I published a book in 1997 – Capitalism and Democracy in the Third World. Now The Politics of Global Competitiveness is the sequel. The first one was a critique of what was known as political development theory, arguing that it was entirely ideological in character. While writing it, I had started to look at the World Bank, and its World Development Reports. That led to a series of articles that culminated in ‘What the World Bank Means by Poverty Reduction and Why It Matters’ in New Political Economy. Based on the Reports from 1990 to 2001, it argued that the World Bank was ‘systematically promoting the proletarianization of the world’s poor – equipping them for, incorporating them into and subjecting them to competitive labour markets. In other reading, I became aware at the same time that the OECD (Organization for Economic Cooperation and Development) was performing a parallel role in relation to the developed countries. This led to a Working Paper ‘The Politics of Global Competitiveness’. What is original about the book, I would say, is first that it identifies a single global project, carried forward by the World Bank and the OECD in tandem, and second that it sees it as intended to establish the capitalist mode of production on a global scale, and secure as far as possible the conditions for its hegemony. I wrote a whole lot of papers in the following years, exploring the related roles of the multilateral development banks and the UNDP, but these didn’t make it into the book. Instead, I focus on the close partnership between the OECD, the World Bank, and the European Commission in the promotion of the politics of global competitiveness, and especially their joint efforts to eliminate under-employment and joblessness. And, because these and other developments raise issues concerning the changing role of the household in relation to capitalist production, I wrote a paper on ‘Marx and social reproduction’ in Historical Materialism that appears in a different form as the first chapter, following a brief introduction. Chapter 2 covers the role of the OECD from its founding in 1961. Chapter 3 covers the World Bank, from 1978, when the first World Development Report was published. Chapter 4 applies Marx’s general law of social production to the joint OECD, World Bank and European Commission project. Chapter 5 addresses the social politics of competitiveness on a global scale, and the final chapter looks at responses to COVID-19 on the part of the OECD and the World Bank. Notably, some of the best evidence for the significance of the politics of global competitiveness emerged long after I started the project, and since I completed it – suggesting that I might be on to something.
So, the book. Let’s begin with the logic of capital – the essential elements of the capitalist mode of production, its ‘laws of motion’, ‘laws of development’, immanent tendencies, or whatever else you choose to call them. These are intrinsic to the capitalist mode of production as such, in abstraction from the trajectory of capitalism as an historical phenomenon, or the broader social context in which it is located.
First, capital takes the form of many separate capitals, so capitalists are obliged to compete with each other to sell the commodities they produce on the market. Second, they do so by driving down the cost of production in order to undercut their rivals. They can do this by extending the working day, but in the capitalist mode of production in its proper revolutionary form they do so by investing in machinery to transform the production process and increase the productivity of workers. Third, this gives rise to uninterrupted processes of technological revolution and division of labour. Fourth, the capitalist mode of production tends to develop on a global scale, producing an ever-expanding world market, as individual capitals seek out new markets and new sources of labour. Fifth, it tends to take over other earlier forms of production that, Marx says, ‘appear more primitive from its standpoint’ such as domestic household production or production in the informal economy: ‘Every limit appears as a barrier to be overcome. Initially, to subjugate every moment of production itself to exchange and to suspend the production of direct use values not entering into exchange’, so ‘the tendency to create the world market is directly given in the concept of capital itself’. Sixth, these processes create an ever-expanding class of persons dependent on capital for their survival – a proletariat that is also tendentially global in scale. Periodic economic crises are inevitable, as is a tendency towards social polarisation and increasingly intense class struggle, as wages tend towards subsistence level, along with the creation of a universal propertyless class that develops the potential to overthrow the capitalist mode of production itself.
Those are the laws of motion of capital and the tendencies to which they give rise. Strange as it may seem, the analysis and policy advice put out by the World Bank and the OECD, reflect and are guided by them. They are devoted to the expansion of capitalism, or if you like of the ‘capital relation’, on a global scale. They are fully aware of the centrality of class struggle and the need to weigh in on the side of capital. They are conscious of the inevitability of periodic crisis. And they are mindful of the need to manage the consequences of these inescapable dynamics. And they recognise that at the heart of all this are two imperatives: to oblige capitalists to compete, and to maximise the potential for capital to extract relative surplus value from labour: if the development of capital on a global scale can be reconciled at all with inevitably recurrent crises, and the polarisation of income, it can only be through continual improvements in productivity, and therefore by a universal process of real subsumption of labour to capital. In short, then, they seek to extend the capitalist mode of production on a global scale, while managing its contradictions as best they can.
First, the OECD. In the shortest of summaries, it promotes the liberalisation of global labour and product markets, in full awareness of the laws of motion of capital. Take for example the first Secretary-General, Thorkil Kristensen, writing in the OECD Observer in 1963. He suggested that European countries should abandon the protection of agriculture on the grounds that it would improve their competitiveness: the freer entry of goods from abroad would strengthen competition and reduce inflation, and the transfer of workers from agriculture to industry would address the ‘persistent shortage of industrial manpower’, with benefits for both growth and productivity. Crucially, he recognised that such a policy would be ‘socially and politically difficult’. But looking ahead, he concluded that:
in the long run we must expect a spectacular increase in the imports of manufactured products originating in the poorer countries. … It is not too soon to start preparing for this. Whether we like it or not, Europe will be forced in the imminent future to change, not only her day-to-day policy but also her economic and political structure under the pressure of inexorable forces which entail ever-growing interdependence between all the continents. Europe cannot live in isolation. There is no protection against the fundamental forces of history.
The fundamental forces of history, here, are the laws of motion of capital. And in 1979 his successor, Emile van Lennep, identified free trade as a spur to increased productivity, suggesting that workers who used to produce goods that were now imported could be ‘employed to produce something else’, and accepting that in the process some jobs would be lost, some wages would fall, the intensity of work would be speeded up, and ‘serious frictional adjustment problems’ were to be expected. Governments would need to promote structural change through flexible labour and product markets, and the upgrading of skills and competencies, and reform welfare to ‘support the adjustment rather than hinder it’. Crucially again, governments would need ‘to help populations to form realisable expectations for both their economic security and their own responsibilities, if social cohesion and political stability are to be secured’ (emphasis mine).
The point is clear: ‘structural adjustment’ to align with global competitiveness was first promoted in Europe, and only later in the developing world.
This was a shared project. The first World Bank World Development Report also condemned advanced economy protectionism on the grounds that it would mean ‘delaying some of the difficult structural adjustments that are necessary if there is to be a return to a higher growth path’, whereas openness would contribute to growth by ‘fostering a division of labour that accelerates the upgrading of skills and labour productivity in industry, encouraging technological progress’. At the same time, it urged developing countries to focus on improving the productivity of the poor. ‘Progress in the developing countries,’ the first report stated, ‘will require a combination of three elements: maintaining high rates of growth in incomes; modifying the pattern of growth so as to raise the productivity and incomes of the poorer sections of the population; and improving the access of the poor to essential public services’. And it went on to spell out further what would be its constant message: ‘the employment problem in developing countries is not long-term joblessness as conventionally understood, but absence of productive earning opportunities, so that long hours of hard work yield only small incomes’.
There is a lot more like this over the intervening years, and it leads directly to current attempts on the part of the Bank to abolish the ‘informal economy’ in the developing world.
But here I need to turn to the central core of the book – Marx’s general law of social production and its significance for the future of work. In a crucial passage of Chapter 15 of Capital, ‘Machinery and Large-Scale Industry’, Marx develops further the implications of the laws of motion of capital for the worker.
First: the principle [of large-scale industry] ‘is to view each process of production in and for itself, and to resolve it into its constituent elements without looking first at the ability of the human hand to perform the new processes’
Second: ‘modern industry never views or treats the existing form of a production process as the definitive one. Its technical basis is therefore revolutionary, whereas all previous modes of production were essentially conservative. By means of machinery, chemical processes and other methods, it is continually transforming not only the technical basis of production but also the functions of the worker and the social combinations of the labour process. At the same time, it thereby also revolutionizes the division of labour within society, and incessantly throws masses of capital and of workers from one branch of production to another. Thus large-scale industry, by its very nature, necessitates variation of labour, fluidity of functions, and mobility of the worker in all directions’. And third it follows that:
This possibility of varying labour must become a general law of social production, and the existing relations must be adapted to permit its realization in practice. That monstrosity, the disposable working population held in reserve, in misery, for the changing requirements of capitalist exploitation, must be replaced by the individual who is absolutely available for the different kinds of labour required of them; the partially developed individual, who is merely the bearer of one specialized social function, must be replaced by the totally developed individual, for whom the different social functions are different modes of activity taken up in turn.
There are two things to say about this. First, Marx here anticipates some significant aspects of global labour processes and labour markets today – the extreme fragmentation of labour processes, in both industrial production and services, including in networks that operate on a global scale; the end of the ‘job for life’ and the standard labour contract; the rise of the ‘zero hour contract’; and the huge emphasis placed on the need for prospective and actual workers to be mobile, adaptable and versatile, and absolutely available for the different kinds of labour required of them. Second, the OECD and the World Bank promote all these crucial developments in global capital-labour relations, in each case with the explicit intention of maximizing the capacity of capital to extract relative surplus value from labour. In doing so they embrace uncritically – enthusiastically – the developments that Marx predicted through his critique of political economy. So in the last three chapters of the book I illustrate the relevance of Marx’s general law of social production to the dynamics of the politics of global competitiveness, in examples that I can only summarize here:
- The joint OECD-World Bank-European Commission project on under-employment and joblessness, focused on the ‘labour intensity of households’, which sought to ‘make work pay’ by refining labour activation programmes and reforming benefit or ‘social protection’ regimes so that both would incentivise work.
- The OECD initiative on reforms ‘conducive to higher productivity and labour utilization’, in successive editions of its Skills Outlook in 2013 and 2015 with its call for flexible education systems responsive to the needs of the labour market, extended in 2017 to the global labour market as a whole.
- The attempt by the World Bank in the 2015-2017 World Development Reports to set out a regime for the governance of the general law of social production, in which the ideal workers would be members of an essentially homogenous global proletariat, linked by competition across global production and value chains, and reproduced as workers by social protection regimes that impelled them to seek paid work, provided a minimum safety net in periods of unemployment without impairing the incentive to seek work, and equipped them to renew their skills over time and remain competitive in the labour market when out of work.
- The character of the European Pillar of Social Rights as a constitution for the general law: its twenty propositions on employment and social protection, first defined the ideal worker under capitalism, then set out a regime of social protection with expansive aspirational content that was crucially conditional on and constrained by the logic of global competitiveness.
- The depiction in the World Bank’s World Development Report 2019: The Changing Nature of Work and the OECD’s Employment Outlook 2019: The Future of Work of the kind of worker that global capital requires, and the implications for society as a whole.
- The attack by the World Bank, in the 2019 World Development Report and the 2020 Report, Trading for Development in the Age of Global Value Chains, on the informal economy in the developing world, and its advocacy of competitive global labour markets, based on breaking down production processes into their smallest steps: ‘GVCs have contributed to lower inflation via downward pressures on labour through heightened competition across countries to attract tasks, in particular when low-wage countries are integrated in supply chains’.
- The introduction and refinement from 2018 on of the World Bank’s Human Capital Index, which proposed to gear policy exclusively towards maximizing the value of a future worker to capital on reaching the age of 18.
- And in the final chapter, the concerns on the part of both institutions that COVID-19 would have a long-term adverse effect on global competitiveness by bringing about setbacks both in the global networks through which production was distributed, and in the ability of today’s future workers to develop their exploitable human capital in full-time face to face schooling.
In conclusion, the future Marx envisaged is already upon us, confirming his insight that free competition made capital free while subjecting individuals to what appeared as objective powers ruling over them, and that this enslavement of individuals to an alien power would ultimately be perfected only in the world market. Marx, then has the last word:
It is not individuals who are set free by free competition; it is, rather, capital that is set free. … It is nothing more than free development on a limited basis – the basis of the rule of capital. This kind of individual freedom is therefore at the same time the most complete suspension of all individual freedom, and the most complete subjugation of individuality under social conditions which assume the form of objective powers, even of overpowering objects – of things independent of the relations among individuals themselves.