Labor in the New Global Economy

...But as multinational capital expanded, exports of manufactures from developing countries continued to rise rapidly—at an annual rate of about 12 percent—swelling the supply of goods to satisfy a decelerating demand...

...As the world's largest debtor nation, the United States will have to adopt its own export-oriented strategy, adding to the world's oversupply of internationally traded goods...

...Common Economic Policies National fiscal and monetary policies are the valves that regulate the overall levels of world income...

...Investors today do not want to make money over ten years from an investment in plant and equipment, but in ten minutes from speculating on the rise or fall of the dollar or yen or mark...

...Although capital is mobile, factories cannot be built overnight, and a firm faced with coordinated demands for union recognition in major locations around the world is likely to be more reasonable than a multinational firm dealing with a union in only one location...

...The same forces that moved capital to South Korea yesterday are today moving it to Thailand...

...There are today at least three broad economic areas for international labor cooperation: (1) the strengthening of minimum labor rights and protections, (2) multinational organizing against common corporate targets, and (3) coordinated economic growth policies...

...And U.S...

...Debtor nations have been driven by their creditors (in the multinational banks and agencies such as the International Monetary Fund and the World Bank) to further expand their exports and slow down their imports—by restraining their populations' incomes—in order to earn the foreign exchange with which to pay the interest on their debts...

...But national governments will resist...

...Major efforts to cut back social benefits, to deregulate industries, and to privatize public firms and services were made in most countries...

...Moreover, multinational banks, while "liberating" themselves from national governments, have not hesitated to turn to multinational government institutions like the World Bank and the International Monetary Fund to collect their Third World debts for them...

...Just as workers in Europe and Japan and North America are threatened by employers with the prospect of "out-sourcing" to areas of cheaper labor, so will workers in Korea...

...As the production of textiles, steel, autos, consumer electronics, computers, telecommunication equipment, and other products has dispersed throughout the globe, wages in the new locations have risen—not only in the firms directly producing the products but in the local industries providing components, supplies, and services as well...

...The overburden of debt and interest payments must be removed from the developing nations if they are to resume more balanced growth, improve the living standards of their people, and provide markets for other nations' exports...

...Who Will Buy the Goods...

...The development of a multinational union strategy is not an easy task...

...As with any effort to organize people for action, the first step is to strengthen the sense of common purpose among labor unions through the experience of working together...

...Among other things, it means a continuing adjustment for workers in industries in the more developed nations that will lose market shares to these new entrants...

...This social contract held that workers had a right—exercised through collective bargaining— to a share of the benefits of increased productivity and protection from rising living costs...

...Their domestic incomes are too low to attract the capital and to reach the economies of scale needed to support industries capable of steadily improving the real wages of their workers and satisfying the demands of their consumers...

...Labor Rights An expansion of labor rights to the global production system is crucial to prevent multinational competition from being based solely on cheap labor and inhuman working conditions...

...global competition in the long run increases the pressure on all managers to squeeze costs by lowering wages and pitting worker against worker...

...The process of globalization will not stop with the last nation to be launched on the road to industrialization...

...It has accelerated innovation, shortened the life cycle of new products, and permitted global competitors to quickly copy a new product and produce it more cheaply somewhere else—all of which has reduced the length of time a new product or a company's market share can generate steady employment in one location...

...This might permit multinationals the advantages of economies of scale and, depending on the strength of national economic and political interests, at the same time provide for some regulation and protection for workers and their communities...

...Until the early 1970s, jobs and incomes in the world as a whole grew fast enough to absorb the rising level of goods in global markets without undue strain...

...Beneath this bias is the fear that a return to the earlier high-employment, high-wage economic path would strengthen union power, revive the post SUMMER • 1990 381 The Global Economy war social contract, and lead to a more equal distribution of income and wealth...

...But the increased wages and benefits that a labor union wins in one facility of a multinational corporation almost inevitably improves the chances of its union "partner" in another country getting a better contract...

...During the same period, the European share of developing nations' imports dropped from 40 to 30 percent, the Japanese share from 13 to 10 percent...

...It is a common problem for labor unions in most industrial nations, and they ought to begin to share ideas on how to develop a progressive, labor-oriented, anti-inflation strategy...

...Indeed, some new techniques, such as flexible manufacturing and "just-in-time" inventory control, are incentives to bring factories closer to their markets...

...This is not an easy process...

...Executive compensation in the United States, which has always been exorbitantly high, is becoming the new norm for European and Asian corporate managers...

...This is the path of economic progress in a modern world, and only a fool would deny its benefits to people who have been mired in poverty...

...Profitable business ventures are made unprofitable overnight by currency traders betting on what they guess other currency traders will be betting on...

...Indeed, given the damage that an import-absorption policy has done to the U.S...

...Moreover, Japan's own industries have reoriented their strategies in order to serve the increase in domestic consumption, so that its trade surpluses remain high...

...They looked at the formidable power of the large corporations, their influence on governments, and the fear of unemployment among workers and said it couldn't be done...

...Thus, more nations are producing goods to export to other nations' customers while reducing the ability of their own consumers to buy imports...

...Until recently, financial markets were the servants of production, permitting the exchange of currency and the borrowing of capital needed for trade and development...

...The slowdown in world income growth has, in turn, worsened the debt burden on developing nations despite their increased exports...

...This was ninety-three times the pay of the average factory worker, 378 • DISSENT The Global Economy seventy-two times the pay of the average schoolteacher, and forty-four times the pay of the average engineer...

...The European Single Market and the U.S.-Canadian Free Trade agreement are vivid examples of nations giving up sovereignty at the urging of corporate interests and a corporate-dominated press...

...In most nations, these policies are decided by a narrow group of financiers and technocrats more concerned with the protection of financial capital than of living standards...

...382 • DISSENT...

...Thus, the shape of a new global economy is not yet determined...

...In Italy wage indexation was weakened...

...In any event, the future will not inevitably bring one global laissez-faire marketplace...

...Total Third World debt in 1988 was over $1.3 trillion, up from $831 billion in 1982...

...It has created a class of multinational managers whose personal prosperity is identified with their multinational corporation, not with the economy of the nations they happen to live in or be citizens of...

...At the same time that workers' incomes and protections are being suppressed in this slowergrowing global economy, top management incomes are rising...

...The economies of all nations are expanding beyond national borders...

...Because of the experience of the 1970s, the threat of inflation has become a hammer with which central bankers can bash efforts to return to a high-wage, full-employment economy...

...International labor cooperation is especially important in a time of international mergers and acquisitions...

...Similar excess capacity is building up in other industries...

...If workers' rights are to be protected, if the cause of economic justice is to prevail, then trade unionism must also expand...

...And not all technological change encourages international production...

...The important point is that firms have become more flexible in both directions—to move production elsewhere or to move it back...

...The questions is: in whose interests will they be managed...

...New Thinking on Growth There are two areas, in particular, that an international labor program for economic growth might focus on...

...Top management located halfway around the world is less likely to be concerned with local public opinion or a labor-management peace...

...The profits and technology that one corporation enjoys from an international business alliance today may be used against its foreign corporate partner tomorrow...

...The right to organize and bargain collectively and the right to basic minimal health and safety standards are essential to protect all workers and to ensure that the benefits of higher productivity will be shared in every nation...

...trade deficit shrinks, where will the customers come from...

...Many factors contribute to the creation of a global economy, but the driving force is technology...

...But, one might ask, is it necessary to enact international rules on labor rights...

...And—slowly, painfully —the struggle by workers to have the independence and dignity of their own labor organization often, although not always, follows...

...One result may be the emergence of larger continental trading blocs—centered in Western Europe, North America, and the Pacific Rim—with nations on the periphery loosely connected to one of the major centers...

...Coordinated Organizing Strategies Just as multinational corporations use their abilities to shift capital and technology around the world to threaten workers, so workers' organizations can use modern communications to fight back...

...They control the spending and interest rates that determine whether incomes will expand fast enough to keep world employment and wages rising...

...The result has been to expand global capacity in a number of industries beyond the ability of global incomes to buy the output...

...Nevertheless, raising the real incomes of the world's impoverished people means a rise in the world's exports...

...The effect of globalization on the bargaining position of labor is not limited to those working for multinational corporations...

...Despite our confident manner, we really do not know what the unemployment rate will be in six months or what interest rates will be in a year...

...In the more industrial economies, a company's threat to shift production to lower-wage areas—even if the company in fact does not intend to do so—undercuts the bargaining position of labor...

...The development of computers and microelectronics has given corporations the power to move capital around the world in microseconds and to shift production rapidly from one continent to another in response to changes in labor relations, market strategies, or government policies...

...This management advantage is compounded by the fact that the number of multinational corporations able to combine advanced technology and capital in different parts of the globe is small relative to the 376 • DISSENT The global Economy number of nations, regions, and localities competing with each other in order to attract these firms...

...High rates of global growth permit industries in developed nations to produce new products to take the place of shrinking market shares in traditional product lines...

...If only to maintain stability, new multinational agreements, regulations, and institutions will emerge...

...The answer is that the case for international standards is the same as the case for national standards...

...Don't international rules interfere with national sovereignty...

...The new international economy—like a national economy— must have regulations, standards, and public management of overall supply and demand...

...Even when these can be overcome, the different legal and political settings within which each union operates make it hard for unions to fully understand each other...

...Or whether in ten years companies will be programming computers to make workers more productive or programming workers to make computers more productive...

...Thus, for example, in the financial sector, we find the international collaboration of the G-7 countries to try to restore order to deregulated financial markets...

...Will not unions automatically develop as nations indus380 • DISSENT The Global Economy trialize...

...This situation will not continue...

...So far the fundamental crisis has been avoided...

...We need economic policies—at the level of firm, industry, nation, and globe—that can permit the orderly expansion of the world economy without ruinous competition based on low wages and low living standards...

...trade deficit will inevitably shrink over the next ten years...

...The existence of strong independent labor unions in competing nations is almost as important to the welfare of a worker as having a strong independent union of his or her own...

...As firms become multinational, top management becomes internationally mobile and less subject to cultural and political constraints on what they pay themselves...

...Working people, organized and unorganized, of all nations of the world have an important stake in developing such new strategies...

...But if corporate managers from different cultures and without a tradition of solidarity can become partners, labor leaders ought to be able to do so as well...

...In addition, the United States has been running trade deficits with Japan, Germany, and most of the other important industrial nations...

...Their universities and laboratories are too limited to furnish the new processes and products that such industries need...

...But only a fool would believe that its benefits are stable...

...By exchanging information, unions organizing the same company in different nations can prevent companies from distorting the facts about working conditions elsewhere...

...It also provided that a share of the benefits of increased national productivity would go to all citizens in the form of minimum wages, health and housing benefits, pensions, and other public goods and services...

...In the aftermath of post–World War II reconstruction, the share of most nations' economies devoted to foreign trade expanded...

...At the same time, the globalization process has clearly spread the benefits of higher incomes and living standards to workers in newly industrialized economies...

...There have already been a number of instances in which international solidarity enabled a union to expose the fact that a firm that claimed to have international "no-union" policies was shown to have good union contracts in its home country...

...In the United Kingdom and France employee protections against arbitrary employer firings were dismantled...

...In a number of developed nations, forces representing industrial interests have begun demanding a resolution of the Third World debt crisis that will give priority to the creation of customers rather than the repayment of bank loans that should never have been made...

...For example, workers in a nation in which pensions and health care are guaranteed by the government may have difficulty understanding a strike over these issues in a nation that does not...

...That is, an economy without such rules gives the unscrupulous exploiter of labor an economic advantage that other producers will be forced to follow in order to survive...

...When a foreign firm takes over a domestically owned one, the new ownership is removed from the political and cultural constraints of the domestic owner...

...So, after having deregulated markets at the urging of multinational financial institutions, the major nations are now forced to design new arrangements to protect against the speculative forces playing havoc with their productive sectors...

...A slowdown in world economic growth has forced nations and firms to compete more fiercely for slower-growing markets...

...Sooner or later, the combination of overcapacity, excessive debt, and inadequate incomes will produce a world recession . . . or worse...

...We need, therefore, a common strategy on the Third World debt that labor unions can collectively advocate to counter the repressive agenda that now dominates the world's financial institutions...

...Unfortunately, friction has increased over the last decade and a half...

...Solidarity, of course, is easier said then done...

...Higher rates of growth can provide the tax revenues for governments to maintain incomes and early retirement and to support retraining and other adjustment programs for displaced workers...

...The increased absorption of the world's exports by the United States is not the result of deliberate generosity but of the policies of "Reaganomics," which covered up America's economic weakness by massive borrowing...

...Labor today has no choice...

...According to one recent survey, the top two executives in each of 354 U.S...

...Accordingly to this view, governments are becoming obsolete, holding up progress to a pure laissez-faire world where giant corporations are "liberated" to roam the globe seeking to satisfy the world's consumers...

...executives' earnings are skyrocketing...

...The original organizers of trade unionism saw that they had no choice but to build a unified movement, so they accepted responsibility and took the risk...

...But its market is much smaller than that of the United States...

...And the corporate-dominated press has helped turn public opinion against unions— now perceived as obstacles to a nation's international competitiveness, rather than as protection against the ravages of the market...

...Despite the recent rise in the dollar, the U.S...

...Foreign applications for new investment in Thailand, for example, tripled between 1986 and 1987 and doubled again in 1988...

...Answering this question presents the free labor movements of the world with a challenge...

...The press and television cheer corporate efforts to break down national tariffs and set common commercial and technological standards that enable them to take advantage of global economies of scale...

...A sensible national path to prosperity should be balanced...

...Multinationals will continue to attempt to break the power of national governments to protect their domestic firms against competition from global giants and their domestic labor forces against cutthroat wage competition...

...Language and cultural barriers persist...

...But many in the past had the same doubts about national unions...

...In the United States, the first major act of the Reagan administration was to break the air traffic controllers union—a signal to employers that the administration would encourage efforts to destroy organized labor...

...In the less industrial economies, competition among nations for investment capital often leads governments to suppress unions in order to keep their low-wage advantage in attracting multinational investors...

...Just as a labor movement is essential to prevent the excessive domination of capital in a nation, so the labor movements of the world must in turn expand their horizons to prevent the abuse of power by international capital...

...A major reason is that the U.S...

...Today's national governments are in a situation similar to that of labor—corporate capital is moving beyond their reach and forcing them to accommodate the multinational corporate agenda...

...The increase in flexibility has given management a powerful advantage over labor in both the more industrial and the less industrial parts of the world...

...it should nurture the expansion of internal mass markets, which in the long run provide a more secure basis for the steady rise in workers' living standards...

...The War on Labor These three factors —(1) the increasing mobility of capital and technology, (2) the increased export-orientation of the world's economies, and (3) the slowdown in global economic growth—have encouraged corporate managers to tear up the postwar "social contract" between labor and capital that formed the framework for social progress in the developed nations of Western Europe and North America and was the inspiration for progressive democratic labor movements throughout the world...

...firms—a total of 708 managers—earned an average of over $2 million last year...

...There are many who look at the formidable power of the multinational corporations and the differences between workers in different countries and conclude that it is impossible...

...Keeping inflation down has replaced keeping employment up as a chief concern of the major governments...

...The other major surplus nation, Germany, appears to have no intention of accelerating growth dramatically...

...And they created a better world...

...Japan has clearly begun to shift its economic policy to stimulate internal consumption...

...Eventually, so will workers in Thailand . . . and yes, China...

...At the very minimum, however, it should provide for the freedom of workers to organize and bargain collectively, the banning of forced labor and exploitation of the very young, and the prohibition of government policies that act to suppress wages and working conditions below what market and democratic political forces would generate...

...This does not mean that economic development must be "export-oriented" —concentrating its resources only on production for export to world markets...

...Increasing wages and incomes from exports in both the developed and most of the developing world enabled workers to buy imports...

...There is also potential in coordinated organizing campaigns...

...In Germany welfare payments for strikers were denied...

...In a global economy, workers will rise or fall together...

...Deregulation turned these markets into financial casinos...

...By 1987 world overcapacity was 20 percent in steel, 15 to 20 percent in autos, 25 percent in semiconductors, and over 20 percent in petrochemicals...

...Most of the world's businesses still produce for consumption within their own national borders...

...If it is to fulfill its historic mission of protecting workers' rights and living standards, organized labor must become a more active multinational force...

...Not all capital is mobile, of course...

...The question immediately arises: As the U.S...

...economy throughout most of the 1980s has been running massive trade deficits and thus absorbing a larger share of the world's imports...

...Indeed, the recent opening up of the domestic economies of the Soviet Union and China—at the risk of incredible political upheaval—tells us that even the world's largest nations cannot sustain development on the basis of their internal markets alone...

...The second important problem is the Third World debt...

...Dilemma of Exports Most developing nations have little choice but to build exporting industries if they want to develop modern economies...

...So long as the global economy as a whole is growing at a reasonably high rate, there is a chance that this adjustment can take place in a way that protects workers' living standards...

...In the absence of new strategies, therefore, we face a world in which the competition for markets will increase and the pressure on workers' wages will get worse...

...One is to have a labor answer to the question of inflation...

...Accordingly, it has expanded somewhat its imports from developing nations—particularly in Asia...

...A sensible international path to prosperity must, therefore, accommodate the entry of new exporters into the international marketplace...

...But there is one prediction that I can make without hesitation: it is that the trend toward the globalization of the economy will continue...

...One does not have to be an expert in economics to see that the world economy cannot continue with all nations expanding exports and constricting the ability of their workers to buy imports...

...share of manufacturing imports from the less industrialized world rose from 46 to 59 percent...

...the rate of growth of exports, particularly SUMMER • 1990 • 377 The Global Economy manufactures, rose faster than the rate of growth of domestic production...

...In the developed world as a whole, exports dropped as well...

...And labor organizations in a nation where unions are national institutions with basic legal rights will see things differently than workers in a nation where to be a union organizer significantly increases one's chances of being murdered...

...This fear is realistic—which is one reason labor in all nations should be demanding economic policies to support higher rates of global economic growth...

...High worldwide growth is the grease that reduces friction in the global economic machinery and keeps it from breaking down...

...The undercutting of the postwar "deal" between management and labor has occurred throughout Western Europe and North America...

...Indeed, keeping unemployment sufficiently high is the primary strategy for keeping inflation low...

...Indeed, the world's leading media—themselves often a product of multinational mergers and buyouts—have made national "protectionist" policies the villain of the globalization drama...

...But after 1973, world growth slowed down considerably, and by the 1980s it halved—barely able to keep ahead of increases in world population...

...But as soon as multinational corporations break through national barriers, they find themselves in an economic jungle where new government rules and regulations are needed to SUMMER • 1990 • 379 The Global Economy protect them from the uncontrolled forces of the market...

...From 1980 to 1986, for example, the U.S...

...Whether we like it or not, barring a world war, depression, or similar catastrophe, the year 2000 will see employment, wages, and the conditions of work in every country shaped by forces that are international in character and increasingly beyond the control of the collective bargaining that goes on in any one firm, industry, or nation...

...Reasonable people can legitimately differ over the precise form an agenda for international workers' rights might take...

...economy, no other nation by itself will choose to run a trade deficit to provide markets for the rest of the world...

...But they were wrong...