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MULTIPLE FLEXIBILITIES:
NATION-STATES, GLOBAL BUSINESS AND PRECARIOUS LABOR
Kevin Hewison and Arne L. Kalleberg
University of North Carolina at Chapel Hill
Concept Paper for the Workshop
MULTIPLE FLEXIBILITIES:
NATION-STATES, GLOBAL BUSINESS AND PRECARIOUS LABOR
at the
International Conference on Inter-Asian Connections
SSRC and Dubai School of Government
DUBAI, FEBRUARY 21-23, 2008
Economic, political and social changes—beginning in the 1970s and accelerating in the 1980s, 1990s and 2000s—in Asian countries (as well as in all industrial and many developing nations) have had profound impacts. These macro-level changes include: rapid innovations in technology; and growing globalization and international competition in product, capital and labor markets. Much of this change has been identified with the spread of neo-liberalism. These changes created a need for nation-states, businesses and workers to become increasingly flexible in their production processes, employment systems and job search behaviors by developing transnational and inter- and intra-regional networks of production and increasingly utilizing nonstandard forms of labor. The adoption of these flexible forms of production and employment, in turn, has increased the precariousness of labor and accelerated transnational migration flows.
This workshop will focus on the opportunities and challenges produced by these multi-level developments associated with the deepening of global production. It will examine the strategies adopted by Asian states and workers as they have sought to respond creatively to the demands of the global economy for increasing flexibility. Papers in the workshop will examine issues such as the emergence and deepening of transnational and inter- and intra-Asia regional networks of production, the transnational migrations they are generating, and their consequences for states, businesses and workers across Asia. At the heart of this workshop is the question of new patterns of economic and geographic flexibility and social precarity, and the ways in which flexibilities are generating new forms and practices of governance.
The issues of flexibilization and precarity are not distinct to Asian societies, of course, but are the more widespread results of the embedded nature of neo-liberalism. Nevertheless, the research agenda that we hope emerges from the workshop will aim to clarify the ways in which patterns of flexibilization and precarity are emerging under specific conditions and with unique outcomes in Asian contexts. Moreover, we hope to help create a research network that can link the study of Asian flexibilization to the parallel processes occurring in other regions, particularly in Europe/Eurasia, the Americas, and Africa/Asia.
In this concept paper, we first outline some of the main macro-level economic, political and social forces that have generated the conditions that require flexibility on the part of nation-states, employers and labor. We then examine some of the responses of these social actors to these macro-level conditions. We next outline some of the consequences of these flexibility imperatives for labor. Finally, we indicate briefly how the nine papers in this workshop fit the themes we have discussed in this concept paper.
MACRO-LEVEL FORCES FOR CHANGE
The Neo-Liberal Revolution
“Neo-liberalism” is a term that has come into common usage over the past three decades as a catch-all for a particular set of ideas about the roles of markets and states.[1] It is also an ideological position. While composed of sometimes diverse and contradictory ideas (see Gamble 2006: 22), neo-liberalism’s core tenets can be identified. It is a collection of economic, social and related political policies that emphasize the market, fiscal discipline, trade, investment and financial liberalization, deregulation, decentralization, privatization, and a reduced role for the state (see Williamson, 1990; Wade, 1992). These elements have remained constant both as policy guides and an ideological core. In practice, a range of policies have been emphasized or modified in particular circumstances, including: a limited welfare state; decentralized labor relations and the weakening of unions; lowering of taxes and fees on business; and fiscal discipline taking precedence over social policies (Portes, 1997: 238).
Neo-liberalism’s proponents argue that self-regulating markets ensure the best allocation of economic resources as rational and self-interested individuals engage in multiple and voluntary transactions that ultimately bring the greatest good for the individuals involved. Neo-liberalism substantially modifies the long-standing positions of economic liberals by envisioning a quite different role for the state, extending the notion of market efficiency to become a prescription for broader social and political organization (Robison, 2006; Robison and Hewison, 2005). Neo-liberals seek a state that can regulate society and its politics because the marketization of the economy and society leads to fragmentation and disorganization. States are required to: (i) overcome residual commitments to collectivism and social democracy; (ii) promote productivity gains through political activism; and (iii) maintain and extend the dominance of capital over labor (see Akram-Lodhi, 2006: 161; see also Akram-Lodhi, 2006: 158-9; Gamble, 2006 28-9; Jayasuriya (2006: 242).[2]
The term “neo-liberal globalization” denotes an extrapolation of neo-liberal positions to enhance the global expansion of capital, using the normalization of neo-liberal policies as international best practice. Scholte (2005: 1) is correct to observe that the “reigning policy orthodoxy holds that globalization works best when it is approached with wholesale marketization through privatization, liberalization and deregulation. Thus, neo-liberalism takes the maxims of traditional laissez-faire economics and applies them to the currently emergent global order.” Trade liberalization takes on a significant policy role, being touted as the most important measure for ensuring that “comparative advantage” is exploited and drives growth (ul Haque, 2004: 2).
These ideas and their implementation have been contested. Some analysts have argued that the most significant issue in the debates regarding neo-liberal globalization is the impact on employment and wages (ul Haque, 2004: 1). Even so, neo-liberal policy has had remarkable resiliency in a range of countries, both developed and developing. Some of this resiliency derives from the globalist nature of neo-liberalism that specifies the optimum conditions for capital-in-general rather than for particular or national capitals (Gamble, 2006: 26).[3]
The Globalization of Production
The neo-liberal “project” is global. Developed-world Keynesianism that ruled economic policy in the “golden age” of industrial capitalism was essentially built on notions of national capitalisms. Neo-liberal globalization provides a strategy that has permitted capitalism to free itself of the spatial “locks” that constrained its mobility (Gamble, 2006: 26).
Globalization is reflected in the increased mobility of products and services among countries, the greater movement of capital through spread of multinational corporations and international capital flows, spread of mechanisms of international and pan-national governance, and the diffusion of international ideologies and consumption trends. Neo-liberalism has had major impacts on states, labor and capital especially since its expansion has coincided with a period of expanded commodity production as investment and production has become truly global.
One obvious aspect of contemporary globalization has been the rapid expansion of foreign direct investment (FDI). Annual FDI inflows have increased from an average of US$548 billion during 1994-9 to more than US$916 billion in 2005. In Asia and Oceania, the increase over the same period was from about $92 billion to $200 billion (UN, 2006: 2). Global production (or value) chains now span the globe and the integration of labor into these is identified by some as a coercive process (Chang, 2006a: v).
Global production is driven by multiple motivations and multiple innovations involving the application of technology, knowledge and logistics. These motivations and innovations require that states, business and labor respond in a manner that enhances competitiveness in multiple ways—the competitiveness of products, firms, markets, and even countries. The globalization of production has resulted in—and been motivated by—cost reduction, most especially through wage cost reduction (see Burkett and Hart-Landsberg, 2000; Santoro, 2000). Equally, though, evidence suggests that industrial relations systems—the control of labor—also has a significant impact on global investment decisions. Levels of unionization, collective bargaining contexts and state workplace regulation are each important factors affecting global investment decisions (see Cooke, 2001a; Cooke, 2001b; see also Kleiner and Ham, 2003; Chiu, 2007).
THE NEED FOR FLEXIBILITY: STATE, BUSINESS AND LABOR RESPONSES
Under conditions of neo-liberal globalization, competitiveness demands flexibility, which in turn requires that the market relation be dominant and that labor be subordinated to the needs of production. Flexibility is thus needed by nation-states, businesses, and labor.
Individual states have responded to competition in many ways, yet nearly every state is required to facilitate increasingly flexible labor markets. State monetary, fiscal, taxation, investment and industry policies are measured by their flexibility. Many states strategically engage their economies in entry or upgrading in various value chains while implementing multi-layered industrial policies that include complex combinations of both high-, mid- and low value-added strategies. In addition, to remain attractive production sites, states increasingly concede that national borders need to be re-imagined if investment and production is to be maintained. Borders cannot be permitted to continue to impede investment or trade.
Production organized along value chains shapes and reshapes relationships between businesses, states and labor, where the emphasis is increasingly on flexibility. While production is being deterritorialized on a scale as never before, states and labor exhibit considerably more “stickiness.” As the ILO (2007: 1) explains:
Recent globalization trends have been characterized by the greater integration of global markets for goods, services and capital across borders while their impact on the cross border movement of people and labour remains much more restricted, regulated by immigration laws and policies that uphold the principle of state sovereignty.
Hence, states and labor are not as footloose as capital and businesses. Indeed, capital takes advantage of their greater stickiness, effectively having states compete for investment (Carrico, 2007). This competition between countries/economies is a hallmark of transnational investment and production as governments and local businesses seek to take advantage of their inherent or constructed comparative advantage. Such advantages can be seen in cheap, skilled and/or controlled labor, access to markets and materials, tax advantages and so on. These neo-liberal policies have been implemented so broadly that they are now seen as orthodoxy; they are the “natural” policies for delivering progress and development (Gamble, 2006: 32).
In a neo-liberal world of competing individuals, labor must also compete. But this competition is conceptualized and regulated as individual workers rather than as the collective power of labor. Freedom is very much defined as the right to participate in the market (Thirkell-White, 2006: 139). When it comes to collective organization, the best that labor should hope for is association at the level of the company, but collective action beyond this level is often seen as “market distorting” (ul Haque, 2004: 8-9). In the developing countries of Asia, capital’s need to control labor is reinforced by state intervention to repress labor organization, often for long-standing political reasons.
Businesses take advantage of limited and poorly implemented national labor laws and make good use of the state’s coercive powers in seeking to limit the organizational capacity of labor. In reality, in Asia, employment policies also maintain a large “reserve army” of labor in the informal sector that allows for greater control over workers in the formal sector (see Wong, 2006). Significantly, they also adopt firm-level and industry-based employment practices that limit collective organization. Such measures include outright coercion, including attacks on workers and union leaders and the smashing of unions or establishment of company unions that are indistinguishable from management (see Chang, 2006b).
One reason for weakening labor is to increase flexibility for states and capital. The “rigidities” of the labor market—especially collective bargaining and worker protections—are seen as impediments to employment generation. In the end, though, it is the fact that flexibility enhances control (and assumptions about increased profitability[4]) that makes flexibility so attractive. Businesses certainly take good advantage of limited and poorly implemented national labor laws and the coercive power of the state. They also adopt firm-level employment practices that prevent collective organization (see Arnold and Hewison, 2005).
LABOR OUTCOMES
Precarious Work and Labor
The conjuncture of the state’s political interests and capital’s need for maintaining its power over workers has resulted in increasingly flexible working arrangements. The consequence of such arrangements and the disorganization of labor can be, in Marjorie Griffith Cohen’s (1997) memorable framing, that neo-liberal globalization spawns a “vampire capitalism.” In this conception, the claimed inevitability of the market as the main and natural regulator of economic and social life actually drains the life from welfare, wages, working conditions, and so on, while exploiting natural and human resources. As ul Haque (2004: 6) shows, the outcome has been to “weaken labour and strengthen capital.” Indeed, this has been one of the principal aims of neo-liberal policy.
A result of the increased need for flexibility on the part of nation-states and businesses—coupled with the decline in the power of labor—has been the growth of precarious and “nonstandard” work arrangements. Work has become more insecure, dirty, dangerous and degrading. One way this has occurred is through the creation of flexible work forces that involve the use of putting-out systems, in-house contracted labor, irregular employment, competitive work teams and migrant workers (see Arnold, 2006; Chang, 2006b; Won, 2007). In fact, as Chang (2006a: 32) points out, these elements of flexibilization effectively amount to the application of a market model to human resources management.
There is considerable and growing evidence that certain kinds of flexible work arrangements—especially temporary and often part-time work—are associated with low wages and lack of benefits such as health insurance and pension benefits in the United States (Kalleberg, Reskin and Hudson, 2000) and with “bad” jobs in Britain (McGovern, Smeaton and Hill, 2004). The growth of these nonstandard work arrangements has been attributed to employers seeking greater flexibility with regard to their workforces, combined with a decline in unionization and a general removal of institutional protections (labor laws, for example) for workers. The expansion of nonstandard, “flexible” work[5] has raised concerns about the quality of jobs within the European Union (i.e., the “decent work” initiative).
The term “precarity” carries the baggage of a European social movement. Feeling deserted by unions and devalued by businesses, and struggling with a shrinking welfare system, European workers have become increasingly vulnerable to the market, especially as neo-liberal reforms have been implemented. People began to organize around the concept of precarity, which meant a situation of living and working without stability or safety net. European activists have generally identified precarity as a part of neoliberal globalization, involving greater capital mobility, the search for lower costs, privatization and attacks on welfare provisions. Carrico (2007) observes that “Precarity is … the characteristic mode of exploitation in the contemporary world.”