Domestic political economy has historically been constructed around the divide between capital and labor, with firms and workers being at odds over the division of the economic pie. Within this construction labor is usually represented as a monolithic interest, yet the reality is that labor has always suffered from internal divisions. Globalization sharpens these divisions, which helps explain why corporations have been winning and workers losing.<\/p>\n
A core problem for labor is that workers are also consumers, thereby creating a divide between desires for higher wages and desires for lower prices. Historically, this identity split has been exploited to divide union and non-union workers. Globalization amplifies the worker \u00e2\u20ac\u201c consumer identity split through its promise of lower prices, a problem that is exemplified in the debate over Wal-Mart.<\/p>\n
This problem is worsened by the fact that globalization impacts the economy unevenly, hitting some sectors first and others later. The process can be understood in terms of the hands of a clock. At one o\u00e2\u20ac\u2122clock is the apparel sector; at two o\u00e2\u20ac\u2122clock the textile sector; at three the steel sector; at six the auto sector. Workers in the apparel sector are the first to be impacted, but all other workers get price reductions. Thereafter, the process picks off textile sector workers at two o\u00e2\u20ac\u2122clock. Meanwhile, workers from three o\u00e2\u20ac\u2122clock onward get price cuts, as do the apparel workers at one o\u00e2\u20ac\u2122clock. Each time that the hands of the clock move, the impacted workers are isolated. In this fashion, globalization moves around the clock with labor perennially divided.<\/p>\n
Manufacturing was first to experience this process, but technological innovations associated with the internet are putting service and knowledge workers in the firing line as services become tradable. Even retail workers are vulnerable as shown by the viability of the Amazon.com business model. Public sector wages are also indirectly in play since declining wages mean declining tax revenues. The problem is that at each moment in time workers are divided, with the majority being made slightly better off while the few are made much worse off.<\/p>\n
Globalization also divides capital, creating a new division between bigger internationalized firms and smaller firms that remain nationally centered. This division has been brought into sharp focus with the debate over the trade deficit and the over-valued dollar. In previous decades manufacturing as whole opposed trade deficits and an over-valued dollar because of the adverse impact of increased imports. The one major business sector outlier was retailing, which benefited from cheap imports. However, the spread of multi-national production and out-sourcing has divided manufacturing into two camps. In one camp are larger businesses that have gone global and benefit from cheap imports: in the other are smaller businesses which remain nationally centered in terms of sales, production and input sourcing.<\/p>\n
This division opens the possibility of a new alliance between labor and those manufacturers and businesses that remain nationally based. This is a potentially potent alliance since in the U.S. there are approximately seven million enterprises with sales of less than ten million dollars, versus two hundred thousand with sales greater than ten million dollars. However, such an alliance will always be unstable since traditional labor \u00e2\u20ac\u201c capital conflict over income distribution can always reassert itself. Indeed, this pattern is already evident in the internal politics of the National Association of Manufacturers (NAM). The NAM has been significantly divided regarding the over-valued dollar, and one way to address these divisions is a domestic competitiveness agenda aimed at weakening regulation, reducing legal liability and lowering employee benefit costs.<\/p>\n
Solidarity has always been key to political and economic advance by working families, and it is key to mastering the politics of globalization. Developing a coherent story about the economics of globalization around which working families can coalesce is a key ingredient for solidarity. So too is understanding how globalization divides labor. Such understandings can help counter deep cultural proclivities to individualism, as well as other historic divides such as racism. However, as if this were not difficult enough, globalization creates additional challenges. National political solutions that worked in the past are not adequate to the task of controlling degenerate international competition. That means the solidarity bar is further raised, calling for international solidarity that supports new forms of international economic regulation.<\/p>\n","protected":false},"excerpt":{"rendered":"
Domestic political economy has historically been constructed around the divide between capital and labor, with firms and workers being at odds over the division of the economic pie. Within this construction labor is usually represented as a monolithic interest, yet the reality is that labor has always suffered from internal divisions. Globalization sharpens these divisions, […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7],"tags":[],"class_list":["post-30","post","type-post","status-publish","format-standard","hentry","category-political-economy"],"_links":{"self":[{"href":"https:\/\/thomaspalley.com\/index.php?rest_route=\/wp\/v2\/posts\/30","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/thomaspalley.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/thomaspalley.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/thomaspalley.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/thomaspalley.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=30"}],"version-history":[{"count":2,"href":"https:\/\/thomaspalley.com\/index.php?rest_route=\/wp\/v2\/posts\/30\/revisions"}],"predecessor-version":[{"id":1684,"href":"https:\/\/thomaspalley.com\/index.php?rest_route=\/wp\/v2\/posts\/30\/revisions\/1684"}],"wp:attachment":[{"href":"https:\/\/thomaspalley.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=30"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/thomaspalley.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=30"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/thomaspalley.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=30"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}