Search This Blog

Thursday, June 17, 2010

Thoughts on Readings Random Economic Ramblings

Amsden's article stood out most in my mind. Her reference to the rise of the Asian Tigers and discussion of the industrial revolutions in Britain, the U.S., and Germany led me to consider the current state of the U.S. economy. I think it was her (or maybe it was Berger) discussion of Primitive Accumulation and the Enclosure Movement that led me to look more at MNC's than states. I have no research or proof for the following, just international economic guessing and wondering.

It seems that labor and technology "filter down" or in a sense, across. States that achieve a stable political system with a favorable economic climate allow for innovation and entrepreneurship (a version of the somewhat misguided modernization theory). Those entrepreneurs create a technology and seek to build and sell it. Due to finances, political support, etc. they build in their home country first. Once the technology is perfected and laborers become unionized and more skilled in the production, laborer pay and benefits increase. Over the course of time, the laborers accumulate an expectation for a high standard of living and become involved in the conspicuous consumption of products. Moreover, their work makes the corporation extremely prosperous (for example, the U.S. automobile industry in the 1950's).

The corporation, meanwhile, in the business of profit accumulation, seeks to maximize its profits. Because workers in the industrialized state (the U.S.) have reached such a high standard of living, the corporation looks to a cheaper labor source in a state that is beyond "developing" but not so developed as to have a high standard of living. The corporation becomes an MNC, shifting its production to the next state/region of the planet.

Slowly, the state that has established an extremely high standard of living moves to the international economic periphery, away from the core that it inhabited for however many years, decades, perhaps centuries. The question is, how does this state "re-balance" its economy? Economic recession and/or recession seems inevitable. How does the state escape the downturn? New innovations that reinvigorate the system and restart the cycle? Is the cycle the second or third time shorter in duration? Does a revolution have to occur?

For the former periphery states now turned core states, how long do they enjoy the MNC's occupation? What is the impact of consumption and societal values in terms of how long it takes for the standard of living to increase to the extent that the MNC (s) move on to the next peripheral state?

It seems to me that this is what has occurred here in the U.S., especially in the automotive industry and computer/tech sectors. Moreover, the MNC's essentially rule the day. They are the "Primitive Accumulators." Is it advantageous for states moving from core to periphery, like the U.S., to ensure world instability to make sure MNC's do not "re-base" their labor? Can a state survive as a service economy (increasingly, the U.S.) as opposed to a production economy? For how long? Can a state like China maintain a dictatorial regime with a liberalizing economy?





3 comments:

  1. "Economic recession and/or recession seems inevitable."

    Should read: "recession and/or depression"

    ReplyDelete
  2. Shane, I liked your term "MNC occupation". I never looked at it that way! But, I am going to add my very impulsive comments anyway:
    Here, in the USA, in the battle between the state and MNC the later has won, and very unfortunately the dictatorship of MNCs is being established through what in disguise is called non-regulatory market economy and all that. In Europe state is and was historically more resilient and independent; an ancient establishment that could somehow resist the pressure to the extent that in time and space did not allow the MNCs to rule. This happened through state acting as a medium and regulatory body between labour and capital. The fight between the MNCs and the state in Europe resulted in welfare state and all that. I think USA will remain the home of MNCs because where ever that it goes it is to deal with the state in terms of regulations. State and MNCs in the USA are amalgamated to the extent that one cannot distinguish between the two; in the health care debates one could increasingly see that the MPs were more representative of MNCs than the people. What is sold to people as democracy in political sphere, and capitalism in economic arena,is the dictatorship of MNCs. Imposing their terms relentlessly, and calling them systemic. Nowhere else the MNCs are above the system or the system, while the MNCs are a global thing in one sense, they are also local in sense that USA has been very protective towards them all along the way. If they benefit from the cheap labour in BRIC, they also are observing the local regulations. And to change this, I do not in any form and shape see a revolution coming or necessary. It's too painful and too costly in every sense, it's like "On Aggression" and "The Road" combined!! Just change the two-party system by bringing independent people to your lawmaking process gradually and little by little and form a state that is independent of both labour and capital,
    MNCs cannot make home anywhere else - because only here they are the system! They just need to be thought a lesson on responsibility and accountability. The end of hegemony is not the end of life...it's the beginning of a more humane one the way it was for Britain...

    ReplyDelete
  3. Good observation and I too like MNC occupation. ALso as the "advanced" states allow production to shift elsewhere, taking the path of firm and finance, they find themselves eventually alienated from the means of the production of the world economy :0) by the way Guy Laron is writing a book that touches on third world industrialization and its role in globlaization during the cold war.

    ReplyDelete