Sunday, December 16, 2007
In the pre-globalization era, western labour enjoyed near-monopoly access to western capital
In the pre-globalization era, western labour enjoyed near-monopoly access to western capital. That is to say, western capital was immobile, and had to treat with western labour because it had nowhere else to go. We are now beginning to have, for the first time in human history, a truly global economy, where almost anything can be produced anywhere in the world, and then sold anywhere. (Lloyd,B & Thurow,L).With globalization, when the dismantling of barriers to world trade gave western capital access to vast amounts of low- cost labor in countries that were previously closed off.
Cheap labour, plus the opportunity to exploit new global markets, has brought a profit bonanza to western companies. But it has not been reflected in higher wages for employees at home because companies are no longer in thrall to employees at home. Instead, the gains have been split between capitalists, who have enjoyed higher returns; executives, whose emoluments go up with profits; and poor workers in the developing world, who have gained from the growth in jobs and rising wages that would once have gone to the west.
This is not quite how globalization was supposed to work out.
Although the demand for labour has indeed fallen significantly in both he USA and EU in recent decades; there is the shift from natural resource-based industries into those dominated by brain power. But if we are now moving to a world dominated by the knowledge industries, the key assets become the brainpower of individuals and you cannot own individual human beings that will change what we mean by capitalism. What will capitalism mean when you cannot own the key
asset? Is there a model in investment banks, law firms, consultancy companies? They are capitalist business firms...