31 The Neoliberal Remaking of the Working Class
Introduction
Throughout its history capitalism has continuously reshaped the working class in terms of occupations, industries, geography, and demographics as accumulation penetrated new areas of production and commodification enveloped more aspects of human activity. The shift of labour from farm to factory was, and in much of the world still is, an ongoing process of dislocation and dispossession, while employment in service-producing industries surpassed those in goods production in most industrial nations by the mid-twentieth century. The last three decades or so have seen another transition in the shape of the working class internationally not only occupationally and industrially, but in the racial, gender, and national composition of this class throughout much of the world. Indeed, in a short period of time the very nature of work itself has been transformed in time, intensity, and location for millions across the globe. The cluster of ideologies, policies, and practices known as neoliberalism has enabled these changes through deregulation, privatization, tax relief for capital, and ‘free’ trade agreements.
The focus of this chapter is on the changing shape of the labour force, and hence the working class, across much of the world with a focus on the developed economies. This rapid change has four basic dimensions: the growth of wage-labour on a world scale; the decline of manufacturing employment and the continued rise in service sector jobs in the developed economies; the rise of global migration that has altered the ethnic, racial, and gender composition of the workforce in most industrial nations; and the transformation of work along with the reorganization of the production and circulation of commodities and the increased domination of capital.
A Growing Global Working Class
One of the most striking trends of the era of globalization and its enabler, neoliberalism, has been the growth of non-agricultural wage-earning employment from 1.5 billion in 1999 to 2.1 billion in 2013 worldwide (ILO, 2011: 68, 2014: 97). By 2008, the International Labour Office (ILO) could report that ‘Approximately half of the global labour force works for a wage’ (ILO, 2008/09: v.). To this, however, must be added at least some portion of the billion or so workers in the world's growing informal economy, where people move in and out of wage labour, self-exploitation, and unpaid work (Davis, 2006: 178). While not all of the officially counted wage-earners are working class, the vast majority clearly are in the sense that they possess no means of production of their own, have little choice but to (attempt to) sell their labour-power in a labour market, work under the direction of an employer, and are exploited while at work in that they produce more value than that which covers their wage (Marx, 1990: 301, 450, 874). Even industrial employment, so often thought to have succumbed to advancing technology, grew from 533.2 million to 724.4 from 1999 to 2013, an increase of almost 40% worldwide. Service employment grew by 39% on a world scale, almost the same rate as industrial wage-work. Perhaps surprisingly, while service jobs in developed countries increased by only 16%, those in East Asia grew by a significant 53% (ILO, 2011: 68, 2014: 97). What this tells us is that service sector growth is to a large extent a function of contemporary industrialization, not its negation.
As might be expected, however, the number of industrial jobs in the developed economies fell somewhat from 122.0 million in 1999 to 106.8 million in 2013, a drop of 12.5%, while those in the developing world rose, with East Asia seeing the largest increase from 176.1 million industrial jobs to 250.1 million in that period, a gain of 42% (ILO, 2011: 68, 2014: 97). The decline in industrial jobs in the developed economies was a long-standing one, but the descent accelerated as the era of neoliberalism arrived in the 1980s. The global recession brought on by the US Federal Reserve Chairman Volker's rapid increase in interest rates in late 1979 brought an accelerated crash of manufacturing employment across much of the industrialized world as it announced the neoliberal era. In the US alone from 1979 through 1983, two-and-a-half million manufacturing jobs were lost (Moody, 2012: 6). In Germany, France, and the UK a total of over 2.6 million industrial jobs, a somewhat broader measure, disappeared between 1980 and 1984 (OECD.StatExtracts, 2015). As a proportion of the workforce, that in manufacturing fell from 27.2% to 10.1% from 1975 to 2007 in the UK, while in Germany it fell from 31.2 to 19.1, in France from 24.5 to 12.6, and in the US from 19.1 to 9.9 in those years (OECD.stat, 2015). The other side of this coin, of course, is the continued rise of service sector employment, which grew from 1.0 billion in 1999 to 1.4 billion in 2013 worldwide and from 296.1 million to 351.0 million in the developed nations, where service jobs compose 74% of those employed (ILO, 2014: 96–97). What, then, is behind this shift in employment?
Explaining the Shift
Capitalism is, of course, an expansionary global system whose tentacles now reach virtually every corner of the planet. As David McNally puts it, ‘It invests in order to expand itself via the capture of shares of global profits (or surplus value)’ and it does so without concern for the social consequences it imposes on the nations of its origins or destinations (McNally, 2011: 37–38). Table 31.1 shows the growth of real value added in manufacturing by region, and specifically for China, for the two decades from 1992 to 2012. But some care is needed in interpreting this shift. Industrial output in the West and Japan has fallen significantly as a proportion, but still remains the largest concentration at 65% in 2012, accounting for 70% of world manufacturing exports (UNIDO, 2013: 182). While its growth rate has slowed down and fallen far behind that of the East, manufacturing output in the developed nations has, nevertheless, grown by 43% over this period. In other words, a shift to the East does not mean a decrease in manufacturing output in the West.
Source: United Nations Industrial Development Organization, Industrial Development Report 2013 (Vienna: United Nations Industrial Development Organization, 2013), p. 171.
Yet, globalization is a frequently mentioned cause of manufacturing decline or even ‘deindustrialization’ in developed economies. The acceleration of world trade and Foreign Direct Investment (FDI) that measure globalization has, indeed, been enormous. Between 1982 and 2013 FDI inflows increased by almost two-and-a-half times, while exports of goods and services grew by almost ten times (UNCTAD, 2006: 9, 2014: xviii). Neoliberal ‘free’ trade agreements have, to be sure, hit some key industries, such as steel, textiles, and electronics, in developed nations very hard. Along with this has been the expansion of trade in intermediate products and the development of Global Value Chains (GVCs) via offshoring and imports (UNCTAD, 2013: 122–147; WTO, 2014: passim). The impact of offshore production, however, is highly uneven between industrialized countries. The global average of internal to external value added is 72%. As the UN wrote in 2013, however, ‘Large economies, such as the United States or Japan, tend to have significant internal value chains and to rely less on foreign imports. There are important exceptions, including China, Germany and the United Kingdom’ (UNCTAD, 2013: 130–131). Some countries have become more dependent on offshoring or imported parts and components. Germany is a clear example, where the share of Eastern European Union countries’ automobile component imports in car production has risen from 9% in 1995 to 37% in 2005 (Bieler and Erne, 2014: 162).
Nevertheless, over these years, manufacturing output in most developed nations continued to grow. In the US, manufacturing real output increased by 131% from 1982 to 2007, or about 5% a year – a little less than the annual rate of 6% for the previous 20 years, to be sure, but still significant (Council of Economic Advisers, 2011: 250). Even in the UK, where the manufacturing workforce fell by almost half since the late 1970s, output measured by gross value added grew by almost half from 1982 to 2007, remaining well above its previous highpoint in 1970 (PricewaterhouseCoopers, LLP, 2009: 6; Rhodes, 2015: 6). In Europe, manufacturing output doubled from 1992 to 2012 (UNIDO, 2013: 171). Whatever the role of FDI and GVCs in the relative shift in industrial output represented in Table 31.1, these cannot completely explain the extent of the movement in industrial employment given the continued growth in output in absolute terms in the developed economies.
To a large extent the shift in manufacturing employment from developed to developing economies was a result of the enormous differences in productivity between the two. Measured as the amount of real value added per worker in all goods production, the average for Canada, the US, the UK, France and Germany was $100,191.20 in 2010, while that for the BRIC countries (Brazil, Russia, India, China) was $10,113.5 in 2010, a tenth of that in the industrialized economies despite rapid increases in productivity by the BRIC and other developing countries. For Indonesia and Malaysia, the average was $21,183, still only a fifth (World Bank, 2012: 360–361). Thus, the shift in industrial employment from West to East (or North to South) was magnified beyond that in output by the enormous gap in productivity.
Productivity and Manufacturing Job Loss
The ILO noted in 2012 that ‘Between 1999 and 2011 average labour productivity in developed economies increased more than twice as much as average wages', as Figure 31.1 reveals graphically for the developed economies as a group. The trend, in fact, began earlier. In the US, it reported, from 1980 to 2011 non-farm business productivity grew by 85% compared to 35% for total compensation, while in Germany since 1990 it had grown by a quarter with real wages remaining flat (ILO, 2012/13: vi). The restraint of wages can be attributed in part to neoliberal policies, including deregulation, anti-union legislation and court rulings that have made striking more risky in many cases, and tax policies that encourage relocation or job-displacing new technology, as well as to competitive pressures from newly industrializing economies and offshore production chains. The roots of productivity, however, lay mostly in the production process itself.
In the first phase of neoliberal development in the US during the 1980s, an annual productivity increase of 5% was achieved with relatively low levels of investment in equipment and software. In the following decades, investments in technology would play a bigger role (Bureau of Economic Analysis, 2010: Table 4.2; US Census Bureau, 1991: 411–412). But it was the new ‘lean’ approaches to production, with their origins in Japan in the 1950s, introduced in the North American automobile industry in the 1980s, and arriving a little later in Europe, that reduced the labour input in one industry after another. Within 20 years lean norms had moved well beyond manufacturing to envelop retail, transportation, health care, and even education. More recently, electronic and biometric forms of surveillance and work measurement have been added to this cocktail of labour intensification, while just-in-time global production chains have added a measure of external discipline (Ball, 2010: 87–106; Pauli and Arthur, 2011: 49–58).
The increases in overall productivity have been significant across the developed countries as Figure 31.1 shows. More importantly, from 1979 through 2001 productivity in manufacturing rose even faster, at an average of 3% a year for the European Union 15, while that in the US grew by 3.6% per year in that period, according to an EU study (O'Mahony and van Ark, 2003: 29). A Conference Board comparative study of cumulative rates puts average annual US output (real value added) per hour increases at 4% a year from 1979 through 2012, with the rate rising to 6% from 2000 to 2007 and then falling somewhat. For France, the Netherlands, and the UK it was 3% a year over this period. Germany saw a slightly slower rate of productivity growth at 2.8%, while all of these countries saw an acceleration from 2000 through 2007 prior to the ‘Great Recession’ (The Conference Board, 2013: 7). From these substantial rates of increase it seems safe to conclude that productivity, even more than offshoring or ‘free’ trade, was the major culprit in manufacturing job loss within the developed economies.
The Changing Demographics of the Global Working Class
Alongside these changes have come enormous movements of people across the world, spurred by the dispossession and dislocations of industrialization, urbanization, agro-business, land seizures, and war (Ferguson and McNally, 2014: 9–11; Harvey, 2010: 48, 244, passim; McNally, 2011: 130–140). ‘Globally, there were 232 million international migrants in 2013', reported the UN Secretary-General, just over half of them in Europe and North America. Over half of those in Europe came from the eastern and southern countries in that continent, while half of those in North America came from Latin America, above all Mexico. Asia, as a whole, contained 30% of all migrants, many of them in the oil-producing countries of the Middle East (UN General Assembly, 2014: 2–3; see also IOM, 2010: 169). Yet, although migration occurs within all continents, and between 2000 and 2013 the flow of migration increased more rapidly between developing countries, it was the older industrial countries of North America, Western and Central Europe, Japan, and Oceana that were the major migrant destinations, accounting for just over half of all migrants by 2010 (IOM, 2010: 149, 153, 165, 185, 221).
Most migrants move to cities. London, Paris, and Moscow all host more than a million migrants, while foreign-born persons form a quarter or more of the populations of Amsterdam, Brussels, Frankfurt, Los Angeles and New York (Beveridge and Weber, 2003: 74; IOM, 2010: 184–185). Women composed a little less than half of all migrants (44%) between 2000 and 2013, but a larger share of women moved to developed economies in this period so that women represent over 52% of migrants in Europe (ILO, 2014: 183–184; IOM, 2010: 184). Of the worldwide total, almost half of all migrants were workers (World Bank, 2012: 232–233). From 1980 to 2007, for example, the proportion of immigrants in the US workforce grew from 6.5% to 15.8% (Mishel, Bernstein and Shierholz, 2009: 197).
International migration has been a deadly business. Between 1998 and 2013 at least 6,000 immigrants died attempting to cross America's fortified border with Mexico (Sacchetti, 2014). From 2000 to 2013 about 23,000 people died trying to enter what Amnesty International has named ‘Fortress Europe', with matters getting worse as land routes have been fortified, forcing migrants to attempt to reach Europe by water. About 1,500 died in Australian waters from 2000 to 2014; over 3,000 in the Horn of Africa from 2006 to 2014. All of these figures are certain to be underestimates (Amnesty International, 2014: 5–6; Brian and Laczko, 2014: 24). Those who succeed face immigration regimes designed to create insecurity and precarity. Immigration policies from North America to Europe to Oceana have essentially criminalized huge numbers of migrants. This is particularly true for the third of all migrants from developing countries who are considered ‘irregular'; i.e., undocumented – most likely another underestimate (Ferguson and McNally, 2014: 5–8; IOM, 2010: 120; Malik, 2015).
The result is that in every region of the world, the ethnic, racial, and cultural composition of the working class, formal and informal, employed and unemployed, has changed dramatically in the last 30 years. Thus, the populations and workforces of the older industrial nations have become more ethnically and racially diverse. As a result, internationalization of the working class consists not only of the many threads of migration, internationalized production, just-in-time global value chains, and intense trade routes, but the internationalization of the ‘domestic’ working classes of the global West and economic North. As Table 31.2 shows, migrants now compose a significant percentage of the population in several major industrial countries. This is an irreversible process.
It is, however, by no means a painless process. The presence of a large population that is distinct from that of the host country by race, language, and culture has made for friction. Not only have far right parties such as UKIP in the UK or the National Front in France, as well as Tea Party extremists, vigilante groups, and presidential contestant Donald Trump in the US made gains on anti-immigrant rhetoric, but polls show anti-migrant sentiment runs deep in many developed countries. A German Marshall Fund survey of Europeans showed that, by 2009, 50% had negative attitudes towards migrants. Although in many countries attitudes were less severe, in Spain this view ran as high as 58%, while in the UK it was a startling two-thirds (IOM, 2010: 199). Behind these attitudes are not only the presence of ‘strangers', or even the far right, but the austerity measures and demagoguery of the traditional parties of power that feed on the insecurities of the native-born population and inflame their prejudices. While migrants are playing a bigger role in the labour movements in most developed countries, the road to domestic internationalization will continue to be a rocky one.
The Changing Nature of Work
Alongside and partly enabled by lean production methods and the increased use of information and communications technology, came an increase in outsourcing and precarious employment. A 2002 survey of 410 ‘global executives’ reported that 75% of firms outsourced food and maintenance services, 66% legal services, 53% internet services, 45% data processing, and 41% telemarketing. For manufacturing, 62% of those surveyed said their company outsourced the production of some parts and components. In the US, General Motors famously reduced its ‘in-house’ work from 70% in 1990 to 49% just a few years later (Moody, 2007: 31–32). Production of goods and services, of course, has always been built on supply chains, but the organization of these supply chains has changed, with far more tracking and control over supplier firms and, ultimately, a tendency towards consolidation among supplier firms.
Another feature of lean production has been increased emphasis on workforce flexibility; that is, the ability to redeploy or shed workers in line with economic conditions. This, in turn, has meant the rise of precarious forms of employment. Before discussing this in some detail, however, it is important to keep in mind, as a major study of precarious work in Europe put it, ‘The assumption that the principal norms regulating work are those of full-time permanency, has never reflected the full variety of working relationships present in industrial economies’ (McKay et al., 2012: 17–18).
The extent of precarious employment is a matter of some controversy, as it depends on what is counted as insecure. The most common way of counting the proportion of precarious jobs is to distinguish between regular or standard employment, usually full-time jobs with labour contracts of indefinite duration and covered by some legal regulation, on the one hand, and those seen as non-standard or atypical due to their temporary nature and the lack of labour market regulation. Irregular jobs tend to be concentrated in hospitality, food service, construction, retail and cleaning (building service), all of which have grown significantly in most industrial countries in the last three decades. In the European Union 27 by 2010, standard full-time jobs of indefinite duration composed 80% of all employment with the rest falling in a number of irregular forms, such as temporary or fixed-term work, ‘zero hours’ contracts or on-call jobs, bogus self-employment (independent contractors), some part-time work, and forms of casual employment. For example, temporary or fixed-term employment in the European Union rose from 8.3% in 1987 to 14.7% of all jobs in 2007 (McKay et al., 2012: 7, 16). US figures for 2005, which includes only those self-employed who are independent contractors, put irregular employment at about 11% (BLS, 2005: 1). If involuntary part-time work were included in the US figures, irregular or contingent jobs would be closer to 12% (US Census Bureau, 2005: 399, 2011: 389). A 2002 Canadian study which includes all non-employer self-employed as well as all part-time workers concludes that non-standard workers are just over 20% of the Canadian workforce (Cranford, Vosko and Zukewich, 2003: 10). Some would include all self-employed people, but this would incorporate huge numbers of would-be entrepreneurs, consultants, and non-working-class professionals, thus inflating the proportion of precarious employment in the working class. Similarly, the inclusion of those part-time workers in permanent employment or who prefer or need part-time work exaggerates the proportion of precarious jobs. Nevertheless, the range of non-standard jobs from 12 to 20% seems realistic.
A number of consequences flow from these figures. The first is that in spite of the growth of irregular and precarious employment, the large majority of working-class job-holders in the developed economies are in regular, long-term employment. Reflecting this is the fact that although job tenure has decreased somewhat, most jobs still last several years. In the US, for those in the 24–34 year-old range average tenure dropped from 3.8 years to 3.5 from 1979 to 2006, while those in the 35–44 age range saw it fall from 7.1 years to 6.6, and for those aged 45–54 it fell from 11.3 to 10.3 (Mishel, Bernstein and Shierholz, 2009: 257). In the UK in 2011, the average job tenure for women was about eight years, while that for men was nine (CIPD, 2013: 4–5). The idea that everyone switches jobs all the time, making organization impossible, is, thus, highly misleading. Nevertheless, in order to lower total labour costs, capital has increasingly turned to precarious work in those lines of production that tend to have lower productivity, such as hospitality, food service, health care, retail, and building services.
To do so, however, business has increasingly incorporated into the workforce, through these more precarious forms of work, a growing proportion of women and migrants. For example, half the growth of the US workforce from 1995 to 2010 was made up of immigrant workers (Ferguson and McNally, 2014: 5). To conceive of precarious work as simply a source of weakness is a mistake in so far as the growth of the employed working class, the incorporation of women into the workforce, and the domestic internationalization of this class are seen as potential sources of strength. In the case of part-time work, it should be born in mind that ‘voluntary’ part-time work has enabled women with children in the US to increase their level of employment by 8 million jobs from 1980 to 2009, which accounts for a third of the growth of female employment in this period (US Census Bureau, 2011: 385). And, indeed, the growing sections of organized labour in the US are composed heavily of women and immigrant workers mostly in those industries listed above as having a high incidence of precarious employment.
From Fragmentation to Reorganization
The picture of today's working class as one fragmented by declining industrial work, ethnic, racial and gender divisions, extensive outsourcing of production, and growing non-standard or precarious employment has led some academics (once again) to redefine class altogether. Recently, for example, Guy Standing has offered an impressionistic seven ‘class’ picture of contemporary capitalism, with an ‘elite’ at the top and the ‘precariat’ at the bottom, sandwiching in four other gradations of ‘class’ (Standing, 2011: 7–13). Similarly, using the recent BBC Great British Class Survey of over 160,000 Britons, a team of nine academics led by Mike Savage of the London School of Economics produced another seven-layer class structure for the UK, this one emphasizing relative traits such as the social, cultural, and economic ‘capital’ of each ‘class', with the layers once again sandwiched between an ‘elite’ and a ‘precariat’ (Savage et al., 2013: 220–250). As with most efforts at stratification models, the results are largely descriptive with no particular relationship between the different ‘classes'. If, in contrast, classes in capitalism are understood in their relations (direct or indirect) with capital and the capitalist class, these descriptive stratifications are not much help in understanding what has changed and what hasn't.
The argument here is that the working class in the developed industrial nations as well as the newly industrializing countries has grown as capital has taken command of more and more aspects of social existence and increased its ability to coordinate the production and movement of goods and services. This has several dimensions: (1) the rise of service sector jobs related to the labour of reproduction; (2) the increase of low-paid, sometimes precarious jobs, disproportionately among women and migrants; and (3) although industrial restructuring has often been experienced as fragmentation, the process of change has increased the domination of capital over more and more types of work and produced consolidation in many industries. What, then, does the working class in the developed world look like today?
The most obvious change in almost all industrialized nations, alongside the decline of ‘traditional’ manufacturing jobs, is the simultaneous rise of jobs defined as service-producing. To some extent, however, the rapid growth of service jobs in relation to goods-producing jobs is a statistical mirage. For one thing, measured by final product as a proportion of GDP, services actually declined from 65% of GDP in 1982 to 62% in 2012, while goods rose from 22% to 32% (Council of Economic Advisers, 2013: 335). To a large extent, the disproportionate rise of service jobs stems from the difference in the average hours worked by those producing goods and those providing services. Those working in construction, manufacturing, utilities and transportation and warehousing in the US averaged 40 hours a week in 2010 (little changed since 1990), while those employed in retail, accommodation and food services, and health care and social services worked just under 30 hours per week; i.e., technically part-time even when these jobs are long-term (US Census Bureau, 2011: 406). That is, service workers worked about 25% fewer hours per week so that it would take many more of them to match a similar increase in GDP output to that by goods-producing industries. Productivity differences are also significant in boosting service sector jobs. As we saw above, productivity in US manufacturing grew by about 3% a year since the 1980s. In retail trade, where job growth has slowed down, productivity grew by an annual average of 2.9% from 1987 to 2006, while that in the more rapidly growing accommodation and food services grew by a mere 0.8% over those years, janitorial services by 1.9%, and so on (US Census Bureau, 2011: 416–417). Generally, the picture is one of slower productivity growth and, hence, faster employment increases in relation to output. Both the differences in hours and productivity would hold for most industrialized economies. But, of course, the numbers of service workers are real, so we can't be satisfied with undermining the statistical mirage.
* Excluding education, leisure, and government.
Source: US Census Bureau (2011) Statistical Abstract of the United States, 2012. Washington, DC: US Government Printing Office, pp. 408–411.
Table 31.3 shows the numerical and percentage growth in employment in the major service industries in the US. Here it will be argued that the biggest areas of service employment growth stem from three developments that accelerated during the neoliberal era: (1) the greater design and technology requirements of both goods production and their movement (logistics); (2) the long-term commodification of more and more aspects of the labour of reproduction of the working class and, indeed, society; and (3) capital's increased need for low-wage, low-skilled labour associated with support activities for a variety of industries, including goods production.
The design, construction, and coordination of the proliferating Big Box retail stores, redesigned hospitals and hotels, the vast logistics network that has arisen in the past two decades or so, both globally and domestically in many countries, along with the intense rise of measurement and monitoring technology needed to make these systems run, to track products, and discipline labour have required more and more design and technology professionals, enumerated in professional and business services in Table 31.3. This latter function was enabled by the deregulated nature of monitoring and surveillance encouraged by the Reagan Administration (Cowen, 2014: 42–47). The increases in these occupations, however, accrued mostly to the credentialed middle class, including many of the own-account self-employed. Some of those in a number of these professions are experiencing a process of proletarianization as the autonomy and relative freedom they once possessed in comparison with most workers have been eroded by management and their connection to production has become closer. The 20,000 or so technical engineers employed by Boeing in the US, who joined a union and went on strike in 2000, are one example.
The increase of those employed in industries serving the reproduction of the working class and society in the US, mainly in privately-run health and social services (5.2 million) and food services (2.8 million), surpassed that of professional and business services by almost 2 million workers and amounts to well over a third of all service sector growth, not including education and government employees (US Census Bureau, 2011: 408–411). To a large extent this is the result of the increased numbers of women with children that capital has drawn into all areas of the workforce, generally beginning in the 1950s in the US. Today, women perform many of the functions of social reproduction formerly done in the home, family or neighbourhood at work under the control of capital, in many cases for low wages. In other words, the labour of reproduction still falls largely to working-class women, not only in the home, but through the jobs they hold as well.
Another growing group were those who provided support and services for other industries, including manufacturing, construction, and transportation – mostly at low wages. In 2005 this amounted to over 8 million workers, a majority at lower than average wages, including all those paid by temporary work agencies, building service contractors, other facility support activities, and waste management (US Census Bureau, 2011: 410). Many of these jobs were outsourced from manufacturing, transportation, financial, and construction firms in the last 30 years. Others were required as both production and the circulation of commodities became more complex and more productive of waste and environmental damage. Some participate in creating surplus value, but all are necessary to the functioning of industry, and hence, with few exceptions, are working class.
The US is somewhat of an extreme example. The percentage of manufacturing workers prior to the Great Recession was higher in Germany, the UK, France, Italy, Canada, and the Netherlands. And, of course, these societies all have more generous welfare provisions for paid time-off work, health care, etc., even after cuts and ‘reforms', that absorb more of the labour of reproduction (Mishel, Bernstein and Shierholz, 2009: 357–388). Nevertheless, what emerges is a picture of a working class with a smaller manufacturing core producing more surplus value in extended (but consolidating) supply chains, served by a growing and large workforce required for the reproduction of the class as a whole, along with a legion of low-paid, often precarious workers recruited disproportionately among women, ethnic or racial minorities, and migrants that is spread among all these industries. The structure of capital that shapes this workforce, however, has also changed.
Reorganization and the Increased Domination of Capital
Marx argued in Volume II of Capital that the total production of the value of commodities involves much more than the act of manufacturing or immediate production. For example, he wrote concerning the need of commodities to change ‘location’ in order to be ‘realized only in their consumption': ‘The productive capital invested in this industry (transportation) thus adds value to the products transported…’ (Marx, 1978: 226–227). Or, as he put it in the Grundrisse, ‘Economically considered, the spatial condition, the bringing the product to the market belongs to the production process itself. The product is really finished only when it is on the market’ (Marx, 1973: 533–534). Today's production chains, of course, require a great deal of movement from place to place, involving more than just the capital and labour of transportation per se, but the entire logistics industry and much of the labour associated with ‘wholesale’ and ‘retail’ functions as well. Thus, the value-producing sections of the working class go well beyond the workers in manufacturing, mining, or construction.
The increased domination of capital over more and more labour can also be seen in the increased value of capital per worker in many industries. From 1990 to 2010 in the US, the private net stock of fixed non-residential assets per employed private sector worker rose from $51,212 to $119.195 or by 133%. In manufacturing, this rose from $27,691 in 1990 to $88,771 in 2010 or by 221%. For those in trucking, the increase was 149%, for warehousing 191%, accommodations (hotels, motels, etc.) 142%, while that in retail doubled in those years. The real net stock of assets per worker in hospitals grew from $28,056 in 1980 to $81,290 in 2009 or 190%, reflecting the growth in capital intensity in that fast-growing service industry (Bureau of Economic Analysis, 2015; Moody, 2014: 5–25).
Outsourcing of production and the shaping of supply chains are no longer the random dispersal of ever smaller production sites. As Bennett Harrison wrote in the mid-1990s, ‘Production may be decentralized into a wider and more geographically far-flung number of work sites, but power, finance, and control remain concentrated in the hands of the managers of the largest companies in the global economy’ (Harrison, 1994: 47, italics in original). More recently, as timing and transparency have become more important factors in competition, production chains have become consolidated and more structured. In the automobile industry in the US, for example, after decades of outsourcing aspects of production to smaller suppliers, in the last two decades the major assembly companies reorganized their production chains into large Tier 1 companies producing larger pieces of the car, such as entire interiors, on a just-in-time basis with a responsibility for the Tier 2 and 3 suppliers. As a result, supplier firms with earnings over $2 billion a year increased from five to thirteen in the 1990s. Since 1990, automotive parts producers, in turn, have seen an industry consolidation that has cut the number of companies by 80%, with the survivors representing larger concentrations of capital through acquisitions and expansions, while the big assembly firms have cut the number of suppliers they deal with from an average of 1,000 to 300–600. Until the Great Recession in 2008, employment in the parts sector remained remarkably stable above 650,000 in most years (Aschoff, 2010: passim; Helper and Kleiner, 2003: 446–478; Moody, 1999: 8–9; US Census Bureau, 2011: 408; US Department of Commerce, 2011: 7). Since then this approach has been generalized to other industries as value chains are rationalized much as production was before. As one British expert states, ‘A further prevailing trend over the last decade or so has been the dramatic reduction in the number of suppliers from which an organization typically will procure materials, components, services, etc.’ (Christopher, 2011: 193).
Beginning in the 1990s, another tightening in the organization of extended production or value chains in both goods and service production has been the high degree of coordination achieved through the application of various forms of communications, measuring, and monitoring technologies. As a leading logistics guru put it, ‘An information supply chain parallels each physical supply chain’ (Sheffi, 2012: 159). The ‘logistics revolution’ at the centre of extended value chains has meant that, as Cowen writes ‘the corporate focus on the cost of distribution in discrete segments of supply chains was transformed into a concern with value added in circulatory systems that span sites of production and consumption’ (Cowen, 2014: 24). That is, the production chain, the transportation it requires, and the circulation of capital throughout the system are increasingly viewed as a single integrated source of surplus value. To this end, the geographic decentralization of phases of production has brought forth an integration and centralization of labour and capital in the way products are moved, whether domestically or globally, in the form of giant concentrations of labour and capital in logistics clusters of warehousing, transportation, and related services, most of them in large urban metropolitan areas.
In the US, one study places the number of ‘logistics’ workers in 2007 at 3.2 million, 85% of them within metropolitan areas (van den Heuvel et al., 2013: 10, 21). This estimate, however, does not include workers on freight carrying railroads, of which there are 185,000 (Association of American Railroads, 2015). The size of logistics clusters in the US measured by employment also grew in recent years, ‘as did the labor concentration in those clusters’ (Sheffi, 2012: 265; see also Rivera, Sheffi and Welsch, 2014: 327–332). These developments have brought tens and even hundreds of thousands of workers together in geographically centralized logistics clusters or hubs around cities such as Chicago, Los Angeles, Oakland, Memphis, and Louisville, as well as along the New Jersey Turnpike in the New York–New Jersey area. In Europe, where logistics as an industry grew at two-and-a-half times that of GDP, such centres are found in Rotterdam, Zaragoza, Duisburg, Frankfurt, and along the Thames Estuary near London (Sheffi, 2012: 265–267, passim). These ‘logistics clusters’ not only bring goods, whether imported or domestically produced, to retailers like Wal-Mart, but intermediate products to manufacturers, sometimes right to the assembly line (see Bonacich and Wilson, 2008; Sheffi, 2012).
Even more recent is the rise of the logistics or ‘distributive city'. Born in Dubai, but spread recently to many areas around the world, these ‘urban’ concentrations on the edge of actual cities offer a micro-view of the emerging capitalist society. As one group of scholars put it, they contain a ‘small percentage of professional, managerial and technical occupations and a high proportion of working class occupations’ (quoted in Cowen, 2014: 180–183). In the US, the radical reorganization of transportation achieved as part of the ‘logistics revolution’ was facilitated by the deregulation of transportation in 1980, which allowed intermodal systems and freed all forms of transport to relocate, reorganize, and compete (Cowen, 2014: 42–47). Being the product of deregulation and competition, these logistics hubs and the firms which operate in and from them have become owned and operated by an increasingly visible number of giant global companies. For example, in the US, after years of mergers and consolidations in freight transportation, the top five freight-carrying railroads account for 80% of employment in that industry, while UPS and FEDEX alone employ over 40% of the country's 1.7 million trucking and express delivery workers. If the next five largest trucking companies are included, the top seven employ almost half of all truckers and express delivery workers in the US (Association of American Railroads, 2015; Freight Rail Works, 2015; Transport Topics, 2014; US Census Bureau, 2011: 409).
Indeed, within the last three decades in US service industries, as in manufacturing, consolidations via mergers, acquisitions, failures, or growth have restructured the hotel industry, hospital systems, telecommunications, air, truck, and rail transportation, and much of retail, among others. Thus, more workers are under the control of larger agglomerations of capital in the US today than at the birth of the neoliberal era. The production of services in the health care sector, for example, has been reorganized in the last three decades into much larger firms competing for profits in urban markets. Hospitals in the US, for example, now employ 4.7 million workers, while nursing care homes employ an additional 3 million (US Census Bureau, 2011: 114). Both have increasingly been organized into chains by large corporate firms. Three-quarters of hospitals in the US are consolidated into urban-based corporate chains and systems employing tens of thousands of workers in large hospital complexes, who are subjected to lean production norms. Well over half of all long-term nursing facilities belong to the big national chains (Clark, 2002: 94; Kumar, 2010: 94–109; Moody, 2014: 5–25). In the UK, the National Health Service faced the erosion of creeping privatization, while more and more of its hospitals are forced into mergers as foundation trusts, similar in many ways to American hospital corporations despite public ownership. Workers there also face lean production methods. Indeed, to one degree or another marketization of health care has spread across Europe, while in Germany hospitals were being privatized (Hermann, 2009: 125–144; Krachler and Greer, 2015: 215; Moody, 2011: 415–434). Finally, in line with the rise of marketization, health care delivery in developed countries is increasingly organized along the same supply chain management practices as those in manufacturing. As one study of health care supply chains revealed, ‘The application of supply chain management practices in the health care sector not only relates to physical goods like drugs, pharmaceuticals, medical devices, but also to the flow of patients’ (de Vries and Huijsman, 2011: 160).
The complex of value chains that move through these huge concentrations of capital and labour are tied together by just-in-time delivery requirements that have gone well beyond internal lean production systems. While, as logistics academics often note, just-in-time delivery, whether at Wal-Mart or the factory assembly line, is often more a goal than a reality, it nevertheless puts pressure on the entire extended production and transportation system – above all on the workers involved at every step. But, as is by now well known, these just-in-time production and delivery chains are highly vulnerable to disruption by many causes from weather to workers’ actions (Bonachich and Wilson, 2008: 159–240; Cowen, 2014: 91–127). Precisely to the degree that these value chains are integrated, they are vulnerable not only at major logistics centres, but at virtually any point or ‘node’ in the chain of production, circulation and consumption.
To summarize, service workers, like those in logistics, health care, hotels, building services, and retail, are employed by bigger corporations than in the past, work in more capital-intensive situations, and are concentrated in or near large urban centres. Production value chains, in services as well as manufacturing, are highly coordinated, typically controlled by the dominant firm in the production chain, connected by electronic communications networks, measured and monitored by advanced surveillance technology, run on a just-in-time basis, and increasingly consolidated via mergers and acquisitions. At the same time, they are highly vulnerable to worker action at various points in the chain. This vulnerability is all the more strategically important for labour due to the emergence of ‘time-based competition'. As one leading expert in the field of logistics put it, ‘In business-to-business and industrial markets it seems that product or technical features are of less importance in winning orders than issues such as delivery lead time and flexibility’ (Christopher, 2011: 15–19). This time compression requires a constant reduction in the value of socially necessary labour time all along the entire system – including in the reproduction of the class and the army of low-paid workers at the bottom of these chains. This is not a picture of fragmentation, but of a process of reorganization and concentration once thought typical only of those in large manufacturing facilities and regions. Objective processes, however, do not by themselves make worker organization, solidarity, and action automatic. That requires human intervention.
There is no doubt that these dramatic changes in the nature of work and the structure of the working class itself have been highly disruptive and disorienting to workers and their organizations. Above all, trade unions have found it difficult to adjust to these relatively rapid changes in employment patterns, occupations, increased ethnic/cultural diversity, industrial restructuring and consolidation, spatial relations generally, and, of course, increased legal restraints on their actions. Traditional bargaining arrangements in the developed countries have frayed or come apart from the US to the UK to Germany. In particular, national or industry-wide systems of bargaining have been dismantled or increasingly decentralized (Bieler and Erne, 2014: 157–177; Moody, 2012: 7–10). One defensive response has been a trade union merger movement across the industrialized world. This, however, has not stemmed decline or loss of power much less reversed things (Moody, 2009: 676–700; Waddington, 2005: passim). In general, it has proved difficult for unions whose institutional arrangements were forged in an earlier era to adapt to the changes wrought by globalization and neoliberalism, particularly in regard to the reorganization of capital and the increased diversity of the workforce across the developed nations.
At the same time, there has been a growth of resistance to neoliberalism around the world and a growing variety of experiments in organizing among migrants, fast-food workers, other precarious workers, and those in logistics in the developed economies far too numerous to describe here (see, for example, LaBotz, 2014: 5–18; McNally, 2011: 146–182; Moody and Post, 2014: 295–317). There have also been fresh political breezes from the left across much of the industrial world where the traditional parties of labour have succumbed to neoliberalism, but it is hard to see these new political movements turning things around if there isn't more organization ‘on the ground'. Perhaps the words addressed by Dan Gallin, former head of the International Union of Food and Allied Workers and currently chair of the Global Labour Institute, to the founding convention of the International Domestic Workers Federation in 2013 provide some context for the fight against neoliberalism. He said:
Under the impact of new forms of capitalism, the working class has changed and is still changing. It has become fragmented, unsure of its identity. The trade union movement has not kept up with these changes. Its response has been confused and weak. Our task is now to restore the identity of all working people as a class, and to restore the trade union movement as the instrument of its emancipation. (Gallin, 2014: 260–261)
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