Sunday 26 July 2009

Thomas Sebastian 1-post ww ii neo-colonialism

Thomas Sebastian

POST WWII-neo-colonialism

Intense rivalry between leading imperialist nations for markets resulted in two world wars.USA perfected expansionism through export of capital. After WWII other imperialist countries followed US methods.
Besides the above growing strenght of nationalist independence movements , increasing tensions between imperialist countries and the inspiring example of Soviet union made the colonial option non-viable.The new phase is known as neo-colonialism.
most of the newly independent countries adapted modernization programs designed by imperialists.W.W. Rostow presented the theoretical frame work of the program in his book "The stages of economic growth: a non-communist Manifesto". the thrust of his argument was that poor countries backward because they have low savings and investment. since they are poor there is no possibility of the situation changing with out foreign capital. The governments would invest it in economic and social infra-structure and some capital goods industries.In the latter the native bourgeoisie and foreign capital were not interested.Infra-structure will help expansion of MNCs. The countries would not be able to catch up or solve the problem of poverty.
The main tool of domination and exploitation are MNCs through the new division of labor of global production.

POST-1970s

Systemic use of science to convert labor into capital during the last two decades of 19th century is known as scientific management; this separation of hand and brain is the most decisive step of capitalist mode of production.
Once factories were established control of labor power became necessary.Taylor advanced the Babbage principle i-labor process to be dissociated from labor skill, ii-brain work to be used to plan, iii-monopoly over knowledge to control each step of labor process.Workers lose control of instruments of production and over their own labor. The pivot of all management is to control core work through control over decision making.
As monopoly capitalism advanced there was progressive elimination of thought from office worker. Taylor would like a pig iron worker to have the mental make up of an ox.( Taylor; the principles of scientific management 1911).
Advances in electricity, steel, coal-petroleum and internal combustion engine helped the process along. Conception and execution were thus separated.
New firms are horizontally flexible and spread over many countries; division of labor is extreme and control over labor process absolute.
Commodification of knowledge and extreme division of labor are the defining features of globalization.
Production of intermediates outside the firm reduces turn over time. MNCs have become the main vehicles of capital export.Stephen Hymer says that business enterprises should be viewed as a process of centralizing the process of capital accumulation and MNCs as not just expansion of 19th century capitalist classes but as their transformation into a new world economic order dominated by them.
Chandler and Reddich (1961) identified three stages in development o of corporate capitalism; i-factory level single function Marshalian firm controlled by one or few persons, ii-large national corporations as result of mergers in the USA in 19th century., iii multi-divisional corporations post WWII.
Singer's first factory in Glasgow 1867 was the first to mass produce its product under i.ts name.During the inter war period MNCs expanded into Latin America when 200 US/Europeans firms set up plants by 1940( Bannerjee-Guha 1997)
1970s saw the emergence of a truly global system based on MNCs. the largest 100 corporations had 3.2 trillions in assets more than a third in foreign countries.
With 40% of 25 largest MNCs in 1990 USA topped the list followed by Japan and according to Bannerjee-Guha the world looked like an industrial village for MNCs.
Over the last three hundred years the main source of wealth has changed from natural assets to to knowledge and information.By 1995 value added in US manufacturing had changed to 30% in processed food/minerals and 70% in knowledge from the proportion of 80;20 in 1950s.
Capitalists have been paying for research which belongs to him. Knowledge is no longer relatively free floating. It is embodied in patents.
Dunning estimates that between 1975 and 1995 research expenditure rose three times that of the rate of output of industry in OECD. Patents in knowledge sectors rose by 182% while in the general rise was 48%, capital spending in information technology was a third of product one in 1961 now exceeds it.
The big firms gen rate a high % of world wide patents in their own countries.
Inventors from all over the world like to register in the USA which serves as surrogate.It favors the rich as the cost of patenting is prohibitive. Bulk of these technological activities is concentrated in ten countries. Ownership of patents USA 55.5, Japan 20.7,, Germany 6.7, France and Britain under 3.
International technology is dominated by a few industrialized countries and further concentrated in large corporations. Mergers are attempts at control of technology.
MNCs have access to public funded R&D in universities. the former also develop strategic alliances with the latter.
Modern MNCs are essentially exporters of knowledge based assets(KBA) which they prefer do through subsidiaries rather than direct selling for royalties etc.By bypassing markets firms are more and more vertically integrated.
Division of labor is the main dynamic factor for vertical integration and it is administratively simpler to decentralize planning which takes the form of networking and sub-contracting.
An advanced type of networking is industrial condominium ( also called modular production). when assembler organizes the facilities of key suppliers around its plants, defines parts to be produced, selects suppliers and specifies the parts to be built. Japan developed it first to reduce cost, increase efficiency and minimize the assembler's expense.
Out sourcing is another strategy of MNCs. Early efforts involved production in Asia, now it involves call centers, book keeping, customer service advertising, computerized salary, storage and systems development. A WB study in 1995 showed that 30% of the 8000 billion manufacture trade is in components.
Location of intermediate stage depends upon relative pull of raw material and demand location.If it is cheaper to produce abroad and transport than produce at the center. The semi-conductor industry of the USA produces blue prints and key components in the USA and shipped fro testing and assembly to cheap labor of subsidiaries in South Asia, and final product shipped back.
MNC administrative system is iii-lowest level of day to day operation, ii- level managers manage iii, i-is the highest level of management at HQ.
The dominant activity of large businesses is product development and marketing. They decentralize and divisions have their own HQ under control of the general office at home. (my note) Microsoft-software, IBM-hardware and Cisco-infrastructure to name but three have divisional HQs in India and Europe with a controlling office in the US) and have since 1960s globalized production to exploit cheap labor.
Globalization in its current perspective could be made a practical proposition only after the break through in transport and communications during the 1980s.
Capital can not renew itself with out appropriating the surplus labor f society.
Modern MNCs are like an octopus, have their brain located in GHQ which sends signals to the tentacles. Globalization implies increasing degree of interdependence and integration across continents but is primarily associated with the triad of USA, EU and Japan.
In earlier stage of capital natural endowment was the main factor of international division of labor. Now sitting in an upper floor of an skyscraper in NY an MNC president can view the global space and allocate various activities to different regions. An apt example is Barbie doll made with plastic injected into molds at two factories in South China adjacent to Hong Kong, two in Indonesia and one in Malaysia where they were shifted from Japan due to rising costs there. The plastic comes from Saudi oil which is converted to pellets in Taiwan, Nylon comes from Japan and card board packaged in the US.
The Chinese get only 35 cents out of $ 2.00 value placed on each doll when leaving Hong Kong, sold for $ 15.00 in the US, the doll is sold at a frequency of 3 dolls per second, 40% are sold in EU and Japan.
During mercantilist and imperialist phases capitalists countries conquered concrete space. Under neo-colonialism they have taken possession of global abstract space and manage it centrally.

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