Contemporary Economic Sociology

Globalization, Production, Inequality

Fran Tonkiss

• Publisher: Routledge
• Year: 2006
• Print ISBN: 9780415300933
• eBook ISBN: 9781134419470
• Topic: Social Sciences
• Subtopic: Sociology
• Index: Social Sciences

Contemporary Economic Sociology closely examines critical and contemporary issues in the sociology of economic life.

Bringing together a range of theoretical perspectives, Fran Tonkiss examines major shifts in the organization of economy and society - from the politics of globalization to the cultural economy, social exclusion and the 'end' of class. This new volume is organized around three core themes (globalization, production and inequality) and answers the questions:

• how are transnational processes re-making contemporary economies?
• can capitalist globalization be governed or resisted?
• do class relations still shape people's social identities?
• how can we think about inequality in national and international contexts?

Key changes in each of these domains raise new challenges for analyzing social and economic relations, power, agency and identity. Setting these changes in a transnational context, this book examines how these issues are being re-shaped in contemporary societies, and explores competing frameworks for understanding such changes. Drawing on arguments from economic sociology, politics and policy studies, political economy and critical geography, the text focuses on both conceptual approaches to the social study of the economy, and trans-national processes of social and economic restructuring.

The arguments provide a critical overview of current concerns for economic sociology, and extend the boundaries of the discipline to a new set of questions. The text is particularly relevant to undergraduate and graduate students and scholars in the fields of economic and political sociology, politics and government, geography, economics and international relations.

Part I

Economic globalisation

1 Capitalism and globalisation

Globalisation is now well established as a central theme in the social analysis of the economy. Over recent decades this broad concept has come to represent a general condition of economic life, as well as the key tendency driving diverse economic processes. It carries with it a certain sense of novelty, suggesting that current economic arrangements are distinctive in their form and unprecedented in their extent. A critical question therefore arises as to how far existing frameworks of socioeconomic analysis can account for the features and effects of globalisation. In particular, how does economic globalisation sit with sociology’s long-standing concern with capitalism as a social and economic system? In a contemporary context, the study of capitalism has been somewhat subsumed within larger debates over globalisation. While the big idea of globalisation extends beyond economic relations to describe a range of political, cultural, military and technological factors (see Beck 2000a; Giddens 1990: 71; Held and McGrew 2003), my focus here is on economic globalisation – specifically in terms of its continuities with earlier capitalist arrangements. Can processes of globalisation be understood as the expression of a long-term capitalist logic? To what extent do global economic forms remain vulnerable to a critique of capital?

This chapter is therefore concerned with accounts that stress the capitalist nature of economic globalisation, and argue that it represents the extension and intensification of capitalist relations on an international scale. In particular, it takes up two of the perspectives with which Richard Swedberg (1991) once urged economic sociology to engage. The first is world systems theory, associated most notably with the work of the sociologist Immanuel Wallerstein. The second is neo-Marxism, represented here by the critical geography of David Harvey. Wallerstein and his colleagues offer a long historical view of the development of a capitalist world economy. Harvey analyses more recent processes of capitalist accumulation as these penetrate further and operate faster across geographical space. What these approaches share is the basic assumption that the logic of capital is to expand. Marx and Engels (1848: 224), of course, put it very simply: ‘The need of a constantly expanding market for its products chases’ capital, in the form of the bourgeoisie, ‘over the whole surface of the globe. It must nestle everywhere, settle everywhere, establish connections everywhere.’ From this simple conception of capital’s restless tendencies, thinkers such as Wallerstein and Harvey develop complex analyses of capitalism’s historical and geographical development. It is notable, however, that neither theorist tends much to use the language of globalisation. Wallerstein writes of the ‘capitalist worldeconomy’, while Harvey largely sticks with just ‘capitalism’, understood as an inherently expansionary process. Both contend, that is, that global economic processes can be understood via the analysis of capital. This is not to say there is nothing new about global economic processes or relations, but it does suggest there is nothing novel in itself about the fundamental logic of globalising capital: the tendency to extend, to seek new markets, to integrate distant actors, to colonise new spaces and sectors is all in accordance with what Harvey (1989: vii) calls the ‘basic rules of capitalistic accumulation’.

The discussion that follows begins by outlining certain basic features of economic globalisation as a backdrop to these critical accounts. It then looks to world systems theory for an historical argument on the integration of a global capitalist system over several centuries. Harvey’s work, in turn, offers a spatial analysis of capitalist processes of expansion and colonisation. I focus in particular on his recent treatment of contemporary global capital in terms of a ‘new imperialism’ of political and spatial domination (Harvey 2003). In making an argument about capitalism’s relation to forms of imperialism, Harvey is concerned not only with the spatial expression but the historical antecedents of current capitalist arrangements, as well as with their political cladding. I return to this question of the politics of economic globalisation in more detail in Chapter 3.

Economic globalisation

Before taking up these critical accounts of capitalism’s historical and geographical spread, it will be useful to set out certain basic conditions for, and features of, economic globalisation. The concept of globalisation is a contentious one, but in simple terms it refers to the idea that economic relations and activities operate on an increasingly transnational scale. Economic globalisation describes the processes through which distant and diverse spaces are integrated through economic exchanges, production systems, communication flows and commodity chains. Approaches to globalisation, however, often take this term to describe not simply these various empirical processes but also a larger historical state of affairs. Globalisation in this sense can indicate both a process and a condition – a tendency within the economy and other spheres, or the state of living in a globalised world. To get at this double meaning, Beck (2000a) makes a distinction between ‘globalization’, which refers to a set of (economic, political, cultural) processes that cut across or undermine national borders, and what he calls ‘globality’, as the condition of living in a ‘world society’. Although there is debate over how far back the roots of globalisation (in both senses) stretch, a very prevalent use of the term is to refer to the period from the early 1970s. The question of periodisation is considered more closely in Chapter 2, but this common usage points to the way that current markets in goods, information, labour, money and images tend to operate on an expanding international scale, such that the contemporary economy integrates much, although certainly not all, of the globe.

Drivers of globalisation

How then might we characterise economic globalisation? There are firstly some key factors that lie behind processes of globalisation. These include:

1 Technological innovation in:

• information and communications technology
• transport technologies
• production technologies.

These represent the key technical drivers of globalisation. Rapid innovation in information and communication technologies often features in accounts of globalisation, but it is equally important to stress the role of new and improved transport and production technology. If ICTs have been crucial to the globalisation of finance, media, communications and services, changes in transport capacities and production techniques have enabled the globalisation of the ‘real’ or material economy in goods and resources. Modes of production, transmission and transportation are all critical to processes of globalisation – allowing for the movement and exchange of immaterial as well as material goods.

2 The growing reach of transnational corporations (TNCs)

Transnational corporations can be seen as the institutional driver of globalisation. By locating different parts of their activities across different sites, these firms uncouple management, production processes, labour and consumer markets from any one national economy. They represent the key corporate players in world trade, such that a large proportion of global economic activity can be traced around exchanges between and within TNCs (see Dicken 2002). Johnston et al. (2002: 21) assert that by the end of the 1990s transnational corporations accounted for up to one-quarter of global output. While TNCs represent only a small number of all exporting firms, they monopolise global trade. Leslie Sklair (2002: 90) notes, for example, that just 15 per cent of US exporters in the 1990s operated from multiple sites, but that these firms accounted for around 80 per cent of all exports – indeed, almost half of US manufacturing exports came from just fifty firms. He sums it up thus:

The global economy is dominated by a few gigantic transnational corporations marketing their products, many of them global brands, all over the world, some medium-sized companies producing in a few locations and selling in multiple markets, while many many more small firms sell from one location to one or a few other locations.

Features of globalisation

These technical and institutional drivers promote processes of economic globalisation in a number of spheres. We might outline the characteristic features of globalisation along the following lines:

1 Trade

Markets in goods and material resources are the most basic and longstanding feature of an international economy. The international trade in commodities has a very long history, but this trade has accelerated greatly in recent decades, eased by transport and production technologies and led by transnational corporations.

2 Capital investment

The stock of foreign direct investment (FDI) in the world economy trebled in the 25 years after 1980. Again, while individual and corporate investors had put capital into foreign schemes for centuries, the growing rate and range of foreign investment is a key feature of economic globalisation.

3 Finance markets

Highly mobile money is central to the contemporary global economy. The globalisation of money markets has been facilitated both by technical innovations – the rapid development of information and communications technologies referred to earlier – and by the political deregulation of key finance markets during the 1970s and 1980s.

4 Organisation of production

Technical innovations and the transnational operations of firms both promote the dispersal of production across space. The component parts for a single product can be sourced widely and moved fairly rapidly, while firms are able to use subcontracting networks and dispersed integration to locate their research, design, manufacture, assembly and distribution functions in different regional and national sites.

5 Organisation of services

The globalisation of services is a distinctive feature of current processes of globalisation. Services now take a growing share of foreign investment and export trade (see Johnston et al. 2002: 22). The outsourced IT industry that emerged in India in the first decade of the twenty-first century, for instance, is exemplary of the increase in foreign investment in services and the growth in export of services from developing countries. Such a trend suggests that the transnational organisation of services is rapidly following the model of manufacturing production.

6 The international division of labour

The spatial dispersal of economic processes has shaped a new international division of labour, as manufacturing (and latterly services) shifts to developing economies. While capital remains highly concentrated in the advanced capitalist core, labour increasingly is located in peripheral regions in the global economy. Along with this division of labour across international space, globalisation is also marked by the increased spatial mobility of labour. By 2004, around 200 million people worked outside their own country, at very high and (mainly) very low levels in the international economy.

Patterns of globalisation

These basic features of a globalising economy are structured in quite distinct ways. Indeed, a free-form language of ‘globalisation’ can obscure the systematic geography that shapes the international economy. It is important, therefore, to underline the structural features of globalisation, as well as certain structural trends:

1 The power of the ‘Triad’

The ‘global’ economy in fact remains dominated by the United States, the European Union and Japan. At the start of the twenty-first century, the US and the EU each accounted for up to one-third of global economic output, with Japan representing around 12 per cent.

2 Changing balance of economic relations

This established balance of power, however, is subject to increasing global integration and penetration. The US is the key case in point here. The US historically has been a highly protectionist economy which until the latter half of the twentieth century traded largely with itself. (It retains, of course, some deeply protectionist instincts which only seem to work in tandem with its will for other economies to liberalise.) In 1960 US exports were just 5 per cent of its GDP; by the turn of the century they accounted for over 10 per cent. The level of US imports, more markedly, has greatly increased. The US has, in the course of a few decades, gone from being the largest net creditor in the world to being its largest net debtor. This turnaround initially was based on the US’s spiralling trade deficit with Japan, but its trade debt to the EU has also escalated, and in early 2005 China’s trade surplus with the US was running at around 16 billion dollars per month.

3 The shift to Asia

In the twenty-first century economic weight is moving towards Asia. China and India are growing rapidly as economic forces, with their huge markets in labour and in potential consumers. At least one projection suggests that, if recent trends continue, China will by 2041 have overtaken the US as the world’s largest economy, with India in third place (see Gyngell 2004: 3). This represents a correction to what may then appear as a twentieth-century ‘blip’ – both countries were significant economic actors into the nineteenth century, accounting for around one-half of world output, whose power diminished during the following century (see also A. G. Frank 1998). At its low point in the mid-twentieth century, the Asian region as a whole represented less than a 20 per cent share of the world economy, but this reversal of fortunes looks likely to be temporary (see Maddison 2001).

The generic concept of globalisation, then, takes in a diverse range of economic processes, characterised by Cox (1997: 1) in terms of:

the growth of multinational and transnational corporations, the expansion of trade and foreign investment, the New International Division of Labor, the enhanced mobility of money capital across international boundaries, intensified international competition with the rise of the Newly Industrializing Countries (NICs), and the globalization of markets for consumer goods.

Doubtless one might add to this list. There are, moreover, some critical questions that arise in this context. How adequate is the concept of globalisation in accounting for this complex of economic factors? To what extent does globalisation represent a new set of economic processes and relations? How do these processes reconfigure economic and social power? Can these processes be controlled or opposed? The discussion in this chapter, and in the two chapters that follow, is concerned with questions such as these. In this chapter, I am particularly concerned with globalisation as a mode of capitalist accumulation across time and space. I begin with the historical view offered by world systems theory, before examining the spatial perspective of Harvey’s (2003: 1) ‘historical-geographical materialism’.

The capitalist world economy

The most sustained historical view of the trend towards capitalist globalisation is to be found in world systems theory (Chase-Dunn 1998, 1999; Hall 2000; Hopkins and Wallerstein 1996; Wallerstein 1974, 1979, 1987, 2003). This body of work offers an historical analysis of the long-term structural development of a capitalist world economy, reaching back to the early modern period in Europe. Originating in the early 1970s, world systems theory pre-dates wider debates over globalisation, although a number of world systems theorists more recently have taken up the terms of this debate (see, for example, Chase-Dunn 1998, 1999). Thinking about globalisation in such a way places current trends against the long-run historical expansion of a capitalist world economy. This sort of long view therefore runs counter to any notion of globalisation as a new and distinctive stage of economic and spatial organisation.

World systems theory is most closely associated with the work of the sociologist Immanuel Wallerstein. In very broad terms, Wallerstein’s thesis can be outlined as follows: the capitalist mode of production has shaped a world economy since the sixteenth century. It is economically integrated by a single division of labour, but includes different cultural and political systems. Capitalism originated in northern Europe, but the search for profit and for expanded production opportunities means that its boundaries have gradually extended to take in much of the world. The capitalist world economy historically has been structured around three major economic zones, and around two world classes. Within these broad spatial and social contours, it has also been marked by ethno-national conflicts and internal inequalities, repressions and revolts within nations.

In these terms world systems theory can be seen as an extremely grand narrative in historical social science. Large-scale theory of this kind has fallen out of favour since the 1970s, but it is important to stress that the very scale of world systems theory represents a critical response to the intellectual context in which it developed. Wallerstein insists that the study of world systems is not about a total theory of the world; rather, it is a rejection of the way the social sciences typically have taken the nation state or national society as their frame of enquiry (Wallerstein 1987: 309; see also Braudel 1984). World systems theory emerged in the 1970s as a challenge to conventional analyses which understood economic development largely as a domestic story. The issue of development (and, indeed, that of economic ‘backwardness’) was seen as a local question, determined by national political and institutional arrangements, and by the ability or readiness of given economies to make the most of their comparative advantage in international trade. Models of economic development more generally assumed a central standard or developmental path along which individual nations would travel, or otherwise lag behind. Theorists such as Wallerstein and Frank (1966), in contrast, argued that national economic development – and ‘underdevelopment’ – should be placed in the context of an international capitalist economy which systematically advantaged certain regions and nations and systematically exploited others (see also Sklair 1994). This capitalist system emerged in Europe, but over the modern period it came to incorporate more and more regions across the globe, especially through projects of imperialism and colonialism. Such patterns of incorporation, then, were not simply a matter of bloodless market processes extending their reach through trade: the expansion of the capitalist world economy over time was the work of material interests and actors, ‘utilizing military, political, and economic pressures of multiple kinds, and of course involving the overcoming of political resistance in the zones into which the geographic expansion was taking place’ (Wallerstein 1990: 36). While world systems theory is primarily an account of economic integration and interpenetration, it underlines the ways in which economic expansion has been and still is tied to forms of military, political and cultural domination.

Accounts of globalisation often see this as a distinctly late-modern phenomenon, but Wallerstein dismisses the idea that capitalism only became a world system in the twentieth century. Rather, he traces the origins of a capitalist world economy to the early modern period. This is not, what is more, merely an historical description of how economic processes happen to have unfolded over time: it involves a more basic analysis of the logic of capital itself. Echoing Marx, Wallerstein argues that capital has never respected national borders. Its logic is always to expand and extend – capitalist accumulation is in this sense an intrinsically mobile process. If by the end of the twentieth century the capitalist world economy had become almost fully globalised, the antecedents of this global system are to be found much earlier, and its impetus lies in the underlying logic of capital.

What, then, is meant by the term ‘world system’? The notion of a ‘system’ is central to this body of work, and has a particular definition within it. World systems theory takes the ‘system’ (rather than ‘society’ or ‘nation’) as its basic unit of analysis. A social system is defined by a single division of labour that draws its members into economic interdependence. It does not require either a shared political structure or a common culture to hold it together. Wallerstein distinguishes between two types of system: mini systems and world systems. Mini systems, firstly, are based on a single division of labour and also have a unified culture. On Wallerstein’s (1974, 2003) account, such bounded mini systems have only been evident in ‘simple’ agricultural or hunter-gatherer societies that do not interact economically with cultural outsiders, although other systems theorists define them more broadly (see Hall 2000). World systems, in contrast, are characterised by a single division of labour across different cultures. They involve economic networks that extend beyond and between societies and states. World systems take two forms. A world empire (as represented by the cases of ancient China, Egypt or Rome) operates under a common political structure, usually imposed by a dominant power through conquest. A world economy, however, does not have a common political structure. It follows that the empires of the nineteenth century, notably Britain and France, ‘were not world-empires at all, but nation-states with colonial appendages operating within the framework of a global economy’ (Wallerstein 2003: 63). Wallerstein’s specific interest is in the modern world economy. Although complex economic networks existed in pre-modern times, as the seminal work of Fernand Braudel showed in the case of the ancient empires, the modern period has come to be dominated by a single capitalist world economy, driven primarily by economic rather than political interests. This capitalist world economy is notable in that it has become a global economic system without being politically unified as a world empire (see Hall 2000: 4).

The capitalist world economy has developed in a cyclical manner, through ‘long waves’ or Kondatrieff cycles of economic expansion and contraction, as well as through dynamics of war and peace, and phases of colonisation and decolonisation (see Wallerstein 1982). It also is subject to more ‘secular’ or persistent trends: the gradual proletarianisation of the world workforce; the growing commodification of labour, land and resources; the concentration of capital in increasingly large firms; internationalisation of trade and investment; and the internationalisation of political institutions (Chase- Dunn 1999). It is this set of changes that characterises a global capitalist economy today. Indeed, the last of these trends – towards international political institutions – increasingly puts into question Wallerstein’s older distinction between a capitalist world economy and a world empire, as common political structures come to assert themselves on the global scene.

World systems theory takes both a long historical view and a very heightened overview, but this perspective makes it possible to analyse the world economy as single social space – segmented and uneven, but nevertheless observable as a system. The story goes like this: a modern world economy began to take shape from the sixteenth century in tandem with the emergence of market capitalism. The origins of this world economy lay in northern and western Europe, as regional agriculture became more specialised and diversified (and therefore more amenable to trade), and was augmented by such emerging industries as textiles and metals. Economic growth led merchants and nascent capitalists to demand more specialised kinds of labour, raw materials and new markets. Such demands were met both by extended trading networks and later by ...

Table of contents

• Cover Page
• Title Page
• Copyright Page
• Introduction
• Part I
• Part II
• Part III
• Bibliography