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some thoughts on offshoring

May 24, 2012

Offshoring. It’s a fairly complicated subject when you think about. On the one hand, capitalism thrives off of cheap labour, and requires what Karl Marx called the ‘reserve army of labour’ (i.e., the unemployed) to function well. Moreover, capital by nature seeks to expend as little as possible on labour because profits essential come from unpaid labour; and the less that’s paid out to labour in the form of wages, as well as other expenses categorized as ‘operating costs,’ the more that can be kept by capital in the form of profit. By offshoring and/or offshore outsourcing, capital can benefit in a global capitalist economy by accessing a cheaper source of labour, as well as other things like less governmental regulations (e.g., more lax employee protections, environmental protections, etc.), less taxes, etc., and it can essentially work labour harder and longer for less while cutting corners in the way of safety, pollution controls, etc.

So, in one sense, capital is exploiting cheaper labour and poorer working conditions around the world while at the same time providing those people with jobs they might not otherwise have (Yay, jobs!). It’s a bit of a mixed blessing, though, since both offshoring and offshore outsourcing not only compel workers in those countries to work harder and longer for less (which is an argument free market advocates actually use to support sweatshops), but it often takes away that work from someone else, forcing them back into the ‘reserve army of labour.’ And even if individual employers are good, well-meaning people who do their utmost to treat their employees as best they can, capital as it logically functions doesn’t care about the worker, whomever that happens to be; it only truly cares about the bottom line, which is the logical outcome of what Marx termed the ‘coercive laws of competition.’

As good as employers’ intentions may be at the start of their respective enterprises, they’re eventually forced to seek greater profits while at the same time suppressing wages as much as possible, which is the only way they can survive in a field full of competitors compelled to do the same. Quite often, employers as individuals are found to be good people, many of whom give generously to charity, etc. Nevertheless, the logic of the system forces the hand of employers to exploit labour as much as they can; and at the same time, labour is coerced into the position of working for a wage and fighting for gains that employers quickly counter in an endless battle punctuated by regular economic crises (these days better known as the ‘business cycle’), creating antagonisms between capital and labour.

Moreover, protectionism (i.e., the movement to keep jobs ‘at home’ and make cheaper imports more expensive by imposing tariffs) isn’t a full-proof solution to the problem of offshoring and rising unemployment because domestic labour forces become increasingly dependent upon cheap goods produced by places which exploit labour even more so. Here in the US, for example, Walmart is so successful because it provides super-cheap food and clothes produced in China to US workers with little in the way of disposable income, even though Walmart is well known for gender discrimination, as well as paying workers poorly and cheating them out of pay and benefits (as multiple class action lawsuits have clearly documented). Making that stuff more expensive through tariffs on cheap goods imported from China means that capital would eventually have to pay labour a lot more just so that the working class can afford to survive, which would consequently eat into potential profits and only serve to motivate capital to pick up and move somewhere else (since capital isn’t as limited by national borders, unlike labour).

Offshoring, then, is ultimately a tool that can be utilized by capital to increase its own profits while simultaneously spreading unemployment and pitting members of the working class against each other, forcing them to compete in a globalized ‘race to the bottom’ where the lowest wages wins, and setting up a situation where employed workers get blamed by unemployed workers for the loss of their jobs. The only real winner here seems to be capital, who benefits either way, i.e., it can blackmail labour at home with the threat of offshoring and/or offshore outsourcing, using that as leverage to break unions, lower wages, and acquire uncompetitive tax breaks and regulatory exemptions, or it can simply find cheaper labour and lax regulatory standards abroad.

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