Outsourcing illustrates the laws of capitalist exploitation (part 2)

We are publishing here the second part of the article on outsourcing which appeared in WR 290. In the first part, against the lies of the leftist and alternative worldists, we dealt with the fact that outsourcing is not a recent or new phenomenon. It was born with capitalism as a consequence of the unbridled competition between capitalists, something inherent to this system. It is a means of increasing the exploitation of the whole working class. In this second part, we will see that outsourcing is a means of putting the workers of the world into competition with each other, and look at how the left wing of capitalism presents it as something ‘avoidable’ and thus less ‘acceptable’ than other attacks. This is just a way of masking the mortal crisis of the capitalist system.

Outsourcing has caused the destruction of thousands of jobs in the western countries. In a few decades entire industrial branches have been almost entirely transferred to countries with much lower manpower costs: “The French textile industry now only employs 150,000 people, the same as Tunisia, against a million twenty years ago”(L’Expansion, 27.10.04). In other sectors they explain the continued loss of jobs. “Wage earners in the French automobile industry went from 220,000 to 180,000 since 1990 despite the arrival of foreign firms such as Toyota, without whom the figures would have been still lower” (ibid). Outsourcing is one of the most brutal attacks by the ruling class. First of all, because of the scale that it can reach at times. In Belgium, for example, between 1990 and 1995, more than 17,000 workers were affected by outsourcing, which represents 19% of collective redundancies. Then, from the fact that the workers concerned have every chance of not finding another job and of joining the ranks of the long term unemployed. Finally, outsourcing is spreading to new categories of workers, white collar and skilled labour. In France “200,000 jobs in the service industry (including 90,000 coming from services to business, 20,000 from research and development) are threatened with being transferred to eastern Europe or Asia between now and 2010”(L’Expansion, 19.4.05).

However, the effects of outsourcing don’t only hit those who lose their jobs in the western countries. It is the whole of the world proletariat which is subjected to the pressure of the insane, competitive race between capitalist nations and to the blackmail of outsourcing, both in the country of departure and in the relocated industry. There is, in India, the fear of competition from Russia, Pakistan and China. The working class in eastern Europe in certain sectors (food, textiles, petro-chemicals and communication equipment) is also confronted with contracting out to the countries of Asia. The pursuit of production at the cheapest cost has made relocation inside China, towards the poor regions of the centre and the east, a dominant tendency in the textile sector. For capital the Bolkestein directive (which claims to establish a legal framework to facilitate the free movement of services between EU states) is ignored in order to use ‘inverse’ relocations, bringing in workers from countries with an ‘economic differential’ to replace existing manpower. The recourse to the employment of illegal immigrants has undergone a considerable increase since the 1990s; it has reached 62% in agriculture in Italy!

What illustrates the reality of outsourcing is the ruthless competition that is forced on different parts of the working class at the international level.

The strengthening of capitalist exploitation for the whole working class

In contracting out to eastern Europe and China, the big businesses of the western states aim to profit from the terrible conditions of exploitation that capital imposes in these regions. Thus in China, “millions of people work between 60 and 70 hours a week and earn less than the minimum wage in their country. They live in dormitories into which up to twenty people are crammed. The unemployed who have recently lost their jobs are as numerous as everyone else” (CISL on line, 9.12.05). “The unemployment payments and benefits promised to the workers are never paid (…) the workers can be refused the right of marriage, they are often forbidden to go outside of the factories (where they lodge) or of leaving outside of working hours (…). In the factories of the special zone of Shenzhen, in the south of China, there are on average 13 workers who lose a finger or an arm every day and a worker is killed in an accident every 4.5 days” (Amnesty International, China, 30.4.02).

What pushes capital to relocate to eastern Europe is the same aim of exploiting “a well trained and cheap population (…) All these countries have longer working hours than the west, 43.8 and 43.4 hours in Latvia and Poland respectively. There is often little or no overtime payment. We also see a strong move to part-time working. This latter is often the prerogative of older people, handicapped and youth coming onto the labour market. In Poland, 40% of part-time workers are either retired or the infirm (…) Often it is foreign businesses “which have the most ‘unsocial’ hours of work; it is standard to find the big stores open 7 days a week, 24 hours a day” (Le Monde, 18.10.05).

In the western countries, outsourcing means the casting aside of workers whose exploitation is insufficiently profitable for capital. However, relocations are one of a number of other attacks. They are not the unique source of unemployment and worsening living conditions; and the aim of the bourgeoisie is not to massively impose the transfer of all production towards countries with lower wages. Thus, “their impact on jobs is not negligible, but remains limited. (…) Relocations only explain 7% of restructurings and 5% of jobs lost in Europe. (…) Between 1990 and 2001, the relocation of German businesses towards the countries of central and eastern Europe led to the destruction of 90,000 jobs in Germany or 0.7% of the manpower of the companies concerned and 0.3% of total German employment” (Le Monde, 26.5.05).

In France, “95,000 industrial jobs have been suppressed and relocated abroad between 1995 and 2001; on average 13,500 per year. By way of comparison, the annual loss of jobs in industry is of the order of 500,000. (…). The contribution of relocations comes to a total of 2.4% of industries’ manpower outside of energy (…). Only a little less than half are destined for countries with ‘lower wages’. These latter welcome about 6,400 jobs relocated per year, or 0.17% of industrial jobs outside of energy. In other words, relocations towards emerging nations explain only less than 2% of industrial jobs lost. About one factory closure per 280 corresponds to a relocation to a country with lower wages” (Dossiers et documents du Monde, Nov. 05). The statements of the bourgeoisie give the lie to the idea that outsourcing is the main explanation for deindustrialisation and mass unemployment.

On the contrary, the systematic recourse to the blackmail of outsourcing as a means of making the proletariat accept still greater sacrifices show where the real stakes lie for the ruling class, which has to impose still harder conditions of exploitation and reduce the cost of the labour force (lowering wages). This in areas where production cannot be relocated and must not be, where the stakes for economic power are most important for capital and where competition between the capitalist sharks is most severe.

The example of Germany is particularly illustrative. It’s in the name of the competitiveness of “the German enterprise” and thanks to the blackmail of relocations and loss of jobs that flexibility of working hours has been imposed, either reduction of hours with loss of wages, or longer hours on the same pay. Thus Siemens, after having transferred its services and development activities to the Czech Republic, India and China, in 2004, increased the working week to 40 hours without wage compensation to a majority of its 167,000 German wage earners under the threat of the relocation of less than 5,000 employees. In 2005, after having announced the loss of 2,500 jobs in its information service branch Com, it reduced the working week from 35.8 hours to 30 with a reduction in wages! At the same time, it was the public sector that made itself the champion of “work longer”. The railway company DB raised the working week to 40 hours and numerous regional states increased working hours from 40 to 42. In all, it is in Germany where the bourgeoisie has in its line of sight the highest cost of labour in the OECD: “wages have fallen 0.9% in real value between 1995 and 2004”. As elsewhere, the blackmail of relocations cannot be separated from other attacks and goes in tandem with the ‘reform’ of the labour market as well as calling into question pensions and health services.

A massive ideological campaign against the consciousness of the working class

If the campaigns of the bourgeoisie put so much emphasis on relocations alone, it is because the dominant class is drawing benefit from this. When unions, parties of the left, leftists and alternative worldists blame outsourcing and complain of a return to 19th century conditions, it’s to better obscure from the proletariat the real significance of its situation in society.

Marxism has never argued that the tendencies towards the lengthening of the working day and the lowering of wages to their minimum of vital subsistence is the product of the carnivorous character of this or that capitalist in particular. They result from the contradictions implied in the very nature of capitalism. By its nature capital is a vampire on the labour force, from which it draws profit and feeds itself. “In its blind and living passion, in its gluttony for extra work, capital not only goes beyond moral limits but also the extreme physiological limits of the working day (…). Capital is thus not concerned how long the labour force lives. Its only interest is the maximum that can be spent on it in a day. And it reaches its aim in shortening the life of the worker (…). Capitalist production, which is essentially production of surplus value, the absorption of extra work, doesn’t just produce the deterioration of the workforce by the working day that it imposes, by depriving it of its normal conditions of functioning and development, physical or moral – it produces the exhaustion and early death of this force” (Marx, Capital, Book I, chapter 10. For ideas on the labour force, surplus value and extra work, see the first part of this article in WR 290.).

The enormous difference with today is that in the 19th century, the proletariat could hope for an attenuation of its situation within the capitalist system. “The first decades of large scale industry had such devastating effects on the health and conditions of life of the workers, provoked an alarming morbidity, such physical, deformations, such a moral abandonment, epidemics, inaptitude for military service, that the very existence of society appeared profoundly threatened (…). It was thus necessary, in its own interests and in order to permit future exploitation, that capital imposed limits to exploitation. It was necessary to go from a non-profitable economy of pillage to a rational exploitation. From this were born the first laws on the length of the working day” (Rosa Luxemburg, Introduction to political economy, chapter on ‘Wage labour’).

This result was only imposed against the ferocious resistance of the capitalists and after decades of an implacable struggle of the classes. It could only be obtained because the capitalist system then found itself in a phase of ascendancy, in full expansion.

Today the relentless competition between capitalist nations, struggling for still more restricted markets, can only provoke a general, unremitting attack on the living standards established in the western countries. All these facts confirm the expectations of marxism: the collapse of capitalism into social catastrophe.

It is up to the workers of the whole world to understand themselves as comrades in struggle and hold out their hands across the limits of sectors and frontiers. They need to make their disparate movements into a single struggle against capitalism and develop the consciousness that this struggle can come to fruition through the destruction of the capitalist system. This means the abolition of wage labour and of labour power as a commodity, which is the root of the proletariat’s slavery.   Scott