Transnational Production and Globalization

Globalization is an oft-cited term that can usefully serve as shorthand. However, this shorthand runs the risk of lumping together a broad range of complex economic, political, and cultural phenomena.   Globalization describes both the benefits and costs of living in a globally connected world. The Internet was once heralded as the great equalizer in global communications. Certainly, we are now accustomed to getting news from across the globe from a variety of perspectives. Activists in other countries, like Egypt and Iran, have famously used social networking websites such as Facebook and Twitter to report what is happening from the ground, in the absence of formal news sources. Egyptian activists also utilized these social networking websites to coordinate demonstrations and marches, leading to the Egyptian government to shut down the Internet for several days during the “Arab Spring” uprisings in early 2011. Globalization makes it possible for social change activists in different countries to communicate with each other, and for people, information, and products to cross borders, with benefits for some and costs to others. It allows for Massachusetts residents to have fresh fruit in winter, but lowers the wages of agricultural workers who gather the fruit in tropical countries, supports repressive government policies in those countries, and increases the carbon footprint of producing and distributing food. Globalized contexts can lead social movements and state, development and conservation agencies to influence each other. For example, Colombian activists’ use of neoliberal development discourses both legitimized the presence of state, development and conservation agencies and influenced these agencies’ visions and plans (Asher 2009). As such, globalization is not uniformly good or bad, but has costs and benefits that are experienced differently depending on one’s social location.

Nations of the world are linked in trade relationships. The US depends on resources and capabilities of other nations to the extent that our economy relies on imports (e.g., oil, cars, food, manufactured goods). So, how is it that the US economy is still largely profitable? Factories in the US producing manufactured goods did not simply close down in the face of competition; multinational corporations—corporations that exist across several political borders—made concerted efforts to increase their profits (Kirk & Okizawa-Rey 2007). One way to massively increase profits is to pay workers less in wages and benefits. In the US, labor laws and union contracts protect workers from working extensive hours at a single job, guarantee safe working environments, and set a minimum wage. Thus, American workers are expensive to corporations. This is why companies based in the US outsource production to the nations of the Global South where workers’ rights are less protected and workers make less money for their labor. One consequence of outsourcing is the development of sweatshops  (known as maquiladoras when based in Mexico in particular) in which workers work long hours for little pay and are restricted from eating or using the restroom while at work (Kirk & Okizawa-Rey 2007). These workers seldom purchase the goods they assist in producing, often because they could not afford them, and because the global factories in which they work ship goods to be sold in wealthier countries of the Global North. These factories predominantly employ young, unmarried women workers in Asia, Latin America and the Caribbean because they are considered the most docile and obedient groups of workers; that is, corporations consider them less likely to make demands of employers or to unionize (Kirk & Okizawa-Rey 2007).

Rather than a nation’s workers producing goods, selling those goods back to its people, and keeping profits within the nation’s borders, multinational corporations participate in global commodity chains. As Cynthia Enloe’s (2008) article “The Globetrotting Sneaker” makes clear, globalization makes it possible for a shoe corporation based in Country A to extract resources from Country B, produce goods in Country C, sell those goods in Countries D, E, and F, and deposit waste in the landfills of Country G. Meanwhile, the profits from this production and sales of goods return largely to the corporation, while little goes into the economies of the participating nations (Enloe 2008).   Companies like Nike, Adidas, and Reebok were initially attracted by military regimes in South Korea in the 1980s that quashed labor unions. Once the workers in South Korea organized successfully, factories moved to Indonesia (Enloe 2008). This process of moving to remaining areas of cheap labor before workers organize is known as the race to the bottom logic of global factory production.

With the increasing globalization of the economy international institutions have been created. The purpose of these international institutions is, ostensibly, to monitor abuses and assist in the development of less developed nations through loans from more developed nations. The World Bank provides monetary support for large, capital-intensive projects such as the construction of roads and dams. The International Monetary Fund (IMF) provides loans and facilitates international trade relationships particularly through structural adjustment programs (SAP). Essentially, in a SAP, a country of the Global North lends money to another country in the Global South in exchange for resources. For instance, the US may lend money to Chile to assist with the growth and harvesting of grapes and production of wine. In exchange, the US would acquire grapes and wine from Chile at a discounted rate, and have control in how Chile spends the money, while Chile repays the initial loan. The problem with this is that, in many cases, the lending process is circular such that the country accepting the loan remains constantly indebted to the initial lending nation. For example, a nation may produce most of its crop to export elsewhere and be unable to feed its own people and therefore require additional loans. Consequences of SAPs are devalued currency, privatized industries, cut social programs and government subsidies, and increasing taxes to fund the development of infrastructure.

Free trade describes a set of institutions, policies, and ideologies, in which the governmental restrictions and regulations are minimal, allowing corporate bodies to engage in cross-border enterprises to maximize profit. One institution that was created to foster free trade is the World Trade Organization (WTO), an international unelected body whose mission is to challenge restraints on free trade. Some countries limit pollution levels in industry; the WTO considers any limits on production as barriers to free trade. They operate on the theory that unfettered, free market capitalism is the best way to generate profits. It may be more profitable to pay people minimally and circumvent environmental regulations, but proponents of free trade do not factor in the human costs to health, safety, and happiness—costs that cannot be put into dollars and cents. One such free trade agreement is the North American Free Trade Agreement (NAFTA) of 1994. NAFTA is an agreement between Canada, the US, and Mexico to promote the unregulated movement of jobs and products. The biggest result of this legislation is the mass relocation of factories from the US to Mexico in the form of maquiladoras that supply goods at low prices back to US consumers, resulting in a loss of around 500,000 union jobs in North America (Zinn 2003). The Free Trade Area of the Americas (FTAA) of 2002 expands NAFTA to include the entire Western hemisphere—except Cuba, due to trade sanctions against its communist government. At the time of this writing, the impact of these free trade agreements is a hotly contested political issue. Some people have argued that it resulted in unionized, higher paying jobs, while others have argued that even with many negative impacts, overall access to jobs, products, and resources has yielded many improvements. In the face of moves to promote free trade, fair trade movements that support safe working conditions and sustainable wages have also cropped up, especially in the coffee and chocolate industries.

The current global economic system is guided by an ideology of neoliberalism. In the contemporary U.S. context, the term “liberal” is identified with the American Democratic Party, but in terms of political theory, the term liberalism refers to restrictions on state power to prevent government infringement on individual rights (Grewal and Kaplan 1994), which transcend party affiliations. Economic liberalism, the belief that markets work best without any governmental regulation or interference, describes the free trade economic policies we discussed above, and should not be confused with the liberalism associated with the Democratic Party. Neoliberalism is a market-driven approach to economic and social policy, where capitalism’s profit motive is applied to social policies and programs (like welfare and taxation), cutting them to increase profits. A crucial project of neoliberalism is the downsizing of the public sphere and social welfare programs that unions and racial justice activists have fought for since the early 20th Century. Feminist historian Lisa Duggan (2003) argues that neoliberalism is more than just the privatization of the economy, but is an ideology that holds that once marginalized groups (LGBTQ people, people of color, the working-class) have access to mainstream institutions (like marriage and service in the military) and consumption in the free market, they have reached equality with their privileged peers (straight people, white people, the middle- and upper-classes). Neoliberal ideology therefore assumes that our society has reached a post-civil rights period where social movements that seek to fundamentally alter mainstream institutions and build up social welfare programs are obsolete. However, as this textbook has shown, mainstream institutions and structures of power often reproduce inequalities.