The Global Division of Labour

Development and Inequality in World Society

Richard Münch

• Publisher: Palgrave Macmillan
• Year: 2016
• ISBN:
  9781137567185
• Topic: Politics & International Relations
• Subtopic: Trade & Tariffs
• Index: Politics & International Relations

Global free trade is one of the most controversial phenomena of our time. Richard Münch offers a new theory of global labour division to explain deeper transformations in the production and distribution of wealth brought about by global free trade. He then carries out and analyzes empirical investigations based on this theory.

1

Introduction: The Dynamics of Global Labour Division

The globalization of societal life looks back upon a long history (O’Rourke and Williamson 2002; Osterhammel and Petersson 2006; Stearns 2009). Our present time excels, however, in having made globalization a first-rate topic of social science research, public debate and politics. Among many other themes, the distribution of affluence in the world is of special importance. The unequal distribution of affluence worldwide has become an ever more significant problem for global politics since the end of the Second World War at the latest (Sen 1992, 1999). A variety of territorial and cross-national conflicts can be ascribed to the unequal distribution of affluence worldwide (Senghaas 2004). For the time being, international terrorism is fed to a considerable extent by the worldwide inequality as regards participation in global affluence. In the course of time, an extremely unequal level of development has been attained in the world’s different regions (Shorrocks and van der Hoeven 2004; Kanbur and Venables 2005; Nederveen Pieterse and Rehbein 2009; Peet and Hartwick 2009; Kremer et al. 2010). Compared with 1950, the global gross national product (GNP) per capita increased to 250 per cent its value by 1992 (adjusted by purchasing power). In the USA, Canada, Australia and New Zealand taken together, it reached slightly more than double its previous value; in Western Europe more than triple; in Latin America approximately double; in Eastern Europe slightly less than double; and in Asia and Oceania combined slightly more than triple the value of 1950. In Africa, in contrast, it rose by a mere 50 per cent on the globally lowest level. While the richest group of countries generated an approximately 11 times as high gross domestic product (GDP) per capita in 1950 compared with the African countries, that result was almost 20 times as high by 1992. The tremendous catch-up movement in Asia and Oceania is a generally known fact (Bornschier 2002b: 49). From the 1950s until the mid-1960s, economic development theory and modernization theory suggested that alongside an increase in the educational level, an extension of the necessary infrastructure and the emergence of a viable middle class, the developing countries will be enabled to catch up and approach the affluence level of the industrialized countries (Rostow 1960/1990). One necessary prerequisite of this development should be a sufficiently large formation of capital and targeted modernization fuelled by a modernizing elite. After all, the distance between the developing and the industrialized countries has hardly diminished over a longer period of time. Instead, the distance between rich and poor countries has grown. Moreover, the number of people living in poverty in the developing countries has increased not only in absolute terms but also in percentage terms as a result of population growth. Hence, in the mid-1960s, the situation changed in favour of theories looking at the causes of permanent underdevelopment, and growing instead of shrinking inequality worldwide. The newly emerging Dependencia theory and the world systems theories saw the reason for this phenomenon in the relationship between the industrialized and the developing countries and, hence, in the extension of global trade (for a critical assessment, see Weede and Tiefenbach 1981).

The basic theorem of Dependencia theory, which has its roots in Latin America, is that the exchange of raw materials for industrially manufactured goods between developing and industrialized countries proceeds along unequal terms of trade in as far as it does not take into account the volume of “societally necessary” labour invested in these goods (Sunkel 1969, 1972). In other words, the high productivity of the industrialized countries coupled with the low productivity of the developing countries results in the industrialized countries becoming ever richer and investing ever less labour, and the developing countries becoming ever poorer and investing ever more labour. Hence Dependencia theory recommended the decoupling of developing countries from the industrialized countries by building up their own industrial production and thus breaking free from imports.

World systems theory, which has essentially been developed by Immanuel Wallerstein, sees the cause for the permanent and rather increasing inequality between industrialized and developing countries above all in the shift of exploitation from the industrially fully employed workforce in the industrialized countries, which is protected by strong trade unions, to people in the developing countries who are not protected by trade unions and who are employed only partially in plantation agriculture. The latter are employed in the extraction of raw materials and in labour-intensive, simple production alongside their activity in the subsistence economy (Wallerstein 1974; Hopkins and Wallerstein 1982). Marx’s theorem (1867/1970) of the growing inequality between capital and labour is, in this way, being transferred to the relationship between the industrialized countries in the centre and the developing countries at the periphery of the world system.

Since the 1980s, however, the discussion has taken yet another turn. The success of the South-East Asian tiger states in their catch-up movement, which brought along far higher growth rates than in the industrialized states along with related achievements in reducing poverty, has drawn attention to the endogenous development conditions of the developing and newly industrialized countries. A development-promoting role is once again being ascribed to growing global trade and the global labour division it supports. The same goes for the role of transnationally operating businesses. The reasons for the persistent underdevelopment of developing countries and the inequality between developing and industrialized countries are now first and foremost attributed to the former’s lack of adjustment to a smoothly running market economy. Such adjustments would be limited public debt, enhanced economic competition, privatization of industry production and services, and legal security. On the part of the industrialized nations, their lack of openness of their markets to agricultural and labour-intensive products from the developing countries is taken as a barrier to the latter’s development (Bhagwati and Hudec 1996; Nederveen Pieterse and Rehbein 2009). In this transformation of the theoretical explanation of underdevelopment and global inequality, the triumph of the neoliberal paradigm in economic theory can be clearly recognized. It has affected essentially the policy of the World Bank and the International Monetary Fund (IMF), but increasingly also the negotiations of the General Agreement on Tariffs and Trade (GATT) and the World Trade Organization (WTO) since the 1980s. Since the mid-1990s the corresponding policy of trade liberalization has inched into the focus of globalization critics who consider this trend a danger not only to the industrialized countries’ welfare-state achievements but also to the developing nations’ chances of further development. In this context, attention is being paid, above all, to the “creative destruction” (Schumpeter 1983, 1994) of given economic structures, which is fuelled in particular by global free trade. It involves phenomena of social disorganization such as loss of jobs, loss of income, increasing inequality, poverty and rising delinquency (Menzel 1992, 1998, 2004; Kiely 2005, 2010; Weinstein 2005; Findlay and O’Rourke 2007; Rodrik 2007, 2011; Shaikh 2007; Blaney and Inayatullah 2009; Ebenau et al. 2015).

The social problem of the market economy is negotiated anew (Berger 2009). The neoliberal praise of global free trade and of the free market economy, and the radical globalization criticism, oppose each other unforgivingly. This conflict is blatant evidence of the fact that the questions of inequality, poverty, exclusion and social disintegration are, meanwhile, no longer questions of national politics but have become questions of a global dimension. It expresses at least a partial overlap of national politics with international relations. Also, we can recognize an overlap of the solidarity of delimited national collectives with the transnational solidarity growing in the wake of global trade and the global labour division it supports. This change in solidarity is mirrored by the fact that participation in growing global affluence is being distributed among developing and newly industrialized countries according to the level of their inclusion in the global economy and the level of their seizing of development chances the latter offers by way of harmonizing foreign direct investment (FDI) and the development of their own economy (Herkenrath 2003). Accordingly, the inclusion in global trade is no longer based merely on being a member of the group of industrialized countries or of the group of developing countries, but increasingly also on the achievements made in open competition with more equal opportunity. This urges the previously privileged collectives of the industrialized countries towards stronger internalization of global competition in their own economy. Another consequence of this development is the gradual shift of inequality of market achievement from the level between national collectives to the level within nations. We can thus anticipate an even stronger drop in living standard of the non-participating developing countries as a result of the intensification of global trade. Furthermore, the affluence divide between the countries included in the global economy is diminishing along with the higher growth rates of the follow-up countries. At the same time, affluence produced within both the follow-up countries and the highly developed states is distributed in a far more unequal way than at times when important branches of the economy were protected more strongly against competition on the world market.

Hence the question of inequality requires a differentiated answer. We can assume that it decreases between the countries included in the global economy as a result of the higher growth rates in the catch-up countries, but that it increases within these countries (Firebaugh 2003). Also, it rises between the countries included in the global economy and the countries excluded from it. In the wake of growing global trade and the advancing global labour division, the pattern of participation in global affluence is therefore changing, as is the corresponding pattern of inequality. The victory of the neoliberal paradigm in the global economic discourse contributes to this development. Nevertheless, its contribution is only part of a more comprehensive transformation in whose framework a profound change in solidarity and, along with it, a change in the idea of justice occur on the tracks of global trade. Solidarity is the basis of the specific formation of participation in the globally produced affluence. The principles of justice and the standards relevant to the access to welfare rest on this foundation. We can look best into the emerging change in solidarity and justice in the framework of world society that develops at the core of the global trade when we scrutinize the meaning of the principles and rules of the world trade order. Such a strategy of investigation allows us to follow up a classical contribution to explaining the transformation of solidarity and justice in the process of modernization: Emile Durkheim’s (1964) study on the division of labour, which needs to be transferred to the global division of labour. To make it clear right from the start and to avoid any misunderstanding, I would like to point out that this study understands “global labour division” in Emile Durkheim’s sense of an interrelationship between economic specializations within and across countries. It means “labour” in the technical sense of a specific competence brought into the market of exchanging goods and services and not directly in the sense of a productive force, which unites workers and opposes them to capitalists in the Marxian sense. The Durkheimian division of labour includes capitalists, managers, professionals, employees and workers in the specialization on supplying specific goods and services on the market. In labour division across borders, capitalists, managers, professionals, employees and workers in one branch or sub-branch of industry specializing in a certain product are in the same camp of specialization. Nevertheless, this primary perspective does not neglect to look at labour division and corresponding class divisions across and within industrial branches from a secondary perspective – for example, when we realize that global labour division in the Durkheimian sense involves the transformation of class divisions between capitalists, managers, professionals, employees and workers across and within nations in a Marxian or broader Weberian sense.

A further model for explaining the change in solidarity and justice, which we can rely on in this context, comes from Max Weber (1927: 356). His contribution concerns the removal of the differentiation between in-group and out-group morality and the formation of equal moral standards within and between nations in the development of modern capitalism (Münch 2001a, 2001b). Weber addressed this change as a retreat from primordial and traditional links and from the separation of the ethics of brotherliness within the household and utilitarian behaviour outside the household. We can transfer this model of thought to the change from the world’s segmentary differentiation into nation states that are united in solidarity inside but separated from one another by the lack of solidarity, to a world society featuring transnational solidarity and justice, which is differentiated in terms of both labour division and functionality. This contribution to understanding global society, which is fuelled by this classical tradition of sociology, wants to supply a description and explanation of the influence of the world trade order on the formation of the global society that is going to develop at its core. This analysis proceeds not only beyond the ideologically determined debate between neoliberalism and globalization criticism but also beyond the debate on the welfare state’s capacity to survive in the global economy. The new entanglement of economy and politics in the context of global trade determines the structure of world society. In this sense, the world society’s political economy forms the subject of our research (on “society/world society”, see Heintz, Münch and Tyrell 2005; Tyrell 2005).

We understand and explain the emerging global order (1) as a struggle about the moral construction of the world economic order among international non-governmental organizations (INGOs), NGOs and transnational corporations; (2) as a legal construction of world trade by the WTO; and (3) as a dynamic process of global labour division along the tracks constructed in symbolic struggles about the moral and legal construction of the global order. In Max Weber’s (1920/1972: 252) terms, the interdependence of ideas and interests drives historical development. In our study, ideas and interests interact as the moral and legal construction of the global order merges with the dynamic force of global labour division.

The global division of labour as the driving force of the transnationalization of solidarity?

The development of the world trade order can be understood as the functional differentiation of the economy from the segmentary differentiated system of nation states. In the following paragraphs I will elaborate on this idea following up Emile Durkheim’s aforementioned basic teaching concerning the development of modern labour division, and complement it with Max Weber’s thesis on the removal of separating in-group and out-group morality in modern capitalism. The emergence of the world trade order can be understood as a new step of development of labour division beyond the system of the nation states. What needs to be analysed in this context is a fundamental change to solidarity and justice. This change is not understood properly in the current controversy about whether globalization steamrolls the welfare states and brings along a triumph of the liberal regime (Altvater and Mahnkopf 1996; Strange 1996), or whether the different types of welfare state are in a position to live up to the challenges of globalization along their own development path without having to undergo a fundamental change (Swank 2002; Weiss 2003).

Both positions are too limited in their explanatory power because they direct their attention exclusively to the nation state’s capability to act in view of the flow of global capital and goods. In doing so, they ignore the fundamental structural change to solidarity and justice in the process of globalization beyond the segmentary differentiation into nation states. The controversy has got stuck in the dual model of the relationship between economy and state, and it does not see that neither of them operates in a vacuum but, instead, is embedded in social structures of solidarity and cultural structures of meaning. These structures change so much in the course of globalization that both economy and politics work under a new framework of social solidarity and cultural identity (Münch 2001c, 2008a, 2008b, 2009b, 2010a, 2010b).

It is not simply the question as to how the globally “unfettered” capitalism can be “re-embedded” in terms of both solidarity and morality that matters here, nor is it the question as to whether the nation state or the European Union (EU) or a sort of world republic form the adequate level for regulating the economy (Habermas 1998). Instead, the question is how solidarity and morality change in the wake of globalization and what character they assume in the multilevel system of the subnational, national, European and global formation of society, thus structuring economic exchange and state activity (Nagel 2002; Singer 2002). Furthermore, Karl Polanyi’s (1944/2001) teaching regarding the disembedding and re-embedding of the economy does not fully cover this matter. The same goes for the systems-theoretical concept of the functional differentiation of the economy as an autopoietically operating system (Luhmann 1988). According to this concept, the functionally differentiated economy is free from any normative structuring working exclusively in line with its own code of paying/not paying. From this point of view, it is not understandable that the functional differentiation of the economy itself is being generated only by the emergence of a new, normatively regulated transnational economic order. Hence it does not refer to the detachment of the economy from any kind of normative structuring, but rather to the substitution of an old form of normative structuring of economic activities with a new form of structuring having a changed meaning. Understanding the meaning of the structural change to the economic order, which occurs in this way, is the job of an explanation of the functional differentiation of the economy (see Beckert 2009a, 2009b).

Only when compared with the nationally regulated economy is the globalization of the economy a process of disembedding and liberation from normative regulation. Nevertheless, it unfolds from the very beginning in a direct internal link with the emergence of a new structure of solidarity and a new idea of justice, which are expressed in the world trade order. Without a world trade order there is no world trade, since it would meet barriers of national regulations (tariffs, subsidies, product safety guidelines) far too frequently. Accordingly, global trade can develop only in the framework of the world trade order, which accommodates a model of transnational solidarity and trading justice (Bhala and Kennedy 1998). This model is realized to the extent to which national solidarity and justice lose in power. Transnational integration and national disintegration are two sides of the same coin. Both processes together converge in the erosion of the mechanically embedded organic solidarity and the far-reaching equality of results being the principle of justice in the nation state. They are coupled with transnational unbrotherliness, and inequality of results and opportunities. This separation of in-group and out-group morality in the system of nation states is replaced by a sort of network solidarity and a stronger emphasis on equal opportunity in the emerging multilevel system of local community, subnational region, nation, transnational regional associations and world society. The new solidarity and the new justice penetrate all levels of this multilevel system. However, they are more powerful towards the top, while relics of mechanical solidarity and equality of results remain within segmentarily differentiated units towards the bottom.

In his study of the division of labour, Emile Durkheim (1964) developed a theoretical tool that can be used for a genuinely sociological explanation of the causes, concomitants and consequences of the international division of labour. First of all we can recognize along with Durkheim (1964: 257–260) the causes of the progressing global labour division when looking at the shrinking distances between people. Distances shrink as a result of population growth, urbanization, and/or denser and faster ways and means of transport and communication. Drawing on Marx (1867/1970) we can add capitalist accumulation as a major driving force behind breaking down borders. The correspondingly increased material density increases competition for scarce resources. This enhanced competitive pressure can be coped with in various ways (functional alternatives) (Durkheim 1982: 122):

• increased mortality rate;

• emigration;

• augmented crime rate;

• war;

• specialization.

In modern history, all five functional alternatives have been realized up until today. Nevertheless, the fifth alternative – namely, specialization – has increased in volume. The more it keeps on doing so, the more the four other alternatives lose significance.

Contradicting Durkheim’s explanation of the progressing labour division as a result of the competition for scarce resources growing along with material density, Dietrich Rueschemeyer (1982: 582ff.; cf. also 1985: 170–171) argues that it is based on a mistaken application of Darwin’s theory of natural selection. He claims that while Darwin explained specialization in the animal kingdom through the competition of “consumers” for food, which is avoided by specializing the demand for food on varying foodstuffs, Durkheim speaks of a specialization of competing “producers”. This competition, he says, can be compensated for by a progress in productivity and/or growing demand so that specialization would not be necessary. I do not think that Rueschemeyer’s argumentation is really convincing. We have to bear in mind that producers offer something in order to turn the yields into consumption or...