The scene was a 2011 dinner held at the home of venture capitalist John Doerr in Woodside, California, a short drive south of San Francisco. Those on the guest list\u2014the aforementioned Jobs, as well as Facebook\u2019s Mark Zuckerberg, Oracle\u2019s Larry Ellison, Yahoo\u2019s Carol Bartz\u2013presented a veritable murderer\u2019s row of the billionaire geeks who, in recent decades, had prescribed the American Dream its glasses; and all were gathered to discuss, over champagne and snorting laughter, the future of their industry and its relationship to the domestic economy. The question\u2014innocent enough, carefully phrased\u2013of whether the iPhone might someday be manufactured in the U.S., where it was conceived and developed\u2014and indeed where many earlier titans of tech, like Thomas Edison and Henry Ford, had flourished and employed millions of workers\u2014was put by perhaps the only non-CEO at the table: President Obama.<\/p>\n
\u201cThey\u2019re not coming back.\u201d<\/i><\/p>\n
And they needn\u2019t. For as today\u2019s ever-more-enlightened corporate officers, such as those of the Silicon Valley coterie described above, are concerned\u2013and they\u2019re in agreement with virtually every \u2018guru\u2019 of Wall Street and swami in The City you want to name\u2014economic nationalism\u2013entailing as it does notions of regional financial security and job rootedness\u2013is just one more material attachment; and international capital\u2014she is a rolling stone. Local politicians, meanwhile, with their sepia-toned rhetoric of \u201creshoring\u201d and \u201cbringing back\u201d these industries, which had anchored and maintained so many of their constituents, are simply playing the part left to them, and invoking nostalgia to assuage present pain, while avoiding the acknowledgement that it\u2019s largely out of their hands now. There are of course numbers out there, factual and positive, to trumpet, of low-yield, capital-intensive jobs, conjured up out of youthful\u2013and yes, high tech\u2014industries since 2010, and these have certainly furnished real employment to real Americans, but they are, on balance, paltry, and no rejoinder to Mr. Jobs\u2019 bald-faced observation. The era of \u2018Made in America\u2019 remains an all but closed chapter in American history\u2013and, interestingly, its Chinese analogue now appears, in all aspects, on the same path.<\/p>\n
Made in China
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Foreign Direct Investment (FDI) in China began shortly after the industrialized nations underwent a crisis<\/a> of accumulation that extended from 1965 to 1982. What ascended out of the crisis was the period of \u201cneoliberalism\u201d which saw profitability rise between 1982 and 1997. \u00a0The emergence, movement, and on-going reconstitution of global<\/i> capital was prefigured and circumscribed by the antagonisms of labor, a pattern consistent with 150 years of industrial history.<\/p>\n When out of the mass of productive powers thrown together for the war effort there emerged a much invigorated<\/a> and enlarged<\/a> labor movement, unwilling, in the decades following, to retire of itself\u2013after defeating Hitler and winning welfare\u2014into passivity, capital\u2013well, capital became understandably anxious. Capital reacted to the labor strife, and falling profit rates, through the creation of labor-saving technological innovations, \u201ctechnological fixes\u201d but with a spike in union density, wildcat strikes and \u00a0wages, (and consequently) higher labor costs resulted in a \u201cprofit squeeze\u201d in the US, and a reorganization towards lean production of deregulation of capital and labor markets, concessionary union contracts, and mergers and acquisitions.<\/p>\n The postwar boom had not been slowing in the 1960s, exactly, but the working and middle classes continued to demand a larger share of it. \u00a0In reaction, the proprietors of capital decided, in short order, to take their dollars and pounds, marks, francs, and lira, elsewhere; to void trade barriers, wherever protective of labor, and inaugurate a bonanza of deregulation that would cast all of Western labor into direct competition with its as-yet unorganized counterparts. But a good deal had already been achieved, in the way of: solidarity, wage increases, labor laws, a social safety net, inflation in the political costs of smashing up peaceful protests. To counter these remaining victories: a tremendous algal bloom in consumerism, reabsorbing wages through the tranquilizing allure of tchotchkes, purchasable on credit; a spiritual blight facilitated by a parallel increase in the ubiquity of advertisements\u2013on TV, in the subways<\/a>, on the buses, in the stadiums, by the highways, in the neighborhoods\u2014and eventually on the internet, where they now blot out the sun. Globalization is a phase in a historical process, and can be reversed no more than could the industrial revolution.<\/p>\n So while the famous diplomatic mission of 1972\u2014when all of contemporary Western media descended onto Beijing to witness America\u2019s grand gesture of good faith\u2014has since passed into official record with Richard Nixon\u2019s jowly charm being the thing<\/i> what done the trick<\/i> and made sociable a hardnosed nation, the stakes were much higher than simply bringing another party in to foot conference lunch bills; capital needed new frontiers. With a few concessions on the Taiwan question<\/a>, it got them. Let it be known, then: before Ronald Reagan\u2019s stiff upper lip could overthrow the U.S.S.R.\u2019s Evil Empire, and raise the Iron Curtain, Nixon\u2019s canny ability to withhold racial epithets for a few days had itself reduced the Bamboo Curtain to toothpicks, packaged for export. \u201cRang yi bu fen ren xian fu qu lai,\u201d<\/i> announced Deng Xiaoping in 1978, \u201cLet some people get rich first.<\/i>\u201d (And \u201csome\u201d did.) Billions of dollars of Foreign Direct Investment (FDI) inundated the countryside, summoning out of China\u2019s vast reserves of unorganized labor and raw materials a great dread empire of toilers and smokestack-afforestation; a real life Mordor, forging acid-washed jeans by the ton. And within a scant few decades China had come out atop the world economic standings\u2014at the number 2 position; a scoreboard-don\u2019t-lie moment of apparently objective triumph for Chinese leaders and their neoliberal bedfellows.<\/p>\n But the Chinese working class, so often caricatured in the West as either globalization\u2019s passive victims or its active vectors\u2013as its stoic assemblers of sneakers or its eager army of blacklegs\u2013have, in recent years<\/a> been exploding this mythology, and asserting themselves in ever-higher numbers. Younger workers, who moved from their villages in the interior to the industrial metropolises then rising in the southeast, during the 80s and early 90s, are proving rather uppity. As Duan Yi, a Chinese labor activist, attests, \u201cThe new generation of workers born in the 80s and 90s are not like their parents. They want to make a life in the cities. So they are becoming better organized and more rebellious than ever before.\u201d Chinese government<\/a> figures paint a picture of burgeoning upheaval: the incidence of mass protests between 1993 and 2003 grew six fold, from 10,000 protests to 60,000; from some 730,000 protestors to over 3 million.<\/p>\n Tellingly, the labor costs for big firms during this same period tripled<\/a>\u2013encroaching upon and often flattening profit margins. Indeed a 2012 survey conducted by the American Chamber of Commerce<\/a> found only 73% of U.S. based firms in Shanghai to be profitable\u2014down from 78% in 2011 and 79% in 2010: an ongoing slide the firms attributed to rising labor and logistical costs, a shrinking labor supply, and the development of domestic competition. Almost half of manufacturers and importers in another survey of the same year<\/a> said they would, in light of the same reasons, consider moving out of the country altogether\u2014of which 26% did. China is in the throes of a major shift in the balance of power between labor and capital, transforming producers into consumers, a deficit-West with a surplus-East.<\/p>\n And this bumper crop of wildcat strikes and work stoppages, which has only accelerated since 2004, is all the more significant for its illicitness in the nominally socialist state\u2013where independent unions and strikes are in fact illegal, and all grievances\u2013concerning workplace conditions, wages, the appointment rather than election of factory representatives\u2013must be mediated through the All-China Federation of Trade Unions, or ACFTU. But the usefulness of that particular legal channel is demonstrated by the recourse en masse<\/i> to extralegal means.<\/p>\n Whereas previous policy dictated that the nail that stands up get the billystick, recent events have shown government goons being, most ominously, called off<\/i><\/a>. But this goon-leashing would be in line, apparently, with what a 2012 IMF report<\/a> concluded was a large-scale return\u2014accompanying not only rising labor cost but rising raw material<\/a> costs as well\u2014of the Chinese economy to services and away from investment and export-led growth; a transition in which the Chinese working classes figure also as consumers, whom must be cultivated<\/i>, and not as just so much brute labor. And accordingly, 2012 marked the first time that China\u2019s working population shrank (by 3.5m). At this rate many economists, even in the IMF, predict that China will reach a point of labor scarcity soon, the so-called \u201cLewis turning point\u201d, an inevitable developmental phase when wages surge sharply, industrial profits are squeezed, with a steep fall in investment. The current process in China is similar to the crisis of the 1960s and 70s. A workers\u2019 struggle leads to higher wages and broader social reforms, resulting in diminished labor output and higher costs of maintaining workers in production as well as an increased \u201csocial wage\u201d, squeezing profits further. In the final phase: capital innovates by automating and\/or leaving for a more profitable terrain. \u00a0The transition may deepen the crisis of accumulation in the \u201creal economy\u201d, at least in the short term, for international capital. Capital depends on the Chinese State to continue its role as comprador; a shift away from this configuration undermines industrial capital\u2019s bottom-line.<\/p>\n Post-China<\/b><\/p>\n And the oxen-cum-cash cows have been fattening. While consumer debt in the U.S. has itself grown a none-too-reassuring 10% in the last half decade, in China\u2013which now has more active credit card accounts than the U.S. has citizens\u2013it has ballooned<\/a> an astonishing 67%. Concurrently, GDP output from services\u2014transport, retail, real estate, etc.\u2013is reaching new heights, and in the past 3 quarters<\/a> has outperformed industrial sectors for the first time since 1961<\/a>.<\/p>\n Such is the speed of this transition\u2014from the world\u2019s supply-side workshop to its next great marketplace\u2014that manufacturing balance sheets in China and the U.S. may soon converge, and the twain to meet as early as 2015\u2013at least below the Mason-Dixon, according to<\/a> the Boston Consulting Group (BCG). In evidence: the relative momentum of Chinese workers, who have been winning real medium wage increases of 17% per annum since 2009 taking home nearly five times<\/a> what they were in 2000, while their American counterparts have annually coughed up<\/i> 1.5%<\/a> and the real value of UK workers fell to 2003 <\/a>levels in 2012. \u00a0\u00a0And since wages, which account for 20-30% of manufacturing costs, were in 2011 only 30% lower in China than in the lowest-paying American states, that leaves for bridging a mere 10-15% gap. Once warehousing and logistical considerations are factored in, says BCG, respective profits, too, approach\u2014and will by 2015 achieve\u2014parity.<\/p>\n But this isn\u2019t to suggest that a downturn in Chinese domestic industry will mean a consequent uptick in America\u2019s, and\u2013to their own amazement\u2013the realization of politicians\u2019 promises\u2013because, as former U.S. Labor Secretary Robert Reich has recently written<\/a>, \u201cif we didn\u2019t have to compete with lower-wage workers overseas, we\u2019d still have fewer factory jobs because the old assembly line has been replaced by numerically-controlled machine tools and robotics. Manufacturing is going high-tech.\u201d Some of these increasingly automated<\/a> capital-intensive production that have already returned to the US have concentrated jobs in a narrow \u201chighly skilled\u201d<\/a> class, reflecting the West\u2019s intensifying economic inequality<\/a>, and a rapidly drying-up consumer base. Labor economists predict<\/a> that this accelerated \u2018technological fix\u2019 of laborsaving automation is, and will continue to, \u201chollow out\u201d the job market in the US, replacing living with dead labor, further substituting the material for the immaterial. Even Chrysler\u2019s much-ballyhooed \u201cImported from Detroit\u201d campaign, with its promise of rejuvenation if the Heartland just toughs it out, is, by the company\u2019s own admission<\/a>, \u201c[not] intended to be literal.\u201d What\u2019s left then for the Joe Schmoes, whose jobs, if they aren\u2019t being exported, are being increasingly colonized by machines<\/a>?<\/p>\n Manufacturers in the east and west will no doubt be following Apple supplier Foxconn\u2019s example<\/a> to replace a million workers with a million robots within 3 years to \u201ccope with rising labor costs.\u201d In recent years the world\u2019s largest contract manufacturer of electronics and China\u2019s largest private-sector employer, Foxconn, has made global headlines after a series of suicides and labor protests<\/a>. In February 2013, Apple stocks tumbled by 2.4% after Foxconn\u2019s announcement<\/a> of a hiring freeze, announcing that they will be opening a 10,000-worker facility in Brazil whilst at the same time committing $10 billion to open factories in Indonesia. This dwarfs Apple\u2019s high-profile announcement of $100 million<\/a> of investment in high-tech capital-intensive with a skeletal labor force operating to operate the machines in the US.<\/p>\n The rostrum set has their answer: learn to program, says David Cameron; \u201ctake a shot, go for it. Take a risk. Get the education. Borrow money, if you have to, from your parents. Start a business,\u201d says Mitt Romney\u2013just take on additional debt pursuing additional training, which you may have to do again many times before you retire, if you can retire. Or become a CEO. Easy peasy.<\/p>\n But skilled labor (which includes programmers and other degreed grunts, but also the \u201cimmaterial\u201d sectors, comprising the creative departments of advertising, research and development, and so on) isn\u2019t immune either. Their white collar domains\u2014which were enlarged during industry\u2019s decline to accommodate the new service economy, and cultivate its markets while managing a new and growing bottom floor of McJobs\u2014are contracting as overseas markets mature and local workers move up the chain. And if the younger, high-tech elements have been insulated from this reshuffling, it is not owing to any especial significance in their work, but to a saturation point that has yet to be reached\u2014and the lingering necessity for grey matter in the computer world.<\/p>\n And as the public sector\u2013the West\u2019s last redoubt of union power\u2014suddenly finds itself besieged by state and local-level politicians, eager to turn economic crisis into opportunity and please big donors while marginalizing opposition blocs, the Keynesians\u2013right on cue\u2013come running over the hills, repair kits in tow. No, no, no: re<\/i>-invest in the public sector! Rehire those laid off cops! Build bullet trains! It\u2019s the only way to staunch job outflow and breathe life again into a moribund economy\u2013and isn\u2019t that what we all want? Sorry, but this ain\u2019t your father\u2019s welfare state, Paul Krugman. Deregulation has gradually rendered Keynesianism a lost cause. With little to no red tape holding it to a social contract or national allegiance, capital is free now to get its profits wherever it finds them. Thus, the present crisis differs not in degree but in kind, and\u2013here comes Michael Spence with the cold water<\/a>\u2013\u201c[a] structural problem demands a structural answer.\u201d Government packages only restore pre-crisis demand temporarily, and are, \u201cunlikely to generate the escape velocity needed to get out of the jobs hole,\u201d because, \u201cnon-tradable job growth can\u2019t mask the declines in the tradable sector anymore.\u201d Steve no-Jobs wasn\u2019t making it up.<\/p>\n Further cementing this redistribution of jobs and industry, from the U.S. (and Europe) to capitalism\u2019s suburbs, is a shift in purchasing power: not only has the dollar been depreciating for a decade<\/a>, but a full fifth of U.S. household annual income today goes to servicing debt\u2013instead of, y\u2019know, buying more things<\/i>. Emerging markets, however, are entering consumer society\u2019s first bloom; and strike-won wages there just beginning to disappear into iPhones and cineplexes. Years of wage suppression in the West predicated on a neoliberal \u2018social contract\u2019 of cut-rate Chinese goods are in a process of mutation. As Bruce Rockowitz, CEO of Li & Fung which handles 4% of China\u2019s exports to the US, claims<\/a> \u201cIt is the end of cheap goods,\u201d and that none of the alternatives will come close to curbing costs and inflation like China. \u201cThere is no next\u201d after China, says Rochowitz, predicting that the price of goods will rise by 5% per annum, optimistically, and that Li & Fung\u2019s sourcing operation has already seen annual price increases of 15%.<\/p>\n The Twilight of the Spatial Fix<\/b><\/p>\n Though, the question of \u2018where next?\u2019 persists, if these territories\u2013Indonesia, Peru, Mexico, Eastern Europe\u2013mature into service economies, will capital nest its factories and convert raw materials and labor into finished product? Africa, populous as it is, lacks the readymade infrastructure to support the logistics of large-scale manufacture. And though Vietnam and India, have variously<\/a> been touted<\/a> as the \u201cnext China,\u201d the real truth in these prophecies, it turns out, has less to do with their inexorable transformation into tomorrow\u2019s workshops for the developed world, churning out new products by the tanker loads, than with their active resistance<\/a> to such a future<\/a>.<\/p>\n While China undergoes a labor shortfall, the UK and US have a burgeoning surplus population of unemployed or underemployed contract workers, aptly captured in the title of a 2012 Forbes<\/i><\/a> article \u201cCareers Are Dead. Welcome to Your Low-Wage, Temp Work Future\u201d with 40% more people holding temp jobs since 2009 and the Bureau of Labor Statistics stating that three out of five new jobs created are part-time and low-wage with no possibility of progression. A new generation of workers can look forward to lives marked by uncertainty and precariousness.<\/p>\n As a consequence of increasing labor costs the price of consumer goods in the industrialized economies will rise, coupled with mushrooming debt levels, falling real wages, a downward resetting of asset prices, accelerated automation of both the service and industrial sector and a reduction of debt-financed purchases, with the net effect of plummeting consumer-buying power. Even with the continued offensive by the state to attract investment and profitability, there is no policy that will benefit both the proprietors of capital at the top and the laborers at the bottom. Any plan that expands the workers\u2019 share will undermine profitability, but without consumer spending the crisis will remain. The system weighs heavy by the contradictions embedded within it<\/p>\n While China is on a path to a service economy other emerging markets are turning export-oriented production inward towards domestic consumption. In the US evolving \u2018technological fixes\u2019 exacerbate the crises of overproduction with dwindling options to divert it within the \u201creal economy\u201d. The post-industrialized West should take heed: \u2018those jobs are gone and they\u2019re not coming back.\u2019 In the 1970s neoliberalism\u2019s raison d\u2019etre was the overtake of labor by capital, a process of annexation that continues with today\u2019s crisis.<\/p>\n David Harvey says that \u201ccapital never solves its crisis tendencies, it merely moves them around\u201d but that \u201cif the spatial fix is negated\u2026 global crisis in inevitable.\u201d As capital continues down the path of least wages into ever-obscurer corners of the globe, following ever smaller returns, while leaving mobilized whatever labor it presses into service, it\u2019s bound to run out of easily exploitable room; the spatial fix is a vanishing frontier, accelerating toward obsolescence.<\/p>\n What then? Evolution or revolution: history.<\/p>\n Ashok Kumar<\/strong>\u00a0is a PhD student of Labor Geography at Oxford University. He tweets @broseph_stalin. Alex Gawenda<\/strong> is a Chicago-based scrounger who writes sometimes.<\/em><\/b>[1]<\/b><\/a><\/p>\n [1]<\/a> Important insights and contributions from Joel Feingold<\/p>\n
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