Latin America and the Changing World Economy
Vuskovic, Pedro
For the third time this century, Latin America is faced with the need to fundamentally realign its structure of production in accordance with a new "international division of labor." To a...
...Or, at best, it will only occur in a very few branches of industry and only in a few, rather exceptional, locations...
...The struggle of the world proletariat increasingly occurs within a single unified framework provided by the international accumulation of capital and imperialism...
...These features include a diversification of exports, the opportunity to participate in the most dynamic areas of world commerce, new and more job opportunities, access to more advanced technology and a chance to expand their industrial base to more modern, hightechnology activities...
...Normally, these operations are closely or completely JanlFeb 1980 7 f8 NACLA Report linked to transnational corporations...
...3. The socialist countries' share of world industrial production rose quickly in this period, from about 20% of the total in 1950 to more than 40% in recent years...
...In the latter, employment opportunities tend to be spread much more widely throughout the entire economic system...
...It has been estimated, for example, that in 1967, transnational firms based in the United States and 14 Western European countries already had some 26,400 branches and a large number of subsidiaries...
...Second, in the "particular" form, industrial exports are manufactured by productive units operating under "exceptional" conditions...
...This is not a minor point...
...These three technological developments have created the material pre-conditions for a 10 NACLA ReportJanlFeb 1960 11 re-definition of the international division of labor and the position within it of the underdeveloped countries...
...Since labor is the chief ingredient "added" to the product, and since labor costs are low in all offshore host countries, duties are also very low.9 Free trade zones are enclaves in which the host government offers special tax breaks and other incentives to encourage foreign investment...
...This general analysis, and the profound social consequences implied by it, immediately raise a variety of questions...
...The number of foreign workers entering France also registered a dramatic decline...
...Furthermore, this world market-oriented production was not limited simply to assembly tasks nor to a few particular branches of industry...
...Tariff Schedule...
...direct foreign investment from 1965-77...
...this accounted for a persistent deficit in the balance of commodity trade which led, in turn, to a constant increase in the level of foreign indebtedness...
...9 Opponents of our analysis have also argued that new advances in technology will lead to increasing mechanization of those productive processes which are still predominantly laborintensive, and that this will produce a "productivity gap" wide enough to negate current wage differentials...
...It seems to be precisely in the technical realm that a "new" situation is arising: there is a coincidence between the need to use "cheap" labor from underdeveloped areas and the practical viability of doing so...
...Rather, it will become the central element of the strategy which determines how these areas "fit" into a worldwide pattern of capitalist accumulation and, consequently, which models of accumulation they will adopt to guide their internal growth...
...On the contrary, its tenuous nature was predetermined by a number of well-known factors including the unequal differential demand for industrial products and raw materials, as well as the simplification of production imposed on underdeveloped economies despite a growing diversification of demand...
...Nonetheless, the critical consequences of this for all Latin American economies were mitigated-actually postponed--by a general intensification of international trade which continued unabated until the crisis of 1974-75...
...During the following long period, the underdeveloped countries found themselves relatively marginalized from the flow of world trade...
...NACLA's findings on this topic are contained in "Dying for Work: Occupational Health and Asbestos," NACLA Report on the Americas, Vol...
...They argue that these trends are relatively less important than the data would suggest, asserting, for example, that "the internationalization [of production] in pursuit of cheap labor is of secondary importance relative to the continuing expansion [of foreign capital in these countries] to control the import-substitution process...
...Brazil is the clearest example in Latin America, given the evolution of its exports in recent years...
...2 A study of migration and the situation of reign workers in Western Europe drew the llowing conclusions: Unilateral measures to halt immigration have resulted in an almost total cutoff in the flow of immigrant workers from countries outside the European Economic Community (EEC...
...There are two main reasons for this...
...direct investment in Latin America has decreased as a percentage of total U.S...
...But, what is important is not the immediate contribution of this process, but rather, its net significance once its indirect effects are taken into account...
...Underdeveloped countries are now becoming part of the productive chain, a part of the very production process of the more advanced capitalist economies, and thus participate in the actual functioning of these economic systems...
...The English version has been slightly edited for space and translation reasons...
...It temporarily offered some Latin American nations the opportunity for rapid growth and "modernization," particularly during the second half of the last century...
...4. ". .. The structure of international investment prior to 1914 and after World War II is very different...
...Before 1914, three-quarters of foreign investments took the form of portfolio investment, and one-fourth was direct investment in production and transportation...
...Isaac Minian, Progreso tecnico e internacionalizacion del proceso productivo (Mexico: CIDE), 1978...
...But it has also fostered the relocation of the polluting industries to other (less developed) areas with the consequent "transfer" of the pollution...
...Electronics: The Global Industry," NACLA's Latin America and Empire Report, Vol...
...In 1965, 22% of all U.S...
...For further discussion of undocumented workers in the United States, see NACLA, "Undocumented Immigrant Workers in New York City," NA CLA Report on the Americas, Vol...
...Kreye, World MarketOriented Industrialization...
...Sectors and branches in industrial production move to areas of lesser development...
...With regard to the size of the available labor force, the International Labor Organization (ILO) found that, in 1975, there were approximately 33 million unemployed workers in underdeveloped countries and some 250 million underemployed...
...From 1934-38, Western Europe was the only large geographical area which was a net grain importer...
...It would certainly be an illusion to think that these trends depended primarily on factors internal to the functioning of the underdeveloped economies, or that they arose because the developed capitalist countries acquiesced to the demands of the underdeveloped world for access to external markets or a diversification of exports...
...The problem of the international class struggle of the proletariat is that even though it shares a common unifying element-accumulation on a world scale-it occurs within the specific framework of different nation-states...
...On the basis of this analysis, heas Vuskovic in this article--argues that a new model of accumulation is operating in the world today which implies a new international division of labor (or, the international differentiation of the working class), the linking of national and international economies, and a new role for nation-states in justifying internal modes of production to international demands and conditions...
...IX, No...
...On the other hand, developments which have occurred in free trade zones or assembly plant operations are much more striking, and are also easier to evaluate because of their size...
...First, in what we can call a "general" form, industrial goods for export are manufactured in productive units spread throughout the whole productive apparatus of the country...
...A revised edition of this paper was published as "Foreign Trade and the Law of Value: Part I," Science and Society, Vol...
...XLIII, No...
...Similarly, recent calculations have concluded that the 100 principal economic units in the world are composed of 50 national states and 50 multinational firms...
...In any case, one point is clear: industrialist's concern with pollution has not led to "investments to counteract these effects...
...XII, No...
...Often maquiladoras are clustered in free trade zones...
...The over-riding goal this time was to expand the use of "cheap" labor in dependent and underdeveloped areas to produce a greater range of goods for the international market...
...We must also explain why this process did not appear with an equal intensity in an earlier period...
...In various countries, export earnings achieved unprecedented levels and growth rates...
...Increasingly, the abundance and low cost of labor will become determining factors...
...JOB SEGMENTATION Of course it is not enough simply to speak of the availability of a reserve army of labor or the disposition to use it...
...imports under Items 806.30 and 807.00 of the U.S...
...Americo Ramos dos Santos, "Imigracao europeia: breve analise de evolucao recente," Economia e Socialismo, No...
...See U.S...
...For example, manufactured products as a share of total exports increased from 13.2% in 1970-72 to 23.4% in 1975...
...Furthermore, the growing role of industrialized capitalist countries as producers,and then exporters, of agricultural products meant that the existing patterns of international trade specialization had to undergo increasing modifications...
...and (3) the patterns of internal growth in the underdeveloped economies...
...Some analysts consider the process as relatively limited and assume that a variety of JanlFeb 1980 1112 NACLA Report factors will tend to curb its potential effects...
...Furthermore, since only one segment of the productive process is "transferred," the additional job opportunities generally offer very little in the way of training or advancement...
...exports in the same year...
...It reduces industrial development to a horizontally disarticulated, non-complex process which produces highly segmented, uncoordinated products...
...Or to pose it another way, the immediate social consequences of these trends will fall back on the underdeveloped countries from which these workers originated, thus closing an historic migratory cycle which has always operated to the disadvantage of the underdeveloped countries...
...From this point of view, given the general framework within which this process must unfold, there is basis for assuming that its aggregate effects are unfavorable...
...The figures for 1975 and 1976 are only a fifth of 1973 levels and about half the 1974 level...
...For example, Christian Palloix noted that In 1971, foreign production by different 'na- tional' capitals ($330 billion) exceeded world ex- ports ($311 billion...
...This suggests that, in a purely political sense, we should reformulate our understanding of the objective common interests shared by workers in underdeveloped, dependent countries and the working class in the more developed capitalist countries...
...Latin America had to import a total of 3 million tons...
...Since assembly operations are only a partial phase of the productive process, they provide no backward-linkages [they don't encourage the local production of parts or raw materials that go into the final product] and no forward-linkages [any further elaboration of the product] other than those determined by the needs of the transnationals which put them there in the first place...
...Demonstration p ro,9 NeW YOr" tty youths folli I importance as one of the most notable social and political characteristics of the newly emerging models of capitalist accumulation...
...The disintegration of strategic sectors of the region's economic activities led to a number of phenomena: the premature obsolescence of productive installations, the abandonment of certain lines of production, growing unemployment, and even the appearance of "ghost towns" in the zones most directly affected by these changes...
...26...
...In this way, U.S...
...Where commercial capital predominates, or where foreign investment is not yet a threat to capital in its country of origin, all one hears in favor of protectionism are the melancholy complaints of the underdeveloped capitalist countries...
...With a world capitalist GNP of $2,000 billion in 1971, the 650 major in- dustrial firms had sales equal to $773 billion...
...In these zones, taxes on profits are often reduced to an absolute minimum, postponed for decades, or simply abolished...
...Both forms are transitional, leading toward a new international division of labor...
...department of Commerce, Survey of Current Business, various issues.] 18...
...Examined in this light, one can conclude that the process of industrial relocation inherent in the new model of capitalist accumulation is transforming the mass of workers in the underdeveloped world into a true "industrial reserve army" for the more advanced capitalist countries...
...Thus, rather than NACLA Report speak of a single moment in the internationalization of capital, he analyzes distinct moments of internationalization...
...A number of Palloix's articles have appeared in English...
...Ibid...
...The periphery has become more than a source of surplus for the more advanced industrial countries...
...By 1960, Latin America as a whole had lost its position as a net exporter, being reduced to a position of self-sufficiency...
...These statistics are already significant enough to demonstrate that we are confronting a general process which is spreading rapidly to an increasing number of countries and which involves a large and growing segment of the labor force...
...The difference in wage levels between advanced industrial countries and underdeveloped areas is, to say the least, dramatic...
...By 1977, this had slipped to 18.6...
...Insofar as "cheap" labor is the essence of the phenomenon, the underdeveloped econo6 NACLA ReportJanlFeb 1980 7 mies can become involved in such a process only under very specific conditions...
...Since the relative increase in production to meet internal demand occurred via import-substitution industrialization, and since the latter required increased importation of high-c4st goods, the value of imports rose dramatically relative to that of exports during this period.] The resulting "external bottleneck" [i.e., a shortage of foreign exchange reserves] is frequently cited as one of the most serious obstacles to growth...
...27...
...True, the process seems to offer additional opportunities for productive employment...
...The Labour Process: from Fordism to neo-Fordism," in The Labour Process and Class Strategies: Stage I (London: Conference of Socialist Economists), 1976.] 8. Palloix, "The Self Expansion of Capital," p. 8. 9. [NACLA has published numerous studies on maquiladoras and runaway shops...
...2 7 By defining "cheap" labor as their major selling point, the governments of underdeveloped countries run the risk not only of forcing an extreme degree of exploitation of labor, but also of adopting a type of production which will result in deeper levels of underdevelopment and dependence...
...It is clear that even a rapid expansion of industrial production for the world market would have only limited effects on the serious problems of unemployment and underemployment which plague most of the underdeveloped world...
...This change implies, as we have seen, a more intensive and direct use of the enormous supply of "cheap" labor in underdeveloped and dependent countries, a relocation of that production oriented to the world market and an extension of free trade zones...
...0 ] CHEAP LABOR AND INDUSTRIAL EXPORTS In both its general and particular forms, the major impetus for internationalized production consists in the potential to use the labor force of the underdeveloped world for industrial production destined for the world The 1gar et shoP, eployin, g w 7hr gorront'bp 8 NACLA Report 4 I.JanlFeb 1980 9 market...
...In sum, it is illusory to imagine that, just because more manufactured goods are exported, conditions of exchange between advanced capitalist countries and dependent, underdeveloped economies will be equalized...
...Latin America's share of total direct U.S...
...And third, advances in communications, information and control techniques allow for centralized direction and administration of industrial complexes despite dispersed plant locations...
...XI, No...
...On the other hand, the proportion of food products and raw materials shrank from 46% to a little less than 36% during the same period...
...It functions as an integral part of a global system, as a segment of this system linked even to the most dynamic elements in the developed capitalist world...
...direct foreign investments over time...
...6 (November-December 1979).] 23...
...See United Nations, Statistical Summary (yearly...
...2 NACLA ReportJanlFeb 1980 3NACLA Report 1972 Total Exports 1977 Total Exports with different levels of development...
...As Raul Trajtenberg noted, this required that "a labor force be found which could be exploited under conditions which the modern evolution of capitalism had already negated in the advanced capitalist countries," and, consequently, the acceptance of "a new dimension to the role which the periphery would play in the evolution of advanced capitalism...
...To a large extent, this article is based on the theoretical model developed by Christian Palloix, a researcher in the Department of Industrialization and Development of the Institute of Economic Research and Planning at the University of Grenoble...
...4 (April 1977...
...As in other comparable historical phases, the Latin American economies had to absorb the costs implied in these changes, costs which went far beyond decreased participation in world trade...
...These disagreements are legitimate given that the implications of this realignment are still unclear...
...Nor does it assume a "dialogue among equals...
...The maquila or maquiladora, which first sprang up along the U.S.-Mexican border in the mid-1960s, is a particular type of manufacturing operation increasingly located in underdeveloped capitalist countries...
...THE WHYS AND WHEREFORES OF INDUSTRIAL RELOCATION A second set of questions now arises concerning the essential nature of this process- why it is so dynamic and what are its economic and technological needs...
...In fact, since the low point of the recent crisis, productivity levels have recovered more rapidly than employment levels...
...The underdeveloped areas are supposedly compensated for this by the fact that they now have a new productive activity in their country and the opportunity for a new line of exports.' Nevertheless, without ignoring such factors, it is reasonable to assume that the most important causes of industrial relocation arise elsewhere, especially from current problems in the sphere of capitalist accumulation...
...Imports of low-cost (non-durable) consumer goods gave way to high-cost, high-technology consumer goods, intermediate products and capital goods...
...The commodity labor-power...
...Thus, high rates of unemployment will be reflected in wages and overall income distribution in these countries...
...Increasingly, as quantitative indices illustrate, the underdeveloped world's participation in international trade declined, trade in industrial products predominated, and finally, industrialized capitalist countries became the primary exporters of raw materials.' Moreover, at the same time as the major capitalist countries were rapidly increasing trade among themselves, socialist countries were also increasing the volume of their own intra-bloc trade...
...Certainly, the internationalization of capital as such is hardly new, since this process has been underway since the end of the last century when capitalism reached its imperialist stage...
...34 (January 1979...
...3 (Fall 1979), pp...
...For example, the CIDE study notes a dramatic decline in the price of silicon transistors from $4.39 in 1962 to 27C ten years later...
...2 2 Events associated with the world capitalist "onomy's recent crisis clearly demonstrate ternational capitalism's intention to reverse .e direction of this historic migratory flow...
...The fall in the rate of profit and the need for large investments are internal contradictions that confront the capitalist world and that call into question the basic models of accumulation operative the last few decades...
...We must study the factors which strengthen the trends rather than those which tend to slow them down...
...In 25 of those countries, production occurred in free zones, and in 9 countries, production exclusively for export also took place outside of such zones...
...Thus, many advances in this field have been developed, but are not implemented...
...Models of internal growth had to be adjusted accordingly, via the transition from specialization in raw materials production for export to industrialization through "import substitution" and programs designed to increase the size of the internal market...
...On the contrary, for these countries, the process is leading to greater economic subordination, more pronounced dependence and heightened vulnerability...
...Trajtenberg, Transnacionales yfuerza de trabajo...
...The Dynamics of Internal Growth Nevertheless, at least on the level of appearances, this new international division of labor has features which some claim can contribute positively to the internal growth of underdeveloped economies...
...Each point merits separate consideration, particularly since this position has won adherents in Latin America even though it implies discarding deeply-rooted social and political values...
...In the meantime, development patterns were imposed on the dependent countries which now make the reabsorption of this emigre labor force very difficult...
...Transnationals and the advanced capitalist economies continue to maintain their privileged hold on technology...
...2 (March 1979...
...On the one hand, a fall in the rate of profit arose because of long-term structural factors: the growing competition between the advanced industrial countries for markets, and the workers' tenacious defense of their wages and working conditions in these same countries...
...1-28...
...Similarly, the underdeveloped countries' share of world trade decreased between 1970-77 from almost 33% to 26% in terms of food products and raw materials, but went up from 7.5% to 9.6% in the case of manufactured goods...
...This system, given the conditions prevalent at the time, produced an extraordinarily rapid growth in world trade over a long period...
...This process began during World War I, accentuated during the crisis of the 1930s and culminated with World War II...
...and "Capital's Flight: The Apparel Industry Moves South," NACLA's LA.&ER, Vol...
...In the United States, illions of legal foreign-born workers are nployed, along with huge numbers of un:cumented workers, estimated at five to ght times the number of legal immigrants...
...The study correctly concluded that this was one of the reasons for the extremely rapid development of internationalized production in the 1960s...
...The fight for higher raw material prices, diversification of exports and franchises which would give access to markets in the major capitalist countries became persistent issues advanced by underdeveloped countries during international negotiations...
...Such views are in total contrast to the increasingly widespread and empirically proven view that, in fact, we are confronting a much deeper, more significant process...
...3 (April 1975...
...Significantly, the underdeveloped countries still find themselves very far from their traditional goal of export diversification which is considered a primary path to autonomous development and national economic independence...
...A similar change has occurred in Latin America...
...63-88...
...investment in underdeveloped countries has grown from 68% (1966-71) to 81% (1972-77...
...firms abroad was estimated to be at least $172 billion, which is four times the value of U.S...
...These activities employed at least 420,000 workers in Asia, 40,000 in Africa, and 265,000 in Latin America...
...is being commercialized-in the world labor market-by the governments of many countries, with the same propaganda techniques which are used in the promotion and sale of any other commodity...
...Particularly regarding the latter form, the data gathered in a recent study by the Max Plank Institute in West Germany is very illustrative...
...IMPORT-SUBSTITUTION INDUSTRIALIZATION These conditions forced a redefinition of Latin America's role in the world economy and in the nature of its international economic relations...
...ENCLAVES OR EXPORTORIENTED INDUSTRIALIZATION...
...7. Palloix "Imperialisme et mode d'accumulation...
...Within the general, and most widespread form, the internationalization process so far is relatively hidden and diffuse, except in a few countries...
...Christian Palloix, "Imperialisme et mode d'accumulation international du capital," Revue Tiers Monde, No...
...Thus, there is an element of truth in the recent insistence by representatives of the great capitalist powers that "interdependence" defineS the latter's contemporary relations with underdeveloped countries...
...The Selling of the Working Class From another point of view, one must recognize the importance of capital's increasing ability to control the location of industries...
...Nonetheless, imports tended to grow even faster than exports...
...In our own view, the development of pollutioncontrol technology and its application are two distinct issues...
...2 (March-April 1978).] 14...
...Also, in 1971, the international production con- trolled by U.S...
...But when foreign investment develops to the point of competing with production in the country of origin itself, protectionism rapidly becomes the order of the day...
...NACLA's publications on free trade zones include "Smoldering Conflict: Dominican Republic, 1965-75," NACLA's LAI&ER, Vol...
...The assembly olant "nackage" is tied for assembly and then re-import them for sale in the United States, paying duty only on the value added to the product abroad...
...We should note at least the most important technical aspects before turning to the political issues...
...In these plants, imported components are assembled in a labor-intensive process, and then exported back to the United States (where the components originated) or to the world market...
...While in the early part of this period, only 6.4% of that total came from underdeveloped countries, in the later years this rose to 46...
...The two most widely used "exceptional" systems are assembly plants (maquilas), where products imported into a country are assembled for export, and "free trade zones," which are owned by transnational corporations...
...These include: "The Self Expansion of Capital on a World Scale," The Review of Radical Political Economics, Vol...
...In other words, this trend will probably amount to little more than the development of a new kind of "industrial enclave" along the lines of previously existing raw materials enclaves...
...Trading patterns consequently developed in strict correspondence with the theory of comparative costs, one kind of product being exchanged for the other...
...Much less is it an expression of nostalgia for older forms of world trade and of the international division of labor...
...This process, which is based on the increasingly widespread internationalization of capital and production, has redefined the geographic location of industrial plants producing for the world market...
...First, and most importantly, what, if anything, is really new in the recent trend...
...See also, AMPO, Free Trade Zones and the Industrialization of Asia (Tokyo), 1977.] 11...
...We will also try to rank the factors which Jan[Feb 1980 910 NACLA Report contribute to the internationalization of production...
...But this system could not work indefinitely...
...Intra-socialist trade continued to represent the major, although a decreasing, share of their total trade, from 80% in 1955 to 55% in 1976...
...In this, we must distinguish between the two forms in which internationalized production tends to take place...
...In some lines of production, competition has led to drastic price decreases-and the expansion of existing markets- despite the increasing concentration of capital in fewer hands...
...It has been estimated, for example, that in 1975 employment in underdeveloped countries in that sector of the electronics industry producing for export equalled 6% of the total number employed in the electronics industries of the EEC, the United States and Japan (330,000...
...After World War II, the situation was completely reversed, with three-quarters of foreign investment being direct investment and one-fourth as portfolio investment...
...34 (January 1979...
...these areas become established as exporters of certain types of manufactured products...
...The problems inherent iin these new models of accumulation are accentuated in those economies which we can call "moderately developed," a category encompassing many of the Latin American economies...
...At least in the beginning, they can shift the effects of unemployment onto the stream of migratory labor entering their countries and the large mass of foreign workers already living there...
...Another recent study gathers equally telling evidence about the dimension and speed of this process by using figures on U.S...
...Rather than a continued shift of work to underdeveloped areas, capital will once again be invested in more productive manufacturing processes in the advanced industrial nations...
...In the final analysis, the number of jobs created in the export sector are more than offset by the loss of jobs in internal market activities...
...Industrial relocation involves a whole complex of factors, not all of which are equally important...
...In particular, "Changing Role of Southeast Asian Women: The Global Assembly Line and the Social Manipulation of Women on the Job," joint issue of Southeast Asia Chronicle and Pacific Research (1978-79).] 10...
...He currently works as an economist with the Centrode Investigacion y DocenciaEconomicas (CIDE) in Mexico...
...Thus, these transactions enter their books as the sales (exports) or purchases (imports) of their subsidiaries...
...SO WHAT'S NEW...
...First, even in relatively more complex activities there is a growing technical ability to "break-up" the productive process, separating out "segments" which require a higher input of skilled labor from those which, though highly capital-intensive, can be undertaken by unskilled or semiskilled workers...
...9, No...
...Political and technical requirements must first be met...
...Furthermore, there were significant changes in the composition of their export trade, tending toward much greater representation for manufactured goods...
...The central factor is the existence of irrepressible forces which have advanced the internationalization of production...
...Rather, this interdependence requires the most complete subordination of the less developed countries as well as the development of structures which further deepen the denationalization of underdeveloped economies and the super-exploitation of their workers...
...LATIN AMERICA AND THE CHANGING WORLD ECONOMY 1. See, among others, Economic Commission for Latin America, Statistical Yearbook for Latin America, 1977, especially the section discussing "Changes and Trends in World Trade in the 1970s...
...CONTROVERSIES AND QUESTIONS As regards Latin America, it is critical to evaluate the significance of these trends for several reasons...
...The possibilities of substituting domestic workers for immigrant workers are relatively small if we take into account the types of employment normally held by foreign workers...
...For Latin America, as for other underdeveloped areas, these changes provoked not only a crisis in the balance of trade, but also the rapid economic obsolescence of those sectors, previously the most dynamic, that had developed around raw material exports...
...XIII, No...
...INTERNATIONALIZATION OF WORLD PRODUCTION (1971) For the purpose of this analysis, we are particularly interested in that part of the "internationalized" product which enters the world market through foreign trade operations, especially that part which materializes as manufactured exports from underdeveloped economies...
...In fact, this controversy becomes even sharper when it involves not only Latin America, but the whole underdeveloped world, as well as the relations among the more advanced capitalist societies themselves...
...Palloix attempts to analyze the international spread of capital by using the circuits of capital developed by Marx in Capital...
...These forces developed out of the dynamics and demands of competition, accumulation and the reproduction of capital, all of which are fundamental aspects of modern capitalism...
...Dependency is becoming more than dependence on imports, capital, markets or technology, factors which arise through a process of exchange and the unequal distribution of the benefits of production...
...The resulting figure is about three and one-half times larger than the total number of people employed in the manufacturing industries of the developed capitalist countries (approximately 77 million in 1970), and it highlights the existence of an enormous industrial reserve army for the world capitalist economy...
...We can argue that, although the process is not a new one, what is new is the speed with which the internationalization of capital has been transformed into the predominant trait of the contemporary economy...
...All underdeveloped areas were net exporters and, among them, Latin America was the source of almost 40% of the world grain exports, including sales in Eastern Europe and the USSR...
...By the mid-1960s, it had become clear that both the prevalent pattern of international economic relations and the model for internal growth based on import-substitution industrialization no longer worker...
...Gerardo Aceituno, "Inversiones Directas y Politica Exterior," Le Monde Diplomatique en Espanol (Mexico), February 1979...
...In the near future it is likely to take on an extraordinary 12 NACLA ReportJanlFob 1980 '3 p the -1rest...
...Thus, paradoxically, the industrialized countries have become the new champions of protectionism...
...Pedro Vuskovic served as the first Minister of Economics under the Popular Unity government in Chile...
...281-302.] 20...
...Productivity, loyalty, mobility and training are the main slogans adopted in the competition among underdeveloped countries to sell their labor force -the main attraction being, of course, that the quantity is large and the price low...
...To a differing extent, both the "central" countries specializing in industrial production, and the "peripheral" countries specializing in raw material production, shared in the benefits of this system...
...Of ese, three-quarters lived in France and 'est Germany...
...For the same reason, the fragmentation of complex productive processes into a series of basic operations does not provide effective access to technology to those who participate only in limited phases of the process...
...In at least three areas, technological developments now exist that were not available earlier...
...57 (January-March 1974...
...On the contrary, it encompassed all of the 29 branches in the uniform international industrial classification with only two exceptions, beverages and tobacco...
...But for this very reason, the indirect effectsof "export reconversion" are more serious...
...The study is based on 1975 data from 103 underdeveloped countries -- 33 in Asia, 44 in Africa and 26 in Latin America...
...For this reason, this process will not be limited, in the underdeveloped world, to particular industrial branches or specific locations...
...Ibid...
...These countries now worry about becoming too dependent on manufactured exports from the less developed countries and fear, as well, the serious social effects of declining domestic job opportunities...
...At one time, the powerful capitalist countries encouraged and attracted this immigration once internal sources of labor, arising from the decomposition of precapitalist modes of production, were exhausted...
...This is not to say that the more developed capitalist economic systems will necessarily absorb the effects of such unemployment...
...Understood in its broadest sense, the internationalization of production has already reached extraordinary dimensions...
...within the amework of a new international division * labor...
...In either case, dependency is intensified and social inequalities heightened...
...See also, NACLA, "Undocumented Immigrant Workers...
...Industrial Employment It is clear that major changes in the international division of labor will seriously affect current levels of employment...
...Rather than "industrial enclaves," we must speak of "export industrialization...
...Also see footnote 7. 5. Raul Trajtenberg, Transnacionales y fuerza de trabajo en la periferia (Mexico: Instituto Latinoamericano de Estudios Transnacionales), 1978...
...of third world testing t9 e r Citblackout...
...2) working conditions, including what we can call the pursuit "to fully realize labor-power as a commodity...
...Kreye, World Market-Oriented Industrialization...
...3 (March 1977...
...In other words, for the United States, the interna- tionalization of production was four times more than its export trade...
...We recognize, however, that different phases of world accumulation are articulated at a national level...
...Otto Kreye, World Market- Oriented Industrialization of Developing Countries: Free Trade Zones and World Market Factories (Germany: Max Plank Institute), 1977...
...True, one can point to occasional, partial contradictions in this trend, but these do not negate the fact that we are dealing with a very different system of international economic organization than we have known in the past...
...But these conditions imply even stricter terms of dependence based on one fundamental and decisive element: the existence of an abundant and low-paid labor force, the key to the new model of capitalist accumulation on a world scale...
...So long as the periphery's industrial exports originate within the context of capitalist exchange, and even more so within the terms of the new model of capitalist accumulation, exchange will continue to be a mechanism for the external appropriation of surplus value...
...permits the geographical dispersion of those segments without prohibitive cost increases...
...We must examine the objective dangers inherent in these trends rather than assume that they will be reversed...
...In this respect, it may be useful to draw a distinction between assembly-plant and freezone operations, on the one hand, and the more general "export-reconversion" forms, on the other...
...And this is true whether we understand this in a limited sense--as a new type of industrial enclave--or in the broadest sense, as a new model of accumulation bearing the stamp of export-oriented industrialization...
...Almost 500,000 immigrant workers from outside the EEC entered West Germany in 1970 alone...
...Not all jobs currently in the hands of foreign workers can be transferred to domestic workers...
...Of this total of 725,000 workers, more than half a million were employed in free trade zones...
...See Minian, Progreso tecnico...
...On the other hand, massive investments are required by these countries in order to respond to new imperatives - the development of new energy sources and the fuller exploitation of maritime resources...
...In assembly-plant or free-zone production, net income from foreign exchange is limited to little more than the equivalent of the wages of a poorly paid work force...
...2 4 This is obviously a problem with enormous repercussions at the level of international economic (and non-economic) relations...
...Anwar Shaikh, "On the Laws of International Exchange," paper prepared for a CIDE conference in Mexico, 1977...
...A United Nations study, based on similar data, called attention to "the profound changes in world trade" which occurred during the 1970s and remarked that "in only seven years the 1970 World Trade 4 1977 World TradeJanlFsb 1980 5 structure of exports from the periphery underwent a fundamental tranformation...
...2. An illustrative precedent is the long-term change in the international grain trade...
...On the contrary, in the specific way in which it is emerging, "industrialization oriented toward the world market does not slow, but rather accentuates, the historic process of dependent development of the countries of Asia, Africa and Latin America...
...However, we will limit ourselves to only a few general observations...
...In essence, all of this suggests that, for the underdeveloped world, this process does not represent an historic opening toward autonomous industrial development, the advancement of the forces of production, or the adoption of new, more progressive social objectives...
...At the same time, it has served to increasingly impose control by the large transnational corporations...
...Indeed, while it is generally recognized that the data support this view of recent trends in the world capitalist economy and the relative position within it occupied by the economies in this region (with the exception of Cuba), there is disagreement on their foreseeable duration and the extent of their future effects...
...s' They call attention to a predictable reaction within the industrialized capitalist nations themselves aimed at slowing this process...
...Such a claim has elicited doubt and provoked controversy...
...In the industrialized countries, the process of industrial relocation has reduced the system's capacity to absorb labor.20 Thus, relatively high rates of unemployment may become a structural constant rather than a transitory characteristic of periodic recessions...
...These have taken the form of commodity capital, (simply, trading in goods), money capital (portoflio investment) and productive capital (investment in productive processes, per se...
...And, to the degree that this occurs, it is also likely to have a direct effect on the workers' ability to negotiate with capital in these countries...
...Using this latter interpretation as a basic hypothesis, we can proceed to examine the effects of the internationalization of production on three main areas: (1) the distribution, composition and continuity of industrial employment...
...This is because the general economic policies associated with export reconversion tend to lower workers' wages and, consequently, their purchasing power, to aggravate competition with locally14 NACLA ReportJanlFeb 1980 15 produced products and to eliminate less efficient business activities in favor of large monopoly interests...
...The new industrial exports have the same disadvantages in relation to the high-technology industrial goods which still must be imported: relative demand is still higher for imports than exports, and prices are relatively lower for exports than imports...
...In other words, these forces provide the foundation for a new model of capitalist accumulation on a world scale...
...Raw materials production, though less dynamic than previously, continued to supply the greater part of exports from Latin America and the JanlFeb 1980 56 NACLA Report underdeveloped areas in general...
...In other words, we can talk of the transition from internationalization of the circuit of commodity-capital and moneycapital to the internationalization of the circuit of productive capital.' It is precisely this capacity to internationalize the production process which allows for a redefinition in the international division of labor...
...Capital goods refer to plant and equipment.] Foreign loans and investment in economic "enclaves" which had predominated in the earlier phase were replaced by direct investment in activities for which there was an internal demand--and which fulfilled the development needs of international capitalism.' This is also the period in which the Latin American economies taken together registered the lowest ratio between the size of their external sector (i.e., the amount of production for exports) and the size of production for the internal market...
...The argument that this model will overcome the external bottleneck and improve the countries' balance of payments is equally tenuous...
...See Alonso Aguilar, Teoria leninista del imperialismo (Mexico: Editorial Nuestro Tiempo), 1978...
...See Gonzalo Arroyo, Silvio Gomez de Almeida, and Jean Marc Vander Weid, Los obstaculos al desarrollo de un programa alimentario mundial dentro de un nuevo orden economico internacional (Paris: CETRAL), 1978 and Miguel Teubal, "La crisis alimenticia y el Tercer Mundo: una perspectiva latinoamericana," Revista de Economia de America Latina (CIDE), No...
...Also, technological developments in the advanced capitalist countries resulted, in many cases, in the displacement of natural products by synthetic goods...
...Trajtenberg, Transnacionales yfuerza de trabajo...
...By 1975 this number, admittedly high, had fallen to 21,900, a level at which it stabilized in the succeeding years...
...It is clear that the concentration of capital accelerated at the start of World War II and that, since the 1960s, large transnational corporations have consolidated their power...
...The issue is a significant one since these igration flows have reached enormous pro,rtions...
...This being the case, one can easily understand the desire expressed by governments in underdeveloped countries to offer capitalists the most "attractive" conditions possible, and these attractions include low wages and an unorganized working class...
...It does not include work undertaken in nationally-owned subcontracting firms...
...XI, No...
...The entire issue is available for $8.00 from CIDE, Apartado Postal 41-655, Mexico 10, DF, Mexico...
...In conclusion, we must face the profound significance of a change in the international division of labor...
...proponents of such a policy have begun to gue that "the solution of the crisis implies a ordering of the sources of labor, and a structuring of labor markers...
...And, by 1976, the context had completely changed...
...On the other side, U.S...
...When new material has been added by the editor, it is enclosed in brackets...
...Palloix, "Imperialisme et mode d'accumulation...
...In addition, Latin America has increasingly become a favored site for the relocation of capital, as indicated by the direction of U.S...
...manufacturers are able to take advantage of high technology in the United States and low wages in underdeveloped countries...
...Only North America, Australia and New Zealand were net grain exporters...
...In addition, in the case of certain industrial exports, the same features which formerly characterized the export of raw materials are reproduced...
...But obviously, this interdependence does not require that both sides be equal in terms of force or capacity to make decisions...
...What's more, since transnational corporations control the foreign aspects of these export operations, they can arbitrarily set both export and import prices...
...However, it is useful to situate the data in a broader historical perspective by examining, in successive, clearly differentiated phases, the composition of trade, and the resulting international division of labor...
...But it won't be long before the effects of the current Jan/Feb 1980 1314 NACLA Report crisis are reflected in the employment figures of the domestic work force...
...And finally, in a number of countries in the region, these trends have provoked direct political responses with extraordinarily adverse social consequences...
...For example, exports continued to demonstrate a certain dynamism, manufactured goods formed an increasingly large part of exports, and there was a rapid and persistent increase in demand for imports...
...In the former, the direct, positive effects on employment are more obvious even though they are also more limited, while the indirect effects, given the "exceptional" nature of the activity, are less acute...
...Ramos dos Santos, "Imigracao europeia...
...Latin America participated fully in this temporary recovery...
...A recent French study indicated that the eventual reduction of 250,000 jobs now occupied by foreign workers would give rise to only 80,000 new positions for French workers...
...Second, a more efficient transportation system (containerization, air freight, etc...
...At the beginning of the century, countries tended to specialize in either the production of raw materials or in manufacturing...
...6. Aguilar, Teoria leninista...
...Thus, these exceptional circumstances appeared to overcome the external bottleneck, reversing a long-term trend...
...As technical restrictions on the internationalization of production are overcome, neither natural nor "external" economic factors will determine the location of industry...
...On this basis, underdeveloped economies would overcome the effects of the external bottleneck and would improve their foreign exchange accounts...
...A NEW ROLE FOR THE PERIPHERY Before long, the world economic crisis ushered out this period of expansion, but some of its basic characteristics did persist...
...Other quantitative indices would further substantiate the argument, but the data are well known and there is a general consensus as to the trends they illustrate...
...And even this figure is low since it only considers productive units which produce exclusively for the world market, and only those which are foreign-owned...
...Simply, it will gradually encompass the entire national economic system...
...Rather, we must accept the fact that deeprooted problems, which were particularly noticeable during the present crisis, forced the world capitalist economy to redefine its model of accumulation in a direction which required important changes in the international division of labor...
...For example, in the advanced capitalist countries, a growing concern with industrial pollution and environmental hazards has definitely led to increased emphasis on technological developments and investments to counteract these effects...
...And, if we add to this data projects still under development, we find "world marketoriented" industrialization projects in 51 of the 103 countries...
...For example, according to estimates the ILO, nearly six million migrant workers found work in Europe in 1974...
...These figures show that total imports to the United States of goods assembled abroad went from $953 million in 1966 to almost $7,200 million in 1977...
...Intermediate products are basically industrial inputs such as chemicals, petroleum products, etc...
...Given these factors, they argue, this process will be relatively transitory...
...The major industrial centers proceeded with their own production of raw materials, and the most dynamic portion of international trade tended to concentrate in that between the industrialized countries themselves...
...We are referring to the specific form taken by capitalist accumulation on a world scale, its concrete effects on the international division of labor, and what this implies for the exploitation of labor in underdeveloped countries...
...The extent to which this process has already spread is shown by data on the composition of, and changes in, world trade, particularly with respect to exports from "developing" countries, and the latter's share in the international trade of manufactured goods...
...Nor do we mean to discount, in the abstract, any form of "transnationalized" organization of production...
...To suggest this conclusion is not to underestimate the importance of any process of export diversification...
...Leaving aside those industrial activities in underdeveloped countries which produce both for the internal market and for export, the study identifies the size and extent of free trade zones and "world marketoriented factories" (which may or may not be located in these zones...
...In this context, changing the international division of labor becomes increasingly important in opening a new pattern of accumulation...
...Even so, import-substitution industrialization was not to provide a transition to more "autonomous" development...
...It found that in 39 of the countries labor was employed in industrial production oriented for the world market...
...6 But, leaving aside the purely quantitative dimension, the central difference consists in the fact that, even though the internationalization of capital is not a new phenomenon, internationalization of the production process is...
...To a greater extent than in prior eras, this realignment is taking place under conditions which require extraordinarily important social transformations and political adjustments...
...And, given the political imperatives of a program which will force the further denationalization of underdeveloped economies and the superexploitation of their labor force, we can expect an increase in authoritarianism, repression and the separation of larger and larger sectors of the population from the political process...
...2 (Summer 1977), pp...
...The footnotes appear at the end of the major articles and contain explanatory as well as bibliographic material...
...The Internationalization of Capital and the Circuit of Social Capital," in Hugo Radice, ed., International Firms and Modern Imperialism (Harmondsworth, England: Penguin Books, 1975), pp...
...For underdeveloped countries as a whole, manufactured goods as a share of total exports (valued at 1970 prices) rose from 19.3% in 1970-72 to 28% in 1975 and to 31% in 1977...
...and, most importantly, labor-power in the underdeveloped countries is employed for industrial production destined exclusively or predominantly for the world market...
...But it also has serious implications for the internal social structure of the industrialized capitalist countries themselves, even though these implications are less immediate...
...It does not encourage the development of an industrial base which could, over time, meet the needs of the masses of the population...
...Only the conscious struggle of workers, environmental activists and others has forced industrialists to cope with the polluting effects of their industries...
...Even so, there is still a great degree of controversy as to the future development of this trend...
...Since the vast majority of workers in foreign assembly plants are women, a number of valuable publications exist which focus on this aspect...
...TRADE AND PRODUCTION IN HISTORICAL PERSPECTIVE Even if we examine the 1970s alone, it is clear that significant changes have altered the patterns of world trade, especially as regards the composition of trade between countries This article originally appeared as "America Latina ante nuevos terminos de la division internacional del trabajo," in Centro de Investigacion y Docencia Economicas (CIDE), Economia de America Latina (March 1979...
...According to one of the above cited studies, the hourly wage of workers engaged in the assembly of electronic consumer goods in the United States is 4.4 times higher than the wage paid in Mexico, 2.8 times that in Japan, 11.8 times that in Hong Hong, and 18.2 times higher than that in Taiwan.Is We can cite similar statistics for other categories of work...
...These include Beyond the Border (1979...
...As quoted in Albano Cordeiro, "Mobilidade internacional de forca de trabalho e imperialismo," Economia e Socialismo (Lisbon), No...
...direct foreign investments were located in Latin America...
Vol. 14 • January 1980 • No. 1
