greater than $5 billion and each employed more than 30,000 workers. Those supplying DaimlerChrysler even mooted a unified challenge to its insistence on price cuts (Automotive News, 23.7.01). Across the world major component manufacturers became true industrial giants in their own right. In some sectors, concentration was greater than in assembly. For example, three tyre firms, Goodyear, Michelin and Bridgeston-Firestone dominated the market. For labour, there were considerable differences between countries and sectors of components-making, with the wage gradient between assembly and components less steep in Europe. Overall, however, lower wages in the components sector may plausibly be attributed to weak organisation commensurate with small firm size. However, union density in the sector in the US fell by the order of 50 per cent

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between 1978 and 1995 (Babson, 1999) even as the companies grew, indicating the causes of decline lay elsewhere. The previous section suggested that amongst other things JIT production systems might concentrate rather than disperse production. The need for stable relations might not only limit firms’ mobility but also suggest considerable potential for labour. Van Tulder and Ruigrok highlight the need for ‘close interaction of suppliers and dealers as well as with other relevant actors, such as trade unions and government’ (1996: 24). Such interdependence, of course, is not something fundamentally new. It was in the parts sector that autoworkers in the US in 1937 scored their first decisive victories in the strikes at Goodyear and Firestone. Strikes at component plants then beat GM into recognising the UAW. But as Babson writes JIT ‘made the unions’ time-worn strategy of “selective” strikes all the more powerful’ (1999: 41). For example, GM was hit by several strikes in the 1990s. In 1998, strikes at two component plants shut down 26 of their 29 American assembly plants, costing the company close to $3 billion (Financial Times, 16.8.98). Sole sourcing reinforced this strength. One small illustration from Australia is afforded by a two-week strike in 2001 by just 350 workers at the Tristar Steering and Suspension Company. It shut down three of the country’s four assembly plants, costing the industry an estimated US$205 million and winning pay increases and an insurance bond protecting leave and pensions in the event of corporate failure (BBC, 10.8.01). The parts sector has historically been comprised of smaller firms and had lower levels of union organisation than assembly. However, rather than seeing a return to genuinely small-scale artisan production, many parts makers grew to become giants in their own right. The sector provided some empirical evidence of the application of what appeared to be a considerable potential for labour. Lean production According to Stewart and Garrahan ‘[t]he conception of globalization comes in many shapes and forms and in the automotive industry it has been represented in the canon of the Japanization school’ (1997: 224). Globalisation is expressed less in spatial relocation than in the universalisation of production methods, alternatively described as Toyotaism (or Toyotism), or as lean production. For many authors, this involves profound changes in the relations

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between production and consumption and at work. It combines the flexibility of craft production with lower costs even than mass production (Maxton and Wormald, 1995). Japanese firms made cars in half the assembly hours of Americans (Womack et al., 1990). Kanban or JIT systems demanded replacement components as jobs were completed, avoiding unnecessary stocks and allowing production of individual units to meet customer specific demands. Allied with e-commerce it could also reduce the need for expensive sales and marketing. Kaizen, or continuous improvement, put responsibility onto the production workers for the quality of their product and expected them to contribute towards a continual process of ‘innovation mediated production’ (Florida and Kenney, 1996). Lean production apparently made better products more efficiently. Moreover, in an industry once epitomising alienation at work, it creates more humane, varied and rewarding working conditions, involving higher levels of skill (Womack et al., 1990). However, this is detrimental if not fatal for organised labour. Not only are there fewer workers but highly skilled problem-solvers are more likely to develop individual interests than class loyalties as market relations replace those of class inside the factory. Within economic ‘networks each firm, and even each employee is simultaneously the “customer” and “supplier” of another employee’ (Enderle, 1997: 141). Critics qualify the most enthusiastic accounts. Greater Japanese productivity was debatable once variations in vehicles, degrees of integration, vehicles’ manufacturability, the activity rates of factories and the accuracy of stated rectification costs are taken into account (Williams et al., 1994; Adler, 1999; Durand, 1999). Lean-production factories were not necessarily less capital intense. They did not involve small-scale manufacturing nor produce ‘ever-expanding product variety and rapid responses to changing consumer tastes’ (Womack et al., 1990: 260). Even as it was introduced in the West, MES levels may even have increased rather than falling, in important parts of the production process. Motor manufacturing, in this respect, remained significantly inflexible. All the major car firms sought to produce fewer platforms, the basic ‘guts’ of the cars representing about 60 per cent of their value. For example, Volkswagen explicitly adopted as its ‘superordinate structuring principle’ a four platform strategy across its entire VW, Audi, Seat and Skoda range. Other firms, including those from

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Japan, did much the same (Wilhelm, 1997; Freyssenet and Lung, 2000). Some parts of the production process were much more flexible, allowing firms to offer what Rubenstein (1992) describes as ‘skin deep diversity’; a variety of external ‘hats’ for the different brands. Such flexibility does not suggest a fundamental shift in relations between production and consumption, nor, as Wood (1989) argues, the ability to make major innovations independently of large firms. Nevertheless, its ready acceptance indicates that lean production works for the corporations and against labour. Although it did often require more skills it did not involve a fundamental reprofessionalisation, the creation of an independent neo-artisanate (Springer, 1999). Instead work could even become less interesting, with workers’ positive expectations declining with experience (Springer, 1997; Stewart and Garrahan, 1997; Jordan, 1999). Even in Japan, not only were skills often firm-specific but companies latterly attempted to divide jobs to the maximum extent with operations ‘becoming more and more monotonous’ (Tanase et al., 1997: 117). Lean production requires ‘a highly repetitive structure with pre-determined times and motions’ (Jürgens, 1997: 270). Often the language is almost explicitly Taylorist. The ‘waste’ lean production seeks to eliminate, as Babson (1999) points out, includes workers’ rest. Traditional assembly line systems made it hard to balance work tasks, creating variable levels of idle time. This made it possible to ‘build ahead’ to gain some relief and was likely to involve some ‘tacit collusion’ between workers and supervisors on job timing (Delbridge and Lowe, 1997). Demand pull, kanban, systems were seen as a way of overcoming this using management by stress. In principle all workers in lean production plants could pull andon cords to stop the line rather than allowing defects to pass unrectified but in practice most were fearful of doing so and lines seldom stopped. ‘Down time’ was effectively cut from 15 or even 25 to 3 seconds a minute. The difference with traditional Taylorist methods being, according to Babson, that ‘the stop watch is to be held by the hourly workers as well’ (1999: 28; see also Parker and Slaughter, 1988; Durand, 1999; Smith, 2000). Reducing supervision to a technical matter, this would also cut out non-value adding labour (Wood, 1989; Durand, 1999). The absence of harmonious development need not produce effective resistance. Some critics agree that deteriorating conditions for

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individual workers are commensurate with worse prospects for collective labour and ‘that management-by-stress inhibits the formation of oppositional class identities’ (Garrahan and Stewart, 1992: 90). Strategies of lean production certainly hope to foster corporate hegemony, to win allegiance to the firm and competition between groups of workers. Durand argues the role of team leader ‘contributes to softening the constraints and reducing awareness of the rigid disciplines associated with Just-in-Time’ (1999: 27). The case does not seem conclusive. Empirically, (as in Japan) lean production was introduced on the back of weakened labour movements so correlation might indeed be predicted. Garrahan and Stewart write of a plant in North East England that, ‘in a region of historically high levels of unemployment there is no real choice in practice’ (1992: 116–17). However, Nissan’s working methods ‘do not significantly transform the attitudes of employees to work’ (Garrahan and Stewart, 1991: 154). Against expectations, lean production appeared to require higher rather than lower levels of supervision (Delbridge and Lowe, 1997; Lewchuk and Robertson, 1997; Murakami, 1997; Rinehart, 1999). The new production systems do not in themselves preclude collective workplace actions. These may be at a low level, for example sabotaging other shifts in response to management goading to compete, co-ordinated speed-up to jam downstream buffers and frequent pulling of andon cords (Clarke, 1997; Rinehart et al., 1997; Walton 1997). Such responses may potentially become co-ordinated and institutionalised. A study at a Canadian GM plant noted: A year after the plant reopened, several participants called the shopfloor a war zone. After another six months, a compromise had evolved: productivity and quality were higher than before the change, but within parameters that reestablished some, albeit limited, ‘space’ for workers (Clarke, 1997: 847). Clarke suggests the ‘contradictions between control and commitment, rather than being minimized or dissolved, can actually be heightened’ (1997: 839). Workers’ potential power to disrupt production, if anything, increases. In Germany in 1996 an employers’ offensive to reduce sick pay collapsed when BMW ‘dramatically refused’, feeling themselves dependent ‘on a high degree of predictability on the

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shop floor and on the active cooperation of their workforce’ (Thelen and Kume, 1999: 487–8). Stewart writes ‘[w]here union shop committees are powerful – as is the case at E[llesmere] P[ort] – this has – unintentionally – reinforced their existing rights, and power’ (1999: 249). A survey of workers at one American Ford plant found no evidence to justify concerns that lean production might see workers identify more with the company than their union (Kaminski, 1999: 171). Another at Mitsubishi in the US concluded attitudes to supervisors and management became less positive over time while ‘attitudes towards union activity seemed to improve’ (Jordan, 1999: 230). Babson argues ‘[e]ven where there is none, as is the case in most of the Japanese transplant operations . . . the threat of union organisation forces management to compromise certain features of the Toyota production system’ (1999: 33). It seems reasonable to conclude that lean production’s introduction was both uneven and contested. Even in poorer countries with weaker labour traditions, there was resistance. For example, Skoda workers prevented non-Volkswagen employees being used on assembly line work (Havas, 2000). In Mexico, Ford Hermosillo was ‘hit by strikes, boycotts, and line stoppages, and labor turnover ranges from between 25 and 44 per cent’ (Rinehart, 1999: 24). Relatively small changes in labour market conditions in maquiladora areas witnessed labour turnover and absenteeism reminiscent of those that beset Ford’s early factories. Lean production intensified exploitation but did not signify fundamentally new social organisation of work. Stewart and Garrahan (1997) suggest it was a propaganda weapon rather than sociological description. For Jürgens ‘[t]he 1990s seem to mark the defeat of alternatives to the classic assembly line’ (1997: 270). Increasing productivity in a mature industry may have facilitated further rounds of job cuts, reinforcing the experiences of defeat. There is little evidence that in itself it precluded opposition.

Conclusion This chapter examined claims of the social and spatial reorganisation in the auto industry. A preliminary discussion of the earlier ‘Fordist’ period illustrated that integration was never complete, and that structure and industrial relations varied over time, between firms and internationally. Labour successes were uneven in extent and

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sometimes internally contradictory. They did not appear to be predetermined by industrial situation but, where won, achieved through social struggles within and beyond the industry. A shifting contemporary geography of production incorporated new assembly locations but did not involve a general dispersal. Most production remained concentrated within the Triad. A few poorer countries, most notably Korea and Mexico, became substantial producers and exporters to the developed world. Even this latter case did not coincide with a reduction in the number of US production workers’ jobs. In other LDCs, production grew, unevenly, along with local or regional markets. Some auto parts were sourced from more distant locations, but underlain by a logic of JIT production, there were countervailing pressures towards concentration. Most components continued to be produced and traded within major regions. Overall, international trade in parts rose more slowly than that of assembled vehicles. Increased outsourcing utilised lower paid labour in the parts sector. This lower pay itself may have been partly the result of smaller workplace sizes. However, restructuring increased the size of component manufacturers. Together with the logic of integrated production systems, this suggested a significant potential for labour. Lean production, meanwhile, did not appear to offer a fundamentally new manufacturing paradigm. It extended and intensified the logic of Fordist and Taylorist regimes. It may have reinforced experiences of defeat. However, its implementation and interpretation were socially constructed and it did not preclude effective labour organisation. The auto industry is widely taken as a model of both Fordism and contemporary restructuring. Although labour organisation was often in retreat and conditions deteriorated it would appear to provide only weak evidence that this was predicated on changes in industrial structure.

7 Construction

Introduction This chapter examines the construction industry. Old and quintessentially material, the sector remains important in its own right, employing many millions of people. It also contrasts with the ‘new economy’ and claims made for finance, knowledge and other abstract forms of capital. A few initial comments put recent changes in some historical context. The chapter then discusses construction’s contemporary internationalisation. The industry is not susceptible to globalisation in the same way as other sectors. Essentially a manufacturing industry, it is distinctive in that its final products are stationary and production locations therefore market-determined. This affords a comparison with foreign investment in other sectors. The high proportions of overseas construction directed towards poorer countries highlight their importance as markets, while, as elsewhere, there were notable trends towards regionalisation. The sector also allows comparisons of workers’ conditions with those in more ‘exposed’ sectors, but shows little if any advantage for construction labour. The chapter then considers industrial restructuring, emphasising recent developments in richer countries, particularly of labour in the US, but compares them with experiences elsewhere. Construction appears to afford valuable comparisons with characterisations of postFordism. In a sense, inherently ‘footloose’, constuction requires few buildings and largely takes place on other people’s land while the fixed capital and workers move from one job to the next. It has long 90

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been characterised by complex interdependencies and subcontracting relations. The fixed final location might also be anticipated to exaggerate tendencies to seek alternative, including more distant, sources of cheap labour through an increase in external materials sourcing and prefabrication. The chapter concludes that the sector’s structure had a number of serious implications for labour but that recent experiences were contradictory rather than uniformly negative while many contemporary developments had historical precedents. Notably poor outcomes for labour in the US had little to do with material reorganisation. The chapter affirms the contingent relation between industrial structure and labour organisation.

Tradition and change in building work Construction is an ancient industry whose long history, geographic scope and diversity preclude any attempt here to offer a comprehensive narrative. Its organisation and methods of production have been diverse and changeable. Nevertheless, given its longevity, elements of continuity and low productivity rises compared with other industries often attract comment. Linder, for example, describes the sector as ‘massively invulnerable to technological advances’ (1994: 182). However, significant improvements are possible. Mechanised and industrialised construction was a point of principle for Le Corbusier and others in the first half of the 20th century while techniques and levels of mechanisation varied between sectors within the industry as well as internationally. Some scholars describe post-war construction productivity as keeping pace with that in the wider European economy until the mid-1970s and to have been still higher in the US (Winch, 1994; Broadberry, 1998). This, and subsequent falls in relative productivity, would at least be consistent with the Regulation School arguments about Fordism discussed in Chapter 4 and the subsequent downturn in the 1970s. However, other scholars dispute such productivity growth (Ive, 1981; Bon, 1992) while international variations might also caution against readily attributing systemic effects. Increased off-site sourcing offered the possibility to overcome low on-site productivity. Here too, substantial international differences remained. Some reflected geography, for example cold climates predisposed Scandinavian and Canadian firms to become early

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specialists in off-site production. However, in Japan too, prefabricated house building became common with significant attempts made to extend mass production techniques into construction (Gann, 1996). Such experiences demonstrate innovation was possible, but it required levels of investment and research that were not widely reproduced. The construction industry, again with considerable temporal and spatial variations, also had characteristic forms of social organisation, of small firm subcontracting and casualised labour relations. Gang labour was introduced from agriculture into UK construction in the mid-19th century and leading firms directly employed only a minority of their workers. Low productivity, low barriers to entry and casualised labour relations may have been mutually reinforcing. The persistence of relatively small-scale production may in turn have contributed towards the endurance of craft traditions, contrary to the experiences in manufacturing typified by the auto industry. Indeed, based on the US experience, Piore and Sabel describe the craft sector, and construction in particular, as an alternative model of industrial development. They see it, rather optimistically, as a ‘form of industrial democracy’ and a ‘community of equals’ in which ‘differences are resolved by debating and eventually agreeing on substantive outcomes’ (1984: 115–16). In many countries there were craft based trade unions. However, organisation varied widely. The situation in post-war US construction was a contingent, and in some respects contradictory, product of complex state, capital and labour relations. American craft unions were formed in the late 19th century. As in other sectors, however, labour organised more successfully during the 1930s, often from low levels. Most leading firms conceded recognition and by 1947 the National Constructors Association (NCA) negotiated most workers’ terms and conditions. Perhaps not a ‘community of equals’, this did represent a substantial institutional compromise. The hiring hall system gave unions influence in the rationing of available work and wages remained high. If US construction labour was unusual in achieving pay significantly higher than in manufacturing, in other developed countries union traditions were also often strong. In the UK, for example, the predominance of small firms proved compatible with high levels of labour organisation. Even before the First World War, in addition to the craft organisations, at least six different unions organised building

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labourers (Drucker, 1980). Extensive subcontracting and inter-firm opportunism did not prevent workers’ organisation and indeed by the 1960s and 1970s, according to Korczynski, they became part of a symbiotic reinforcement of militancy. In contrast to the US, however, this depended on a ‘locus of power within worker organisation [that] lay overwhelmingly in the ‘cabin’, that is the shop floor of individual contractors’ (1999: 139, 147). High levels of state involvement were also characteristic, encouraged by the sector’s unique structure. Fixed final assembly locations limited international competition. Moreover, low capital intensity and multiplier effects through extensive backward and forward linkages made construction an attractive vehicle of national economic management. Used as such at least since the early 20th century it later became central in at least some poorer countries’ state led development strategies (Amsden, 1989). Governments continued to use construction as a direct policy tool but increasing internationalisation, in particular of supplies, might suggest more contested outcomes. Levels of overseas contracting would escalate in the 1970s. However, international work was not novel. British railway-building companies had moved abroad in the mid-19th century, initially within Europe, then across the empire. Firms from other countries followed, constructing railways, buildings, bridges, canals and harbours around the world. Already in the 19th century, prefabricated buildings and bridges were also widely exported. Even with fewer large public works projects available to foreign firms, inter-war retreat was never absolute. French and British contractors, for instance, continued to work within their empires and US companies in Latin America. The USSR’s automobile, steel plant and even city building projects also provided work for Western firms. A post-war boom was initially fuelled by the need to restore damaged infrastructure and social pressures that led, for example in Britain, to substantial house building programmes. In Japan, construction spending ran as high as 20 per cent of GDP. With potential rivals having fewer capital resources and being largely preoccupied with domestic reconstruction, the number and geographical scope of US firms doing overseas work expanded rapidly. By the mid-1950s they were responsible for up to 90 per cent of all major international projects with half their revenues derived from oil related work. The largest firm, Bechtel, made half its revenues abroad. Their expertise

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created opportunities within the developed world, for example building the British oil-refining industry, and they won one-third of Western European contract revenues while reverse investment amounted to less than 1 per cent. Europe began a ‘lagged re-internationalisation’ in the 1960s but US firms’ continued to dominate, in particular in chemical, gas and oil plants, while military related work was also important. World Bank disbursements were also disproportionately spent on US capital, equipment and services (Linder, 1994). Nevertheless, even in LDCs, overseas contracting was usually a negotiated process as host states attempted to construct domestic industries. They required the use of home products and the employment and training of locals, imposed mandatory joint ventures, ‘floor limits’ to tenders, differential taxation and tender preferences for local firms while the World Bank allowed indigenous firms a 7.5 per cent tendering preference (Linder, 1994). Strassmann (1988), also describes bribes as ‘customary’, with only the US and (in a weaker form) Japan having legislation preventing companies from accepting them for foreign work. Through diverse means and in an uneven way, varying with the type of work and both their origin and destination, many major firms already won high proportions of their contracts overseas by the early 1970s. Finally, although labour migration is not a central theme of this project, construction provides some important evidence. Widespread use of foreign workers again predates recent ‘globalisation’. The slave trade and indentured labour transported millions. Later Irish ‘navvies’, in particular, built much of Britain while, amongst others, Chinese, Indian and Italian building labourers were prominent in many countries. Firms also exported labour from richer countries: leading UK firm Brassey paid more to British and Irish workers in France than to natives, reckoning them more productive (Linder, 1994). The imperial ventures of the Royal Engineers also set a precedent while both poorer and developed country nationals were also used as strikebreakers. Levels and patterns of migration changed but Drewer (2001) suggests that more than 60 per cent of those employed on major projects in European cities by the late 1960s and early 1970s were migrants. At the same time, Western, and particularly US, nationals followed their companies, and armed forces, abroad. They also now took others with them. Koreans, for example, worked alongside the US military on Vietnam War related work and subsequently in numerous other

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places. So already in the pre-globalisation period, construction was characterised by a variety of physical and social relations and considerable movements of both capital and labour.

International construction and international construction workers Construction and economic growth Bon (1992) suggests that the contribution of construction to GDP varies as an inverted U shape with economic development and that this is true both historically, for any one country, and across national economies at any given time. Declining construction shares are then taken as evidence of economic maturity (Bon and Yashiro, 1996). There would seem to be a strong prima facie case that industrial expansion, in particular, requires both buildings and infrastructure. Some contemporary ‘post-industrial’ sectors might require less. Some of the largest national construction sectors have been in countries with rapid growth, such as Korea and (over a long period) Japan. Similarly, falls in relative construction output since the 1970s and in Japan in the 1990s would support Bon’s hypothesis. However, different developmental paths may require different levels of construction and empirically the relationship seems rather weak. Moreover, despite any fall as a share of GDP, the final assembly, or on-site construction workforce in the G7 continued to grow, from about 20 to 25 million between 1980 and 2000, some decline in France and Italy notwithstanding (ILO, various years). Foreign contracting Theories of globalisation understand labour’s disempowerment as based, at least in part, on the loss of jobs to lower wage economies. The previous chapters have suggested claims of capital flight may be exaggerated and that manufacturing FDI is likely to be something of a ‘hedge play’, seeking markets and predictability as well as low wages. In construction, there is little room for ambiguity. Overseas construction cannot normally be sold back to home-country markets. Foreign investments are market seeking not value chain reducing. Any cheap labour must be brought to the job, not vice versa. So although supply is not perfectly elastic (Drewer, 2001) this suggests

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foreign contracting cannot be seen as a threat to domestic workers in the way that it is presented in manufacturing. Nevertheless, despite the apparently different socio-spatial logic, contractors often espoused similar strategies to those of manufacturing companies. As suggested above, international activities are neither new, nor recent forms unprecedented. Nevertheless, the periodisation of contemporary ‘globalisation’ from the 1970s has considerable force. US firms, in particular, were well placed both in terms of geo-politics and established expertise when the oil-fuelled boom boosted work in the Middle East. Construction growth outstripped even that of oil revenues. The concomitant debt recycling, including project based and tied loans, also boosted overseas contracting in other developing countries. The value of US firms’ overseas contracts leapt from $6.1 billion in 1973 to $48.8 billion in 1981, when the world total also peaked at $135 billion (Linder, 1994). The boom also increased demand for foreign labour. Local populations contained insufficient skilled craft workers or underemployed poor (people who could typically be transformed into building labourers). Construction accounted for over a third of migration into the region in the early years of growth (Harris, 1995). Initially, most migrants came from nearby Arab states and South Asia. Turkish firms also won substantial foreign revenues, enjoying advantages of proximity and of access to Islamic holy sites denied to westerners. However, US contractors dominated while using familiar sources of cheap labour, Filipino, Thai and especially Korean, already employed in the Far East (Wells, 1996). Contract labour was sold en bloc, minimising contact between clients and their workforces. By 1983, 150,000 Koreans worked in the Middle East. It was an attractive but also potentially volatile package. The most dramatic resistance, over working conditions and wage differentials, occurred in a 3000 strong, 33 hour, riot at the Saudi Arabian Jubail port project in 1977. Brutally repressed, it nevertheless led to the Korean government introducing a ‘standard wage contract system’ enforcing ‘equitable’ wages for all Korean employees and joint labour-management arrangements at every site (Chang, 1988). By the late 1970s leading Korean firms, in particular, also began to operate as prime contractors; even if they then subcontracted the most specialised work. By 1982, the region accounted for 40 per cent of the total international contract value of the top 250 international firms, over $51 billion. US firms took

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36.1 per cent of this, Koreans 20.9 per cent while the next largest share was the 7.2 per cent claimed by French contractors.* Many firms subsequently retreated from foreign work. Much of the developing world experienced well-documented problems of indebtedness that cut construction spending. In the Middle East, the oil boom trailed off while there was also a limit to the amount of infrastructure needed. The isolation of Iran and its war with Iraq also cut western opportunities. For top US firms, having risen from 10 per cent to over 40 per cent of their work in 1980, overseas contract values fell to about 17 per cent in 1988. Earnings in the region fell to $13.4 billion in 1987 and, after recovering at the end of the decade, back to $11.1 billion in 1999. The end of the boom also changed the workforce composition. Labour intensive subcontractors such as Korean firms were squeezed from above by developed country contractors and, as Korean workers won wage rises, from below by ever lower waged competitors. Meanwhile, increasing proportions of smaller scale maintenance and repair works were carried out by (relatively) local firms and Arab workers. However, there was no return to the 1930s and in the 1990s overall overseas contracting again increased, albeit to the levels lower than in the early 1980s. State intervention remained important on both demand and supply sides. A trend towards greater private sector participation in infrastructure has been described and celebrated and total public sector construction spending decreased in many countries (Ofori, 1990; Walker and Smith, 1995). However, government money subsidised much nominally private work: the Financial Times reports estimates that ‘about three-quarters of the total spent on construction in Europe is linked to public funds’ (30.3.99). In the US, private nonbuilding construction as a proportion of the total peaked in 1975 at 14.6 per cent, declining to 6.6 per cent by 1998 (SAUS, 1999). * This section relies heavily on data from the ENR (formerly Engineering News Record) annual list of ‘Top 225 International Contractors’ (until 1990 a ‘top 250’). This is a widely used and accepted source. However useful, there are a number of problems with the data. Firm compliance is voluntary and some disappear from one year to the next. Conversely, ENR figures may also double, or rather multiply, count and subcontracting may inflate the total values. Until 1994 rankings were by value of new contracts, subsequently by revenue and are therefore not strictly comparable.

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By 1999 US public sector growth was double that of private (ENR, 22.5.2000; Financial Times, 4.4.2000). Governments, notably in Germany and Japan, also helped ailing companies but across the developed world, they maintained links, of varying probity, with leading firms (Linder, 1994; Winch, 1994; Monbiot, 2000). Most developed country states also used bilateral or tied aid, ‘mixed-credits’, tax exemptions and low cost insurance to promote and protect overseas contracting. Levels of assistance varied but poorer states were in general less able to back their firms. From the free market’s heartland, but operating in the US and abroad on a ‘cost-reimbursable basis without profit’, with 34,600 employees the US Army Corps of Engineers remained one of the world’s largest construction firms (USACE, 2000). Patterns of overseas contracting nevertheless changed. Fewer firms from fewer countries did a greater proportion of the work. The centralisation is particularly stark amongst US firms. By the end of the century the three largest – Bechtel, Fluor and Kellogg Brown & Root – earned a majority of their revenues abroad, but between them accounted for over half the total US foreign construction earnings. The ten most internationalised US firms performed 63 per cent of their work overseas and between them accounted for 80 per cent of all US international work. The declining Middle East share of the overseas market is probably the most obvious trend. The African market also fell, if less sharply and from a lower base. Those in the wealthiest regions of Europe and North America grew. So too did that in Asia. Firms increased their propensity to contract within home regions. Aggregating data over 6-year periods, this is particularly evident in intra-European work, which rose between 1982–87 and 1994–99 from 6.6 to 19.4 per cent of the world total and from 15.5 to 38.5 per cent of the value of European firms’ overseas revenues. However, it was an uneven process. French and German contractors, in particular, increased their intra-European work while Italian firms lost revenues. UK firms continued to win higher revenues within the US than Europe. Strong national variations and difficulties in cross-border mobility clearly remained, Kvaerner’s Chief Executive describing the EU as ‘a series of very closed markets’ (ENR, 14.8.2000). Japanese firms similarly increased their work within Asia. So too did contractors from ‘other’ countries. Although this category cannot be fully disaggregated as consistent data are not available across the entire

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18-year period, contractors from China and South Korea accounted for 57.0 per cent of overseas earnings by all firms from other countries between 1994 and 1999, and for 79.4 per cent of these within Asia. Again confirming the regionalisation pattern, the Asian market accounted for 63.8 per cent of their total overseas earnings where earlier they had won most of their contracts in the Middle East. Even within North America the share of the total overseas revenues won by US and Canadian firms (overwhelmingly the former) in the other country rose from 7.6 to 10.7 per cent. Their share from within ‘the Americas’, North and South, rose from 15.3 to 26.2 per cent. The US domestic market was itself of continental scale and despite falling restrictions to entry of overseas markets, in conditions of domestic boom in the 1990s US contractors became less likely to seek work abroad. Caution in the wake of the Asia crisis caused even the largest contractors to become more selective in their overseas bids (ENR, 22.5.2000) but even investments in Europe declined relative to domestic projects. Fifteen years earlier they had won more work than foreign Europeans and as late as 1992 claimed $16.8 billion of new contracts, but by 1999 earned only $7.8 billion. The US market also became more attractive for European and Japanese firms. By 1999, 14 of the top 100 US firms were foreign subsidiaries, their revenues $15.8 billion, about 10 per cent of the total of the top 400 (ENR, 14.8.2000). Experiences, however, were somewhat mixed. Japanese contracting declined with the level of compatriot FDI and official hostility that prevented participation on large public works (Levy, 1990). However, Yen revaluation helped acquisitions while expertise, for example in building semiconductor-clean rooms, won work from corporate clients. A relatively strong Pound also aided British overseas purchases in the 1990s. However, despite a weakening Euro but with a faltering home market, German firms made the largest acquisitions in the late 1990s. Several LDC firms also won substantial foreign contracts within their home regions. Such firms appeared in the ENR rankings of top ten regional contractors within each of the Middle Eastern, African and Latin American regions in 1999. Penetration of advanced country markets by contractors from poorer ones, however, was slight; less than 1 per cent of the world total. Various barriers to effective technology transfer remained and economies of scale, especially with the development of inclusive ‘turnkey’ and build-operate-transfer

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Table 7.1 Foreign direct investment inflows and construction revenues, 1990–96 (US$ millions) Foreign direct investment inflows

Europe North America Asia Latin America Africa

Overseas construction revenues

Annual average

Per cent

Annual average

Per cent

99,528 50,942 58,257 22,536 3,498

42.4 21.7 24.8 9.6 1.5

30,815 16,183 58,011 10,081 13,453

24.0 12.6 45.1 7.8 10.5

Sources: Dunning, 2000; ENR, various issues.

arrangements, reinforced western firms’ advantages (Raferty et al., 1998; Ofori, 2000). Table 7.1 directly compares overall FDI levels and the location of overseas construction revenues in the early 1990s. Despite similarities, what is perhaps most significant and surprising is that although there is no re-export of construction, investments in the cheaper labour locations of Africa and Asia were relatively higher within the sector. The figures for Asia include about 15 per cent of construction investment that went to the Middle East during this period but even without this, Asia’s share exceeds that in overall FDI. The internationalisation of construction highlights the importance of markets to overseas investments. Foreign contracting does not, in general, cost domestic jobs. Construction workers might suffer from aggregate labour market effects but not directly. Yet there is little evidence that in terms of pay or conditions, or in their organisation, construction workers fared better than those in other sectors. Indeed, at least in the US they appeared to fare considerably worse. Construction workers’ average hourly earnings there fell from $20.76 in 1980 to $17.86 in 2000 (in 2000 constant dollars, SAUS, various issues; deflated using IMF, 2001). Trade in materials and equipment As might be expected, a different picture emerges in industries producing construction equipment and materials. Here, as elsewhere in

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manufacturing, there could be significant international competition. However, each product developed distinct manufacturing dynamics. So, for example, concrete typically only travelled about 20 kilometres. Batched in relatively low cost plants it was bulky, heavy and (ready mix) suffered problems of setting. Cement could be profitably shipped ten times as far. Haulage costs were still high but production was a more complex capital-intense manufacturing process (Financial Times, 17.12.99). This greater relative mobility allowed a significant international trade. The United Nations International Trade Statistics Yearbook only provides specific data to 1993, but for cement, trade in that year represented about 3–4 per cent of world production. Other goods were much more mobile; for example clay and refractory construction materials, especially Italian glazed tiles. The apparent potential to export other products was not realised. In particular, and in contrast to the 19th century, trade in wholly prefabricated buildings was slight. Table 7.2 shows a significant shift away from Triad domination of building materials exports, although they continued to export over three-quarters of the more highly manufactured goods. It shows variations between commodities and that for many, trade rose at best slowly. Distance remained a differentially significant obstacle according to what was moved across it. The US had the highest imports and largest deficits in most construction products. The UK, as recently as

Table 7.2

Trade in construction materials and equipment, 1980–2000 Triad percentage of exports

Worked wood Lime, cement, etc. Clay and refractory materials Mineral manufactures Glass Civil engineering plant and equipment

Average real annual trade growth (%)

1980

1990

2000

75.9 64.7 89.1

65.7 68.7 90.6

78.6 57.0 80.7

1.44 1.11 0.56

−0.75 0.55 0.24

92.5 91.5 94.7

91.7 85.3 89.2

82.8 80.7 82.9

3.16 5.24 −2.00

2.27 4.87 0.50

Source: UNITSY (various years), deflated using IMF, 2001.

1980–90

1990–2000

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the 1970s a major materials exporter, also developed a substantial trade deficit and experienced significant job lossess in the manufacture and supply of building materials (Gruneberg, 1997; Agapiou et al., 1998). Internationalisation and dependence on materials imports may, however, have a particularly significant effect in poorer countries. Formerly, much house building, in particular, relied on traditional materials, often acquired and incorporated through ‘informal’ and extra-monetary relations. Such activities might nonetheless be highly time and labour consuming and effective costs therefore very high. As international standards come to dominate, capitalist building techniques and increasing proportions of bought inputs could lower effective construction costs. However, increased dependence on imported plant and materials implied exposure to a system in which the weak were vulnerable. The proportion of construction materials imported into Sri Lanka, for example, doubled to 60 per cent from the 1960s to 1990 (Raferty et al., 1998) and imported construction materials accounted for around 5–8 per cent of total imports to many African countries. Markets could be volatile and while liberalisation and low exchange rates might help attract export earnings, they increased prices of imported materials. For example, in 10 years to 1995 the price of cement in Dar es Salaam rose 33-fold, nearly four times the general inflation rate (Wells et al., 1998). This suggests a greater volatility of the construction industry in poorer countries and may provoke a retreat from construction rather than integration into the world market. This, of course, may contribute to difficulties in building stable labour organisations but construction here is far from unique, the scenario hardly novel and the corollary often more sporadic but greater militancy. A similar picture to that in materials trade emerges with construction machinery. Triad shares of exports declined with Singaporean and Korean firms being the major newcomers despite substantial difficulties after 1997. Use too was uneven – greater in particular sectors, particularly within non-building construction, and in particular countries. So, for example, German firms owned (rather than renting) a higher proportion than British counterparts. This may have limited mobility but increased the longevity of plant within German companies (Biggs et al., 1990). Both production and exports remained highly concentrated in the advanced countries but with

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a fall in US at the expense of European production locations. The industry confirms that any trend towards global sourcing depended on the specific products, while trade growth often lower than of construction output indicated significant localisation processes. Labour migration and aggregate labour market effects Here we might consider two other possible explanations for the experiences of on-site construction workers. The first concerns labour migration. As mentioned above, much LDC overseas contracting was in labour only, or in a narrow range of labour intensive work. The oil boom left a legacy of increased cheap third country labour, employed even where adequate local labour was available. For example, Thai workers employed in Saudi Arabia and the UAE and trained in ‘Skanska ways’ were then taken to Algeria where there was no labour scarcity (Drewer, 1988). There are empirical difficulties in discussing migration and ‘self-interested reasons that lead to concealment of abuses’ (ILO cited in Wells, 1996: 295). Despite social and political obstacles, migration, legal or otherwise, continued. Migration patterns and a racialgeographic division of labour were complex and migrants subject to multiple abuses. Often forced to pay extortionate recruitment fees, contractually unable to join unions or even to seek alternative work, they were typically lower paid than nationals. Skills were less likely to be recognised and imposed maximum stays were a disincentive to train. Hong Kong airport serves as an exemplar of divide and rule, with wages varying according to nationality, but with no Hong Kong Chinese working on site and trade unions explicitly denied access (Wells, 1996; Ofori and Debrah, 1998). Abuses and sometimes appalling pay and conditions were not confined to developing countries. The benefits to firms could be greatest where illegality kept wage costs down and subverted negotiated pay levels. For example, German unions established a common wage but an estimated half of 400,000 ‘generally low-paid foreign workers’ on building sites were employed illicitly (Financial Times, 12.5.98). Nevertheless, whilst the scale of abuse and numbers of migrant construction workers were huge, Wells writes ‘the vast bulk of construction activity is still undertaken by local construction firms and local labour. When foreign labour is required, it is still very often drawn from sources which are local and specific’ (1996: 305). Construction workers enjoy few special privileges so all the social and

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political factors normally presented as weakening labour through its immobility still apply. Where migration was unrestricted, as with internal movement in the US, rates were lower for construction workers than the general male labour force (Herzog and Schlottmann, 1988). Although comprehensive studies are not available, work from the US also suggests foreign-born workers formed a lower proportion of the unskilled construction workforce than amongst other trades (Enchautegui, 1998). Furthermore, the developed world had long relied on immigrant construction workers, often in higher proportions than in most contemporary situations, for example, the numbers in Germany, cited above indicate ratios of the order of one-third those of 1970 (Janssen, 1982). Finally, although conditions of illegality, in particular, presented huge difficulties, immigrant workers themselves are not merely passive victims. There was a long tradition of resistance, from the riots at Jubail to the successful drywalleros strikes in California in the 1990s. The effects of competition for jobs on the migrant workers may be severe but most evidence suggests any adverse effects of migration on host country workers were, at most, slight (Stalker, 2000). The effects of structural change in relation to cheap labour – whether of construction work in LDCs or of migrant workers in the more developed – seems insufficient explanation for the experiences of trade unions or of workers more generally in the latter. Secondly, however, labour’s predicament might be understood in terms of aggregate labour market effects. Workers at particular levels of skill would have similar experiences. Lower skilled workers in the ‘North’ suffer as jobs are lost, either directly to LDCs or in the defensive innovation this induces. While Wood’s (1994) logic is compelling, the evidence from construction suggests at least three reasons to be cautious. First much manual construction work might indeed be relatively low skilled (at least compared with the ideals of ‘symbolic manipulators’ portrayed by theorists of the new economy). However, for many trades, skills are far from immediately replaceable and construction workers continued to experience at least some degree of continuity of occupation (it remained possible to identify people as building workers). Even in conditions of considerable skill shortages, pay often remained relatively low. Secondly, the evidence elsewhere is much more ambiguous than in the US. In other richer countries, there was little evidence of overall income decline, either in absolute terms or relative to other workers. Similarly, whereas US construction

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workers experienced a steady lengthening of the working week, elsewhere this was more variable with a substantial reduction of hours, for example, in Japan. The corollary of Wood’s argument of declining conditions of unskilled workers in the ‘North’ is of rising conditions for workers of commensurate skill in the ‘South’. Here the available evidence is more fragmentary but it is again, at best, equivocal. The hypothesis of rising pay would appear to be confirmed by the experiences in, for example, Sri Lanka, Thailand and Brazil, but contradicted by a relative fall in construction wages in Egypt, Kenya, Zimbabwe, China and the Philippines (ILO, various issues). Thirdly, in the US, decline began in the late 1960s, that is before the era of ‘globalisation’ is usually understood to have accelerated. It may have been reinforced by subsequent structural changes but this suggests closer attention be paid to the specifics of social reorganisation. Spatial relocations seem insufficient explanation for construction unions’ decline.

Industrial structure, workers’ conditions and labour’s response Construction might offer some insight into the arguments of labour’s social dispersal, experienced with the decline of giant corporations and the rise of industrial networks. The proportion of value added in final assembly, that is on site, is relatively straightforwardly measurable. Moreover, with the point of final assembly fixed and the industry therefore unable to take advantage of cheap assembly locations and (historically, although by no means universally) beset by problems of low on-site productivity, trends towards global sourcing heralded in the wider economy might be expected to be exaggerated. Such outsourcing may be distinguished from an on-site division of labour that in construction historically proved susceptible to organisation on an inter-firm basis. The sector, for Piore and Sabel, indeed affords a prime example of subcontracting and industrial ‘networks’, a model ‘of emergent organisational form’ (1984: 115), pioneering spirit of a post-Fordist age. The potentially anti-labour connotations of ‘flexibility’ both within construction and more generally have been criticised (Pollert, 1988; Winch, 1994). Work is often arduous and low paid. High transport costs and frequently sporadic employment also cut into wages

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(Allman et al., 2000). A European Commission Report noted extreme weather conditions and heavy, dangerous and insecure work and found that ‘in no case were the favourable aspects of construction work mentioned, for example, independence and craft like occupations’ (cited in Ofori, 1990: 72). However, as suggested above, in the post-war period, the sector’s structure was compatible with strong unions and improving conditions. In the US it is possible to identify an overt strategy against organised labour advanced by Fortune and the ‘Business Roundtable’ from the late 1960s. The proportion of contracts won by ‘open-shop’ firms rose from 31 to 59 per cent between 1965 and 1975 (Goldfield, 1989; Linder, 1994). Never simply an employers’ offensive, state intervention was also important. Courts read no strike clauses into collective agreements and limited outside, ‘third party’ or secondary action to ‘choke off expressions of solidarity that maintained the balance of power between capital and labour in dispersed craft industries’ (Piore and Sabel, 1984: 121). Thus ‘extra-economic’ influences were significantly involved in reorganising relations within US construction. However, subsequent ‘downsizing’ cut the proportion working for large firms. Numbers working in firms of 500 or more employees fell from 10.3 to 5.6 per cent of the total between 1983 and 1996, even as the total construction workforce grew, although the proportion then rose to 7.6 per cent by 2000 (SAUS, various issues). Bechtel cut its staff from 43,000 to 30,000 between 1987 and 1996 while sales more than doubled (Hoovers, 1998). Vertical disintegrations included the development of ‘pure design’ firms and ‘pure builders’. A horizontal separation of tasks and some degree of specialisation were near universal. Even the largest companies did not compete in every market. Several smaller ones specialised in single niches, from roofing to wrecking and steel erection to stadium seat installation. Firms invoked ‘flexibility’ in laying-off permanent staff and using more subcontracted workers. Increased competition may have led to pressure, and increased the ability, to impose cuts on subcontractors, with ‘labour targeted as the most accessible cost-cutting element, especially in periods of high unemployment’ (Gruneberg, 1997: 122). By 2000 agencies supplied non-union contractors with 250,000 ‘day laborers’ (ENR, 24.4.2000). Union membership fell from well over 50 per cent in the 1960s to 31.6 per cent in 1980 and to 18.3 per cent in 2000 (SAUS, various

Construction

107

issues). Anti-union policy, more intense competition, increased unemployment and an end to the wave of labour militancy of the late 1960s and early 1970s reinforced each other to undermine organisation. The NCA declined while members also incorporated non-union practices of acquired firms and subcontractors, or established parallel open-shop subsidiaries. This accords with characterisations of peripheralisation in other sectors. However, contrary to the technological basis upon which this is often understood to be predicated, Thieblot suggests in construction, innovation ‘compressed skill requirements away from the extremes and towards the center: fewer craftsmen with highly refined broadly based skills . . . [and] less need for lift and carry work’ (2002: 571). As described above, firms recruited overseas, if less successfully than in other industries with comparable skill levels, and, unevenly, increased their employment of black workers. Despite considerable campaigning the recruitment and retention of women remained poor. An industry made less attractive by casualisation in general, and in which primary contractors denied responsibility for subcontractors, seemed unattractive, particularly as opportunities for paid employment rose elsewhere. ‘Flexibility’ could also be a contradictory strategy for employers. For example, hiring cheaper engineers from the developing world only when required meant that whereas in the 1970s Bechtel could assign engineers to new projects without interfering with ongoing work they later became more selective in their bids (Linder, 1994). Subcontracting also often had adverse effects on the training and retention of craft workers with a decline in the traditional union training and apprenticeship programmes. While in wage, or total factor, terms productivity rose, in physical terms, it declined (Arditi and Mochtar, 2000). Efforts were made to address skill shortages through administrative measures, for example, legislation insisted on apprentice employment on state jobs. Industry leaders, however, identified low pay as the primary cause of poor recruitment (ENR, 18.9.2000). This was exacerbated as unemployment fell in the 1990s. There were also counter tendencies (Ofori, 1990). The number of firms testifies to an ease of entry but many, for a considerable time, were confined to small works. At the same time differentials in output to employee ratios by firm size rose, suggesting that increased small firm subcontracting did not negate an effective concentration: within

108

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extensive subcontracting relations independence could be more apparent than real. M & As at both national and international levels increased steeply in the 1990s. Construction sites were typically small compared with the largest factories but, while the work could be split between firms, they were less susceptible to overall workforce reductions. The integration of construction sites meant that divided and specialised labour groups could disable whole sites and thus exercise a considerable, if frequently ad hoc power. There were several successful strikes at US contractors and union recognition victories in the late 1990s. Specialisation also meant that, amidst the overall decline in union density, concentration could remain high and effective within certain trades; for example the Elevators Constructors Union claimed 24,000 members and 95 per cent representation (ENR, 22.5.2000). The possibilities of organising beyond a firm’s own workers were epitomised in the recognition dispute at Roy Kay, a firm of about 200 employees. Action, including a demonstration of around 30,000 on the streets of Manhattan, won formal recognition in October 1999, with craft workers apparently reconciled to the prospect with journeymen cards and 50 per cent pay increases on non-prevailing wage work (ENR, 24.1.2000). This may all be a long way from ‘a form of industrial democracy . . . achieved through the close collaboration of craftsmen and union officials with management in the organization of production’ (Piore and Sabel, cited in Winch, 1994: 576) but it does suggest a more than residual strength. In 2000 the National Labor Relations Board also legitimised organising temporary workers, deeming there was a ‘community of interest’ among workers at a single ‘user’ employer (ENR, 11.9.2000). Despite small firm size, subcontracting and the steep decline, union density remained higher in US construction than in manufacturing. There were, however, also contradictions within labour organisation. Goldfield (1989) describes former strength as based on conservative, craft privilege. White writes ‘once the critical mass of union craftsmen was reached, it became economically efficient to convert employers, rather than employees’ (1997: 68). When unions were strong, they could deny skilled labour to non-union firms, but as densities declined, they became less able to supply union contractors, undermining the hiring hall system, encouraging open-shop employers and exacerbating the situation. The advantages of membership declined. Many construction unions remained committed to a co-operative approach

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109

and, attempting to be competitive in terms of pay, productivity and quality, made substantial concessions over wages, hours and no-strike deals with little return in terms of increased market share. Elsewhere, however, unions adopted new approaches and, recognising the imperfections of the union shop system, allowed ‘salting’, membership and recruitment within non-union firms. At least two case studies report success in terms of both membership and pay (Condit et al., 1998; Lewis and Mirand, 1998). Industrial organisation, workers’ conditions and labour institutions varied between countries and elsewhere any decline was less marked. However, some similar contradictions could be seen. Britain experienced a coincidence of increased small-firm, in particular in this case labour-only, subcontracting and union decline. The total proportion of construction workers directly employed fell from 77 to 45 per cent between 1976 and 1996. Half of the 200,000 UK ‘firms’ were single individuals, only about 4 per cent of whom even considered themselves self-employed (Harvey, 2001). This ‘false’ self-employment provided a state subsidy to the industry and indeed changes in tax definitions of ‘self-employment’ led to a drift back towards formal recognition of employee status in the late 1990s (CIB, 2000). Again, the contradictions between the benefits in flexibility from Labour only Subcontracting (LOSC) for individual employers and its negative implications for productivity were widely reported, supporting Ofori and Debrah’s (1998) characterisations of change as ad hoc developments of past practices rather than a strategic ‘peripheralisation’. Although unions suffered, national construction bargaining endured, in contrast to engineering, while national agreements were also frequently regarded as a minimum, above which workers negotiated in an informal or ‘unformal’ system that depended on local bargaining positions (Drucker and White, 1996; Gruneberg, 1997). Elsewhere too, for example in Spain, although at lower levels than in the UK, LOSC was seen as a way around collectively bargained minimum wages, which remained high (Gonzalez et al., 1998). In Northern Europe although small firms predominated, direct employment remained the norm. Wage levels were largely maintained, and in some major firms, unions won conditions that, in theory at least, also applied to subcontractors. Hochtief, for example, signed a labour charter binding it and its subcontractors to ‘humane labor policies’

110

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including minimum job standards and the right of workers to unionise (ENR, 3.4.2000). The Financial Times reports both pay and productivity as being much higher in Germany and the Netherlands than in Britain (1.5.96). Small firm predominance was also notable in Italy where union densities continued to rise into the 1990s and in no year between 1989 and 1997 did fewer than 74,000 construction workers strike (ILO, 1999). There were also examples, from Australia and from Sweden and Denmark respectively of relatively successful organisation amongst, or of union control of, LOSC (Winch, 1985). Conversely, the largest Japanese firms, significantly bigger than counterparts in other developed countries, nevertheless similarly relied on subcontracting while union representation, albeit of a conciliatory type, was largely maintained. Finally, if rather obviously, in China there were numerous vast firms, and an average workforce of over 300. Construction workers perhaps had a potential power but strikes were illegal except over certain safety issues, the All China Federation of Trade Unions remained Communist Party run, and pay low (Flanagan and Shirong, 1997). Bought supplies provide another potential alternative to on-site labour and low productivity. Mass produced prefabricated buildings and materials may be subject to more typical processes of capital production and price competition and organised at more distant, cheaper locations (Gibb, 1994). There are striking examples of prefabrication such as Hong Kong airport where 4500 tonne units were produced off site. Overall, increases in off-site production would decrease the proportion of value added to total construction output, at least in constant price terms. Between the mid-1980s and 1990s several important national industries, for example those of France and Germany appear to fit this trend, the percentage of output value added within construction falling from 47 to 43 and from 50 to 48 respectively. However, in both Japan and the US the value added within construction rose, in constant, and in current value terms. Thus claims of a trend towards outsourcing and off-site prefabrication, a physical relocation and reorganisation of construction work, need to be treated with caution. Decreasing prefabrication, at least in the US, might in part reflect the exceptional extent of construction labour’s retreat and the declining relative cost of on-site work. There is some evidence that where labour organisation held up better, there was an increase in prefabrication and off-site materials production.

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However, the construction workforce fell only marginally in France and, for example in Germany and the Netherlands, continued to increase. Alternatively, low proportions of value added within construction in some poorer countries might reflect the high relative cost of imports rather than high physical levels of prefabrication. It was noted above that possibilities of ‘global sourcing’ varied for different materials. The industry also had distinct characteristics, in moving from job to job it limited the possibilities for developing industrial follow sourcing while JIT methods proved hard to introduce (Pheng, 1992). Experiences might not be easily generalised to other sectors. However, within construction it seems clear the substantial increases in subcontracting in some countries had little to do with any fundamental transformation in the nature of work. Further qualifying characterisations of disintegration, amongst the supplying industries, there were some indications of increasing firm size. For example, concentration rose amongst manufacturers of contractor’s equipment (Construction News, 4.5.2000, 14.9.2000; Financial Times, 17.12.99) and, at least in the UK, amongst materials producers (Agapiou et al., 1998). Economic networks and trends towards greater small firm interdependence may have presented new problems and contributed towards undermining trade unions, particularly in conditions of rising unemployment and low labour confidence. However, they do not suggest quite the catastrophic results predicted by theories of post-Fordism. An increase in small firm subcontracting did not appear to offer a particularly promising path towards capital’s success. For labour, longstanding small average firm sizes and extensive subcontracting did not previously preclude successful organisation.

Conclusion Construction has distinctive features including the dynamics of its geography, the manner and extent of state intervention and its industrial relations. It also exhibits features such as internationalisation and a tension between concentration of capital and increasing division of labour familiar to other sectors. Labour organisation would appear to be conjunctural and complexly socially determined, its uneven experiences not congruent with those of industrial structure. The internationalisation of contractors followed broadly similar patterns to manufacturing FDI but cannot plausibly be seen as capital

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flight. This highlights how (rather than simply being sources of cheap labour) LDC markets were important for western firms. In some high waged economies, possibly as an alternative to reduced labour costs, there were notable increases in off-site procurement. Most machinery, materials and prefabricated building production remained concentrated in the developed world but with significantly increasing shares from (some) poorer countries. It may be argued global interdependence increased the vulnerability and volatility of construction, particularly in LDCs and made construction more susceptible to familiar processes of capital accumulation. Nevertheless, in general, construction jobs were not lost to outsourced materials or prefabricated suppliers. Developed country construction workforces tended to grow. Yet the experiences of construction workers in terms of pay and hours of work were broadly similar to those in manufacturing while in the US, the deterioration was notably more severe. An increase in the long-standing industry practice of small firm subcontracting appeared to have adverse effects, in particular on the maintenance of national standards and exacerbated low pay. However, there were significant variations between national industries and sectors of construction. Moreover, any such peripheralisation had little to do with changes in labour processes. It also had adverse consequences for training and productivity. It did not therefore resolve deep-seated problems of construction capital. As Winch (1994) suggests, its poor record makes it an unlikely model for a successful postFordist future. Neither in terms of conditions or autonomy for workers nor in the performance of capital did construction provide superior outcomes to other industries. Construction ‘networks’ seemed, in Broadberry’s phrase, to be characterised by ‘opportunistic behaviour in a world of asymmetric information’ (1998: 393) rather than an ideal of individuals bound by interpersonal knowledge. They involved seeking profit in exchange rather than production and targeting other firms and labour rather than productivity. They could reflect, rather than cause, labour’s weakness. There were simultaneous counter-trends, of firm concentration and increasing M&A activity. Restructuring did not eliminate, indeed in some situations it contributed towards, sectional labour strengths. As Langford and his co-authors write in their study of the sector, ‘the portents of harmonious industrial relations are not good, for there will remain the ever-present threat of conflict’ (1995: 108). Greater small firm

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subcontracting did not previously, in either the US or the UK, preclude higher levels of organisation in construction than in other industries. It even reinforced militancy in conditions of greater confidence or sectoral strength and rendered disputes less tractable to national bargaining. Construction demonstrates that labour organisation correlates poorly with industrial structure and provides significant historical examples of labour coping within subcontracting relations and inter-firm division. It also demonstrates that forms of labour organisation were themselves contested and developing processes, the success of particular strategies varying in different situations.

8 Semiconductors

Introduction The preceding two chapters discussed ‘old economy’ sectors – automobiles and construction. They reported a (uneven) decline in labour organisation but suggested that only with difficulty, or in part, could this be attributed to structural changes. The next two chapters discuss ‘new economy’ industries – semiconductors and finance. The former, considered here, was the main basis of any high-tech revolution and grew rapidly even amidst general economic stagnation. Physically light products and technical disarticulation made the sector susceptible to spatially discrete production and an inter-firm division of labour. Again the chapter begins with a brief historical introduction, commenting on the development of the industry in the US, Europe and Japan. It then discusses the spatial reorganisation or ‘globalisation’ of production that saw, from the 1960s onwards, East Asia included as a substantial manufacturing location. However, the chapter confirms the importance of state intervention in the most successful East Asian producing countries, highlights enduring pressures towards concentration and the large proportion of the industry’s workforce in the US and Japan at the end of the 20th century. The subsequent section considers relations between and within firms. It discusses tensions within semiconductor networks between disintegration and integration and identifies the importance of relatively large and old firms within the sector. It briefly discusses the nature of work in the industry. It employed a high proportion of 114

Semiconductors 115

skilled workers but also large numbers, especially of women and ethnic minority workers, in routine production. Labour organisation varied but was seldom strong and workers played little overt role in shaping the industry. The chapter concludes that patterns of social and spatial development were in many respects similar to, and comprehensible in the same way as, those in older industrial sectors and provide insufficient explanation for low levels of labour organisation. Although there was little history of militancy, international variations in unionisation show the significance of connections to wider labour movements and that the sector’s structure did not preclude organisation.

The early semiconductor industry The Bell Labs of AT&T announced the invention of the transistor in 1947. Subsequent development was rapid with key markets provided by military aerospace and later space applications. From its invention in 1958 until 1963, government departments comprised the entire Integrated Circuit (IC) market (Molina, 1989). The Economist (29.3.97) reports estimates that the Pentagon also paid around $1billion for semiconductor research between 1958 and 1974. Texas Instruments (TI), in particular, won big contracts from the United States Air Force (USAF) while Fairchild Semiconductor was the main beneficiary of US space research reinvigorated by the launch of Sputnik (Borrus et al., n.d.; Morris, 1990). US firms established unrivalled world leads. Demand from commercial sources, particularly production industries gradually rose but military applications continued to provide a huge market and remained vital for many companies. State influence also continued, amongst other things, through direct subsidies and overt interventions, such as the invocation of ‘national security’ to block the sale of Fairchild Semiconductor to Fujitsu (Molina, 1989; Heinrich, 2002). Semiconductors were first made by the established integrated electronic companies located in the industrial North East. From 1955 new firms rapidly ‘spun-off’, with histories of the industry describing a ‘family tree’ descended first from Shockley Semiconductor and thence from Fairchild. While the state created the market, venture capital backed small companies of scientists and engineers. Many firms located in the South, particularly in what became known as

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Silicon Valley in Santa Clara county, California, but older firms moving into microelectronics also thrived in Texas (TI) and in Arizona (Motorola). Amongst various factors, the proximity of arms, especially aerospace, manufacturers influenced the relocation (Henderson, 1989). Clean air and the supply of skilled workers from nearby universities were also important. The moves south took the industry away from the heartlands of organised labour. However, the significance of unorganised, cheap, usually female and often immigrant, production workers can most plausibly be seen as becoming important only in the later consolidation of the industry when proportions of lower skilled workers increased. Nevertheless, anti-union policies at major firms such as IBM and later Intel, Hewlett-Packard (HP) and Advanced Micro Devices (AMD) held – at least within the US. From the early 1950s, Western European firms also began to develop semiconductor capabilities, but usually on a smaller scale than in the US. Only the UK and France were committed to similarly high relative levels of defence spending. Moreover, European military spending accounted for a smaller proportion of semiconductor sales; as late as 1972 only for 14 per cent compared with 24 per cent in the US (Morris, 1990). French and British goverments both promoted national champions but, amongst other things, smaller domestic markets meant less internal competition. Those in the UK, in particular, eventually proved expensive failures. By the 1980s, only three European firms survived as major integrated producers. The electronics companies Philips and Siemens both received state support for their semiconductor work, albeit less than in the US, and established successful microelectronics divisions, the latter’s ‘spunoff’ as Infineon in the 1990s. The third, ST Microelectronics (ST), was formed from the merger of Thomson and SGS in 1987 as a joint French and Italian state owned company. Subsequently partially privatised, it became Europe’s largest producer. Each of these firms established typical European industrial relations regimes and recognised trade unions. Details of the development of semiconductor industries in the USSR and Eastern Europe are less readily available but defence spending and military oriented research remained high in both relative and absolute terms. However, the increasing gap between military and civilian research and the dearth of consumer uses, which in the West saw an increased quantity and share of investment coming from

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non-state capital, appears to have significantly disadvantaged the industry in the East. Cold War politics also denied both export orientations and technology transfers available elsewhere, and utilised most successfully in Japan. Semiconductor standards similar to, but incompatible with, those in the ‘West’ also restricted later possibilities of benefiting from any international division of labour beyond the Eastern bloc (Castells, 1998). However, several Eastern European semiconductor manufacturers survived the collapse of Communism, the largest, Integral NPO in Minsk, was listed as employing 30,000 people at the end of the century (Manners and Makimoto, 1995; Dun and Bradstreet, 2001). In Japan, debarred from high levels of military spending, governments nevertheless targeted microelectronics amongst key industries and provided support through the Japan Development Bank and the Ministry of International Trade and Industry (MITI). Whilst insisting on productivity increases, the state underwrote long-term, low interest finance. It remained crucial in shaping the microelectronics industry but as Fransman writes, ‘the uncertainty-reducing effects of government intervention [went] together with a significant degree of pressure for innovation exerted by the competitive interactions of Japanese companies’ (1993: 257). Private firms soon replaced universities and government institutes as the main centres of R&D although government agencies attempted to establish joint or compatible research programmes. Success in this was somewhat limited but there was some sharing of know-how, for example, MITI forced NEC (NEC Corp.) to licence IC technologies to other companies. Without matching the spending of the US military, Nippon Telegraph and Telephone Corp. (NTT), the state owned (until 1985) telecoms company, also provided a vital market for the ‘Den-Den’ family, or group of companies that supplied it, including NEC, Hitachi, Fujitsu and Oki (Morgan and Sayer, 1988; Fransman, 1993). Japanese firms initially relied heavily on licensing agreements with Western companies, paying royalties of about 10 per cent of revenues (Morris, 1990). This implied an enduring technological gap while firms remained vulnerable to volatility within the US. However, growth was rapid and by the 1970s the gap narrowed. A highly skilled labour force facilitated the assimilation of technology while wages, and wage growth, were initially lower than in the US and ‘co-operative’ labour relations were established as the norm. By the early 1980s the superior quality of

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Japanese chips shocked US manufacturers and sales (if not production – a greater proportion of the US industry was ‘in-house’) overtook the US by the end of the decade (Mazurek, 1999). From the 1950s to the end of the century world semiconductor sales expanded erratically but at an average annual rate of 17 per cent (Semiconductor Business News, 17.2.2000). Even when the long boom gave way to a period of prolonged downturn the industry still grew. Although punctuated by key events such as the invention of the IC and microprocessor in 1971, accounts often depict a law-like regularity of technical innovation. ‘Moore’s Law’, after Intel founder Gordon Moore, in 1964 predicted a regular doubling of chip capacity. The periodicity however fluctuated: variously cited at between 1 and 2 years at the end of the century, it appeared to be shrinking (Morris, 1990; The Economist, 4.12.99; Ashford, 1999). Even during the boom, when the military contracts offered a degree of protection, there was fierce competition. There was always a market for the latest chip and profits for those selling it, attracting capital into the industry. As Intel’s Andrew Grove commented, ‘there is never enough production capacity to produce leading-edge products, and there is always more than enough capacity for yesterday’s technology’ (cited in Mazurek, 1999: 107). With such rapid innovation, capital was rapidly devalued. In the words of former IBM president Jack Kuehler, ‘[t]he next generation of memory kills the last generation of memory and everyone knows that’ (cited in Greider, 1997: 176). The corollary to Moore’s law suggests a concurrent halving of price, but again this could vary and was amplified, for example in an 80 per cent fall in 16M chips’ price in 1 year to 1997 (Financial Times, 5.2.97). The industry experienced rapid cycles of boom and slump, creative destruction of approximately tetraennial periodicity. The rhythms reflected the sector’s internal dynamics but were also in complex relations with the wider economy and demand for semiconductor devices. This growth and volatility seems to have significantly affected both the spatial and social organisation of the industry with potentially significant implications for labour.

The globalisation of microelectronics? Microelectronic products are discrete, small and mobile. Transport represents a tiny fraction of total costs. Fixed capital is often costly

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but, given the industry’s volatility and rapid expansion, is quickly replaced. However, this section will show that although the proportion of production beyond the Triad of Europe, North America and Japan was high, and was indeed associated with international rather than local markets, it was confined to a few East Asian countries. Following initial moves beyond the Triad in the 1960s and 1970s, only the original ‘tiger’ economies that made the transition to developed country status established major industries in the core manufacturing processes during the 1980s and 1990s. At the same time, the ‘domestic’ production workforce in the US continued to grow. US firms, led by Fairchild, began moving production offshore from the early 1960s. They utilised low wage locations especially for final assembly. The US state and international agencies of which it was a vital prop, such as United Nations Industrial Development Organization (UNIDO) and the World Bank, played an important role in establishing export-processing zones, including various freedoms for capital and the institution of ‘favourable’ labour laws. The 1963 US tariff schedules also meant that import duty was paid only on value added overseas (Henderson, 1989; Borrus et al., n.d.). Fairchild initially located in Hong Kong then moved its operations to lower waged Korea having extracted concessions from the government allowing access to the local market and changes in the law permitting exclusive ownership (Hong, 1997). Other firms’ ‘screwdriver plants’ similarly moved on, in particular, when labour became less cheap. By the end of the 1960s the number of offshore assembly plants had risen to 29 and by 1974 to 101, 56 of them in East Asia (Morris, 1990). Morris (1990) records 89,000 working offshore for US firms against only 85,000 in the US as early as 1972 and Henderson the disappearance of all but the highest capital intensity jobs from the US by the mid-1970s (1989: 32). Semiconductor production involves numerous discrete processes and Henderson elaborates a potential five way international division of labour on the basis of research and development, mask making, wafer fabrication, assembly and final testing. Even wafer ‘fabs’ (semiconductor wafer fabrication factories), despite their cost, were built in several Asian countries. However, the places that attracted the majority of investment were those with previously established consumer electronics industries and the successful consolidation of microelectronics appears to have required substantial

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links with the wider economy (Lowe and Kenney, 1999). The ‘front-end’ production processes remained concentrated in the advanced countries, overwhelmingly so if the original Asian NICs, South Korea, Taiwan and Singapore are accepted as having become industrialised. State intervention was again pivotal in the transition of Korea and Taiwan, in particular, into major manufacturing locations where domestically owned production including wafer fabrication became important. The Cold War meant that both countries received high levels of US aid. Home states, however, ensured the reproduction of low wage labour markets, through repression and the ‘creative use’ of ‘traditional patriarchal social forms’ but also through various social subsidies (Henderson, 1989; Applebaum and Henderson, 1992). The Korean state did not dominate the semiconductor industry in the way that it did heavy and chemical engineering and much of its policy implementation was delegated. Nonetheless, the Ministry of Trade and Industry (MTI) targeted electronics amongst six strategic sectors based on its export potential. ‘Intimate ties’ with firms, state controlled financing and ‘behind the scenes’ assistance ensured a high degree of effective control (Amsden, 1989; Henderson, 1989; Hong, 1997). Initially, technologies were imported and licensing arrangements with Western and Japanese companies often remained important but increasing investments in R&D (and indebtedness) in the late 1980s helped maintain the position of Korean firms. Despite wage levels already high by East Asia standards and further rises after the militancy of 1987, Samsung, Hyundai and LG became major international producers, in particular, of memory chips. Although less militant than in autos, semiconductor workers’ industrial action was at the centre of the (ultimately unsuccessful) opposition to LG’s acquisition by Hyundai, the result of restructuring and an opening to foreign investment after the 1997 crash. In Taiwan, according to Hong (1997) the state ‘actually created the whole industry’, initiating and financing the two major companies. However, its investments in the 1970s were much less than those spent unsuccessfully by other governments, about 10 per cent of those in Britain, France and Canada. Its success appears to have lain in the particular strategy, and perhaps fortune, of the market niches it chose, in particular in Complementary Metal Oxide Semiconductors (Morris, 1990; Hong, 1997). However, by the 1990s the major

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manufacturers, Taiwan Semiconductor Manufacturing Company (TSMC) and United Semiconductor Corporation (UMC) adopted a horizontal rather than vertical niche, abandoning chip design and operating as ‘foundries’, manufacturing other firms’ chips. Western companies continued to bemoan more or less direct state subsidies. While foundry operations were the largest business, smaller integrated firms and others specialising in each of the stages of production, from chip design to packaging, also survived. Singapore too maintained a significant but somewhat smaller microelectronics industry with Chartered Semiconductor the world’s third ‘pure play’ foundry. However, as cheap labour locations, the original Asian tigers were undercut and the industry grew dramatically in several other countries. By the late 1990s Malaysia became a major exporter mainly through the assembly and testing operations of advanced country firms. Low wages but also (more controversially and in ways that were sometimes hard to quantify) state subsidies attracted investments. However, strategies to construct independent ‘national’ industries including wafer fabrication were less successful. ‘Catch up’ became harder with rising entry costs. China, however, provided a low wage economy and an exceptional one in terms of size and state authority. Influenced by the booming market, China’s semiconductor industry grew rapidly in the latter half of the 1990s, mainly in assembly and testing and in materials production. Nevertheless, by the end of the century, Motorola, and the Taiwanese foundries, amongst others, also built or proposed mainland Chinese wafer fabs. The Triad share of exports fell from about 75 per cent in 1980 to 56 per cent in 2000 (UNITSY, various years). However, a large proportion of the change was of re-exports and at least until the end of the century, there appeared by some measures to be a concentration of production rather than dispersal. Table 8.1 shows the approximate locations of the world’s semiconductor manufacturing workforce in the late 1990s. It confirms the significant production in the ‘Rest of Asia’ by domestic firms as well as those from Japan, Europe and the US but also the large industries within North America, Japan and Europe. Overseas investments outside East Asia were limited, a change since the 1970s when several states had comparable industries. Most of these subsequently failed. For example, in 1970, 21 per cent of

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Table 8.1 World semiconductor workforce by production and firm ownership location, 1999

Firms from

Production in Western Eastern US/ Latin Japan Rest of Africa Europe Europe Canada America Asia

Western Europe Eastern Europe US/Canada Latin America Japan Rest of Asia Africa

31,700 – 3,800 – 3,100 – –

– 24,400 41,800 – 200 255,300 – – – 16,200 – 4,950 – –

2,320 – 31,400 – – – – 3,000 84,000 4,900 – – – 97,800 24,700 – – 142,000 – – –

– – – – – – –

Notes: The figures are approximations based on data in the Dun and Bradstreet Directories. In particular where firms list two or more lines of business an estimate of their relative employment has to be made. There is a reasonable first order correspondence with levels cited by firms where these were available. Sources: Dun and Bradstreet (1999a,b, 2001).

semiconductor devices imported into the US were from Mexico, 4 per cent by 1980 and by 1994 just 2 per cent, before rising modestly (Scott and Angel, 1988; Feenstra, 1999; UNITSY, 1999). There was little microelectronics production in South America and virtually none in Africa in the late 1990s (Dun and Bradstreet, 1999b, 2001). The industry also again indicates that the high skills, low wages and proximity of an Eastern Europe embracing the free market, were (with the significant exception of East Germany) largely ignored by Western firms. Even within Asia, amongst poorer countries, the industry was concentrated in just three: Malaysia, China and to a lesser extent the Philippines. Greater investments were made in the Triad. Japanese FDI largely involved joint ventures, M&As but NEC’s labs in Princeton were an exception of greenfield investment (Doremus et al., 1998). Many firms established a presence and did at least some research within Silicon Valley. US firms had located parts of the production process in Europe from the 1960s, firstly in assembly and testing but later also introducing mask making and wafer fabrication. The UK hosted most inward investment, including National Semiconductor (US), Fujitsu (Japan), Hyundai (Korea) and Mitel (Canada) as well as Siemens from within Europe. However, both planned and

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operating plants were abandoned or ‘mothballed’ in the industry’s recession of the late 1990s, often at considerable cost. There were differences in levels of overseas production according both to the type of firm and their origin. US ‘merchant’ producers led moves of assembly offshore while integrated firms usually retained a greater proportion of home based production. Japanese firms also built back-end factories in East Asia and, in the 1990s, semiconductor plants specialising in relatively simple analog and discrete devices. However, moves offshore remained at a lower level than those of US firms or, for example, their own consumer electronics divisions; attested by a dramatic rise in semiconductor exports to relocated Japanese owned electronics factories in the 1990s (EIAJ, 2000). By the end of the century, while nearly two-thirds of major US firms’ assembly plants were in Asia, Japanese firms did as much as three-quarters of their assembly at home (Arita and Fujita, 2001). One leading European firm to detail its manufacturing locations, Infineon, shows that in 2000, it employed over 22,000 workers in a total of 28 sites, over half, 11,600 in Europe, 7800 in Asia, 3200 in the US and 75 in the Middle East. Fourteen of the locations were oriented towards R&D. These were mainly small establishments, only that in San Jose, with 800 staff, employing more than 250 (Infineon, Feb 2000). Even for US firms, the foreign to domestic employment ratios appeared to be lower in the late 1990s than those cited above for the 1970s. About one in four of their direct employees were overseas. Amongst the largest and most multinational firms the ratio was somewhat higher, for example, in 1997 two-thirds of Intel’s 60,000 employees were in the US, as were 7000 of AMD’s 12,000. Although their operations extended well beyond semiconductors HP and Motorola similarly employed a little over half their workforces ‘at home’ (Greider, 1997: 91; UCOP, 2002). This simple numerical account does not differentiate the work done in different locations. However, it highlights that although the last three decades of the 20th century were ones of rapid replacement of semiconductor capital, opportunities this provided for relocation to LDCs were utilised to only a limited extent. One factor influencing this appears to have been that chip integration and automation meant a decline in the number of assembly workers required relative to chip function (Morgan and Sayer, 1988). Furthermore, although most firms were rather secretive concerning

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the exact nature of their operations it appeared that instead of separate facilities for each of the potential stages of the production process, most made simple ‘front-end’/‘back-end’ dichotomies combining assembly with the more capital intensive testing operations. The rising scale of investments, while still much lower than in wafer fabrication, suggested prolonged commitments. Moreover, while there were few independent US based assembly facilities (Scott and Angel, 1988), firms often incorporated these with front-end operations at single manufacturing locations. Despite falling rapidly in the late 1990s, even in 2000 the geographical distribution of test equipment sales shows that 26 per cent was spent in North America, 18 per cent in Japan and 11 per cent in Europe. For assembly and packing equipment the figures were 9, 22 and 8 per cent respectively; still significant in the US but confirming the greater proportion of on-shore assembly in Japan. Although perhaps weaker than in some other industries, even amongst independent supplying companies there were tendencies to cluster and for the level of local inputs to increase over time. Smaller firms were particularly prone to localisation effects (McCann and Fingleton, 1996; Arita and McCann, 2000). The tensions between economic concentration and disintegration will be more fully discussed in the next section and, of course, MNCs also subcontracted chip fabrication to foundries in Taiwan and Singapore and assembly and testing operations, in particular, to other LDC based producers. The largest of these latter were themselves MNCs like US owned Amkor Technology and ASE, from Taiwan. However, technically separate processes were not always divided spatially and a high proportion of the workforce remained within the richest countries. So although most large-scale manufacturing left Silicon Valley much remained in the US and Japan. Mazurek notes that by 1994 Texas became the centre of wafer fabrication and concludes the ‘most obvious trend is the shift of manufacturing facilities away from California to other parts of the United States’ (1999: 118). Similarly within Europe, firms built new wafer ‘fabs’ in poorer areas within rather than outside the region, for example ST in Catania in Sicily and Infineon in Dresden. States remained influential in the moves of semiconductor firms; in the US context not only at the federal level. Historically, firms

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took advantage, for example, not only of US bankruptcy laws but also of California’s tax structure, which ‘treated capital gains more generously than income’ (The Economist, 29.3.97). Other states offered competitive tax breaks and incentives such as grants and workers’ training. Cleaner air, once a factor in moves away from the industrial North East again became a factor in moves away from California. Modern clean rooms eliminate contaminating impurities but the industry continued to pollute. Lower atmospheric levels in other states and different environmental standards allowed firms to make greater emissions elsewhere, one of the attractions of New Mexico, for example (Haynes, 1989; Mazurek, 1999). Despite the apparent spatial mobility of semiconductor products and the preparedness of states, in both senses of the word, from Virginia and Delaware to Malaysia, Israel and Egypt, to bid against each other to attract semiconductor firms, production remained highly concentrated. Japanese and US companies accounted for 75 per cent of world sales of around $150 billion in 1998 and in the late 1990s these countries had about 50 per cent of the total workforce (EIAJ, 1999; Mazurek, 1999: 40). However, as the industry slump continued into the next century there were indications that both Japan and the US lost grounds to Asian production locations, particularly Taiwan. Nevertheless, although conditions of increasingly chronic overcapacity may have accentuated it, the attraction of cheap labour was only one amongst many. If ‘triadisation’ includes the East Asian NICs as well as Japan alongside North America and Europe it is particularly stark in semiconductors. A few LDCs made the transition to developed semiconductor producers while the industry declined in some richer countries, notably the UK. Many manufacturing operations were run by Western MNCs in lower waged countries, while ‘domestic’ firms in the latter also did substantial subcontracted work. However, while the potential of LDC production locations was huge, in practice their utilisation was limited; mainly concentrated in a few East Asian countries and a few sectors of production. Rather than globalisation causing jobs to be lost overseas, in the US at least, MNCs appeared to employ higher proportions of their workforce at home in the late 1990s as in the early 1970s. The US domestic workforce, despite a dip in the recession

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of the early 1990s, grew approximately threefold during this period of ‘globalisation’.* According to Appleyard and Brown (2001), only two US ‘fabs’ were unionised. In ‘transplants’ too, union densities were often low, but neither the nature of the microelectronics industry nor of American firms precluded organisation. In Britain, a few firms were organised but with companies adopting attitudes reminiscent of the car firms in the 1930s, an indirect influence could be described. Findlay cites one manager as saying ‘our company is deliberately paying more than the union rate. We also began issuing shares . . . to stop the unions coming in’ (1993: 36). Some firms accepted, and adapted to, unions elsewhere. In contrast to its anti-union stance in the US, IBM, for example, conceded union recognition at plants in Europe and Canada.

Semiconductor networks Crisis ridden growth and the tensions between disintegration and concentration Integrated electronics companies dominated the earliest chip making. As late as 1972 just two firms, IBM and Bell, neither of whom sold chips on the open market, did 80 per cent of US research and development (Morris, 1990). However, the industry was characterised by processes of disintegration, for some writers typifying ‘flexible specialisation’ (Scott, 1988; Saxenian, 1994). The US ‘start-ups’ in the 1950s and 1960s were mentioned in the section ‘The early semiconductor industry’. Four US companies made semiconductors in 1951, about 50 in 1957 and around 120 in 1962. Numbers remained roughly constant until the early 1970s when they took off again. By the late 1990s, there were over 900 firms (Braun, 1980; Morris, 1990; Mazurek, 1999). Many others supplied the industry with machinery and materials while firms’ interrelations often easily crossed national boundaries. On an international level too, where US manufacturers had once dominated, Japanese, European and later Korean and * Sources give different employment levels, ranging from about 200 to 300,000 in the late 1990s. Indeed this variation is found within The Statistical Abstract of the United States depending on which Administration within the Department of Commerce is taken as a source (SAUS, various years).

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Taiwanese competitors challenged them. Nevertheless, tendencies towards disintegration remained in tension with pressures towards concentration and centralisation and most semiconductor employees worked for (relatively) large firms. In Japan the large, integrated producers continued to dominate. Nineteenth century anticipations of the concentration and centralisation of capital find an enduring resonance in the development of giant contemporary firms. However, this was never a unilinear process. As reported in Chapter 4 Marx also describes how manufacture seizes upon both particular tasks and stages of production and converts them into independent industries. These tendencies develop both as growth increases industrial scope and through industrial cycles, which continually disrupt established relations of production. The semiconductor industry’s rapid and ‘crisis ridden growth’ appears to have accentuated these tensions between division and concentration. Initially IBM’s size and monopoly position enabled it to make long-term investments in an unstable market. However, uncertainty reduction may be double-edged. IBM came to appear increasingly inert and ‘featherbedded’ by its own dominance. At the same time the increasing scale of production made it hard for even the largest firms to innovate and upgrade every stage of the manufacturing process for each new chip. It became cheaper to ‘contract-out’ some processes to specialist companies who, without competing overall, could succeed in particular areas of production. The volatility of the market also meant that there were boom-time chip shortages for captive producers that provided opportunities for smaller merchant suppliers (Morgan and Sayer, 1988). So IBM remained an integrated producer in the sense of having capacity in design, mask making, wafer fabrication, assembly and testing. But it also subcontracted some of the work as well as buying machinery and materials from external suppliers. Symbolically, in 1980 it bought Intel’s 8088 microprocessor and subsequently relied on its successors. Many other major firms similarly continued to produce ‘in-house’ while subcontracting some work to other firms. Specialists emerged in each of the phases of production. Numerous ‘fabless’ firms emerged in many parts of the world. With low capital expenditures and a concentration of highly skilled labour they designed (and perhaps also marketed) microchips, or component

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‘design modules’. Many were small start-ups and pure ‘intellectual property’ companies but others, such as Cirrus Logic and SEEQ, were former integrated producers who went ‘fabless’, abandoning manufacturing rather than make a new round of upgrades. Other manufacturers went some way in the same direction, retaining their own ‘fabs’ but also using ‘foundry fallbacks’. Counterparts to the ‘fabless’ strategy were ‘foundries’ that did not design their own chips but produced them for others. In 2000, they took about 15 per cent of the market. The Taiwanese and Singaporean market leaders were mentioned above. Other specialists included smaller firms like Xfabs, German owned but located in the US while integrated producers including IBM, Honeywell and Infineon also offered foundry services in periods of overcapacity. Other firms, largely from within the Triad, specialised in mask making while assembly and to a lesser extent testing, either separately or together were the most likely parts of the production process to be located in lower waged economies. Numerous materials producers and equipment manufacturers also supplied each stage of production. Most leading equipment suppliers, in particular, were from within the Triad. At the same time as this separation of tasks, few firms offered full product lines. There were separate markets for, and often producers of, types of microchip and other electronic components. Major firms continued to produce a range of a particular type of product, for example Intel and AMD made microprocessors, and Micron memory chips. Sometimes developing through the sale or devolution of divisions or product lines, other firms concentrated in narrower niches, for example making specialist non-state-of-the-art chips or old lines for repair and replacement. An international dimension saw first Japanese and later Korean firms dominate in memory, Americans in ICs. This picture of disaggregation appears to contrast sharply with the experiences of Fordism and to typify the alternative ‘networked’ logic of the new economy. However, it does need to be qualified. Many small firms struggled, went bankrupt or were taken-over. In 1999, the 20 leading firms had an average age of 62 years, predating the invention of the transistor (Dun and Bradstreet, 1999a,b; Semiconductor Business News, 7.6.2000). Siemens’ spin-off of Infineon that year would reduce the average age by 7 years but hardly negate the basic point that old established producers dominated. Most

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production was associated with the semiconductor divisions of, or devolved from, integrated electronics firms. Of the specialist startups only four, Intel, AMD and Micron from the US and Rohm from Japan, made it to the top 20. The only other leading firms formed since 1950 were Lucent, spun off from AT&T and ST. The top 10 took about 50–60 per cent of the world market. While rapid growth and volatility contributed towards the creation of new markets and new niches, alongside this was a rather old picture of capital concentration. In periods of boom, there were huge profits to be made, especially on leading-edge chips. ‘Fabs’ ran at, or near capacity. Foundries charged high prices and made good profits as even integrated manufacturers also now subcontracted work. Booms thus motivated increases in capacity and its ownership by those who could afford it. At the same time, boom conditions made life difficult for the other side of the disintegrated schema, as high prices squeezed the fabless firms (Ó hUllacháin, 1997; Semiconductor Business News, 7.2.99). However, each boom rapidly developed into a classic crisis of overproduction. There was a technical aspect to this cyclicity. Product cycles were accompanied by regular recessionary cycles; formerly of 4-year periodicity, by the latter half of the 1990s they became more rapid. Product innovation was discontinuous and the capacity of chips jumped in geometric progression. Hence a tendency to a periodisation of investment, followed by increasing production then overproduction with each innovation. This oversimplifies, and in practice fortunes changed in intimate relation with the wider political economy. For example the recession of the early 1980s ended with a boom in VCR and PC sales (Forester, 1993), themselves made possible by the economic recovery of the Reagan boom. Recession in 2001 thwarted an anticipated semiconductor boom. As with any crisis, there were large elements of unpredictability of outcome, while the success of particular market niches was equally hard to predict. For example, European firms benefited in the late 1990s from an orientation towards telecoms applications. In general, however, a glut of each new generation of chips caused a rapid depreciation and severe economic difficulties for all but the strongest. Overproduction, obsolescence and reductions in value occurred from the industry’s earliest days. Overcapacity left ‘fabs’ underused or unused. ‘Pure play’ foundries, in particular, suffered in contemporary slumps as firms

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with their own manufacturing capacity retreated within it. State support could become crucial to survival. The integrated producers may suffer less while nevertheless enviously watching falling foundry prices enjoyed by surviving fabless firms. The latter’s success then is associated with overproduction and their numbers multiplied during the latter part of the 1990s as this became increasingly chronic. Slump itself may discourage expansion. However, competitive pressure meant overproduction did not necessarily lead to firms cutting production but fighting to maintain market share by increasing capacity. Say’s law, a staple of liberal economics, suggesting that supply creates its own demand, became truly ephemeral. ‘The balance of supply and demand in this industry’ according to Moore, ‘lasts for about 35 minutes’ (cited in Forester, 1993: 62). Crises created the impulse for firms to overcome them through the next innovation. Those seeking to remain manufacturing companies, despite, or rather because of, a fall in profits, were forced to spend on innovation to produce the next round of upgraded chips. Those with sufficient resources or backing could now expand production facilities at lower prices. Intel spent $7.5 billion while the industry ran at two-thirds capacity in 2001 (Semiconductor Business News, 31.12.01). Moreover, each generation of manufacturing facilities rose in cost. Estimated at $14 million (in 1999 dollars) in 1966, the cost of a state-of-the art ‘fab’ rose to $2 billion by 1996 and nearer $4 billion by the end of the century, with R&D costs rising almost as fast (EIAJ, 1999; Mazurek, 1999). So, for example, while 15 US firms survived as producers of memory chips to 16 K, only 5 to 64 K (Forester, 1993) and only one, Micron, survived as a major producer at the turn of the century. Competition further motivated firms to ‘leapfrog’, to the next but one more sophisticated chip, spending more and accelerating the cyclicity. All this indicated a growing concentration. Even in specialist niche markets high entry costs proved prohibitive to all but the very large. Within each market, relatively few firms tended to dominate. While Intel’s 80 per cent share of the microprocessor market was exceptional, ST and TI took over 40 per cent of the smaller markets for Electrically Programmable Read-Only Memory and Digital Signal Processors respectively. Other markets were more evenly divided between small groups of leading firms (Electronic Business News, 6.7.99). Three companies, Intel, Motorola and TI took about

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half the total US chips market. Nevertheless, they also developed relations with numerous others. Ó hUllacháin argues that ‘vertical integration often takes intermediate or hybrid forms’ (1997: 219). Besides take-overs and mergers, many fabless firms established equity stakes in foundries while the number of major alliances multiplied. The US National Research Council associate cyclical downturns with increases in alliance formation (NRC, 1992). This might create industrial ‘networks’, but contrary to common depictions of flexible specialisation, ones dominated by major corporations. The US, home to the most small firms, also had most alliances. Similarly, in materials and equipment production a volatile market claimed former world leaders in the demise of GCA and Perkin-Elmer (Forester, 1993; Randazzese, 1996). In general, however, the largest companies grew fastest (Semiconductor Business News, 11.2.2000). Chon writes, [O]ne can infer that each producer has to sell more equipment than in previous generations to cover higher fixed development costs so as to achieve a competitive advantage over smaller remaining competitors. Essentially, as fixed development costs become a larger portion of overall costs, consolidation becomes more crucial to survival (1997: 31). This process had particular significance in Japan. Confirming Moody’s (1997) argument that specialisation or ‘disintegration’ could result from increasing rather than decreasing economies of scale, the development of parallel equipment technologies for chips of 16 M became prohibitive and the existence of six parallel chip making keiretsu untenable even in an expanding market. Specialist ‘out-ofhouse’ chip making equipment manufacturers came to dominate, especially, the ‘up-stream’ or ‘front-end’ of the market, in particular of wafer processing equipment (Mazurek, 1999). In moving production processes away from the traditional affiliations, this also allowed entry to foreign firms. US leader Applied Materials dominated the market alongside Nikon and Tokyo Electron. It also undermined co-operative inter-firm relations as chipmakers became less likely to share innovations with equipment producers, fearing their transmission to competitors (Appleyard and Brown, 2001).

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Nevertheless, national developmental paths remained distinct. Large integrated producers continued to dominate in Japan. Smaller firms, especially in R&D, were much more significant in the US but even there tensions remained between processes of fragmentation and concentration whilst most production workers continued to be employed by relatively large firms. The work of semiconductor manufacture Rapid growth and innovation also meant a high proportion of spending on R&D, and employment of R&D workers. This produced perhaps the most obvious of agglomeration effects. The greatest initial, but an enduring, problem for semiconductor firms was the supply of skilled scientists and technicians. Highly mobile capital might in principle move to cheaper, educated labour in distant locations (May, 2000b). In practice semiconductor R&D appeared ‘to need the kind of local urban/environmental conditions (such as are found in and around Silicon Valley) which can sustain the effective social reproduction of this form of labour’ (Henderson, 1989: 45). Skill increased workers’ mobility: first, in abilities to overcome political and social restrictions to migration. The US attracted scientists from around the world. Secondly it meant job mobility; labour turnover of skilled workers in California remained high. The concomitant diffusion of knowledge has been seen as a strength of the US industry, which maintained a lead in product innovation. It nonetheless harmed several firms that individuals left, the demise of Shockley Semiconductor being only the first example, and became a legal battleground over Intellectual Property Rights. Such mobilities were markedly less in Japan. ‘Lifetime’ employment meant security, at least until the age of 55, for many skilled male workers. Consequently companies could be confident of retaining skills and effecting a ‘mouldability’ of R&D workers (Fransman, 1993). Concentration was reflected in R&D plants with an average size of more than 3000 workers (Arita and Fujita, 2001). However, even R&D work may be subject to displacement and deskilling. Greater complexity, rather than increasing skill, hastened the introduction of ‘electronic design automation’. A subdivision of tasks challenged any early egalitarian scientific research atmosphere while an increasing weight on ‘D’ rather than ‘R’ made productivity more quantifiable and labour more alienable. Even Silicon Valley’s elite suffered long hours and ill

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health (Haynes, 1989). Labour turnover remained high but, unlike other skilled high-tech workers, for example in aerospace, semiconductor workers in the US remained largely unorganised. With innovation, productivity, the output per worker, rose steeply. Morgan and Sayer characterise the industry’s expansion as ‘jobless growth’ (1988: 93). Appleyard and Brown (2001) describe how each stage of ‘fab’ innovation cut the proportion of routine production workers through automation. However, despite this and substantial production in East Asia, direct employment within the leading firms within the US increased. The number of ‘production workers’ rose from 90,500 or 49.2 per cent of the total in 1988 to 105,800 or 53.4 per cent in 1997 (SAUS, 1995, 2001). Several authors describe this production workforce as ‘peripheral’. Firms did use large numbers of casual, agency workers in addition to their own employees. However, this characterisation is frequently used more generally. Somewhat optimistically, The Economist describes Silicon Valley as ‘disproportionately staffed by those who find themselves at a disadvantage in a less results-oriented environment: women and immigrants’ (29.3.97). Immigrants were well represented throughout the industry, if more thoroughly at the bottom, but with Eastern Europeans and Asians, especially Taiwanese, amongst the skilled workers of Silicon Valley (Saxenian and Hsu, 2001). Gender segmentation was clearer. Rare at the top, women predominated amongst production workers both in the ‘fabs’ and in assembly. Few were unionised. The danger of circularity (and of racism and sexism) in such presentations was noted in Chapter 4. Other sectors, even amongst those discussed in this project, show that both immigrants (for example in cars and construction) and women (in finance) could organise. If in semiconductors low waged labour often remained unorganised this was historically contingent. However, it may be reasonable to suggest a path dependency in which low levels of organisation encouraged industrial relations regimes in which shop floor input was neglected and cost emphasised. It may have accentuated differences and contributed towards what Appleyard and Brown (2001) characterise as divergent trajectories of organisation in the Japanese and US industries. Nevertheless, contrary to many predictions of peripheralisation not only did their numbers increase but so too did their wages. Even in the US, hourly production workers’ pay rose from $11.38 in 1988 to $16.36 in 1997, rather higher than the manufacturing average (SAUS, 1995, 2001).

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There may be some justification in the optimism of Santa Clara county AFL/CIO organiser Amy Dean who links union organisation with industrial maturity (Working Partnership, 2000). However, older firms such as IBM and TI remained unorganised. Low levels of trade unionism in the US microelectronics industry might also be associated with weak traditions in the areas, particularly in the South, in which the industry established itself but also with wider defeats. Industrial growth corresponded with a period of general economic downturn, in which, in contrast to the 1930s, the response of organised labour was largely acquiescent. Weaknesses in labour’s strongholds, perhaps most obviously in the concessions granted by the auto unions, discouraged new organisation. Bureaucratic control of post-war unions left little scope for independent organising by new groups of workers. Rank-and-file efforts within Silicon Valley plants, such as those in the 1970s around Workers Voice at IBM, received little official backing. Haynes (1989) also suggests that the conservatism of unions, reflected in support for repressive (anti-communist) regimes was not conducive to the recruitment of migrant workers from those countries. Any resistance remained largely individualised; reflected in high labour turnover and sickness levels; the latter only partly accounted for by often appalling occupational health risks. Some progress was made in the 1990s, for example in attempts to establish unionised staff agencies (The Economist, 12.6.99) while the Communication Workers of America (CWA) increased its recruitment, for example within IBM, although at the time of writing it declined to force recognition ballots. The structure of the industry appears to be connected with its rapid growth but also its cyclicity, with its failures as well as its successes. The unpredictability of the industry might militate against stable union organisation but conversely, the speed of innovation and volatility of semiconductor markets would appear to make firms vulnerable to labour action. Their situation within small firms may make labour organisation difficult for some workers but most worked for firms that were at least relatively large. The employment of ‘peripheral’ workers seems insufficient explanation for workers’ overall experiences. In Europe, where labour’s general retreat was less severe than in the US, and in Korea where labour organisation grew, workers also organised within semiconductor firms.

Semiconductors 135

Conclusion Semiconductor products were unusually mobile but production remained highly concentrated. Only assembly operations proved widely susceptible to location in low wage economies. Even these were frequently integrated with testing operations, characteristically more capital-intensive and located in higher waged economies. Similarly, these back-end operations, were, through automation, often integrated with core ‘front-end’ tasks in many developed countries. Furthermore, increasing chip complexity reduced the number of assembly operations per chip function. The ‘assembly’ workforce declined as a proportion of the total. Wafer ‘fabs’ increased rapidly in capital intensity and the industry in productivity. Job growth in the richer countries was low in relation to sales but it is hard to depict this as a loss of jobs overseas. Employment rose and proportions of workers within the leading semiconductor producing countries of the US and Japan were relatively stable. The European industry struggled but again firms located mainly specific, back-end tasks within LDCs. There were moves towards cheaper labour, for example to the South in the US and within Europe. However, strong pressures towards geographical concentration endured, evidenced in the concentrations of skilled workers in Silicon Valley and other smaller imitations. Even in manufacturing processes, pressures towards geographical proximity endured. Numerous different sorts of work were involved in R&D, mask making, wafer fabrication, assembly and testing and other tasks, sometimes in different and dispersed sites. At least some of the organisation of this division on an inter-firm basis seems to be associated with the industry’s characteristic booms and slumps. This may also have had disruptive effects on labour. The proportion of highly skilled and relatively well-paid workers was higher than in the old economy sectors discussed here and indeed than in most industries. Nevertheless, although polarised, the tendency would appear to be towards decreasing differentials with falling conditions for a smaller proportion of elite workers. Most employees worked in routine production in wafer fabrication or in assembly and testing. In the US, there was little history of workers’ organisation. Relatively small workplaces may also have contributed to this although wafer ‘fabs’ typically employed over 600 people, while most were owned by

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Evidence of Labour’s Condition

relatively large firms. The microelectronics industry continued to change rapidly but in ways that were comprehensible and recognisable. This suggests that although workers often faced hostile employers and regimes it might still be possible for the experiences of the past and of other sectors to inform the struggles of and for labour organisation within microelectronics.

9 Finance

Introduction This chapter discusses the finance industry and considers labour’s situation within it. As noted in Part I the role of ‘global finance’ is central to many characterisations of the new economy and of labour’s decline. The chapter briefly puts recent changes in historical context and outlines the transition from the ‘Bretton Woods’ system to contemporary liberalised finance. It then considers the sectors’ spatial reorganisation, identifying the concentration of financial work within rich countries and particularly key ‘global cities’. It contrasts the near absolute physical weightlessness of contemporary monies with diverse social restrictions of mobility. Space remained important in finance’s internal and external relations. Labour was not substantially displaced or dispersed to low-wage locations. The following section considers inter-firm and work reorganisation. Major financial institutions remained crucial and, with variations between sectors of the industry, direct employment the norm. However, for example in banking, local branch sizes often declined with a greater proportion of work done in centralised processing centres. Changes in labour processes corresponded poorly with those in labour organisation. The final section provides a summary, concluding that structural changes were, to varying degrees, contradictory and contested processes. Frequently exaggerated, they were, at worst, ambiguous in their implications for workers, with the experiences, in at least some countries, more positive than amongst the wider labour movement. 137

138

Evidence of Labour’s Condition

From Bretton Woods to global finance? Finance is, of course, an ancient occupation and even international monies have existed for over 2000 years. This section’s historical commentary is necessarily hugely abbreviated. Any ‘globalisation’ has been a centuries long process but one that took on new dimensions with the development of capitalism. In particular, many authors emphasise the highly internationalised gold standard era in the decades before the First World War. The inter-war years represented a ‘retreat’ in terms of trading levels and during the 1930s an abandonment of the gold standard. Nevertheless, crisis affirmed the enduring interdependence of finance and national economies. The depression was close to global. The financial system agreed at Bretton Woods in 1944 subsequently coincided with the ‘golden age’ of Keynesian boom. Nevertheless, the system was the product of some contradictory compromises and only briefly functioned as intended. In the early period, US economic dominance and demand for its products produced dollar deficits. The value of the dollar was fixed against gold but devaluations in relation to it were allowed or even encouraged. Marshall Aid provided more direct assistance, further dollars and in the short term exacerbated a reliance on US goods. Only in 1958, after more than a decade of recovery, did the European currencies achieve the envisaged convertibility, the Canadian and Japanese not until the 1960s (Scammell, 1975; Porter, 1997). National economies continued to follow distinct financial practices. Universal banking, exemplified by Germany, contrasted with more differentiated markets and a greater role for equity financing in the ‘Anglo-American’ model. Many of the pre-war structures persisted; in the US in particular, formal regulation continued to segregate branches of the industry and imposed ‘fire-walls’ between different activities to prevent financial contagion. There was perhaps a more extensive transformation of labour processes. Finance provided a prime example of the proletarianisation, feminisation and degradation of clerical work (Braverman, 1974; Appelbaum and Albin, 1989). Workplace sizes were typically relatively small but in Europe, albeit with considerable variation, trade unions grew. In the US, however, unionism was effectively ‘extinguished’ in 1950 when the CIO expelled the United Office and Professional Workers of America for

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refusing to comply with Taft-Hartley (Pollard, 1995). Organisation there remained weak. The post-war period witnessed unprecedented but uneven economic growth. However, the system precluded dollar devaluations as the US declined from its position of supremacy relative to Germany and Japan. Instead, the US pushed for revaluations of their currencies but with limited success. By the 1960s the dollar deficits turned into gluts. Private overseas holdings of ‘Eurodollars’ escalated over the decade to levels exceeding US gold reserves (Gamble and Walton, 1976). For a time political authority could ride this contradiction but in 1971, Nixon suspended convertibility and after 2 years of attempts to revive it, the system was formally abandoned. Currency markets, officially at least, would subsequently determine exchange rates. This coincided with the boom in oil prices and petro-dollar re-cycling which produced an explosion in financial transactions, including lending to hitherto largely excluded LDCs. Many scholars see this opening an era marked by flows of unprecedented extent, intensity and velocity (Perraton et al., 1997; Held et al., 1999; Sassen, 2001). A further series of reforms created a more open international financial regime. Helleiner (1994), amongst others, describes a process of ‘competitive deregulation’ and liberalisation. States removed barriers to competition while technological innovation facilitated new means of financial interaction, increasing mobility. For several authors, this was crucial in undermining states’ ability to intervene against financial flows. According to Cerny (1993), governments were ‘whipsawed’ between sectors and firms within the financial services industry. States trying to resist had their powerlessness confirmed in massive losses. Governments nevertheless remained a vital prop to the new regime. The US, in particular, although it usually promoted increasing liberalisation, could enforce ‘rules of the game’ and influence multinational organisations including the IMF, World Bank and Bank of International Settlement (BIS). Global agreements were also underwritten by understandings of state support. Kapstein writes that when the Federal Reserve bailed out the London branch of Franklin National in 1974 it ‘said implicitly that it would act as lender of last resort for the Eurodollar operations of American banks’ (1994: 42). Instead of ‘de-regulation’ Moran (1991) characterises change as ‘re-regulation’ stressing the introduction of new laws, such as the UK

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Banking Act of 1979 that gave that country its first formal regulation and bans on insider dealing, which had not previously been illegal in most countries. Haufler describes a shift in the insurance industry during 1980s from the private to the public sector, seeing the system as ‘more politicized and unstable’ (1997b: 104). Clearly, tensions remained between public and private finance. Leyshon and Thrift note how in the UK the Financial Services Act ceded ‘a freedom to engage in a wider range of financial markets in exchange for a far higher level of surveillance over their activities’ (1997: 209). It remained largely unproven to what extent new technologies might have been used by states to prevent capital movements had they chosen to do so. The US was able to enforce disclosure rules of investments in US sanctions countries on foreign firms. Even relatively weak states like Malaysia and Chile had some success in controlling financial flows in the late 1990s. ‘State retreat’ therefore seems an inadequate description of the changing organisation of finance, and in particular an insufficient basis for describing labour’s altered circumstances. Moreover, and more significant here, the social reproduction of finance continued to require labour in definite places and institutional contexts.

The international division of labour: the changing territoriality of global finance Globalisation is conceptualised in different ways: most notoriously, by O’Brien (1992) as the ‘death of geography’, and similarly, if less dramatically, as a tendency towards homogenisation and dispersal. Some of the more influential accounts of global finance, however, immediately qualify this. Castells (1989, 2000) and Sassen (2001), amongst others, stress the importance of global cities as control points or nodes in a global web; a situation in part at least based on their labour markets. This section will show some of the ways in which place still mattered but also how this varied for different activities. Qualifying characterisations of hypermobility, there was continuity in the location of employment and movements ‘offshore’ of financial work were relatively small. Mapping finance, and its different sectors, presents empirical difficulties. It is often hard to describe where money is or goes and data may either not exist or be confidential. The focus on labour,

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141

however, does provide some useful approximations of the location of financial activity. However, aggregate data often combine finance and insurance with real estate or even less specifically with ‘business services’. For the few major countries for which disaggregated data were available these show significant falls in employment in some AICs during the 1990s, notably in Australia, Switzerland and Sweden and an increase in some LDCs. However, in general, the proportion of finance within GDP and of finance workers within the total appeared to rise with GDP per capita. Finance provided a very high proportion of GDP and of jobs in some ‘offshore’ financial centres (OFCs) (ILO, 2000; SAUS, 2001). However, these were not major sites of cheap labour. The populations in the major OFCs were small and, even prior to this role, most were at least relatively affluent. Thus finance capital, despite the products’ almost infinite physical mobility, did not move en masse to cheap labour locations. Nevertheless, although boundaries between them were somewhat, and in some respects became increasingly, arbitrary, patterns of geographical distribution varied between sectors of the industry. Banking Bank workers in richer countries might be potentially vulnerable to relocation, to automation and to a suggested decline of banking as a proportion of all financial services. Nevertheless, the evidence is ambiguous. In the 1990s employment levels rose in the US, Germany, Canada and the Netherlands but fell in other major European countries. Employment did, however, fall in relation to bank assets. Table 9.1 shows how assets rose as a proportion of GDP in most major countries. Alternative data from the BIS (2001a) (not reproduced here) yield different numerical values but broadly confirm the trends. However, they suggest the US was an important exception with declining asset ratios after 1980 and that in Japan, having risen steeply in the 1980s, assets fell in the 1990s. Nevertheless, in most countries, any decline in the economic weight of banks was at most a relative development. Again with the exception of the offshore centres, the ratio of bank assets to GDP tended to be higher for richer countries, but grew rapidly in some poorer ones. Many banks extended their activities beyond national boundaries. Foreign bank loans grew from less than $1 billion in the late 1950s to nearly $1.3 trillion in the early 1980s (Cohen, 1998). By the beginning of

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Table 9.1

Bank assets to GDP, selected major countries, 1980–2000 1980

1990

2000

Australia Belgium Canada France Germany Italy Japan Netherlands Spain Sweden Switzerland UK US

46.1 52.7 50.3 98.3 n.a. 101.2 103.0 87.5 96.6 66.6 260.0 37.4 83.4

73.4 61.9 54.3 106.4 n.a. 89.2 134.4 128.7 116.2 66.7 202.5 116.6 84.2

83.6 149.4 81.6 135.7 167.6 102.0 152.5 177.9 129.6 72.9 209.4 136.8 84.1

Argentina Bangladesh Brazil India Indonesia Korea Mexico Nigeria Pakistan South Africa Thailand Turkey

91.7 17.3 30.5 41.5 24.4 46.1 30.3 46.6 51.6 60.5 52.6 23.7

25.9 24.2 90.1 53.2 50.5 62.9 29.4 45.0 47.5 55.9 100.2 19.0

39.1 49.1 51.2 61.4 79.5 116.9 26.8 42.2 49.4 79.1 132.9 53.7

Note: Data for Belgium includes Luxembourg. Source: IMF, 1999, 2000.

2001 banks from the major BIS reporting countries held $8.2 trillion overseas (BIS, 2001b), something under a quarter of their total assets. Table 9.2 shows ratios of overseas to domestic bank assets for 23 major countries. Whilst differences in the statistical bases make comparisons inexact, the ratios were notably high in the UK and Switzerland and low in the US. The proportion of assets held overseas often increased. However, only exceptionally was the trend consistently upward. In most of the developed countries, ratios in 2000 were lower than in either 1980 or 1990. The proportion of assets held overseas by banks from some LDCs also rose substantially. Comparable data for

Finance

Table 9.2

143

Foreign to domestic bank assets, 1980–2000, as percentages

Australia Canada France Germany Italy Japan Netherlands Sweden Switzerland UK USA Argentina Bangladesh Brazil Egypt Ethiopia Indonesia Iran South Korea Mexico Nigeria Pakistan South Africa

1980

1990

2000

0.52 21.05 11.89 11.39 9.32 4.37 49.82 9.79 53.65 178.70 7.32 3.17

5.22 15.58 23.08 20.95 9.83 15.89 56.61 20.62 39.38 80.71 2.57 5.61

8.39 15.86 29.06 20.76 6.03 11.70 28.51 58.16 105.04 111.39 4.43 18.71

8.30 2.84 18.45 3.77 51.05 3.78 17.35 2.17 1.64 2.74 1.25

9.23 5.47 29.90 1.02 12.18 0.89 6.68 2.06 10.32 7.32 0.74

17.17 6.08 8.71 17.19 11.95 3.33 9.12 7.60 47.24 5.35 6.16

Note: For Euro area, ‘foreign’ is the non-Euro area and ‘domestic’ is national. Source: IMF, 2001.

important offshore centres such as the Cayman and Channel Islands were not available. However for other OFCs, although the ratios of overseas to domestic assets often remained very high, the trend was sharply downward after 1980, for example in the Bahamas from 64:1 to 19:1 and Panama from 8.1:1 to 1.2:1 between 1980 and 2000. From the opposite, host country, perspective, Claessens and his co-authors (2001) detail the proportions of domestic markets held by overseas banks in 80 countries over the period 1988–95. The highest average levels of penetration, about a third, were amongst middle-income countries. The average for low-income countries was 26 per cent, for high-income 28 per cent. Foreign banks had their highest penetration, 59 per cent, in the (small) African market, their

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Evidence of Labour’s Condition

lowest in Latin America with 25 per cent. Some markets proved hard to enter. A few countries including Finland and India had no foreign banks. Some countries, particularly smaller ones with large neighbours, for example New Zealand and Luxembourg, had very high proportions of foreign bank ownership. Other sources suggest considerably different levels of foreign penetration, and in some places levels rose after these data were compiled. Nevertheless, the overall foreign presence roughly corresponds with the level of banks’ overseas holdings at the end of the century. From the perspective of the banks, during the 1990s, while the overall assets held overseas increased, a sharply increasing proportion of these was held by (a smaller number of) highly internationalised, mainly rich country, banks. The 28 most global banks held $3.9 trillion of assets overseas in 1999, a little under half of all overseas bank assets (The Banker, Sept. 2000). This was not a static population, several banks, particularly those from Japan, retreated in the 1990s while others increased their overseas holdings. Nevertheless, this did appear to reflect a specific strategy of a small and apparently declining number of banks. Even these usually had solid home market bases and highly focussed rather than genuinely global strategies. Even major players had limited mobility. For example, Wells Fargo, the US’ 6th and world’s 30th largest bank in 1999, explicitly rejected even a fully national, let alone global strategy (The Banker, July 2001). Foreign expansion, according to Laulajainen (1998) depended on a saturated home market, increasing interest rate gaps and a large bankable expatriate community. Banking was most likely to cross national boundaries when its customers, mainly MNCs, did too. Because most trade and investment was with neighbours so was most foreign banking. Germain argues, [F]oreign customers do not borrow from foreign banks to invest in their home countries, they either borrow in their own country from a national bank or a foreign subsidiary, or they raise capital in foreign markets with bond offerings using investment banks’ (1997: 151). The geographical pattern of major M&As in the 1990s confirm that of 93 only 19 were international and just seven intercontinental, two of these were Mexican–Spanish mergers, all the others involved US banks

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(The Banker, various issues). Although often into relatively poor countries, most moves represented market seeking activity rather than capital flight and as such are hard to see as detrimental to workers in richer ones. In addition to such moves, in particular by retail banks into national markets, there was a concentration in the regional centres particularly of New York, Tokyo and London. In Tokyo the number of foreign banks rose during the 1990s from 184 to 241 and their employment from 10,500 to 18,300 (Sassen, 2001). Tables 9.3(a) and (b) show more comprehensive data for New York and London between 1979 and 1999. Again, there were steep rises in overseas bank employment. However, with industry concentration, the number of banks in each centre declined in the 1990s. The tables also indicate a marked concentration in terms of banks’ origin. In New York, banks from 47 countries reduced their staffing levels while those from only 18 increased them, in London the figures were 44 and 26 respectively. The increasing share of banks from the ‘Paris Club’ or G10 was particularly pronounced; the massive sale of assets by Japanese banks in the 1990s not withstanding. German, Swiss and, from a lower base, Dutch banks expanded in both cities. International movement was clearly possible. However, Gehrig writes, that in practice ‘financial services follow real activity’ (1998: 10). While some banking functions may potentially be performed in low wage economies, pay did not appear to be a big factor in most banks’ location decisions. Those from wealthy and proximate countries dominated a pattern of interpenetration. Although employment fell relative to banks’ assets this cannot readily be attributed to relocation. Insurance Insurance too was proportionally bigger as well as better-documented in richer countries with, as Laulajainen writes, ‘a clear positive correlation between per capita income and per capita premiums’ (1998: 20). In 1997 the Triad took 88.1 per cent of the global market, North America 34.5 per cent, Western Europe 30.6 per cent and Japan 23.0 per cent (IIM, 1999). There were, however, significant international variations with the UK’s market, for example, larger than those of Germany or France and more than three times the size of Italy’s (IPB, 2000). Amongst poorer countries, insurance was typically a much

2.51

The Netherlands Others G10*

12,133

Italy The Netherlands Hong Kong

Canada

36,179

22.85 76.65

1.92

2.44 2.41

4.21

24.41 17.75 6.92 6.28 5.71 5.10

Spain

The Netherlands Israel Italy

Germany France Switzerland Canada Japan UK

1999

49,037

10.56 88.01

1.31

1.82 1.46

4.69

21.38 14.15 12.23 11.87 10.78 9.75

Total ($ billions)

Germany The Netherlands Israel

Switzerland

Japan Italy Canada UK France Hong Kong

1989

Notes: * Data for Belgian banks’ assets not available in 1999. Data is not available for all banks, figures are therefore underestimates and proportions inexact. Source: The Banker, various issues.

Total

4.53 3.75

Italy Puerto Rico

19.81 65.64

5.12

Germany

UK Japan Switzerland France Israel Germany

UK Japan Israel Canada Switzerland France

14.74 11.39 11.13 10.75 8.86 7.41

1990

Staff

Overseas banks in New York by country of origin, 1979–99 (in per cent)

1979

Table 9.3(a)

426

9.41 85.93

1.43

1.90 1.56

3.69

55.77 6.79 6.03 5.06 4.42 3.94

Switzerland

Sweden Spain

Germany Japan France UK Canada The Netherlands Italy

1999

Assets

801

9.03 >90.97

1.74

2.10 2.01

2.80

25.33 19.15 16.16 9.76 7.62 4.30

146

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Table 9.3(b) Overseas banks in London by country of origin, 1979–99 (in per cent) 1979 US Australia Canada France Switzerland Honk Kong Japan India Germany Spain Others G10

1989 39.62 6.94 6.22 5.53 5.07 4.73 4.73 2.57 2.21 1.80 20.58 63.32

Total employment 25,441

US Germany Japan Switzerland France Australia Canada Hong Kong Italy Ireland

1999 33.67 8.58 8.57 7.03 4.54 4.23 3.99 2.31 2.29 2.20 22.59 72.71 45,922

US Germany Switzerland Netherlands France Japan Canada South Africa Ireland Italy

36.39 16.94 13.80 5.80 5.01 4.39 2.47 2.07 1.66 1.14 10.33 87.50 81,624

Note: Data is not available for all banks, figures are therefore underestimates and proportions inexact. Source: The Banker, various issues.

smaller proportion of GDP, for example in China and Brazil about 2 per cent compared with about 8 per cent typical in rich countries (The Economist, 2.6.01, 30.6.01, 11.8.01). However, the highest premium to GDP ratios in the world were in South Africa and South Korea, both having very large life sectors (IIM, 1999). Ïnsurance firms’ assets in major economies for which data were available without exception rose in both the 1980s and 1990s (BIS, 2001a). As in banking, the situation with employment was more ambiguous, with a dramatic fall in the number of insurance workers in Sweden and smaller declines in Belgium, France and the UK but increasing numbers in most large Organization for Economic Cooperation and Development (OECD) countries during the 1990s (OECD, 1990, 2001; SAUS, 2000). The industry itself comprised distinct sectors with different mobilities and relations between ‘production’ and markets. Non-life, general insurance markets, involving small, short-term and readily estimable risks, were apparently susceptible to entry by foreign firms. Overall foreign penetration, however, changed little in the late 1980s and 1990s. Unweighted averages for foreign market share across the OECD varied around a quarter to a fifth of the total

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between 1984 and 1999. Some markets, for example, in Japan, Finland, Korea and Turkey remained overwhelmingly national. Others, including Austria, Australia, Denmark and the UK had between 40 and 50 per cent taken by foreign firms. Relatively routine and calculable risks were also susceptible to automation and less dependent upon interpersonal contact, making at least intra-national dispersal possible (Appelbaum and Albin, 1989). Within Britain, for example, there was a geographical decentralisation of insurance from the 1980s with a decline in employment in London but rises elsewhere in the South of England (McDowell and Court, 1994; Danford et al., 2003). ‘Long-term’ insurance, principally life insurance and pensions cover, was often closely associated with national tax and welfare systems. This could make markets hard for foreign firms to penetrate. However, several achieved a substantial overseas presence, usually through taking over established domestic operations. Within the OECD there was, overall, little change in the level of overseas investments until the second half of the 1990s when the foreign share rose rapidly. In value terms, it increased by almost 200 per cent or $137 billion between 1994 and 1999 to around 18 per cent of the total. Thus, within the OECD, differences in average levels of foreign ownership between the life and non-life sectors became less pronounced. Nevertheless, international variations were considerable with no obvious sign of convergence (BIS, 2001c). Of the increase in the 1990s, $64 billion was into the US and a further $12 billion into the previously closed Japanese market. At the same time foreign presence declined in several countries including Austria, Canada, Spain and Portugal (OECD, 1993, 2001). In the largest poor countries, China and India, foreign penetration remained 1 per cent or lower but in a few, for example in Malaysia, the Philippines and Singapore, over 50 per cent (The Economist, 11.8.01). Thus, M&As, particularly in life sectors, increased foreign penetration. However, links with distant customers and adjusting to different regulatory regimes might continue to limit firms’ global ambitions. Katrishen and Scordis report that even where firms expanded overseas ‘multinational insurers achieve economies of scale only up to a point . . . the most internationally diverse insurers suffer diseconomies’ (1998: 305). Moreover, most of the work, whether for local or foreign firms, was done inside the countries where the risks occurred, mostly within the Triad.

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A third sector of the industry, covering large ‘one-off’ corporate risks, including Marine, Aviation and Transport and Re-insurance, was different. A few major firms dominated the industry and employed much of their workforce abroad. In Re-insurance, Swiss Re controlled 20 per cent of the world market. Fewer than one-third of its 9000 workforce was in Switzerland (Financial Times, 27.10.99). Here work could be done far from clients but mainly within major centres. Amongst these, offshore locations, in particular Bermuda, were significant. By the mid-1980s, Bermuda equalled London in international premium income. Although it subsequently declined somewhat in relative terms, with even Bermudan companies establishing subsidiaries in London, it maintained about 25 per cent of the global market for property catastrophe insurance and a ‘guesstimated’ $200 billion of domiciled funds. Nevertheless, it displaced few workers. Bermuda’s population was tiny with much of the actual management performed in conventional finance centres, especially New York and London (Laulajainen, 1998: 251). Haufler argues that, in general, insurance remained ‘undergirded by a strong sense of appropriate behaviour and reinforced by the fact that this is not a market characterized by arm’s length transactions’ (1997b: 17–18). In an important further respect, insurance remained strongly national. Government sponsored agencies underwrote large international risks. A few of these such as the German ‘Hermes’ were private firms. With that caveat, the ‘value of what is insured by these public agencies exceeds by many times the size of the private market’ (Haufler, 1997a: 90). State aid for capital, which these agencies offered, confirmed the industry’s concentration in the most developed countries. Securitisation and securities dealing A potentially different mix of geographical constraints effected instruments (like bank credit) that constituted forms of funding, directly linking finance with the ‘real’ economy, and those that were, or could be, traded for their own sake within the financial community. The debt crisis of the early 1980s made banks less willing to lend and investors less willing to invest in banks. This increased incentives for direct corporate financing. Nevertheless by 1999, financial institutions themselves issued most corporate bonds, notes and

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shorter-term commercial paper while non-financial corporations issued only 25 per cent of international bonds and notes and 21 per cent of commercial paper, perhaps less than is sometimes imagined (BIS, 2001b). Their origin and residence followed broadly similar geographical patterns to bank loans. The ratio of outstanding domestic to international bond and note issues by the end of the century was about 4 to 1, $23.8 to $6.1 trillion. Of the international bonds and notes, 85 per cent were issued in developed countries, as were 94 per cent of the shorter-term commercial paper and other money market instruments. The overwhelming majority were also held in the richest countries, although here OFCs, principally the Cayman Islands, took a significant 8 per cent share. Economic uncertainty may have played a role in their creation, but later threatened to undermine bond issues. Sassen (2001) describes banks again taking a more central role by the mid-1990s. Enthusiasm waned first for junk (risky, therefore high yield) bonds and as recession loomed in 2001 The Economist (even before the collapse of Enron) reported financial experts advising investors to ‘avoid corporate bonds at all costs’ (27.01.01). Nation states, here too, remained central. Governments were themselves substantial issuers while, as Sinclair writes, the rating agencies, most importantly Moody’s and Standard and Poor’s, were state-backed authorities (1994). Crucially, firms were unlikely to be rated more highly than their home government (Laulajainen, 1998). A proliferation of stock markets around the world and a rapid escalation of trading in various securities, currencies and their derivatives have also been taken as indications of globalisation (Scholte, 2000). The capitalisation of the world’s stock exchanges grew from $9.4 to $32.2 trillion between 1990 and 2000. Low and middle income countries’ proportion of this rose from 5.2 to 6.9 per cent. The correlation between GDP and stock market capitalisation, already high in 1990 (0.946) grew during the decade (to 0.955) but the developing countries remained underrepresented, their market share around half their share of GDP. Chinese market capitalisation rose from $2 to $581 billion and represented nearly 26 per cent of the total poorer country market in 2000, indicating that the share of all other poorer countries actually shrank. Many new exchanges traded stock from only a few companies, had small total capitalisation and low turnover. The US exchanges together accounted for 45.4 per cent of world capitalisation, up from 32.6 per cent in 1990, and for 60 per cent of world

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turnover. London’s share fell slightly but Western Europe’s 30 exchanges increased their share from 25.0 to 28.7 per cent. Only the collapse and subsequent stagnation of Japanese share prices bucked the trend of increasing concentration in the Triad (World Bank, 2001, 2002). In developing countries, share issues could represent as much as 40 per cent of corporate funding. Elsewhere this was less important. In the US, rather than the stock market providing a financial resource, takeovers and buy-backs withdrew funds. Between 1981 and 1997 they retired 11 per cent of capex or $813 billion; in 5 years to 2001, $2.7 trillion (Henwood, 1998; The Economist, 27.01.01). The rise in capitalisation in many countries may therefore have reflected highly significant transfers of ownership, especially privatisations and, by the end of the decade, a speculative bubble, but did not necessarily represent new financing. Nevertheless, relations with the traded firms might remain important. Coval and Moskowitz (1999) describe how nearly 94 per cent of US equity traders funds went to domestic securities, even though these comprised less than 48 per cent of the global market. Even within national economies, distance mattered. For example, within the US, mutual funds investing in local stocks performed significantly better than those which did not, and local stocks avoided by such funds consistently underperformed (Graves, 1998). Technologies made it possible for some products to be traded without institutions while for others the role of spatial influences declined. For example, for US government stocks information was widely available and there appeared to be little place based advantage (Coval and Moskowitz, 2001). There were other exceptions to the better performance of local investors but most products, even where traded by large professional trading houses saw foreigners at a disadvantage. Hua (2001) confirms this even for electronically traded German Blue Chip firms. Despite numerous technical innovations, strong national biases persisted and information asymmetries maintained a ‘strong negative relationship between asset trade and distance’ (Portes et al., 2001: 783). Furthermore, traders’ proximity to each other was also important. Some financial market information was ‘vague, ambiguous, and difficult to interpret’ reducing ‘its ease of dissemination through electronic systems’ (Agnes, 2000: 349). The importance of insider, or local knowledge, the ‘feel’ of the trading floor, meant that face-to-face

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interactions could be decisive. The need for ‘knowledge in a hurry’, as Pryke and Lee write, increased the ‘tendency to cluster’ (1995: 337). This type of relation between financial traders and similar centripetal forces characterised much of the exchange of corporate paper, forex and derivatives. Denominated overwhelmingly in a few major currencies, trading in bonds and notes was concentrated in the major centres and banks. ‘A bit surprisingly in this era of globalized finance’ writes Henwood of US government bonds, ‘only about 4 per cent of that trading was done in London and another 1 per cent in Tokyo – meaning that 95 per cent of the market was in the U.S., mainly New York’ (1998: 24–5). Daily volumes of foreign exchange trading rose from $80 billion in 1980 to a peak of $1.4 trillion in 1998, 70 times the value of world trade and equal to the world’s official gold and foreign exchange reserves. Nevertheless, net flows were much lower than gross volumes. They were only a few percent of banks’ assets and headed mainly towards the developed countries, particularly the US (Eatwell, 1996; Baker et al., 1998; Laulajainen, 1998; Sassen, 2001). Trading concentrated in a few major centres, particularly London and New York. Most currencies became tradable but a few predominated and for less international currencies the advantage of home trading increased (Agnes, 2000). Banks were crucial conduits of much of this trade; the currency and interest rate ‘swaps’ market ‘dominated by a handful of predominantly US financial institutions’ (Leyshon and Thrift, 1997: 126). Over 80 per cent of the $17.5 trillion of outstanding derivatives in 2000 were traded on exchanges, with London, New York, Tokyo and here also Singapore dominating (Agnes, 2000). Only $286 billion or 2 per cent of the total was held outside North America, Europe and ‘Asia-Pacific’ (Mathieson and Schinasi, 2001). The timeliness of transactions and trust remained crucial. In such trades, between and within the financial ‘community’, speculation may seem closest to the zero sum games played in the casino. Nonetheless, state support and preparedness acting as speculators of last resort, made it a particularly unusual (and morally hazardous) casino, frequently having significant outcomes for the ‘real’ economy (Callinicos, 2001). Overall, rather than the globalisation of financial activity, by the early 1980s the ‘flight to quality’ saw financial institutions withdraw credit and close operations in LDCs. As Leyshon and Thrift write, the system that developed ‘was global only in the sense that money and

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finance now began to flow more intensively between the three regional blocs of the industrialised world’ (1997: 200–1). State intervention still mattered and contributed towards the enduring importance of place. Rather than overcoming distance, Portes and his co-authors argue that ‘a gravity model explains international transactions in financial assets at least as well as goods trade transactions’ (2001: 783–4). That is, links between countries were proportional to the weight of their economies and inversely proportional to their distance. Nevertheless, different geographical constraints mattered for different activities. Improved communications allowed a de-centralisation for some but created pressures towards centralisation for others. Centrifugal forces (seeking cheaper labour, market access, localised information and to avoid costs of political intervention) were in dynamic relation with centripetal forces (seeking economies of scale, information spillovers, liquidity and thick market externalities and state support). The relative significance and the consequences varied between sectors (Gehrig, 1998). There were changing patterns of geographical organisation in the financial services industry. Some may have had disorganising consequences for labour. However, the speed of transformation of financial work’s location was rather slow and there was no general pattern of dispersal. Local embeddedness, in financial centres and major markets remained crucial. Few richer country jobs were moved to LDCs. Some work moved within national territories to lower wage labour markets and there was some potential for this displacement to be extended across borders. Most activity, however, remained tied to place through links with customers and other financial service firms. Restricted mobility, according to Pollard an inability ‘to wipe the slate clean and start afresh’, meant that firms had to ‘reconstitute their employment relations largely in situ’ (1995: 134).

The reorganisation of the financial services industry A physical, geographical dispersal is, as the previous chapters have discussed, only one facet of the suggested disorganisation of labour. Reorganisations also supposedly transformed relations between and within firms. Financial and technical innovation, according to Cerny, created diverse new instruments that did what ‘flexible manufacturing

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systems’ did for other industries (1993: 63). Information and communications technologies, according to such a scenario, undermined the distinction between institutions in different financial sectors and reduced barriers to entry, introducing new competitors and facilitating a proliferation of smaller specialist firms. At the same time, regulatory change allowed new waves of M&As, loosening former restrictions, for example on combinations between commercial and investment banks and between banking and other financial institutions. This undermined the importance of banking capital while firms also shifted liability cover from the formal insurance sector to stocks and futures markets. New technologies also allowed the provision of financial services without a network of local branch offices. Automation cut the number of, and transformed, routine jobs. Firms also pursued directly anti-labour policies trying to cut costs. All this created a polarisation, between a well paid, highly skilled core and a periphery of diminished numbers of casualised, low paid, often women, workers. There is some evidence for such trends but this section argues that complex and contested processes were involved and that general characterisations of an increasingly fragmented and segregated workforce are misplaced. De- (or re-) regulation increased flexibility in the sense of eroding the ‘compartmentalisation’ of financial markets and removing many barriers to competition. Banks faced competition from non-bank institutions, securitised forms of credit, from overseas and in the US from across state lines. However, as the previous section indicated there are some grounds for caution. In most countries, bank assets rose. The ratio of bank assets to those of all financial institutions did decline in some countries, for example France, Italy and the US. However, the trend was far from universal. Moreover, even of the US where the trend seemed particularly strong, Ettin argues that this was largely a statistical artefact, and that in particular in ‘private credit markets, banks in the United States have maintained and even increased their share of credit market lending’ (1995: 186). Internally generated profits and bank credit remained the major sources of corporate finance and, outside the US and Canada, bond markets were of relatively minor significance (Blommestein, 1995). Li maintains that new technologies had the potential to undermine the integrated banking model but concedes that ‘so far’ Internet banking remained compatible with integration and that the main

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reason for investments was ‘to “set a foot in” the market . . . should it take off one day’ (2001: 314). The BIS reports that new entrants may require substantial advertising outlays while electronic banking might not reduce information costs where local knowledge is important (2001c: 26). By 2000 the Prudential was ‘dubbed the most successful Internet bank in the world with 600,000 customers and $12 billion in deposits’ (The Banker, Jan 2000). The largest conventional bank at the time, Citicorp, had, by comparison, assets of $717 billion. The impact of ‘pure play’, new entrant Internet banks on established financial institutions remained small. Other financial institutions moved into banking while ‘brand stretching’ by firms from other sectors also made some significant inroads. However, by the mid-1990s the OECD argue that liberalisation had gone least far in terms of links between finance and nonfinancial institutions (Borio and Filosa, 1995). Moreover, moves into finance were not novel, dating at least since Nathan Rothschild, who moved from textile exporting into banking. One of the more significant entrants of the 1980s, the US retailer Sears Roebuck had already established a banking department in 1899, offered credit to customers since 1911 and auto-insurance from 1931 (Gillan et al., 2000). Similar contemporary moves typically involved loans for particular goods, notably cars, offered by the manufacturing companies and the use of retailer cards, especially in France and Sweden (Vesala, 1995). However, some of these incursions proved unsuccessful: Business Week (15.07.02) describes Ford’s finance subdivision as having become its Edsel, after the failed model of the 1940s, and some companies scaled back operations (Borio and Filosa, 1995; Gillan et al., 2000). Technical innovation in most sectors was highly capital intensive and high capital costs restricted entry while driving others out of the industry. Merger and Acquisition activity escalated in the 1990s but mainly involved firms in the same financial sector industry and the same country (BIS, 2001c). In most BIS reporting countries, albeit with significant variations, M&As produced clear trends towards concentration and falling bank numbers (Baethge et al., 1999a; BIS, 2001a: 447). Mergers in the US and Japan were particularly notable. In the former, the 100 largest banks trebled their number of branches and doubled their employment between 1980 and 1999 (BIS, 2001a). Big banks remained intermediaries in most financial transactions.

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The power of hedge funds, for example, lay in their ability to borrow from banks and even top tier investment banks lost business to the largest integrated banking groups in the late 1990s. Banks organised financial space developing products, markets, trading fora and procedures (Laulajainen, 1998). The biggest firms could be flexible while smaller ones had to seek more restricted niches (Cerny, 1996). Meanwhile some banks diversified into new fields, particularly insurance, notably in Germany, France, the UK, Denmark, the Netherlands and Spain (Borio and Filosa, 1995). The insurance industry had lower barriers to entry than banking, and for example in the UK, retail firms such as Tesco and Virgin also made inroads (Danford et al., 2003). However, Haufler (1997b) suggests new entrants in the 1980s produced an overcapacity and competitive lowering of prices to untenable levels. Subsequent consolidation produced concentration ratios similar to those in banking by the end of the 1990s (IPB, 2000). Many established firms maintained their presence. Banks claimed the majority of the insurance market in only a few countries, including France and Spain. Elsewhere their share was much less. In the US banks won 15 per cent of the life market but insurance was considered less easily sold by lower skilled bank staff (The Economist, 7.4.01). A few US firms such as Citigroup, through its purchase of Travellers, became genuinely diversified. Others appeared to be more cautious, despite the apparent opportunities opened by the demolition of Glass-Steagall restrictions (The Banker, July 2001). In securities, few firms were ‘still operating, because the global presence demanded of the biggest players requires capitalization ratios beyond all but the very strongest’ (Germain, 1997: 129). So, as in other sectors, the ‘post-Fordist’ scenario rather overstates the importance of independent small firms and the dispersal of workers within them. It cannot plausibly be maintained that diminishing firm sizes undermined labour. However, while increasing firm sizes, M&As were often used to ‘rationalise’ operations; enabling banks to cut staffing levels relative to assets, capital and profits. Even where reducing labour costs was not the major motivation, redundancies, or their threat, and conditions of change and uncertainty could make building stable trade union organisation difficult. Conversely, they might also create opportunities to introduce union organisation from the better to the less well represented of the merging institutions (Upchurch and Danford, 2001).

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The changing division of labour in finance Post-Fordist arguments also depict such transformations of intra-firm relations and of work. The abstract, immaterial nature of financial products means that most workers are already ‘symbolic analysts’. Money may have material forms but modern non-commodity monies are only ‘real’ through social customs. Contrary to characterisations of symbolic manipulators as an inherently privileged group, the abstract character of financial work is evidently not a sufficient condition for workers’ prosperity. Rather, in common with other sectors, authors depict a polarisation. Typically, Leyshon and Thrift describe two career structures. At the top they see a core of managers, professionals and upwardly mobile young graduates whose wages increased rapidly. At the bottom, a periphery of clerical and support workers, often part-time, susceptible to reduced labour costs through ‘flexible labour market models’ and ‘capital deepening’ with the increased use of IT (1997: 215–16). Pryke and Lee describe ‘an everincreasing social division of labour’ (1995: 337). For example, cashier or telling operations were automated while competition between sectors and a proliferation of products increased the emphasis on winning customers and selling new products to existing ones. This, Regini and his co-authors (1999a) suggest, transformed workers From Tellers to Sellers. The division of labour further increased as banks differentiated corporate and personal markets, ‘abandoning the notion that the traditional High Street branch can cope adequately with the needs of both sets of customers [putting] a greater emphasis on specific recruitment for specialized roles such as telesales or data processing’ (Storey et al., 1999: 134, 143). Regini identifies a significant and consistent international transformation in ‘the growing distinction between front office and back office employees’ (1999: 322). Particularly in insurance there were examples of fragmentation and evidence of increasing intermediation. In many countries the proportion of the workforce employed as brokers grew. In Italy, Spain and Latin America where their role had formerly been less significant, brokers gained market share (Doman et al., 1999). Again, however, there were substantial variations. Insurance companies themselves employed little over 20 per cent of the workforce in Japan but as much as 80 per cent in Germany. Moreover, if an increased role for independent brokers represented a decentralisation there were again countervailing tendencies and by the end of the

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decade, a few major brokerage firms dominated the global market (Doman et al., 1999). In France and the US, against the general trend, the proportion employed directly by the insurance companies increased (OECD, 1993, 2001). In the UK, by the late 1990s, The Economist (US) described ‘ “direct writers” – insurers soliciting business with a low-cost combination of letters and telephone calls – a[s] making big inroads’ (19.04.97). Some firms sought to separate their businesses into specialist operations. For example, United Bank of Switzerland (UBS) broke up its offshore and onshore operations (The Economist, 26.2.2000). Outsourcing was also used as an anti-labour practice, cutting wage costs. In some firms, the classic picture of disintegration through ‘contracting out’ was observable with routine work ‘outsourced’ to subsidiary firms. Lloyds of London cut its direct employment from 2000 to 600 in 2 years, ‘everything from data services to catering is put out to contract’ (The Economist, 28.7.01). Standard Chartered similarly outsourced messenger, maintenance, post room and premises staff (Unifi, 30.8.1). However, some banks, were ‘moving in the opposite direction, toward integrated service delivery and using branches as a focal point for distribution’ (Keltner and Finegold, 1999: 47). In France some activities were reinternalised by banks such as BNP and Crédit Lyonnais ‘to find work for wage earners whose jobs had disappeared but who could not be laid off’ (Dressen, 1999: 196). In insurance too, some firms expanded direct authority to ‘lessen vulnerability to price swings, disruptions and costs of contracting in general’ (Haufler, 1997b: 8). There is little evidence of a decline in direct employment by the major financial institutions, although there were attempts to reorganise relations within firms. In finance the possibilities for ‘telework’, removing the work from the place where the services are needed, appeared considerable (Stanworth, 1998). Some of the difficulties of overcoming geographical constraints were discussed above but a withdrawal of bank branches and centralisation of control operations has been widely described. However, the evidence is again rather mixed. In the US investment ‘in ATMs, POS [point of sale] terminals, and on-line terminals for teller and new accounts personnel has outpaced investment by banks in other countries’ (Keltner and Finegold, 1999: 57). However, even here the number of bank branches rose significantly in the 1980s and 1990s. In six of thirteen BIS reporting countries for which

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data were available there was an increase in the number of branches in the 1990s with little evidence of any general trend (BIS, 2001a). There were steep rises in the number of bank branches in Canada, Japan and especially Italy. Conversely, there was a marked decline in numbers in Sweden, Australia, Switzerland and to a lesser extent the UK. Sometimes branch and staff reductions were frustrated. In Spain, for example, banks were reported to want to reduce their workforce and to take advantage of skilled unemployed workers at low pay but ‘found that dismissals are problematic and costly, because voluntary redundancy is close to nonexistent and labor unions are strong and disputatious’ (Miguélez et al., 1999: 230). Dressen reports how in France ‘by occupying their workplace, workers succeeded in forcing Société Générale to abandon a plan to eliminate jobs’ (1999: 211). Meanwhile ‘the strategy of the German banks, at least for the time being, aims at a strong reduction neither of their territorial presence nor of their staff’ (Baethge et al., 1999b: 311). Staff levels within branches tended to fall, but rather than simply being replaced, for example, by ATMs, more workers were employed in central processing and call centres. While such ‘greenfield’ sites might, at least initially, be poorly organised, again they contradict depictions of declining workplace size. In the UK, the union, Unifi, achieved some success recruiting call centre workers, citing one of their organisers as saying, ‘[n]ot all call centres are the dark satanic mills of the 21st century. Where unions have a presence the working conditions can improve significantly’ (Unifi, 1.5.01). Call centre employees and the remaining cashiers might, however, be less well trained than formerly, to perform a narrower range of operations. Automation and specialisation increased productivity. However, Stanworth, for example, argues there was no evidence of decline in routine work and describes restructuring as ‘incremental rather than revolutionary’ with teleworkers as only exceptionally independent and home based. More usually, they were employed in ‘typical hierarchical organisations’ within which ‘routine “back-office” telework is expanding, not contracting’ (1998: 56, 57). As the previous section showed, only in a few countries was there evidence of an overall decline in financial services employment. The number of workers may have declined relative to the economic weight of the industry but absolute levels were fairly stable. In the US for example, even for ‘production workers’ FIRE (Finance, Insurance and Real Estate)

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increased its employment share from 6.0 to 6.6 per cent (SAUS, 2000). With much of the workforce in low paid, casualised jobs even a rise in numbers could be ‘associated with reduced job security, since the overall figures hide an alteration in employee patterns with new types of employees joining banks in the 1990s’ (Rasmussen and Jackson, 1999: 108). An upward shift in average earnings is consequently compatible with declining numbers and conditions at the bottom. Increased polarisation is borne out by rising differentials between the top and bottom deciles of pay. In the UK for example, in 1980 the lowest decile of male earners received 30 per cent of the highest, in 2000 only 23 per cent. However, depictions of polarisation, involving lower pay for those at the bottom, often associated with an increase in temporary and part-time work and feminisation, are problematic. In the US for example, the percentage of top-level jobs increased only slightly. Keltner and Finegold conclude ‘[t]he relative percentages of employees in low- and high-skill positions have remained constant in the United States between 1984 and 1993’ (1999: 38). This would seem to be confirmed as the proportion of all FIRE employees designated ‘production workers’ fell from 75.7 to 72.4 between 1980 and 1990 but rose marginally to 73.1 in 2000 (SAUS, 2000). There were some intersectoral differences with the proportion in clerical occupations in insurance falling rather more sharply (Hecht, 2001). The largest group of production workers, in ‘depository institutions’, had particularly low average pay, of only $11.72 per hour in 2000. However, overall, average hourly earnings of US financial ‘production workers’ rose from $11.68 to $15.07 between 1980 and 2000 (in 2000 dollars), slightly faster than the private sector average over the same period (SAUS, 2001; deflated using data from IMF, 2001). In the UK too, wage distribution for full-time finance workers qualifies depictions of polarisation. As mentioned, the difference between the top and bottom deciles increased between 1980 and 2000 for men, although it did not for women. However, as the top decile (particularly for men) includes managers and executives, an alternative and perhaps better perspective of intra-class polarisation might be obtained from the same data by comparing differentials between lowest and median earnings. Again, particularly for men, these rose in the 1980s but then fell in the 1990s. Perhaps most telling, the

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wages of the lowest decile of female earnings increased slightly relative to median male earnings (ONS, various years). Other national studies broadly confirm this picture. In France, Germany and the Netherlands banks appeared to upgrade higher levels of staff without a commensurate downgrading of the lower levels and the proportion of workers on the lowest grades fell (Baethge et al., 1999b; Dressen, 1999; Visser and Jongen, 1999). Certainly, any correspondence between employment grades and the skills required for particular work may be weak. Nevertheless, this would at least modify characterisations of polarisation. Most jobs remained highly routinised and relatively low paid. According to Storey and his co-authors the ‘new model’, ‘technocratic, performance oriented, staff as resource, sales oriented . . . indicated the direction in which banks wish to move rather than their actual operation’ (1999: 135). The sector employed large proportions of women in most rich countries but as an overall process, it is less clear whether feminisation continued. The ILO provides consistent data across the 1990s for only a few countries: Argentina, Australia, Canada, Korea, Mexico, Singapore, Sweden, Switzerland and the UK. Even this small sample shows considerable international variation but indicates substantial increases in the proportion of women workers in only one, Argentina, where female employment rose from 33 to 43 per cent of the total. Elsewhere, with the exception of Sweden, where the proportion of women fell from 62 to 56 per cent, there was little evidence of substantial change (ILO, 2000). Other sources do indicate that, at least within banking, for example in Spain and in Italy, where women remained a minority, it was also an increasing one (Miguélez et al., 1999; Regini et al., 1999b). The more significant claim is that ‘what is happening is not simple substitution; women generally move into lower-skill positions that are more poorly paid and more insecure’ (Miguélez et al., 1999: 231). Steep vertical gradients tended to exclude women from the most well paid and prestigious jobs. There were also some significant horizontal differences with certain sectors more feminised than were others. Sassen (2001), for example, describes insurance companies, in particular, using women home workers. However, it is harder to find evidence of this polarising tendency. The narrowing gap between the lowest female and median male earnings in the UK was mentioned above. In a number of countries, there was also an increasing proportion of women at higher levels. The

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number of women designated ‘Financial Managers’ in the US rose from 357,000 to 753,000, from 38.6 to 51.1 per cent of the total, between 1983 and 1999 (SAUS, 2000). Similarly, in Australia, albeit gradually, proportionally women’s employment increased in the higher-grade jobs (Kitay, 1999). Meanwhile Pollard (1995) notes of lowest grade bank tellers in Los Angeles that male employment rose from 11 per cent in 1970 to 23 per cent in the 1990s. Many accounts of changing employment relations focus on the increase in part-time work. The figures cited above for UK pay neglect this potentially important aspect of peripheralisaton. Here again, however, the trend appears overstated. Only in a few countries did part-timers represent more than a fifth of the workforce. In some the proportion increased, for example in the Netherlands, for women bank workers from 22 to 40 per cent between 1982 and 1995. However, this compared with an economy-wide average of 67 per cent. Only 5 per cent of men worked part-time compared to 17 per cent nationally (Visser and Jongen, 1999). In the UK, France, Germany and Italy between 10 and 12 per cent of bank employees worked part-time (Dressen, 1999; Storey et al., 1999; Baethge et al., 1999b; Regini et al., 1999b). In Spain levels were so low ‘that it could be considered nonexistent’ (Miguélez et al., 1999: 239). Overall, figures for the US were not available but the average working week remained stable and above the national average. Again from Los Angeles, overall full-time employment increased, although amongst certain occupations, like tellers, more worked part-time (Pollard, 1995). Amongst major countries for which data are available, only in Canada were the weekly hours worked in FIRE substantially below national averages (ILO, 2000). Evidence of trends towards causualisation was also mixed, varying across national boundaries but also between sectors. Unions often influenced reorganisation. In Germany, despite efforts to circumvent existing employment agreements by imposing shift working on lower paid staff recruited in regions of higher unemployment, and although union membership never exceeded 15 per cent, collective salary agreements still covered 65 per cent of the workforce (Baethge et al., 1999b). In Italy, too, nationally bargained collective agreements endured; ‘an anomaly within the Italian industrial relations system, which is otherwise characterized by low institutionalization’ (Regini et al., 1999b: 162). Numerous smaller actions contested processes of regrading and re-skilling.

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Even in the absence of effective opposition, casualisation could prove contradictory. One US bank reported ‘turnover is enormous, consistency starts to suffer, so you end up retraining everybody, customer service suffers, so it doesn’t work’ (cited in Pollard, 1995: 133). Another in the UK rejected performance-related pay because it was incompatible with teamwork (Storey et al., 1999). Even temporary contracts, while a negative outcome for labour, did not necessarily correspond with shorter average lengths of employment. For example, in the Netherlands average tenure at major banks increased (Visser and Jongen, 1999). The implementation and even meaning of labour flexibility varied with differences related, amongst other things, to state policies, local labour market conditions and labour organisation. In the UK, Danford and his co-authors (2003) describe the insurance industry as less well organised than banking and see this as at least in part responsible for greater changes in the labour process and their commensurately greater impact on conditions, for example in the abolition of negotiated pay scales. However, their study of the industry in Southwest England found the ‘complete range’ of relationships between employers and labour, from non- and anti-union through staff associations to successful independent organisation. They also found that although there were differences in levels of unionisation according to skill, even amongst high skilled IT staff, union membership varied from zero to almost 100 per cent. Union densities in finance were often higher than the average, for example in Spain, or increased amidst a general pattern of decline as in the UK. The tendency to centralise processing increased firms’ vulnerability to potential industrial action (Rasmussen and Jackson, 1999). Baethge and his co-authors conclude that ‘[t]he evidence . . . does not support a simplified interpretation of current tendencies in terms of the fading away of collective bargaining and their progressive replacement by market regulation’ (1999a: 28).

Conclusion The financial services industry changed significantly, and in some respects dramatically, in the last two decades of the 20th century. States introduced regulatory reform, removing many barriers to competition both between and within countries. Although often

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characterised as ‘deregulation’ states continued, or even increased, their supervision and to underwrite financial activity. Technical change, regulatory reform and changes in the wider ‘real’ economy encouraged a proliferation of instruments and steep rises in the number of financial transactions. This has been seen as undermining previously dominant institutions, particularly banks, and freeing finance from geographical constraints. Nevertheless, banks remained key players in most of the new financial innovations; their assets and often also their workforces grew. The apparent physical mobility of finance was not matched by a geographical dispersal, either in places of production or trade. Although (with the consent of leading states) there was a significant use of Offshore Financial Centres (OFCs) to avoid legislation and some attempts to move routine finance work away from well paid labour markets there was, if anything, an increased concentration of financial activity in the traditional centres. Enduring advantages of proximity to other financial firms and wider markets produced different spatial pressures in each sphere but ensured a rootedness to finance that belied its immateriality. Most work continued to be done in similar places to those prior to the ‘financial services revolution’. Regulatory changes allowed competition between different sectors of the industry. Increased competition encouraged M&As and increased concentration ratios in most countries in both banking and insurance. Some firms ‘contracted-out’ non-core services and smaller firms sought niche markets. In insurance, brokerage firms often grew relative to the insurance companies. Nonetheless, direct employment remained the norm, especially in banking, and tendencies towards a greater sales role were largely contained within firms. Across the sector, the size and importance of the largest institutions increased. Financial service industries greatly increased their productivity. In some firms and some places the introduction of automation and the withdrawal of branch networks led to large-scale redundancies. Overall, however, employment grew. There was little change in the overall proportion of routine clerical work but employment on the lowest clerical grades appeared to decrease, while some tasks were concentrated, removed from local branches to call centres and central offices. The effects of these changes on labour seem to be ambiguous. Call centres gathered large numbers of low paid workers but often remained poorly organised. Meanwhile, predictions of labour market

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bifurcation do not appear to be borne out by the admittedly somewhat fragmentary evidence of pay, gender composition and employment structures, or in the anticipated effects on labour organisation. The sector in many places bucked trends of declining unionisation and militancy.

Part III Reconsidering the Power of Labour

10 Assessing Restructuring and Labour’s Situation

Introduction Hirst and Thompson charge of globalisation, that it ‘is above all a literature of anecdote, inference and reliance on the accumulation of isolated facts removed from contexts’ (1999b, xiii). There is an abundance of evidence, which, carefully marshalled may be used to support any number of claims for economic restructuring. To begin a more systematic evaluation of claims for global change, this book argued for the need for a global scope and, after Boyer (1998) for a long-term, comparative method and it attempts to apply this to industrial sectors. The previous four chapters discussed the socio-economic structure, and restructuring, of four industries, and considered the implications of this for the situation of labour. These sectors, automobiles, construction, semiconductors and finance, provide contrasts between ‘old’ and ‘new’ economy industries but also afford potentially fruitful comparisons in terms, amongst other things, of their markets, mobility, industrial structure and pre-existing social relations of production. This chapter attempts to synthesise the evidence. The next section assesses the evidence of spatial reorganisation and capital mobility. Production locations changed but they did so unevenly and in ways that cannot readily be seen as radically new nor as fundamentally transforming relations between capital and labour. The following section similarly reviews claims of transformed relations between and within firms and for a social dispersal of labour. While there is some evidence for falling average firm sizes and increases in various forms of ‘flexibility’, this appears to provide insufficient 169

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explanation for labour’s condition. Changes are explicable in familiar terms and any decline in workplace sizes existed alongside counter trends towards increasing concentration. Other claims of labour fragmentation or heterogenisation seem at best equivocal. The chapter concludes that despite many changes in industrial structure in the last two decades of the 20th century there was insufficient evidence to support stronger characterisations of globalisation and post-Fordism or of systematic correspondence between industrial restructuring and labour’s situation.

Assessing claims of spatial transformation Amongst diverse meanings of ‘globalisation’, this thesis identified influential macroeconomic arguments that suggest that capital moves to cheaper wage locations creating structural unemployment, greater competition between workers and worse conditions (particularly for the less skilled) in the ‘North’. Capital can ‘switch and re-switch’ to take advantage of geographical differences (Dicken, 1998: 177), dealing with multiple labour markets while workers remain tied to place (Greider, 1997). Even without physical relocation several writers argue that capital’s increased potential movement weakens the situation and bargaining power of relatively less mobile workers (Talalay, 2000; Blyton et al., 2001). These latter claims are somewhat difficult to evaluate but the evidence from the comparative surveys does appear to challenge the bolder interpretations of socio-economic change and so question whether the conditions of ‘Northern’ workers should be seen as effects of globalisation. The international division of labour – centrifugal pressures towards low pay locations In gross, aggregate, terms there were also marked (if rather obvious) differences in spatial organisation. A ‘mature’ industry, automobile output rose slowly and in many countries firms cut employment levels. Many companies also increased their degree of multinationality, extending production systems: within nation states, on a continental basis and sometimes wider still. Cars, commercial vehicles and their parts were made in numerous countries, rich and poor, and increasingly traded internationally. There was a decline in many traditional ‘rust-belt’ industrial areas and growth in others, including several in

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LDCs. Nevertheless, the major producing and exporting locations remained within the Triad. Production levels, but also growth, correlated positively with GDP per capita, although this became marginal in the 1990s. The biggest growth in trade also occurred within regions, most particularly within Western Europe. Construction was a truly global industry, taking place in every country. Output tended to vary with GDP, although some authors argue that proportionally it was greatest in middle-income countries. Construction firms, too, performed a rising share of foreign work in home regions over the course of the 1980s and 1990s, but still at the end of this period with a greater share of investment in lower income countries than in cars or in manufacturing in general. A very high proportion of semiconductor output was traded, often over long distances, particularly within US firms from their mainly domestic based wafer fabrication to overseas assembly and testing operations and thence to their markets either within the US or elsewhere. A greater proportion of Japanese production remained ‘on-shore’ but the relocation of electronics assembly in the 1990s increased semiconductor exports to it. Large foundries, notably in Taiwan, fabricating chips often designed elsewhere, were also often strongly oriented towards overseas markets. Nevertheless, microelectronics production was highly concentrated compared to the other sectors. At the end of the 1990s about half the world’s workforce remained in the two largest developed countries, the US and Japan. Major European firms increased their market share in the late 1990s but over a longer 20-year period European production declined. Meanwhile large industries developed in the original Asian NICs, in particular Korea and Taiwan. Finance was again global in being present in every country. Rather than being relocated to low wage economies there appeared to be a positive correlation between GDP per capita and the size of the sector both in terms of its assets and workforce. Massive growth of transactions in diverse financial instruments from the 1970s appeared to reinforce the concentration of work in the major centres. While cross-border financial activity increased, it too did so disproportionately into neighbouring and wealthy countries. Even for the more widely dispersed sectors the aggregate measures contrast with well-known case studies from other industries, for example of garments and textiles (Fröbel et al., 1980). They might therefore

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also qualify the extent to which such industries can be taken as a model, which others would follow. The declining correlation between national income and auto industry growth in the 1990s (and the contrast with semiconductors) might be suggestive of increasing dispersal as the industry matures. However, previous cyclical changes and enduring problems of production in many LDCs, caution against drawing such conclusions too strongly. The more general, comparative evidence would also appear to question characterisations of diffusion, even those that allow for this occurring at different times and rates. In automobiles, the centrifugal effects of the search for low paid labour more often involved relocation within established car producing nations or regions than beyond them. Few poorer countries became major exporters to the Triad. Korea was the most significant exception, while Mexico too became a large net exporter. Its industry, dominated by foreign MNCs, was less reliant on domestic sales even than Korea. Although some cars were sold beyond North America, particularly from Volkswagen’s Puebla plant, most went to the US rather than global markets. Volkswagen also sold Skodas produced in the Czech Republic to the rest of Europe, making that country too a net exporter but this too was exceptional and overall production levels in Eastern Europe declined with the collapse of Communism. In construction, by contrast, the final products cannot be traded and strong growth in several (particularly Asian) LDCs in the 1990s was associated with domestic economic success rather than export processing. (The case of materials, in which there appeared to be considerable potential for international trade, is considered below.) Semiconductor manufacturers of the US relocated parts of the production process to low wage locations from the 1960s, particularly assembly and testing operations. By the end of the century, several wafer fabrication plants were also sited beyond the Triad and the original Asian NICs. However, the greatest shifts in ‘fab’ location involved intra-regional moves particularly within the US. The capital intensity of back-end processes also rose significantly. Here too, rather than sweeping centrifugal effects, operations were concentrated in East Asia, principally in Malaysia, the Philippines and latterly China. Some parts of the finance industry appeared to be significantly more mobile than others. However, despite the rise of ‘offshore finance’ most work continued to be done in traditional financial centres: most OFCs had relatively small, well-paid workforces. There was also some

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evidence, in terms of the levels of overseas funds held, that OFCs’ role declined in the 1990s. Banking and securities trading remained highly concentrated in major centres, albeit with the incorporation of a few newer locations from formerly poorer countries; as in the case of Singapore in derivatives trading. Meanwhile, routine insurance was sometimes processed at more distant locations, although these too typically remained within national boundaries. The inter-industry differences highlight that any orientation towards cheap labour involved a selective movement both in the sense that some industries or parts of industries moved more than others and in that relocation was predominantly directed towards only a relatively few formerly poorer countries. Furthermore, these were seldom the cheapest labour locations. There was little sign of the most important major new locations of production or investment, Korea in auto production, Korea again and Taiwan in semiconductors and Singapore in finance themselves being marginalised as their GDP per capita rose towards AIC levels. Nor did the experiences of national economies or of workers at particular levels of skill necessarily converge. Indeed, probably the strongest case of LDC to AIC exports, of Mexican assembled autos to the US continued to indicate a divergence – with Mexican workers’ wages falling (more rapidly than those in the US). The varied experiences in construction, both North and South, might similarly temper suggestions that their bases lay in labour market effects. The weakness of evidence of a polarisation of pay structures in finance, despite numerous claims of de-skilling at the bottom, might also qualify such accounts. If there were incentives to relocation towards cheap labour, it appeared that significant countervailing pressures persisted. Centripetal effects of embedded relations of consumption, exchange and production Despite many physical improvements in transport and communications technologies, proximity to markets seemed to remain one of the most obvious and important factors ‘immobilising’ production in wealthier regions, but also in many movements into poorer ones. In automobiles, production and trade remained concentrated within the Triad, while the greatest FDIs were made by Japanese firms into the richest, North American, market. At the same time substantial output in many poorer countries correlated closely with levels of

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consumption. Tendencies towards a regionalisation in poorer countries, broadly producing for markets of a similar economic level, were most strongly confirmed in South America, within which, Brazil, although its sales to the richest countries declined, became the favoured site of production. Overseas construction activity, which by definition is market seeking was more strongly directed towards LDCs than manufacturing, affirming the importance of these locations as markets rather than simply as sites of cheap labour. Despite financial products’ immateriality and the sector’s much vaunted mobility, proximate connections with markets, either with other financial institutions or in the wider economy, remained important for most activities. Few financial products were ‘manufactured’ in one country for ‘consumption’ in another. Net financial flows remained small relative to the escalating gross volume of transactions, with large-scale relocations of assets from rich countries only directed towards a few, small, rich OFCs. The most striking feature of rising M&A activity, particularly in banking, was its concentration within national economies, and to a lesser extent home regions. In semiconductors, high cost to weight ratios and technically disarticulated manufacturing processes made the sector seem particularly susceptible to globalised production. Spatial organisation was less oriented towards final markets than the other sectors. Nevertheless, production remained highly concentrated. This highlights that market seeking activity does not provide a full explanation of locational inertia. Nevertheless, the evidence from autos, construction and finance indicates a significant influence in both the most material and immaterial of economic sectors. Such importance of final markets would tend to support interpretations of high wages as a product of growth rather than simply a barrier to it. However, if their markets influenced the locations of final assembly, arguments of a New International Division of Labour suggest that at least in the manufacturing sectors, but perhaps in finance too to a lesser extent, firms had the opportunity to overcome the implied restrictions to mobility through ‘global sourcing’. Overall, in the motor industry, the rise in trade in parts was less than that in assembled vehicles although some, such as electrical components, were particularly susceptible to distant sourcing. The UK example showed that while the average distance of import markets for assembled vehicles fell, on

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average it rose for components. However, for many parts, proximate connections to assemblers seemed to remain important. In construction, machinery, prefabricated buildings and materials were potentially mobile. However, trade in civil engineering plant and equipment, fell. Trade in prefabricated construction, in contrast to the 19th century, also remained at very low levels. For materials, there were significant social and physical differences between products, leading to very different mobilities. However, for many products, trade appeared to rise rather more slowly than construction output although within this the proportion of some supplies sourced from LDCs increased, again suggesting contradictory pressures towards agglomeration and dispersal. In semiconductors, too, there were agglomeration effects amongst supplying industries, although these may have been weaker than in other manufacturing sectors such as cars. Design facilities, whose products were immaterial and potentially particularly mobile, were located in many (mainly) developed countries but the most successful were particularly strongly clustered, especially in Silicon Valley, while Japanese firms employed thousands of R&D workers in single sites. Within finance there was a potential to source certain ‘backroom’ tasks from distant locations but many activities continued to require close, often including face-to-face, interactions not just with customers but also within the financial ‘community’. Thus ‘global sourcing’ also seemed to be at best a simplification, applicable at most to specific products. Indeed, rather than overcoming restrictions imposed by final markets, it has been suggested, as noted in Chapter 3, that consumer rather than capital goods may be more mobile (Sutcliffe and Glyn, 1999). High concentrations of fixed capital have also been acknowledged to increase the ‘embeddedness’ of production in particular places. In autos substantial investments by both assemblers and component manufacturers and amongst other things the introduction of JIT systems continued to underscore centripetal effects and suggested significant restrictions on mobility. However, lower capital investments by assemblers in the 1990s compared with the preceding decades may have reduced their relative significance. Similarly, the lower investments by outsourced parts manufacturers may have contributed to the greater ‘reach’ of some components. In construction the use of on-site machinery varied considerably between countries both in terms of

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extent and according to whether it was bought or rented. The latter might add a degree of geographical flexibility for contractors, confirming the significance of sunk costs although, in aggregate, production locations of course remained market determined. In microelectronics, the costs of wafer fabrication plants grew particularly rapidly. The combination of assembly and testing and sometimes of these together with wafer fabrication also reinforced geographical constraints and increased the capital intensity and the immobility of production. The use of information and communications technologies may also have increased the capital intensity in many sectors of finance although few authors have suggested they constituted a major immobilising factor. Conversely, tendencies towards a greater dispersal of production might be associated with capitalist failures rather than successes. There appears to be some evidence that low wages became relatively more attractive at times of overcapacity and relatively lower investment, for example in autos in the early 1990s and semiconductors in the early 2000s. Nevertheless, across the sectors, the evidence for any fundamental reconstitution of production, involving low capital strategies, seems weak. State Support Neo-liberal theories of globalisation emphasise that firms can move to avoid excessive state regulation or taxation. While this may often have been true, there has been ample discussion elsewhere of how states also remain vital for capital’s reproduction. More or less direct state intervention also appears to have contributed towards maintaining the territoriality of many industries. State subsidies, both national and regional, to auto assemblers helped to secure investments in many countries. Governments also often funded a high proportion of construction. In semiconductors, substantial state support in various forms was important in each of the successful producing countries with subsidies to Taiwanese foundries, in particular, attracting criticism at the end of the century. There is an important, if contested, claim that financial innovation and escalating trade produced global convergence in the evaluation of finance and undermined state capacities. However, as noted in Chapters 2 and 9, other scholars emphasise how states continued to regulate and protect finance. Despite substantial restructuring, much of the US industry, in particular,

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remained strongly ‘national’. The evidence seems sufficiently ambiguous to conclude, minimally, that state intervention cannot be conceived simply as a barrier to investment. Uneven development The comparative studies indicate considerable variation. The old economy industries were the more geographically dispersed. Significant auto production took place in numerous countries with production levels correlating closely with sales. Construction was genuinely global in taking place in every country. Semiconductor production was concentrated within a few national territories. The US and Japan continued to dominate although this was also a vital industry for two of the original Asian NICs, Korea and Taiwan. Amongst poorer countries Malaysia developed a substantial industry in assembly and testing, followed by a few other Asian countries. Finance, again, took place in every country of the world. Here the level of activity as a proportion of GDP tended to increase with GDP per capita but with particular concentrations in the major centres especially New York, Tokyo and London. The sectors also exhibit some notable similarities. In each, ‘balances’ (unstable and changing) between centripetal and centrifugal forces were evident. In none of the sectors did capital move en masse to low wage economies, and in each, capital mobility appeared to remain restricted in many ways. So although each sector had distinct spatial features, strong elements of continuity and concentration were also evident in each. During the last decades of the 20th century production locations in each industry shifted, within and across national borders. Industries grew in several (formerly) poorer countries and declined in some richer ones. The transition of a few East Asian countries from LDC to advanced country status challenged crude core–periphery models of development but without negating a general concentration of economic wealth and production. The established developed countries continued to dominate both production and trade. Most LDC production was in a few specific places and oriented towards domestic or regional markets. Moreover, the fragility of such markets might, in some circumstances, frustrate scale economies. This would confirm accounts, which have seen economic restructuring as ‘globalisation’ in at best a rather weak sense, with transnational business remaining concentrated in the Triad, a few formerly poorer countries

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in East Asia and in occasional outposts elsewhere in the world. Although the relative economic position of some developed countries, and particularly of certain industries within them, declined, the rise of the Asian NICs is less readily seen as coming at the expense of industry in the more developed countries as a whole. There was not a straightforward shift in production from AICs to LDCs. Where they occurred, increases in FDI beyond the Triad were seldom, in Barnet and Cavenagh’s phrase directed towards ‘the bargain basement of the world labor market’ (1994: 67). Both manufacturing industries, cars and semiconductors, notably avoided Africa as a production location. In contrast, the market seeking activities of construction and finance produced higher levels of investment there. Meanwhile, an increasing intra-regional share of overseas investments, especially within Western Europe was confirmed here in cars, construction and finance. Globalisation is often dated from the early or mid-1970s, since which time most fixed capital might have been replaced and moved. It did so to a remarkably limited extent. Most LDCs were largely excluded from ‘globalisation’. Nor did changes take place along an ‘old/new’ or ‘manufacturing/service’ division. Shifting patterns of production were complex, with many causes, and often contradictory. The implication is that attributing labour’s experiences to relocation in any straightforward way is also deeply problematic. Problems of capital mobility Claims of increased capital mobility, distinguished from any achieved movements, and their implications for labour, are rather harder to evaluate. Threats of relocation may pose real problems for workers while it may seem almost self-evident that capital mobility increased in various ways in the late 20th century. However, the evidence again suggests some qualification. Having already indicated that various locational inertia or centripetal influences endured, there are reasons to question whether or to what extent mobility increased, particularly stronger claims of a qualitative spatial transformation. Chapter 3 noted that several accounts of globalisation invoke Harvey’s (1990) concept of ‘time-space compression’. However, this might alternatively suggest a considerable tension within any contemporary transformations. The competitive imperative for capital to cut turnover time, described by Marx and re-emphasised by Harvey, operates both in production ‘proper’ and in transport and

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communications. Rates of profit are a function of those in both production and distribution and a reciprocal of the turnover time in each. So alongside the annihilation of space by time, innovations in production annihilate time. Each capital strives to increase profit and to reduce the time taken in each of the phases of production. If innovation in production exceeds that in transport, distances may become relatively more important to capital despite absolute physical improvements. Which spatial ‘solution’ will result seems inherently unpredictable, even in terms of this first order ‘capital logic’ before even considering the influence, for example of markets, nation states and sunk capital. It is, in short, necessary to problematise capital mobility rather than to assume its increase. The ability to overcome distance remained highly variable. Differences in capital intensity or in products’ physical weight could be important. The latter did, for example, help make concrete less mobile than semiconductor wafers. However, the evidence here also suggests that mobility can be limited and centripetal forces strong in the least material and information intensive industries, for example in finance and semiconductor design. All things being equal, it seems reasonable to suggest that capital will move to avoid overpaid or insubordinate labour. It nevertheless continues to require at least the temporary immobilisation of labour of particular qualities (Holloway, 1994). Even in the absence of active opposition to relocation, firms’ movements continued to be constrained by multifarious social relations with customers and suppliers and the need for suitable social and political infrastructure – often involving direct state support of various forms. High sunk costs, which for example in automobiles, semiconductors and finance, all appeared to increase, reduced mobility. Suggestions that product innovation and upgrading tend to be immobilising were noted in Chapter 3. The relative importance of the search for cheaper, including more distant, labour can plausibly be understood to increase as capital investment falls. This would seem to be confirmed in lower rates of concentration; commensurate with over-capacity and falling levels of investment in the automobile industry in the 1990s compared with previous decades. Despite apparently greater physical mobility, the rapidly innovating semiconductor industry remained more highly concentrated. Such evidence confirms sceptical criticisms of globalisation and that workers did not, in general, lose jobs to the Third World. Moreover, the

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comparisons here indicate there was little correspondence between the experiences of labour and the extent or timing of capital’s movements. Spatial change and its implications for labour Industrial relocation can mean plant closures and massive job cuts, sometimes destroying gains won through decades of struggle. However, it appears to offer insufficient explanation of labour’s situation. The North American auto industry provides some effective examples, the onset of concession bargaining preceding the rapid rise of Mexican production and of exports to the US. Moreover, even as these increased, so too did US output and employment. Falling wages and union concessions continued into the 1990s despite this. These might, in principle, have contributed towards limiting relocation but even substantial pay concessions and ‘give backs’ could hardly compete with wage levels available in LDCs. Wages in Mexico fell more steeply than in the US. Canadian unions meanwhile rejected concession bargaining and adopted a more militant practice that won significant gains. This did not appear to jeopardise immediately Canadian production or its integration in the auto-producing region. In construction, although the globalisation argument does not directly apply to on-site workers, and they cannot plausibly be seen as threatened by foreign competition, their wages and conditions often declined broadly in parallel with those of workers in manufacturing. In the US they deteriorated considerably more sharply, with the period of decline again beginning before what is usually understood as the era of ‘globalisation’. Arguments that this might alternatively be explained by increased labour migration did not seem convincing. In semiconductors, despite high concentrations of labour, some of them in long-established sites and locales, there was little organisation amongst the largest national production workforce in the US. Nor, although it did not preclude unionisation, was the sector elsewhere noted for its militancy. In finance, although their products were immaterial, and in principle almost infinitely mobile, workers faced only limited threats of capital movement. Nevertheless, this did not appear to have much direct relation with the experience of labour. In the US, workers were poorly organised. Elsewhere, especially in Europe, despite evidence of greater, and unevenly increasing, internationalisation, unions’ experiences

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in finance tended to be rather more positive than in the labour movement as a whole. Such brief examples illustrate that not only may characterisations of globalisation fail to capture the contradictory complexity of contemporary social change but also caution against attempting to predict outcomes for labour directly from economic structure, or structural transformation, however accurately described, a theme to which Chapter 11 will return.

Assessing the post-Fordist argument Many accounts describe restructuring in terms of a shift to a postFordist or disorganised capitalism. Often closely associated with globalisation, these typically make claims of social dispersal and fragmentation as a conceptually distinct explanation of labour’s decline. Chapter 4 suggested that it was possible to distinguish two clusters of post-Fordist argument. The first describes changes between production and consumption and in relations between firms, the second changes within firms and in the nature of work. In extremis, the first set of characterisations of post-Fordist, consumer led production, understand market relationships to have superseded class antagonisms and removed the possibility of economically based collective action. Less categorically, others maintain that information technologies allow a diffusion of authority and reduce scale economies. This increases the importance of small firms, seen as less susceptible to labour organisation and within which job security may also decrease. The second set of arguments depicts an ever-widening division of labour with increasing specialisation and differences of skill and pay amongst workers. This may again be sufficient to render notions of a single ‘working class’ anachronistic. Less dramatically, but with nevertheless deleterious consequences for labour, intra-working class polarisation grows. Restructuring increases the two ends of the spectrum unsusceptible to organisation. On one side it develops a ‘core’ of flexible, highly skilled, well-paid workers, not liable to the normal disciplining of labour and unlikely to be receptive to calls for collective organisation. At the opposite end of the spectrum a ‘periphery’ of ‘numerically flexible’, casualised, unskilled, often women workers, also grows, again seen as less likely to respond to trade unionism than skilled or semiskilled male employees.

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Consumption, production and economies of scale Post-Fordist accounts suggest moves away from resource driven, mass production of standardised goods by large firms towards consumer led, flexible, small batch production within which smaller plants and firms became become increasingly dominant. In automobiles, in important parts of the production process, minimum efficient scale levels tended to rise rather than fall and the variety that customers were offered has been seen as somewhat superficial. Most major modern assemblers remained huge firms. Nevertheless, they reduced their direct employment with a clear increase in subcontracting amongst western firms over the 20-year period considered here and dramatically so in comparison with Ford’s integrated factories of the 1920s. However, subcontractors did not appear to become key sites of innovation. Productivity gains in the components sector were low compared with assembly. Some spun-off firms proved unstable and required subsidies or were reacquired by the assemblers. Furthermore, rather than producing a straightforward decline in firm size, many component manufacturers grew; themselves becoming major companies. Much of construction, by contrast, had ever been consumer led. The sector was accordingly characterised by smaller firms, albeit with considerable international variation. Average sizes, for example in Japan, Korea and in China (where independent trade unionism was, of course, proscribed), were much larger than in Europe and North America. However, in construction too, major western contractors decreased their direct employment during the 1980s and 1990s indicating that such changes were not, or were not solely, associated with changes in the relations between consumers and producers. Production processes within construction changed remarkably slowly in many countries. Nonetheless, albeit with international and intersectoral differences, various forms of firm ‘flexibility’ and outsourcing increased with more use made of subcontractors, sometimes including labouronly subcontractors, and particularly in the US, of non-unionised agency workers. However, the on-site construction workerforce grew in most AICs with little evidence of systematic efforts to replace it through prefabricated building or off-site materials production. Despite being a new industry, large and old firms tended to dominate in semiconductors. There were distinct, and some argue diverging, national characteristics, but contrary to predictions in the 1980s,

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firm concentration remained significantly lower than in automobiles. Particularly in the US, and for example in Taiwan, small companies remained significant innovators, particularly in chip design, and employers of highly skilled workers. There also remained numerous smaller firms in diverse supplying industries and in specific product niches. However, within these too, the largest firms tended to dominate, prompting alliances and ‘intermediate’ forms of concentration and a search for ever narrower niches amongst the smaller firms. Small companies were less significant in Japan, Korea and Europe. Some of the sector’s diversity appears to have been associated with its volatility but also with increasing economies of scale, so that even large firms found it uneconomical to produce for themselves whole ranges of chips or equipment. This would support the association of the development of contemporary smaller firms with the growth of production systems beyond the capacities of even the largest single facilities (Moody, 1997). De- or re-regulated finance allowed new waves of M&As and appeared to increase the dominance of major financial institutions. Banks remained central to many financial transactions with claims for their decline and for ‘disintermediation’ apparently overstated. The largest institutions increased their size and employment. There were exceptions, and different national patterns. For example in the US, banking declined relative to other sub-sectors. The biggest American banks nevertheless grew rapidly. The comparative evidence for a purported retreat in terms of the number of bank branches was also equivocal although employment within them may have fallen with the centralisation of certain routine operations. In insurance, in some countries, smaller firms increased their market share, either as direct sellers or as intermediaries. However, despite a proliferation of firms in the 1980s, by the 1990s industry concentration ratios again increased, approaching those in banking. Moreover, particularly at an international level, major brokerage firms came to dominate. There was little evidence of any declining significance of major institutions in securities trading. The comparative surveys do provide some evidence of smaller workplaces. For example auto assembly operations and bank branches often employed fewer workers than they had done formerly. There is also evidence for the proliferation of smaller firms within construction and, for example, in the contrast between automobiles and

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semiconductors as examples of ‘old’ and ‘new’ industries. However, as these contrasts highlight, differences between sectors remained considerable. Suggestions that declining firm and workplace sizes were predicated on a fundamental transformation of relations between production and consumption also seem problematic, with little evidence of significant increases in consumer choice or of major innovations being made independently of large firms. Construction, always consumer led, also appeared to experience a growth in subcontracting. Nor does increased outsourcing necessarily seem to be associated with new, information based flexibilities in production. Cost cutting measures in automobiles appeared deeply contradictory in terms of productivity while construction, with its fixed point of final assembly, and despite slow rates of productivity growth, provides only limited support to hypotheses that predict efforts to overcome this through increased off-site, outsourced manufacturing. Moreover, there were also counter trends, with materials and equipment suppliers (in cars, construction and semiconductors) often increasing in size. Similarly, while bank branches became smaller, larger concentrations of workers developed in central processing and call centres. The largest financial institutions increased their direct employment. There were also ‘intermediate forms’ of industrial concentration, with numerous examples of cross-shareholding and alliances (for example in cars, semiconductors and finance). The evidence from both semiconductors and construction, in particular, also appears to offer some support to claims linking small firm subcontracting to the problems and crises of capitalist development rather than to new models of success. Chapter 7 described an association between low productivity and low barriers to entry in construction while Chapter 8 identified processes of fragmentation connected with the speed and instability of its growth among the reasons for the microelectronics industry’s diversity. The development of production ‘networks’ appears to be comprehensible in familiar terms of an ongoing dynamic between concentration and specialisation, already described by Marx in the middle of the 19th century. ‘Downsizing’ may be connected with specific and cyclical difficulties rather than a strategic reorganisation of capitalism. Thus, processes of disintegration were variable, contingent and often contradictory. The variation both within and between sectors suggests that ‘flexible production’ and niche markets were suitable in only certain specific

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areas and confirms that efficient scales of production varied between different sub-processes. It supports earlier work that suggests appropriate ‘matches’ between the production and consumption of products are neither automatic nor achieved independently of ongoing relations between labour and capital (Storper and Walker, 1989; Beynon and Hudson, 1993). Restructuring relations with labour Subcontracting to smaller firms appears in some instances to have been a more or less directly anti-labour practice. For example, in automobiles, labour in smaller firms was usually less well paid and organised than in assembly. Growth of the independent parts sector might thus plausibly be seen as ‘peripheralisation’. Wage differentials nevertheless varied considerably between countries, and between component manufacturing sectors. Similar moves, aimed, at least in part, at overcoming collectively bargained wage rates, can also be seen in construction and finance. Some of the developments towards decreasing firm size, especially of LOSC in construction, appeared to have a somewhat formal character. Rather than reflecting substantive structural shifts, neither construction contractors nor employees typically regarded such workers as self-employed, affirmed when a redefinition of tax codes in the UK rapidly changed the number of ‘firms’. Moreover, the implications for labour of outsourcing and of changing firm sizes were neither direct nor unambiguous. In automobiles, the size of firms in the parts sector grew. Along with the spatial agglomeration discussed above, this may plausibly be interpreted as having conferred considerable sectional strengths on labour. However, at least in the US, unionisation within the components sector continued to fall. In construction, the growth of ‘open-shop’ employers and of recruitment through employment agencies in the US, and of LOSC in the UK, can also be interpreted as anti-labour tactics. They challenged established trade union practices, in particular the American union shop and hiring hall system. However, earlier experiences from both countries show that small firm subcontracting need not preclude effective organisation. Indeed, despite the predominance of small firms, union densities remained higher than in most other sectors and national bargaining agreements, for example in the UK, endured longer in construction than in manufacturing in general. In continental Europe, average firm sizes were also small but

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direct employment remained the norm while levels of labour organisation varied considerably. In semiconductors it is notable that even large integrated firms did not directly produce conditions favourable to labour organisation while finance saw the growth of large-scale data processing and call centres, which remained badly organised. On the other hand, unionisation in Europe, if not the US, could be relatively strong even within smaller workplaces like bank branches. The comparative evidence seems to confirm Harrod’s (1987) caution that the size of enterprises may be indicative but does not determine social relations. Historically, some groups of workers in particular sectors and countries have established strong organisation despite working within small units. Average workplace size may have declined but the evidence from the sectors studied here shows little evidence of a return to the genuinely small scale, artisanal or familial production of early handicraft manufacture of the sort that might plausibly preclude trade unionism. Moreover, small firms or production units’ situation within giant networks would seem to suggest their enduring fragility and potential vulnerability to labour disruption. Both autos and construction provided some concrete examples of workers acting on this. Labour flexibility and fragmentation Accounts of post-Fordsim, however, emphasise not only changing sizes and shifting relationships between firms but also a transformation of relationships within them. Labour becomes more ‘flexible’ both in terms of employment relationships and in the work it performs (Benner, 2002). Consequently, it becomes more internally differentiated. In automobiles most assembly workers, in particular, at least in the West, remained full-time and permanent direct employees. Experiments in ‘moduralisation’, integrating the work of external suppliers, were limited and contested even in some poorer countries. There was some evidence that greater skills were needed in ‘flexible’ or Japanese manufacturing systems but evidence that they made work more rewarding was rather weak and there was little indication that attitudes to work fundamentally changed. Lean production, or what critics termed ‘management by stress’, tended to make work harder. It has been depicted as introducing new forms closer to Taylorism than the end of alienated labour. However, interpretations and implementations of lean production continued to vary considerably.

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In construction, the increased use of employment agencies and of LOSC, discussed above, represented a significant casualisation of employment relations. However, it was also noted in Chapter 4 that some commentators described such developments as an ad hoc, short-term, and counter-productive extension of familiar practices rather than as a strategic peripheralisation. While production processes in many countries changed remarkably slowly, it is suggested that the impact of technological change, rather than leading to a separation of the workforce, engendered a convergence of skill requirements towards the centre. Any casualisation did not extend to widespread recruitment of women, or did so only in a few areas of work. Furthermore, while the sector employed large numbers of migrant workers, levels (in developed western countries) appeared to be lower at the end of the century than they had been in the 1960s and 1970s. In semiconductors, rapid growth and innovation were associated with high proportions of skilled and well-paid R&D workers. These had very different conditions from poorly paid production employees. The numbers of both types of labour grew with the industry. However, it is not clear that this should be regarded as a polarising process. The bifurcation remained significantly more pronounced than in automobiles but as the level of technology and automation inside the industry increased, the proportion of high skilled workers declined. Many of their tasks, too, were liable to subdivision and automation. The egalitarian scientific atmosphere fostered in the earliest manufacturers ceased to be the norm. Despite huge productivity rises, the number of production workers also rose. A high proportion of this production workforce whether in the US or in East Asian assembly operations was female, non-white and often worked on the casualised basis characteristic of the ‘peripheral’ worker. However, while the data is somewhat patchy, more regularised employment relations appeared more normal in Europe and Japan. Even in the US, production workers’ wages were higher in Silicon Valley than in other parts of the country and in semiconductors higher than the manufacturing average, again perhaps qualifying some stronger characterisations of peripheralisation. There were some significant transformations of work within financial service institutions. A concentration of routine tasks in central processing and call centres meant that not only did the numbers working in local branches often fall but also that employees within both sorts of workplace might require fewer skills. However, the evidence of

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systematic polarisation, particularly of peripheralisation at the bottom, appeared to be considerably more equivocal than some accounts suggest. While many institutions initiated re-grading and introduced temporary contracts, the outcomes were rather uneven in terms, for example, of systematic downgrading and achieved duration of employment. During the 1990s, there was little evidence of an overall process of degradation in terms of falling pay, or of increased parttime work, or of a process of feminisation. Re-grading, for example, was not only often a contested process but also one in which, even where unions remained weak, as in the US, contradictions within strategies of firm reorganisation, for example in terms of productivity, limited restructuring. Overall, there were some significant examples of changing workplace relations but little consistent evidence of a systematic polarisation. Moreover, it seems necessary to distinguish employers’ success in altering contractual arrangements, in managing work in different ways and in paying less to labour from more significant claims made for the ‘new economy’. Although it took different forms, there was evidence from each of the sectors that firms achieved some successes introducing anti-labour strategies. The implementation of these appears to have been sufficiently uneven and contested to qualify depictions of straightforward labour decline but outsourcing, temporary contracts and overcoming opposition to job demarcation, for example, could all be interpreted as having weakened labour. However, many developments appeared to have a rather weak association with transformed labour processes or the skill bases of work. As observed of the reorganisation in automobiles, the introduction of ‘flexible production’, although it too could require greater mental (and physical) effort from workers, may have had more to do with labour control than re-skilling. This cautions, in particular, against reductionist characterisations of the causation of labour decline by post-Fordist restructuring of work. Heterogeneity and organisation In automobiles, where labour organisation was stronger it was, at least in some significant cases, able to adapt, and adapt to, restructuring. Nevertheless, although interpreted in different ways, Japanisation, or Toyotaism, became a widely accepted management strategy. However, its implementation on the back of labour retreat would suggest that the line of causation be, at least in part, reversed, even if it may plausibly

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be seen as having subsequently reinforced workers’ experiences of defeat. In construction, union decline may not only have preceded economic restructuring but occurred against a background of declining heterogeneity amongst construction workers. The experiences in both semiconductors and finance highlight the weakness of the relationship between economic structure and outcomes for labour. In semiconductors US plants were mainly non-unionised, although strategies to keep unions out, including stock options, pay and significant antiunion campaigning recalled those once used in other industries like cars and suggested that structure alone was insufficient to exclude labour organisation. Outside the US, for example in European plants, unionisation was the norm and even American anti-union employers like IBM adapted to labour organisation in Europe and Canada. In Korea, where trade unions grew, they included semiconductor workers. In finance, while there was evidence that changing structure could undermine existing labour organisation, there appeared to be little clear relation between the diverse structure of the industry across sub-sectors and nations and the wide variety of outcomes for labour. There was also evidence of significant contradictions for capital, for example in strategies of casualisation, in terms of negative effects on productivity and long-term competitiveness. This might qualify claims that contemporary shifts should be seen as irreversible processes of profound restructuring. Perhaps most fundamentally, there seem to be difficulties evaluating levels of working-class homogeneity, abstracted from the subjective and institutional achievements of labour. At least since the 19th century, hierarchies of skill have been a central feature of labour market and work relations – and Marx’s category of variable capital internally heterogeneous (Watson, 1995; Harvey, 2000). There would appear to be dangers of tautology (at best) in identifying particular groups as inherently ‘peripheral’; the ‘normal’ worker and potential trade union member as male, in already unionised industries; the female worker in new industries as abnormal and outside the ambit of trade unionism. Typical male jobs, as for example in construction and cars in the US, were themselves often casual and unorganised until the 1930s. Women often face various social disadvantages and pressures militating against effective unionisation. The evidence from the comparative studies here suggests that highly feminised production workforces in finance and semiconductors confirm the stereotype in the US in being poorly organised but that

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in Europe they do not. Indeed, in different circumstances, as Harrod writes ‘social disadvantage may transform itself into a base for solidarity’ (1987: 229). The working class is necessarily diverse and heterogeneous while the point of notions of solidarity and of labour organisation has been to overcome division (Panitch, 2001), either amongst sections of workers or more widely as a class. Conversely, particular institutional practices may also reinforce divisions, for example on a sectional or gender basis. At the same time, some structural changes appear to contradict the post-Fordist scenario. There was evidence of increasing firm and workplace sizes, for example in the auto components sector or in processing and call centres in finance. In terms of the skill bases of work there appeared to be declining differentiation within labour in construction, and perhaps also in semiconductors and at least in some areas of finance. However, these at most may have produced conditions more conducive to, but of course did not directly generate, labour organisation. Recalling Cox’s triangulation, changes in the material conditions of labour may undermine past values and institutions. Nevertheless, notions of asymmetric interdependence defended in this book leave open the question of extent, the importance of these particular changes and their implications for consciousness and organisation. From labour’s perspective, the Fordism/post-Fordism dichotomy appears to overstate the difference between periods and labour’s strategic tasks within them. Historical examples show the unevenness and contradictory nature of the Fordist period. Post-Fordist characterisations appear to underestimate continuity with the past but also, in basing interpretations of labour’s condition on technical change and structural shifts in contemporary capitalism, to underplay the role of agency and possibilities of labour influencing relations of production in the present period.

Conclusion Significant socio-economic changes occurred in the late 20th century but they appear to have been more complex and contradictory than is suggested by stronger versions of globalisation and post-Fordism. Globalisaiton theories have suggested that vastly increased or even near infinite capital mobility allowed firms to flit from one location

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to another in search of the cheapest labour. This did not appear to be the case. Capital did move but the evidence from each of the sectors indicated its mobility remained significantly restricted. Relations of production were complex social processes, which could not simply be reproduced at will. Contrary to some of the stronger claims for the deterritorialisation of contemporary capitalism, persistent state intervention in each of the industries often represented a significant immobilising force. Somewhat less emphatically, globalisation theories have depicted a dispersal of production, leading to growth in poorer countries at the expense of the wealthier. Here too, the evidence appears to contradict such hypotheses, with levels of production and growth often appearing to remain greater in richer countries. Even in the most immaterial, knowledge based processes, in finance and semiconductor design, the concentrations of labour in the richest countries remained strong. The search for cheap labour more often saw movements within richer countries, or sometimes regions, than beyond them. There were significant examples of production in LDCs for export to AIC markets. However, these were for the most part highly specific, both in terms of place (for example Mexican auto production for US markets and Malaysia as a centre of semiconductor assembly), and in terms of the type of production, with certain sub-sectors being more widely dispersed than others. The activities of overseas construction contractors and of foreign banking emphasised that their markets rather than simply low wages, represented a significant factor in any movement towards LDCs. Each sector continued to experience a number of what could be described as both centripetal and centrifugal forces. In some areas, the relative significance of the latter did seem to increase. They did not, however, appear to override considerations and continuities of place as suggested by stronger versions of globalisation or ‘deterritorialisaton’ while the role of low wages within such movements also appears to have been exaggerated. The picture also appears to be far more contradictory than suggested by more sweeping interpretations of post-Fordism. There was some evidence of declining workplace sizes, despite significant counter trends. There was little evidence in any of the sectors of the end of large firm dominance or of the emergence of demand driven small batch production. Increased subcontracting also appeared contradictory,

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particularly in terms of productivity, and appeared unlikely to represent a successful ‘new paradigm’. Within firms there did appear to be a trend towards greater ‘flexibility’ in terms of employment security and, in some cases, in the work performed. However, any variety or multi-skilling of work appeared to be rather less than more optimistic accounts suggest. Again, there were significant countervailing tendencies, with examples of increasing specialisation and division of labour, but with this seldom occurring as a straightforward polarisation between skilled and unskilled. Furthermore, the changes that occurred did not seem to have the direct implications for labour frequently imputed by such accounts. Labour’s experiences seem to correlate poorly with changes in the organisation of capitalism, whether in terms of geography, firm size or the skill basis of work. The extent to which narratives of globalisation and increased capital mobility and of flexible specialisation and post-Fordism adequately explain the situation of labour is therefore questionable. The historical, geographical and cross-sectional comparisons demonstrated a greater diversity in the relationship between economic structure and labour organisation than such presentations appear to suggest. There were many examples that seem to confirm the characterisations of what might be described as the dominant paradigm, pessimistic of labour’s prospects. Mexicans assemble cars that would once have been made north of the border. German construction firms subcontract to smaller non-union operations that break negotiated work and pay norms hiring illegal immigrants. Low paid, female workers in small Malaysian firms assemble semiconductors. French banks employ workers on temporary contracts. However, as suggested at the beginning of this chapter, isolated examples, or relatively small, and possibly cyclical, changes, may sometimes be too readily considered proof of a paradigmatic shift. As discussed in Chapter 5 there was considerable unevenness in the evidence here, in the choice of sectors and in the availability of information. But although they have a certain provisional character the comparative surveys do indicate that such negative experiences cannot be taken to epitomise overall trends. Capitalism remained concentrated in the richest countries; a social process embedded in intricate relations restricting its movements. Large firms continued to dominate within intra-capital relations and over labour while

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there was little evidence of systematic intra-working class polarisation. Some accounts exaggerate labour’s decline while real problems may be read off too casually as the result of structural change. Refuting such determinist interpretations is thus a prerequisite for positive investigations that might begin a more adequate description of workers’ situation and prospects.

11 From the Critique of Globalisation and Post-Fordism to Strategic Research for Labour

Introduction This final chapter reviews the book’s arguments, considering their implications for future research and pro-labour strategies. The next section discusses the claims of labour’s weakening in the light of the empirical evidence. The section ‘Towards a strategic research agenda for labour’ extends the discussion of the previous chapter, which criticises economic explanations of labour’s retreat. It suggests an evaluation of labour’s situation and problems in terms of the interaction of ideological, institutional as well as material conditions might better identify appropriate strategies. The final section concludes the chapter and the book. It re-iterates the results of the research, indicating more complex and contradictory processes of change than stronger versions of globalisation and postFordism allow and suggesting that adopting a more critical attitude towards economic change and its implications for workers should be a condition for a more effective pro-labour research agenda.

Rejecting the dismissal of labour Against the most abstract presentations of socio-economic change the book suggested that there were sometimes unwarranted determinist assumptions in the way structural reorganisation was understood to weaken labour. It nevertheless accepted that there was a case to 194

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answer: despite much hyperbole, there may have been significant changes in the organisation of capitalism with serious consequences for workers. However, it suggested that more concrete and detailed investigations were required to establish adequately the existence and effects of any such shift. The ‘Introduction’ outlined the theoretical perspectives of the book and how these informed the way that claims of restructuring would be investigated. It advocated an anti-reductionist Marxism. For such an explicitly pro-labour perspective, writing about ‘globalisation’ and ‘post-Fordism’ is not a neutral ‘scientific’ activity. At worst, it might contribute towards perceptions of powerlessness. Even more critical acceptance of mainstream accounts was likely to significantly influence labour strategies. A careful engagement with the claims of structural transformation was therefore not simply a useful intellectual exercise but one that hopes to contribute towards an evaluation of appropriate bases for labour activity. While labour’s situation cannot be reduced to ‘economic’ conditions, these may continue to set limits to what is possible and to actively condition labour’s responses. The book therefore sought to undertake systematic research into the extent of restructuring in the late 20th century, in particular investigating the claims of stronger versions of globalisation and post-Fordism, which depict the spatial and social dispersal of labour. Chapter 5 suggested an effective critique of mainstream accounts could be begun through an inter-industry comparison. This approach could retain the broad focus on global restructuring while allowing relatively detailed studies of at least a few major sectors. It argued that if these were suitably chosen they could provide effective contrasts of the extent of restructuring and its implications for labour. It briefly discussed why the specific sectors, automobiles, semiconductors, construction and finance were selected, identified some of the limitations of the survey but argued that these industries offered effective contrasts between key sectors of the ‘new’ and ‘old’ economy. Concentrating on claims of a direct transformation of capital–labour relations, the book said less about any relationship between the fate of labour and that of nation states and should accordingly be read as a complement to the existing state-centred literature and international studies of industrial relations. Chapter 6 considered the social and spatial reorganisation in the auto industry, a sector often thought to exemplify both Fordism and

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contemporary restructuring. A brief discussion of the sector’s earlier history highlighted the limits of past integration and ways in which structure and industrial relations varied over time, between firms and internationally. Even in the supposed post-war ‘golden-age’, labour’s experiences were diverse and contradictory. Successes were achieved through struggles rather than being given by industrial structure. The chapter showed that in the late 20th century assembly locations shifted without involving a general dispersal. Production remained concentrated within the richest countries and a few formerly poorer countries, notably Korea, which moved somewhere close to AIC status. Mexican production was the most significant exception, with its incorporation into a North American producing region and major exports to the US. Even this, however, did not correspond with a decline in US production or employment. In other LDCs production growth, although sometimes rapid, was mainly oriented towards local or regional rather than rich country markets. Some auto parts were more distantly sourced but there remained countervailing pressures towards concentration, provided, for example by JIT production regimes. Most components, too, continued to be produced and traded within major regions. Outsourcing increased, utilising lower paid labour in smaller workplaces in the parts sector. However, the size of component manufacturing firms simultaneously increased. Together with integrated production systems, this indicated a significant potential for labour. Innovations in flexible or lean production did not appear to fundamentally change auto work, rather intensifying the logic of Fordist and Taylorist techniques. This may have reinforced labour’s prior experiences of defeat. However, the introduction of changes in industrial relations practices varied according to specific social circumstances with little evidence that they precluded effective labour organisation. Although labour was often in retreat, this did not appear to be based primarily on structural changes. Chapter 7 discussed construction, a sector with distinctive features including its geography of production, the nature of state intervention and its history of industrial relations. Overseas contracting highlighted the importance of LDC markets for western firms. It took similar patterns to manufacturing FDI but was oriented towards markets and not sources of cheap labour. In some richer countries

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there was a rather limited shift to greater off-site production but on-site construction workforces tended to grow. Nevertheless, construction workers appeared to experience a similar fate to those in manufacturing. In the US, their conditions and union organisation declined more rapidly. There were significant increases in the proportion of some products sourced from beyond the Triad but trade levels varied widely; for some materials declining relative to output. Increased small firm subcontracting appeared to have adverse effects on labour, undermining national standards and pay. However, this had little to do with changes in labour processes while it also appeared to have negative implications for training and productivity. Firms sought profit in exchange rather than production, targeting other contractors and labour rather than productivity. The extension of what was a longstanding practice of subcontracting could reflect, rather than cause, labour’s weakness. Moreover, there were also counter-trends, and examples of increasing M&A activity. The major firms continued to dominate. Historically, the industry also shows that labour organisation correlated poorly with industrial structure, offering significant examples of labour coping within subcontracting relations and inter-firm division. Small firm interdependencies had not always precluded strong organisation or militancy while it might continue to afford sectional strengths and make disputes less tractable to national bargaining. The discussion also highlighted that union organisation was itself contested, with different strategies having different effects in different situations. Chapter 8 considered the semiconductor industry, a sector whose products were highly mobile but one in which production remained strongly concentrated. Assembly operations were often located in low wage locations. However, integration with other stages of production increased capital intensity and the likelihood of location in richer countries. With increasing chip complexity reducing the number of assembly operations per chip function, the assembly workforce declined as a proportion of the total. Core ‘front-end’ manufacturing, especially wafer fabrication, increased rapidly in capital intensity and productivity. Job growth in the richer countries was therefore low but not primarily because jobs were lost to poorer country locations. Moves towards cheaper labour often took place within home regions, for example to the South in the US and within Europe. Despite the low weight and apparent physical mobility of

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the products, agglomeration economics still applied within manufacturing. There were strong pressures towards geographical concentration amongst skilled workers, particularly evidenced in Silicon Valley. The proportion of high skilled well-paid workers was higher in semiconductors than in the old economy sectors. However, the tendency appeared to be towards decreasing differentials. A slowly growing proportion of the workforce performed routine production tasks in wafer fabrication or in assembly and testing. At least some of the intra-sectoral division of labour seems to have been associated with the industry’s rapid cyclicity, which may also have had disruptive effects on labour. The US showed little history of workers’ organisation. Relatively small workplaces may have contributed towards this, although wafer ‘fabs’ typically employed over 600 people, with most owned by large firms. Neither the industry’s structure nor the employment of ‘peripheral’ workers seems sufficient explanation of labour’s condition. In Europe, where the general retreat was less severe and, for example, in Korea, where labour organisation grew, workers also organised within semiconductor firms. Chapter 9 considered the financial services industry. This changed considerably in the late 20th century. However, the immateriality and apparent physical mobility of finance did not correspond with a geographical dispersal, either in places of ‘production’ or trade. The significant use of OFCs and some notable attempts to move routine finance work away from well-paid labour markets notwithstanding, the concentration of financial activity in the traditional centres and richest countries appeared, if anything, to increase. Advantages of proximity in links both to other financial institutions and with markets in the wider economy produced different but important spatial constraints. There was rapid growth in some parts of East Asia but most work continued to be done in similar places to those before any ‘financial services revolution’. Regulatory reform, technical change and restructuring in the wider economy saw a proliferation of financial instruments and escalating numbers of transactions. Banks appeared to remain central to many innovations while their assets and workforces grew. Regulatory changes allowed competition between sectors but also encouraged M&As as a result of which concentration ratios increased in most countries in both banking and insurance. Some firms did ‘contract-out’

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non-core services with smaller firms seeking niche markets while brokerage firms often grew relative to the insurance companies. However, direct employment appeared to have remained the norm, especially in banking, with tendencies towards a greater sales role largely contained within firms. Across the sector, the size and importance of the largest institutions tended to increase. Automation increased productivity and other innovations, for example, the decline in some countries of bank branch networks, saw large-scale redundancies. At the same time, however, call centres and central processing offices gathered large numbers of workers. Aggregate employment in the sector grew with little apparent change in the proportion of routine clerical work. Although the evidence was incomplete, it did not support predictions of labour market polarisation by pay, gender composition and grading structures. Overall, the effects of any changes on labour seem to be ambiguous. Often workers remained poorly organised and badly paid but the sector in many places showed signs of enduring or even increased unionisation. Chapter 10 attempted to synthesise the evidence from the empirical chapters. It suggested that overall the patterns of economic change were far more complex and contradictory than depictions of a paradigmatic shift usually indicate. The claims of globalisation, of fundamentally transformed capital mobility or of a systematic shift of production to poorer, lower waged locations were not borne out by the evidence in any of the sectors. There did appear to be pressures towards dispersal but low wages appeared to be only one factor amongst others in this while countervailing pressures which tended to concentrate production also continued to operate in each of the sectors. There were significant differences between sectors, and also of sub-sectors within them, in terms of spatial organisation but these did not appear to reflect either the old/new economy dichotomy nor, in any straightforward way, the physical characteristics of the products. Rather than a simple increase in capital mobility, production appeared to remain embedded, and therefore relatively immobilised, in strong, spatially specific, social relations. Similarly, in terms of the claims of post-Fordism, there was some evidence of declining workplace sizes and of increased flexibility in employment relations and in the nature of work. However, any such changes did not appear to be associated with a fundamental transformation either of the technical bases of production, or in the

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relationships between production and consumption, as is sometimes assumed. Large firms, benefiting from scale economies continued to dominate. They employed strategies of outsourcing but these appeared contradictory, for example in terms of productivity, and seemed unlikely to herald a new era of small firm preponderance. Changes in the nature of work and of relations within firms also appeared to be more equivocal, in their extent and in any polarising effects on the workforce, than is suggested by stronger versions of post-Fordism. Moreover, in terms of workers’ experiences, the relationship with structural change appeared far from direct. Temporally, there appeared little correspondence, with workers’ defeats often preceding rather than following economic restructuring. Labour organisation also declined in situations where industry grew and where the size of workplaces increased. Conversely, there were examples of at least relatively effective labour organisation in strongly ‘globalised’ sectors, for example amongst European finance workers, within small workplaces and where firms introduced ‘flexible’ of ‘lean’ production. Some structural changes did appear to have negative implications for labour. For example, the research noted examples of industrial decline in particular places and growth in other areas with weaker labour traditions. It observed increased subcontracting and declining workplace sizes and changes within firms that challenged established industrial relations practices. However, it also suggested there was little evidence that such changes were occurring in radically new ways. Few structures of capital were without precedent or appeared to present insuperable barriers to labour organisation. There was also evidence that new opportunities might be opened, for example of power within JIT systems and extended product networks and as new collectivities developed. The research thus confirmed that capitalism continued to push workers apart both socially and spatially but also identified ways in which it continued to pull them together. However, despite some important indicative examples of labour’s potential, neither the apparent structural strengths nor weaknesses corresponded particularly closely with the achieved state of labour organisation. Any implications for structural change on labour need to be qualified. It was certainly not possible to map the relationship between structural change and the outcomes for labour in every instance. A great deal more, including primary, research would be needed to establish

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any substantive relationships between structural change and labour’s experiences. Sometimes the evidence is likely to be ambiguous, shifts in practices within particular workplaces, for example in terms of co-operation and co-option, may have impacts, which cannot readily be characterised as either a gain or loss of union power and certainly cannot easily be quantified. The evidence of Danford et al. (2003), reported in Chapter 9, that found a ‘complete range’ of forms and levels of organisation amongst both high and low skilled workers within a single UK region in the insurance industry seems particularly telling in this context. It reinforces the conclusions that contest claims of any straightforward relation between the nature of work and labour organisation. It indicates that any attempt to show a systematic relationship between the conditions of labour and their propensity to organise is likely to require a significant and extensive research project. The evidence here does nevertheless appear to question stronger versions of globalisation and post-Fordism. Socio-economic change was much more complex and contradictory than is often suggested and its implications for labour also seem far less straightforward. While this book has sought to challenge the exclusion of labour as a potentially significant social actor, it has only occasionally and by way of illustration, described the ways in which workers or other ‘behind the border players’ might continue to actively shape international political economy. Its contribution has primarily been one of critique, hoping to clear the ground for more positive evaluations of global interdependence. Criticising structural explanations it hopes to redirect attention towards more detailed studies of labour’s own institutional and ideological shortcomings.

Towards a strategic research agenda for labour Reconceptualising labour’s uneven decline While this book suggests that typical mainstream characterisations of global restructuring did not adequately account for labour’s troubled condition, this still requires explanation. Although the timings and patterns of change were heterogeneous, in the last two decades of the 20th century union densities and workers’ militancy fell in most rich countries. How and why this happened and whether

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anything, or what, can be done about it, remained vital questions for labour. However, if the anti-determinist conclusions are correct, an exposition of labour’s condition also requires more detailed investigations not simply of economic restructuring but also of the interaction of this with ideological and institutional change. It seems reasonable to hypothesise a path dependency and mutual interaction, which might often have produced more negative outcomes for labour. The industries studied here appear to offer several significant examples. There were indications in several countries that in the auto industry the decisive defeats of labour preceded substantial restructuring and may have provided the basis for it, rather than simply being its consequence. In Japan, militant workers’ organisation was beaten in the 1950s. However, subsequent industrial growth enabled the auto firms to offer ‘core’ workers secure employment and improving conditions and thus to consolidate a co-operative unionism. Without such a material basis, the future of the model, in Japan or elsewhere, seemed less certain. There are important parallels with the US, although here primacy has perhaps to be ceded to ideological rather than industrial struggles. As early as the late 1940s, the politics of the Cold War and anticommunism changed the nature of auto trade unionism. Unions remained numerically strong and able to organise occasional industrial action, especially over pay. However, traditions of militancy were effectively broken and the UAW committed itself to a co-operative approach and certainly one that was pro-US capital. Again this was broadly compatible with improving conditions in boom time but proved its weakness in the 1980s as the union allowed ‘give backs’, concession bargaining and ‘whipsawing’, the playing of plants off against each other. The Canadian comparison is illustrative in that despite their ostensibly similar material circumstances, autoworkers north of the border were able to reject the concessionary approaches adopted in the US. Kumar and Holmes (1997) suggest that although they did not necessarily have a coherent alternative strategy, stronger workplace organisation enabled them both to shape changes to working practices and to win higher pay and longer holidays than their US counterparts. In Europe there was considerable institutional diversity. In Germany, we do again see a single and often rather conservative union, IGMetal, dominating the industry throughout much of the post-war period.

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But in Italy and France, for example, unions of different political orientations competed for membership, with communist led organisations remaining influential in many auto plants. In Italy even these were notably encouraged by Fiat as a counterbalance to more militant rank-and-file organisation in the 1970s, and it was not until 1980 that the firm confronted labour and began massive job cuts (Ginsborg, 1990). In the UK, multiple unions organised more on a trade than political basis. Although there had been anti-communist purges in the TGWU in the 1940s and sometimes sharp conflicts between conservative national officers and shop stewards and rank-and-file leaders, for example at Ford Dagenham in the GMB in 1962, the situation was not comparable with that in the US. Plant level organisation often remained strong and again only after the defeats of overt conflicts especially those at British Leyland (BL) in the 1970s did firms make widescale cuts, on the basis of which they were able to forge a more compliant trade unionism. Nevertheless, as elsewhere in Europe this continued to be contested. Meanwhile, amongst poorer countries, in Mexico significant defeats for independent trade unionism appeared to be an important contributing factor in attracting new investment by the auto firms. But elsewhere, in South Korea and Brazil for example, despite many difficulties, unions appeared to have been at least relatively successful. The US construction industry also provides a powerful example of the prior ideological and political confrontation with labour, beginning in the 1960s. It also highlights the way in which labour strategies and modes of organisation, in this case the union shop system, which worked effectively in one situation, may be undermined by restructuring. The contradictions of the union or closed shop system, increasing union membership but tending to reduce activity, have indeed meant that in other sectors too, it has sometimes been favoured by management (Nichols and Beynon, 1977). Different traditions of organising produced better outcomes in other countries, while changed strategies also appeared to offer some prospects for redeeming labour’s weakness in the US. In both finance and microelectronics, the book noted strong international variation in labour’s experiences, sometimes in ostensibly similar material circumstances and even within particular firms. This strongly suggested that different institutional practices and national attitudes towards unionisation might be highly significant.

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The intersectoral comparisons confirm other studies that have commented on international variations in labour organisation, for example even amongst similar groups of ‘Anglo-Saxon’ countries (Fairbrother and Yates, 2003). However, there do appear to be important similarities, with conspicuous labour strengths and militancy in the 1960s and early 1970s being reversed across the developed countries. Recessionary conditions may have undermined labour and its practices established in the previous period. At the same time the advance of a pro-capital, neo-liberal challenge celebrated, and may have exaggerated, labour’s weakness, while also contributing towards it. In many countries, even where it was relatively strong, ideological institutional and economic attacks in turn undermined the left, whether the prospects of reformist Keynesian government or the optimism of more radical alternatives. With, amongst other things, the marginalisation of those arguing that more assertive tactics could overcome retreat, unions adopted more co-operative approaches, which in turn may have facilitated restructuring, in the face of which, and in failing to oppose which, unions were themselves further marginalised. While such a scenario may be plausible, an adequately nuanced account requires substantial further research. However, even the studies here indicated that it would be inappropriate to describe a straightforward vicious cycle of labour decline. The evidence showed that economic changes continued to be contested, limited in extent and with outcomes often contradictory for capital and ambiguous in their implications for labour. Increased tendencies to move production to low wage economies appeared to be associated with the failures of investment in richer areas, and yet it did not eliminate concentrations of workers in major developed countries. Similarly, outsourcing to lower waged suppliers simultaneously created new vulnerabilities and new concentrations of labour. The evidence confirmed that, at least in certain circumstances, workers’ struggles continued, in practice, to make a difference. Despite numerous shortcomings, ‘traditional’ trade union struggles often appeared to remain significant, at least sufficiently so to refute their dismissal as mere anachronism. Elsewhere new opportunities appeared to open and to be utilised. Diverse unions, adopting different strategies, continued to recruit hundreds of thousands of workers. The unionised remained much better off than the unorganised. At the same time union structures and strategies were contested, while despite the decline of traditional

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Communist and Social Democratic organisation, political opposition within labour also continued to take institutional forms. Similarly, however pervasive discourses of globalisation might seem, any new right intellectual hegemony was at best equivocal (Pilbeam, 2003). If local and sectional strengths remain at least partly effective, they may also continue to provide the bases from which historically the left has sought to forge greater collective solidarities. Lessons of labour’s past successes and failures, including strategies for overcoming division and in building wider alliances may remain important. This suggests potential problems with some of the more imaginative theorising of International Labour Studies. Their anti-national strategies and those aimed at winning a wider inclusiveness may be important while a simple repetition of past practices is surely inadequate. However, it seems appropriate to caution against accepting mainstream (and ultimately, overly determinist) characterisations of economic change as the basis of new orientations. Strategies of resistance Chapters 3 and 4 briefly discussed discourses of Social Movement Unionism and New Labour Internationalism. These highlight the possibility of labour overcoming narrow sectional and national particularities. Typically, they refuse to accept labour and trade union weakness as simply given by the structure of capitalism. The articulation of alternative organising models of trade unionism, the rejection of narrowly economistic, sectional and place bound perspectives and the rediscovery of internationalism, all provide a contrast with the conclusions of post-Marxist writers and some grounds for optimism for labour. They assert internationalism against a conservative localism, which ultimately accepts the divisions within labour rather than challenging them. Globalisation and postFordism do not, for such perspectives, preclude effective independent organisation. The possibilities for activity and organisation that overcome territorial and social divisions are surely worth pursuing. However, the evidence here, questioning a radical disjuncture indicates potential problems. At least some interpretations of such approaches may too readily accept mainstream acconts of socio-economic change and of labour’s weakness as their starting point and so dismiss potential sectional strengths and the possibilities for local action.

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The emphasis on the transnational or global as the only worthwhile arena for labour activity may underplay the potential for smaller scales of resistance, including their potential to increase in scale. The evidence here confirmed that changes in the structure of capitalism in the late 20th century involved a significant geographical dimension. However, Part I suggested that in theoretical terms the social world has, in an important sense, to be conceived as global to begin with. Moreover, historically, labour internationalism (or anti-nationalism) both in theory and in practice, is hardly novel. Meanwhile, Part II suggested that the evidence contradicted the idea of capital becoming ‘footloose’, industries remained embedded in complex and often strongly social localised relationships. Dismissing these might disarm labour and undermine the basis upon which, historically, wider scales of action have been developed. It is also at least plausible, as Wood (2002) suggests, that the primary battlegrounds remain local and national. Ultimately, the system is undoubtedly global but this might imply that action at lower scales may continue to be at least partly effective. Any reform may be limited and vulnerable. As long as it exists, capital continually threatens any material gains or institutional structures of labour. Already a century ago, for Luxemburg, capitalist society rendered trade unions, however indispensable, ‘into a sort of labour of Sisyphus’ (1989: 67). The more qualified characterisation of change suggests that for labour, as Herod (2001) argues, rather than an a priori proscription of particular scales, different possible levels of action may remain interdependent and mutually reinforcing rather than exclusionary alternatives. The balance, the relative importance of different scales, may indeed shift but Herod’s own studies, particularly of the 1998 GM strike, perhaps provide a better indication of the ways in which changing geographies of production presented new difficulties but also opportunities to labour (Herod, 2000). There may be similar troubles involved in accepting mainstream characterisations of post-Fordism and descriptions of labour’s increasing heterogeneity. Often inspired by the relative success of organising in poorer countries, advocates of ‘Social Movement’ or ‘New Social’ Unionism, challenge the conservatism of much of ‘Northern’ trade unionism and suggest that labour can forge new alliances, building coalitions with other groups resisting, excluded or oppressed by neo-liberal restructuring, for example in the women’s movement

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and around environmental campaigns (Moody, 1997; Stevis and Boswell, 1997; Beynon, 2003). So baldly stated, such initiatives may appear entirely positive. The stress which several authors also place on respecting diversity is important, but without due caution this can slip into accepting divisions imposed by capitalism and the way in which it redirects protest into more manageable non-class forms. Some of the calls for new structures, strategies and alliances are clearly framed as a response to increased working-class diversity and weakness. With post-Fordism having eliminated labour’s traditional sectional strengths, at least according to more radical interpretations, the significance of existing organisations and the effectiveness of limited resistance is dismissed as a basis for overcoming divisions within labour (Waterman, 1998; Hyman, 1999). Thus, the implication is also often that labour has become a less central or less powerful social agent than it was formerly. In accord with the conclusions of theorists of postFordism, resistance and ‘progressive’ social change now depends to a greater extent on new social movements and non-class based action (Chin and Mittelman, 1997). Even Moody (1997), who insists that what is new about contemporary social movements is precisely their working-class character, sees the world as being in an important sense ‘leaner’ than previously, and the need for broader alliances to reflect this. Labour practices may too often have reinforced sectionalism and division but there have also been longstanding battles to overcome this. Similarly, the importance of inter-class alliances has been recognised even by the most orthodox Marxist scholars (Draper, 1978; Poulantzas, 1978). The results of this study, more sceptical of claims of a paradigmatic change, question whether post-Fordist restructuring should be taken to have fundamentally reconstituted the bases on which unity might be established. At worst, avowedly pro-labour theorists may reinforce the neoliberal claims of disempowerment they seek to oppose. Accepting globalisation and labour’s spatial dispersal and post-Fordist descriptions of labour’s increasing heterogeneity may naturalise divisions. Such accounts may also share with stronger characterisations of restructuring an emphasis on the autonomy of ideology and culture. Influential theories of a paradigmatic shift typically herald a new era in which material circumstances are irrelevant. Lash and Urry, for example,

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see consciousness or reflexivity as having become determinant of social structure (1994: 319). Castells similarly heralds the autonomy of culture from material conditions (2000: 509). This shift is echoed by at least some labour supporters who emphasise the need for ideological renewal. Where once Marxism maintained that practice provided the essential basis for establishing the appropriate theoretical and institutional responses for labour, now it seems a thoroughgoing internationalism and appropriate politics must precede effective action. However, the less categorical interpretation of change developed here might support perspectives that see cultural determinism as no more satisfactory than the economic determinism it purports to supersede. Ideological battles to overcome narrow national or sectional perspectives remain important, precisely the point Marx and Engels made in the Communist Manifesto. But these seem unlikely to be won from outside, or without an adequate appreciation of, the contradictory complexity of labour’s existing ideas, institutions and material capabilities. The previous section described how the research undertaken here might usefully be extended to elaborate a fuller account of labour’s material capabilities. Any attempt to develop an adequate description of institutional and ideological change confronts much greater challenges. The variation in workers’ organisation is huge, with unions of different size, strength and strategy, but with political organisations too having significant influence, both within and beyond established trade unions. The forms taken by workers’ organisations also differ across time and place while they often involve awkward tensions and contradictions, for example, in the relationship between leaderships and memberships. There is already a substantial industrial relations literature that deals with just such themes, and some of it has been referred to in the course of this study. However, it also became clear how uneven the coverage was, with certain industries, especially within key developed countries receiving a great deal of attention while others went virtually ignored. A more systematic comparison might be revealing but would appear to require a substantial collaborative research effort. Such difficulties are likely to be writ large in any attempt to integrate an account of ideological change, confronting both intangibility and infinite variety. A sufficiently well-conducted primary research project

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could perhaps make significant comparisons of attitudes across industrial sectors and between places. How such a project might achieve a meaningful breadth and depth and, in particular, how it could do so retrospectively, present significant methodological challenges. Nevertheless, such comparisons might in the future begin to map ideological changes and in so doing add a vital component to our understanding of labour’s situation and help to inform strategies for changing it. This research has developed a critique of stronger versions of globalisation and post-Fordism and in doing so attempted to provide a basis for future, more concrete, investigations of economic change and labour’s situation. It emphasised the relative nature of change, indicating that it was often complex and contradictory and involving stronger elements of continuity than is suggested by characterisations of a paradigmatic shift. Further research is needed to confirm its findings and to evaluate more positively the complexities and implications of socio-economic change in the late 20th century. Its qualifications of the claims of more radical versions of globalisation and post-Fordism suggest that strategies for labour continue to require an evaluation of its material capabilities, its structural strengths and weaknesses. However, this also needs to involve a more developed account of their interaction, to repeat the Coxian triangulation once more, with institutional and ideological change.

Conclusions This book, has criticised stronger versions of globalisation and post-Fordism and determinist interpretations of labour’s situation. In doing so it has attempted to encourage more positive investigations of how workers may act as effective social agents. It concentrated on arguments of structural change and suggestions that these directly altered labour’s circumstances. It said less about the implications of changes in state powers and broader macroeconomic arguments. However, in Chapter 2 it cited a substantial body of work sceptical of state retreat and the subsequent chapters also provided empirical evidence, which indicated the enduring importance of state intervention and problems with reducing workers’ situation to that of national labour markets. Even allowing that the durability of national reforms may have been eroded in various

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ways, they were never absolute, social relations at national level in dynamic relation with those at higher and lower scales. Labour’s power, it was argued in Chapters 1 and 2, cannot methodologically be understood as a subset of that of nation states, nor strategy limited to winning reforms from the state. Chapters 3 and 4 also identified significant arguments that changes in the structure of capitalism directly weakened labour. They distinguished accounts of spatial and social dispersal, or of globalisation and post-Fordism. A historical materialist perspective suggested it was plausible that economic change might alter the conditions and potential of labour but that the relation was likely to be strongly mediated. Problems for labour, of declining union densities or militancy could not then be presumed to be the outcome of structural transformation in any straightforward way nor labour’s power simply read off from the current state of its organisation. Rather, the claims for labour’s disempowerment needed to begin with a more careful assessment of socio-economic change than is typically assumed by accounts of globalisation and post-Fordism. The cross-sector comparisons here aimed to begin such an evaluation. They indicated that economic restructuring was much more equivocal and contradictory than is often suggested. Shifting geographies of industrial production threatened to undermine labour organisation and capital’s mobility remained a source of significant power in relation to labour. This may indeed have increased in certain respects in the late 20th century. There appeared, however, to be insufficient evidence of a fundamentally new spatial organisation or increased capital mobility to suggest qualitatively new dimensions to these perennial problems. Capital could not effortlessly switch production locations. Technological innovations that produced physical improvements in transport and communications cannot be directly equated with increased capital mobility that remained a complex social process. Strong pressures towards agglomeration and locational inertia endured, factors that have in the past been thought important in affording workers strength within labour markets and in producing environments conducive to solidarity. Moreover, there were also examples in which spatial changes suggested new potential, for example attested by a number of strikes in the auto industry, in which extended product chains appeared to have increased the effective spatial reach even of action by relatively small groups of workers.

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Questions of whether, or to what extent, labour succeeds in utilising such apparent potential cannot, however, be reduced to questions of capital’s location or mobility. The evidence also qualified stronger characterisations of postFordism involving the transformation of relations between and within firms. There was some evidence of declining average plant and firm sizes, although this was far from universal with significant counter examples. There was, in general, little indication of a return to genuinely small production units or that scale economies became less significant. Elsewhere, new concentrations of labour simultaneously appeared to produce new opportunities, although these, too, may have required renewed organisation and revised strategies for their affect. Firms employed a variety of distancing and disciplining strategies, reducing employment security and introducing ‘flexible’ work. However, these appeared to have little basis in a fundamental transformation of work or polarisation of labour according to the skill (or the lack of it) required in a ‘new economy’. It often seemed more appropriate to interpret them as the consequence of labour’s weakness rather than its cause. Theories of globalisation and post-Fordism too often assert simple dualisms between ‘then’ and ‘now’, exaggerate the extent of change and maintain that contemporary economic structures worsen workers’ conditions and preclude opposition. In doing so, or in as far as they do so, they mystify complex social relations and work as ideological justification for accepting anti-labour policies. The rejection of such claims is therefore a prerequisite for an adequate theory and practice of labour. Theories of paradigmatic shifts often ignore potential structural strengths of labour but also political and institutional weaknesses. While the emphasis on economic change as the cause of labour’s difficulties may indicate that there is little that workers can do, it may be more directly possible for labour to address ideological challenges and its own institutional failings. In beginning a process of rigorous investigation of underexamined and overly reductionist claims of labour’s situation, this book has sought to contribute towards identifying and overcoming its weaknesses. A relatively long-term, comparative method, applied to industrial sectors, challenged conventional interpretation of the relation between economic organisation and labour’s institutions. It indicated labour’s shortcomings could not simply be attributed

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to structural change and suggested more attention be paid to endogenous weaknesses. It hopes to encourage, and to provide the basis for, further strategic investigations aimed at overcoming these and informing renewed labour practice.

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Index

Advanced Industrialised Countries (AICs), 35, 178, 182, 191, 196 Aglietta, M., 42–3 All China Federation of Trade Unions, 110 Altschuler, A., 79 Appleyard, M.M., 126, 133 Atkinson, J., 46, 47 automobile production, 42, 43, 56, 196, 202 assembly, 69–78, 89 capital-intense strategies, 77 centrifugal effects, 172 closures/layoffs, 70 concentration of, 173 in developing countries, 76–8 globalisation of, 69–70, 74, 76 in higher-wage countries, 77 increased subcontracting in, 82–4 in Japan, 73–4, 79 in Korea, 72 in Latin America, 75–6 lean production/JIT system, 78, 84–8, 89 levels of, 70–1 location of, 170–1 in Mexico, 72–3 and minimum efficiencies of scale (MES), 76, 85 networks/global sourcing, 78–82, 83 North/South relocation, 78 organisational/spatial concentration, 61 outsourcing of, 61, 174–5 pay/conditions of workers in, 70 post-Fordism, 82–8 post-war Fordism, 66–9

pre-war Fordism, 62–6 production/consumption relationship, 182, 184 and productivity-raising automation, 77 regionalisation of, 71–8, 174 size of, 83 spatial reorganisation, 69–82, 76–8, 88–9, 185 strikes/disruptions in, 84, 87–8 in Western Europe, 74–5, 76 Automobile, Aerospace, and Agricultural Implement Workers of America (UAW), 65, 67, 73, 74, 202 Babson, S., 86 Baker, D., 18 banking see finance industry Barnet, R.J., 35, 178 Benson, J., 15 Bon, R., 95 Boyer, R., 20, 33, 43, 169 Braverman, H., 48 Brenner, R., 38 Bretton Woods (1944), 138 Bromley, S., 27 Brown, C., 126, 133 Budd, A., 39 Callinicos, A., 22 Campbell, D., 37 Canadian Autoworkers union (CAW), 73 capital, 52, 189, 195, 210 concentration of fixed, 175–6 cross-border, 15 expansion/mobility of, 17–19, 24, 25, 28, 34, 37–8, 55, 178–80, 190–1 237

238

Index

capital – Continued flight from advanced to low-wage countries, 35–6 internationalisation of, 33 and problem of effective demand, 42 production/consumption balance, 42–3, 44 resistance through labour’s globalisation, 38–40 restructuring of, 44–5, 47 structural contradictions, 43 upscaling of, 37 Carnoy, M., 37 Castells, M., 14, 25, 26, 33, 35, 37, 45, 140 Cavenagh, J., 35, 178 Cerny, P.G., 139, 153 Chang, H., 37 class relations, 20, 23, 25, 28, 207 in automobile industry, 65 blurring of, 45 demise of class/class conflict, 50 effect of new technologies on, 46 and management-by-stress, 87 comparative advantage, 31–4 Comparative Political Economy (CPE), 54 construction industry, 196–7, 201 aggregate labour market effects, 103–5 anti-labour tactics in, 185 as global industry, 171, 180 background, 90–1 centre/periphery aspects, 107 distinctive features, 111 domestic markets, 98–9, 172 and economic growth, 95, 172 employee status in, 109 in Europe, 109–10 and flexible production, 105–8 foreign contracting, 95–100 growth in, 96 importance of LDCs, 99, 102, 174 industrial structure, 105–11 internationalisation of, 93, 95–105, 111–12

and labour migration, 94–5, 96–7, 103–5 labour response to, 105–11 mechanisation of, 91 mobility of, 175 outsourcing in, 91–2, 110 post-war boom, 93–4, 96–7 production/consumption relationship, 182, 184 restructuring of, 112–13, 203 size of workforce, 111, 185–6, 187 social organisation of, 92–3 and state involvement, 93, 97–8, 106 subcontracting in, 107–8, 109–10, 111, 112 trade in materials/equipment, 100–3 tradition/change in, 91–5 in UK, 109 women in, 187 workers’ conditions, 105–11 Coval, J.D., 151 Cox, K.R., 34, 36, 38 Cox, R.W., 8, 10, 32, 38, 190 Crouch, C., 37 Danford, A., 201 Davis, M., 67 Debrah, Y.A., 109 Dickens, P., 33, 54–5 Dressen, M., 159 Du Gay, P., 5 Dunning, J.H., 37 economic change, 5, 6, 10, 39–40, 195, 199, 210 Ettin, E.C., 154 finance industry, 198–9, 203 Anglo-American model, 138 background, 137 banking, 141–5, 158–9 brand stretching in, 155 casualisation in, 162–3 and competition, 164

Index 239

de-/re-regulation, 139–40, 154, 164, 183 in developing countries, 151 diversification/consolidation in, 156 earnings in, 160–1 effect of automation/specialisation, 159–60 employment increase/decrease in, 159, 164, 184, 187–8 firm size, 156, 183 flexibility in, 154 and flight to quality, 152–3 from Bretton Woods to global finance, 138–40 gender differences, 160–2 globalisation of, 140–53, 170, 180–1 gravity model, 153 increase in volume of, 152 increased concentration of activity in, 164 insurance, 145–9 and international division of labour, 140–53 location/territoriality of, 140–53 mergers and acquisitions, 155, 174 mobility of, 172–3, 174 and new technology, 151–2, 154–5 outsourcing of, 175 part-time work in, 162 post-Fordist scenario, 156, 157 post-war reforms, 139 public/private tensions, 140 reorganisation of, 153–63 securitisation/securities dealing, 149–53 separation of functions in, 158 and state support/intervention, 152–3 stock market growth, 150–1 structure of, 162 and the Internet, 154–5 transformation of labour in, 138, 189 flexible manufacturing, 62, 169–70, 182, 184, 188, 192, 200

as contradictory strategy for employers, 107–8 as management strategy against labour, 48 and concept of power, 49 and conditions of work/organisation, 48 and construction industry, 105–8 criticisms of characterisations of, 46–9 diversity in, 46–7 and internal organization, 47 limits to, 47 move towards, 41–6 and shop-floor disruptions, 48 variations between industries, 47–8 Fordism, 41, 56, 61, 196 as contested term, 42 as mode of accumulation, 44–5 as virtuous cycle of mass production/consumption, 63, see also post-Fordism concept of, 66 European characteristics, 67–8 Japanese interpretation of, 68 move towards flexibility, 41–6 national/international level, 43 post-war, 47, 66–9 pre-war, 62–6 and state intervention, 68 Foreign Direct Investment (FDI), 20, 30, 34, 47, 74, 100, 112, 178, 196 Garrahan, P., 84, 88 Garrett, G., 18, 19 Gehrig, T., 145 Germain, R.D., 27, 144 Giddens, A., 10, 14, 25, 26, 33 globalisation, 47, 195, 199, 206, 211 as death of geography, 140 as process of deterritorialisation, 14, 16, 18 as process of westernisation, modernisation, Americanisation, 35

240

Index

globalisation – Continued in automobile industry, 69–70, 73, 74, 76, 84 and capital mobility, 190–1 and class relations, 25 cultural/economic aspects, 5 definition of, 4–5 and dispersal of production, 191 and economic restructuring, 177–8 effect on labour, 55 and finance industry, 140–53 and high-and low-waged industries, 36 and immobility of labour, 25 and increased mobility of capital, 25 misunderstandings concerning, 5 and notion of collective class based action, 38 qualifying claim of, 33–8 rich/poor gap, 35 sceptical criticisms of, 179–80 similar to social/spatial dispersal, 41–2, 84 and social democracy, 16–17 state, capital, class relationship, 13 and technological change, 14, 25 and time-space compression, 24–5, 27, 178–9 and timeless time, 25 understanding of, 24 and universal schizophrenia, 25 Glyn, A., 39 Goldfield, M., 108 Gowan, P., 19 Gramsci, A., 63 Gray, J., 19 Harrod, J., 186, 190 Harvey, D., 24–5, 26, 66, 178 Haufler, V., 149 Haynes, D., 134 Helleiner, E.N., 139 Herod, A., 206 Hirst, P., 4, 35, 169 Holloway, J., 38 Holmes, J., 73, 202

Hong, S.G., 54 Husan, R., 66 Hyman, R., 14, 46 industry, centrifugal pressures, 170–3 centripetal effects, 173–6 concept of, 55 cross-industrial studies, 55–8, 195, 204 data/sources on, 57–8 mobility of sectors, 56 production, consumption, economies of scale, 182–5 and skill comparisons, 56 and spatial transformation, 170–81 and state intervention, 56 and trade unions, 56 uneven development between, 177–8, see also automobile production; construction industry; finance industry; semiconductors insurance see finance industry International Confederation of Free Trade Unions (ICFTU), 38 international division of labour, 170–3, 174 International Labour Organization (ILO), 13, 16 International Labour Studies, 4, 205 International Political Economy (IPE), 4 International Relations (IR), 39 International Trade Secretariats (ITS), 38 internationalism, 17, 21, 30–3 and banking, 144–5 of construction industry, 93, 95–105, 102, 111–12 and financial markets, 150–3 and insurance, 145–9 Jameson, F., 29 Jones, B.R.J., 49–50 Just-in-Time (JIT) production, 78, 85, 196, 200

Index 241

Kaizen, 85 Kanban, 85, 86 Kapstein, E.B., 3, 139 Katrishen, F.A., 148 Keynes, J.M., 18 Keynesianism, 22 Kumar, P., 73, 202 Kume, I., 48 Labour only Subcontracting (LOSC), 109, 185 labour, ambiguities of theorising dispersal of, 27–30 anti-labour policies, 185, 211 as passive victims, 3 as ununionised, 51 asymmetrical relationship with capital, 52 bottom-up opposition, 38 centrifugal pressures towards low pay locations, 170–3 and class, 11 comparative advantages, 32–3 core/peripheral, 46, 50–1, 198, 202 decline of, 3–4, 44–5, 192 diffusion/homogenisation, 33 disempowerment of, 3, 54 and distancing strategies, 45 downsizing of, 31–2 and economic change, 5, 6, 10, 26 effect of economic structure/capital movements on, 29–30 experience, regulation, performance, 37–8 feminisation of, 188 flexibility/fragmentation of, 26–7, 49, 181, 186–8 Fordist/post-Fordist dichotomy, 190 and globalisation, 3–5, 6, 55 heterogeneity of, 64–5 and ideological renewal, 208 immobility of, 25 implications of spatial change on, 180–1 independent role of, 38 individualistic behaviour of, 46 inequalities with capital, 26

and loss of collective identity, 26–7 and management-by-stress, 87, 186 Marxist views, 8–11 material capabilities, 208–9 militancy of, 48, 204 mobility constraints, 29 and neo-liberal deregulation, 21 new strategies for, 50 North/South differences, 32, 35, 37 optimism/pessimism concerning, 3–4 organisation of, 48 and outsourcing, 185 in partnership with employers, 46 power of, 48, 49, 87–8 re-grading of, 188 reconceptualising uneven decline, 201–5 reorganisation/restructuring of, 6–8, 50, 64, 185–6, 200–1 skilled, 183, 187, 188, 189, 190, 198, 201 social/spatial dispersal, 6, 23, 41–2, 45, 69–78, 180–1 standards, 16–17 and state retreat, 17–22, 54 strategic research agenda for, 201–9 strategies beyond sceptical critique, 22–3 and strategies of resistance, 205–9 strengths, 8–9 strikes, 66 structural change, 39–40 and technological innovation, 28–9 vulnerability/weaknesses of, 8–9, 26, 194–5 writing off, 4–5, see also automobile production; construction industry; finance industry; semiconductors Langford, D., 112 Lash, S., 41, 45, 207–8 Laulajainen, R., 145

242

Index

Less-Developed Countries (LDCs), and automobile production, 69–70, 72–3, 77–8 and construction industry, 94, 99, 174, 175, 191, 196 and dispersal of industries, 172 and finance, 139, 152, 191 move to advanced status, 177, 178 production locations in, 177–8 Leyshon, A., 32 Linder, M., 91 Lukacs, G., 10 Marxism, 42, 127 and (in)determinism, 9–11 as form of reductionism, 9 as pro-labour perspective, 8–9 structure/agency interdependence, 10–11, 54 and theories of imperialism, 49 mass production, 42, 44, 64, 68 materialism, 11–12 Maxton, G.P., 78, 81 May, C., 33 microelectronics see semiconductors Moody, K., 32, 34, 131, 207 Moran, J., 18 Moran, M., 139 Morgan, K., 133 Moskowitz, T.J., 151 motor industry see automobile production Multinational Corporations (MNCs), 14, 34, 37, 47, 74, 83, 172 Munck, R., 3 nation state see state National Union of Vehicle Builders (NUVB), 66 Navarro, V., 17, 21 neo-Fordism, 41 neo-liberalism, 20–1, 176, 206 neo-realism, 19, 22 New Social Movements, 49–50, 51, 205, 206, 207 Newland, K., 50

Newly Industrialising Countries (NICs), 34, 172, 177, 178 Notermans, T., 28 O’Brien, R., 140 Ofori, G., 109 Panitch, L., 19, 20, 39, 51 Piore, M., 45, 105 Pollert, A., 50 Pollin, R., 17 post-Fordism, 7, 55, 156, 199–200, 206, 211 as mode of accumulation, 44–5 assessment of, 181–93 in automobile industry, 82–8 changes within firms/nature of work, 41, 181 characterisations of, 44–6 class relations, 181 and concept of power, 49 and consumption, production, economies of scale, 182–5 contradictory factors, 191–2 criticisms of flexibility, 46–9 and division of labour, 181 and heterogeneity/organisation, 188–90 and intra-working class polarisation, 181 and labour decline/capitalist restructuring, 44–5 and labour flexibility/fragmentation, 186–8 and new technology, 45–6 production/consumption between firms, 41, 44, 181 and reorientations of strategies of resistance, 49 responding to diversity/differentiation, 49–51 and restructuring of labour relations, 181, 185–6 and social dispersal, 45 and sustained prosperity, 44 terminology, 41–2 see also Fordism

Index 243

postmodernism, 26 production, agglomeration effects, 36 balance with consumption, 43, 44 and capital relocation, 30–1 centralisation/specialisation of, 46 changing patterns of, 36 and comparative advantage, 31–3 conditions of, 48 consumer-led, 45, 46 convergence/divergence in, 31 core/periphery movements, 30 and cross-industrial studies, 55–6 and downsizing, 31–2, 37, 184 embeddedness of, 175 and globalisation, 30–1, 36–7 increasing circularity in, 47, 133 internationalised systems, 30–3 lean production/JIT techniques, 48, 78, 84–8, 186, 196, 200 location, 7, 210 problems of flexibility, 47–8 spatial constraints, 37 terminology, 41, see also automobile production; construction industry; finance industry; flexible manufacturing; semiconductors Radice, H., 23, 38 Regini, M., 157 Regulation School, 42, 43 Reich, R.B., 31, 32, 78 restructuring, 4, 169–70, 190–3, 195, 209–12 capital, 43 cross-sector/comparative method of assessment, 7, 53–8 labour, 6–8, 39–40, 50, 64, 185–6, 200–1 Marxist, 9–10 post-Fordist argument, 44–51, 181–90 progression from abstract to concrete, 53 and social reorganisation, 45, 55 sources, 57–8

and spatial transformation, 55, 170–81 state-centered approach, 54 and strategies of resistance, 205–9 totality argument, 53 and trade unions, 202–5, see also automobile production; construction industry; finance industry; semiconductors Rosenburg, J., 18 Rowley, C., 15 Sabel, C., 45, 105 Sassen, S., 31, 140, 150, 161 Sayer, A., 133 Say’s law, 130 Schechter, M.G., 50 Scholte, J.A., 14, 16, 21 Scordis, N.A., 148 securitisation/securities dealing see finance industry semiconductors, 56, 197–8, 203 background, 114–15 clustering tendencies, 124 competitive pressures, 130–1 concentration of production, 135 crisis ridden growth, 126–32 disintegration/concentration tension, 126–32 early development of, 115–18 effect of booms/slumps on, 129–30, 134 fabless firms, 127–8, 129–30, 135, 172, 198 foundries, 128 fragmentation of market, 118–26, 184 gender segregation in, 133, 189 and globalisation of microelectronics, 118–26 Japan/US domination, 125–6 location of, 171 manufacturing process, 119–20, 123–4 military/civilian gap, 116–17 national developmental paths, 132

244

Index

semiconductors – Continued networks, 126–34 overseas investments, 121–3 production costs, 118–19 production/consumption relationship, 182–3, 184 re-location of, 172 skilled/well-paid workers in, 187 state intervention, 120–1, 124–5 structure of labour in, 133–4, 135–6 susceptible to global production, 174 work of manufacture, 132–4 social fragmentation, 26–7 social relations, in automobile industry, 66 effect of economic boom on, 68–9 space-time effect, 25, 27–8 territorialisation of, 24, 27–8 transformation of, 24–7 social/spatial reorganisation, in automobile industry, 69–82, 88–9 constraints on production, 37 and cross-industrial studies, 55 and globalisation, 41–2 and labour, 6, 23, 41–2, 45 and organisational concentration, 61 spatial transformation, assessment of, 170–81 centripetal effects, 173–6 implications for labour, 180–1 and international division of labour, 170–3 and problems of capital mobility, 178–80 and state support, 176–7 and uneven development, 177–8 state, and control of capital, 22 as public good, 22 decline of, 13–16 differences between, 19

and financial movements/expansion, 15, 17–19 and free markets, 19 Hobbesian tradition, 13 and industrial location, investment, trade, 14–15 and internationalisation, 17 interventions, 76, 106, 152–3 interventions by, 56, 68, 76, 93, 97–8, 120–1, 176–7 and labour relations/movements, 20, 22–3, 54 neo-Gramscian accounts, 23 and regulatory change, 14 and rescaling of role, 16 sceptical critique of retreat/transformation, 17–22 and social practices, 18 and socio-economic change, 21–2, 23 and technological change, 14, 21 and territorial concerns, 18 Weberian thesis, 13 Stewart, P., 84, 88 Storper, M., 28, 33, 36 Strange, S., 21, 55 structural change see restructuring structure/agency relationship, 9–12, 52–3 Sutcliffe, B., 39 Swyngedouw, E., 29, 36 technology, 14, 28, 46, 151, 210 Thelen, K., 48 Third Way, 16 Thomas, K.P., 14 Thompson, G., 4, 35, 169 Tooze, R., 21 Toyotaism, 84–8, 188 trade unions, 16, 20, 21, 29, 38, 52, 56, 185, 210 adjustment/flexibility of, 50 in automobile industry, 64–6, 73, 88 co-operative, 202 and construction industry, 107, 108–9, 110, 189

Index 245

decline in, 47 effect of restructuring on, 202–5 and finance industry, 159, 162, 163, 186, 189 greater success for, 47 institutional diversity, 202–3 organisation of, 48 recognition of, 67 and semiconductor industry, 133–4 Trades Union Confederation, 38 Transport and General Workers Union (TGWU), 66 Triad production, 177 automobiles, 62–9, 171, 173 construction industry, 101–2 finance industry, 148 semiconductors, 119, 121, 122–3, 125 Tussie, D., 20

United Nations Industrial Development Organization (UNIDO), 119 Urry, J., 41, 45, 207–8 wages, 31–2, 34, 36, 52, 63–4, 67, 185, 191 in automobile industry, 73, 74, 77, 83, 180 in construction industry, 100, 103, 105–6, 180 in finance industry, 158, 160–1 gender differences, 160–1 Walker, R., 28, 33, 36 Waterman, P., 38, 41–2 Weiss, L., 18 Winch, G., 112 Wood, E.M., 10, 32, 34, 86, 104 Woods, N., 20 Wormald, J., 78, 81