World Bank, World Development Report 2020: Trading for Development in the Age of Global Value Chains, World Bank, 2020; free download.
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RATING: 80/20
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Free download
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Another year, another World Development Report. It is another instalment - and a significant one - in the systematic construction of a model for a global economy based upon the universal subjection of the propertyless majority to the demands and disciplines of capital. And like its predecessor, it rates 80 for significance, 20 because of its uncritical love for global capital. It is no surprise that it opens with the world market, and highlights an Asian-centred production chain:
'Around the world, the process of delivering goods and services to consumers has become specialized to a degree no one could have ever imagined. Businesses focus on what they do best in their home markets and outsource the rest. Samsung makes its mobile phones with parts from 2,500 suppliers across the globe. One country - Vietnam - produces more than a third of those phones, and it has reaped the benefits. The provinces in which the phones are produced, Thai Nguyen and Bac Ninh, have become two of the richest in Vietnam, and poverty there has fallen dramatically as a result' (xi).
Its focus - global value chains - is on production as much as on trade, and by exploring the spatial organisation of production and its domination by a minority of large firms involved in both importing and exporting, and focusing particularly on dynamic change in labour markets, it complements last year's Changing Nature of Work, a seminal document that spelled out an ambitious programme for the thoroughgoing proletarianisation of the world's poor. In doing so, it returns, in new circumstances, to long-standing themes: the goal of proletarianisation itself, and the significance of trade as a means to global competitiveness and the disciplines it entails. As the Bank argued over thirty years ago:
‘The experience of developing countries over the past three decades suggests that when direct controls replace market mechanisms, economies work less efficiently. An economy that imposes few barriers to trade and encourages domestic competition is likely to develop an industrial sector that is more efficient in its use of resources and more competitive in international markets. Domestic policy also interacts with trade policy. The success of trade reforms hinges on the ability of firms to expand export production and meet the challenge of increased import competition. The speed of that adjustment depends on the flexibility of domestic product and factor markets. Government policies can aid flexibility by removing barriers to resource reallocation and by encouraging competition in the domestic economy. Outward-oriented trade strategies and government policies encouraging domestic competition are therefore complementary’ (World Bank, 1987, p. 131).
So the Bank has not privileged 'Western' corporations or capital, but the worldwide hegemony of capital under a regime of global competitiveness to which all states must conform. This is the significance of its long-standing argument that speed of adjustment 'depends on the flexibility of domestic product and factor markets', and its insistence on 'removing barriers to resource reallocation and ... encouraging competition in the domestic economy'. It is still grounded in a classical liberal perspective based upon the idea of comparative advantage, but with a twist that is central to the argument developed in WDR 2020. It does not take a static view of comparative advantage based narrowly upon trade, but a dynamic view that is focused primarily on a different factor of production - labour - and active state intervention aimed at addressing imperfections in labour markets that hinder integration into global value chains:
'At the heart of policies that reinforce comparative advantage are those that minimize distortions of market prices—of land, labor, and capital—so that factors flow smoothly to the sectors and places where comparative advantage can be best exploited. These
include economy-wide policies to support land market reforms, competition, open labor markets, and access to finance, along with investments in critical infrastructure. In low-income, labor surplus countries with large pools of unskilled labor transitioning from the agriculture sector, externalities arising from the divergence between the market price and the opportunity cost of labor may call for additional targeted incentives for the private sector to invest in labor-intensive activities' (196; see also Robalino and Walker, 2017).
The imperative here, according to the Bank, is to adopt policies that will avoid 'low-wage traps', and instead facilitate 'transitioning up the GVC typology' successively from specialisation in commodities to light manufacturing, then to advanced manufacturing and services, and finally to innovative GVC activities; the Czech Republic is identified as a successful case (54-5, 74; 186-9). Can the Bank be serious? Yes. Its ambition has always been to develop as productive a global proletariat as possible, and it now sees the successive technological revolutions that have given rise to the fragmentation of production on a global scale as transforming the potential for this process. The Bank favours free trade because it imposes competitiveness: first, cheaper imports of finished goods subject domestic producers to competition, forcing them to become more competitive themselves or go out of business, while imports of intermediate goods (goods used in the production process) have the same effect on domestic suppliers of those goods, while reducing the production costs of the firms they supply, and raising their competitiveness. But what the Bank values above all is competitiveness in labour markets - the first response of firms facing increased competition is not to go out of business, but to replace labour with capital and/or reduce wages, in order to restore profitability. So a flexible labour market (one in which wages can be reduced and workers laid off with relative ease) is brought about by liberalisation, deregulation and privatisation, which remove barriers to resource allocation and encourage competition in the domestic economy. Only when these two go together, and are pursued in advanced and developing countries alike, will workers be subjected to the discipline of competition in the world market. All of this is restated in detail in a recent OECD paper which summarises extensive recent research (Andrews, Gal and Witherage, 2018: 7-10); WDR 2020 draws on it to argue that 'GVCs have contributed to lower inflation via downward pressures on labor through heightened competition across countries to attract tasks, in particular when low-wage countries are integrated in supply chains' (106). This is the key idea on which the logic of the report depends, and it is supported further by an important body of recent work, originating in studies of FDI in global value chains, which argues as follows:
'Global trade integrates not only markets for products, services, finance and technology, but also, directly and indirectly, markets for labour. ... Economists are largely in agreement that, at least at the aggregate level and over the long term, trade plays an important role in driving economic growth, job creation, and wage growth. However, the process of trade-induced growth entails the continual reallocation of resources away from less productive activities to more productive ones. This inevitably creates winners and losers, at the level of countries, sectors, and firms, as well as across groups of workers, as trade results in changes in the relative demand for certain skills. ... Specifically, the emergence of global value chains (GVCs) – whereby activities that used to be produced under one roof are now fragmented and distributed across networks spanning many countries (‘offshored’) – means the trade and technology nexus is increasingly merged. Producers play off trade, investment, and technology to maximize profits. This has fundamental impacts on where jobs go, who gets them, and what types of jobs they are' (Farole et al., 2018: 6).
This paper is one of a flood of 62 publications that have emerged since 2017 from the Bank's Jobs Group, all specifically intended to influence programmes and policies in client countries. Its three authors are all members of the core team that produced WDR 2020, and no doubt, like Banerjee, Duflo and Kremer before them, future recipients of the Nobel Prize for services to the extraction of surplus value from the poor. Essentially, the Bank wants to have it both ways. It encourages governments to subsidise the creation of unskilled jobs in the lowest tier of GVCs in order to draw the poor in, in order to maximise the size of the proletariat available for exploitation, while trusting to a competition-driven process of 'creative destruction' both to drive up the global productivity of capital, and to continually reproduce available surplus labour at the base.
In short, then, the Bank and the OECD agree that global value chains are to be encouraged because they provide the best means to the goal of 'downward pressures on labour through heightened competition across countries to attract tasks'. This presupposes two developments that are both relatively recent: the fragmentation of production down to the level of separate individual tasks, and advances in transport, logistics and communications to a point where low-wage countries all around the world can participate, and these together underpin a regime of genuine global competitiveness. So WDR 2020 'sets out a comprehensive domestic agenda for governments: investments in connectivity, improvements in business climate, and unilateral reductions in trade and investment barriers', combined with an international agenda of coordinated trade liberalisation, a universal regime for foreign investment, and the subjection of state-owned enterprises to rules of competition. Crucially, as always, this entails complementary programmes of reform in advanced and developing countries. First, 'reinvigorating the international trade system will require governments in certain advanced countries to first look inward to address the discontent and inequality associated with openness. More generally, advanced economies need to rethink the priorities of the welfare state to better help workers adjust to structural change'; second, developing countries 'need to expand social assistance and improve compliance with labor regulations in order to extend the jobs and earnings gains from participation in GVCs to more people across society. They also need to take steps to ensure that their domestic firms benefit from knowledge transfer from lead global firms' (xiii). Set out right at the start by Chief Economist Pinelopi Koujianou Goldberg in the preface to the report proper, along with the admonition that 'all countries need to ensure that the growth associated with trade does not lead to environmental degradation', this is the basis of the World Bank prescription for a genuinely global capitalist economy. And she concludes with a thumbnail sketch of broader complementary areas of global regulation:
Cooperation on corporate taxes will enable governments to better tax capital in a global, digitalized economy, so that they have the resources to finance infrastructure projects and social policies. Improved cooperation on competition issues is needed to ensure that firms enjoy a level playing field globally. And finally, new models of cooperation are needed for data flows to strike a balance between the privacy of citizens and the needs of business and innovators' (xiv).
The report takes for granted, then, that the fragmentation of production across global value chains is a good thing. GVCs, it argues, 'are associated with structural transformation in developing countries, drawing people out of less productive activities and into more productive manufacturing and services activities' (3); they are more likely than non-GVC firms to employ women; and are associated with a reduction in poverty. Even so, they can also increase inequality within and between countries, and cause environmental damage. Continued reform is necessary, therefore, to avoid or mitigate negative consequences, and the key word here is 'adjustment' - adjustment to the logic of global competitiveness, that is, through policies that smooth the path of change in its favour, such as 'labour market policies to help workers who may be hurt by structural change; mechanisms to ensure compliance with labour regulations; and environmental protection measures': 'Adjustment assistance, which is especially important in middle- and high-income countries, will help workers adapt to the changing patterns of production and distribution that GVCs bring about. Adjustment policies can include facilitating labor mobility and equipping workers to find new jobs' (6). This in turn is the point of intersection with 2019's Changing Nature of Work, and the global agenda of skills training and labour activation in response to changing demands for labour (a connection that is made directly here, 151-3).
As noted, not all of this is new. The mapping out of the requisites for a comprehensive regime of global competitiveness and the means by which it can be brought to bear on the attitudes and behaviour of the world's poor has largely been accomplished over the period from the late 1980s on, while other forces have brought about a genuinely global world market. What is new is that the regime that was already envisaged in the late 1980s can now be realised in practice, while more fine-grained sources of data make it possible to explore policy areas such female employment in more strategic detail than in the past. In the meantime, just as the material content of trade has changed as it has become dominated by goods that did not exist four decades ago, so has the world in which trade takes place. The latest IMF World Economic Outlook (2019: 126) attributes 40.8 per cent of world GDP (PPP) and 63 per cent of world exports of goods and services to the advanced economies (which now include Singapore, Korea, Hong Kong and Taiwan, as well as the Czech Republic, Estonia, Latvia, Lithuania, the Slovak Republic and Slovenia) and 59.2 per cent and 37 per cent respectively to emerging market and developing economies, while China heads the US in both (18.7 and 10.7 to 15.2 and 10.1 per cent respectively). The G7 economies that were dominant in the post-war period command only 30 per cent of world GDP (though still 44 per cent of world exports), a shift that is largely a consequence of growth in 'emerging and developing Asia', and that continues: while world growth barely surpassed an average of 3.5 per cent per annum from 2012 to 2018, and is projected to hover around that mark for the next five years, the advanced economies averaged under 2 per cent and are projected to settle at a rate of 1.7 per cent from 2019 on (with the Euro area slipping back to 1.3 per cent, and Japan even lower), while emerging and developing Asia grew at more than 6.7 per cent per annum, and is projected to continue to grow at 6 per cent per annum (ibid: 147).
At the same time, the World Bank is concerned that renewed protectionism is threatening the relative freedom of trade, and thereby hindering the operation of the competitive pressures it brings about. Both the expansion of trade and the advancing global division of labour are slowing; and the distribution of GVC production across the developing world remains uneven. It responds first by looking for means to press the development of global value chains further, and second by addressing the factors that are slowing their expansion.
On the first of these issues, the emphasis is heavily on the prospects for and means towards the increased employment of women in 'good jobs' in GVCs, and the Bank has been assiduous, along with the WTO, in exploring this area in detail. It observes first that the most successful developing world firms integrated into GVCs not only increase their productivity through greater capital intensity (more investment per worker), but also employ increasing numbers of workers, especially if they are involved in both exporting and importing. So 'GVCs are associated with structural transformation, with exports pulling people out of less productive activities and into more productive manufacturing jobs' (78). Noting that female workers tend to predominate (and specifically, that GVC firms are more likely than non-GVC firms to hire women), it illustrates the potential positive effects with the example of Bangladesh, where 'young women in villages exposed to the garment sector delay marriage and childbirth, and young girls gain an additional 1.5 years of schooling' (a common phenomenon, noted by Ong in Malaysia over thirty years ago), and suggests similar trends in India, Kenya and Senegal (Box 3.5, 79-80). But it identifies at the same time a persistent gender gap in wages, as 'women are generally in lower-value-added segments of the value chain, mostly in labor-intensive production jobs and in occupations that require lower skills and pay less' (90, esp. Fig. 3.18). It attributes this, and the fact that very few women own or run GVC firms, to familiar causes: 'disadvantages in endowments, such as assets, education, skills, experience, networks, and social capital, as well as gender-biased regulations or discriminatory social norms' (90), drawing particularly on a previous World Bank study (Staritz and Reis, 2013) for support. The focus of the Staritz and Reis collection of case studies was on the extent to which these aspects were not only barriers to the advance of women, but also restraints on competitiveness in the global economy, and WDR 2020 takes up the same theme, arguing that 'gender-intensified constraints can restrict a country’s ability to remain competitive and upgrade to higher-value segments of the chain,' and identifying this as 'a topic discussed in a forthcoming report by the World Bank and World Trade Organization on trade and gender, “How Can 21st Century Trade Help to Close the Gender Gap?”' (91). The two studies from this project that are currently available show how keen the Bank is to find and promote global value chains in which women enjoy better career opportunities. The first, a case study of Chile, argues that even in the 'worst case' of the mining industry, technologically advanced large-scale mining offers more opportunities for women as jobs shift from manual labour on site to automated and remotely operated techniques of production. Its focus is directly on 'understanding the important role women should have as a strategic asset for competitiveness' (Fernandez-Stark et al, 2019: 2-3), in a context in which the Chilean Mining Skills Council estimates that new projects in the pipeline will increase remote-operated and automated job profiles to 71 per cent of those in extraction, 90 per cent in processing, and 58 per cent in the currently lagging sector of maintenance (ibid: 9). As the skills requirement increases to an anticipated norm of a four-year technical degree, the largest current obstacle to increased female employment is the small number of women in such programmes, making this a particular focus of World Bank attention. In the meantime, the state-owned copper company CODELCO has led the way not only in introducing digital technologies, but in aiming to make the strategically named Gabriela Mistral Mine (commissioned 2008) a showcase for social innovation with the highest proportion of female workers anywhere, and adopting a range of initiatives to raise female employment (ibid: 13). As yet, however, these initiatives have had limited impact on the sector overall: 'gender stereotypes remain strong and mining is still considered to be male work' (ibid: 17). The second paper offers a marked contrast. It examines the rapidly expanding high value medical devices industry (anything from syringes and sutures to pacemakers) in Costa Rica and the Dominican Republic, and similarly addresses 'the relative opportunities for men and women in these higher value GVCs, and what, if any, gender sensitive policies are required to enhance a country’s competitiveness in these sector' (Bamber and Hamrick, 2019: 2; see also Bamber and Staritz, 2016). It paints a much brighter picture than in mining: women account for more than half the workforce, and 'this female participation holds steady as the sector grows, upgrades into new, higher value products and as wages rise; and ... these predominantly female jobs are good quality jobs despite being primarily in production stages; that is, they are sustainable and characterised by permanent contracts and higher than average wages' (ibid). This relatively unusual situation is explained, for these authors, by a number of factors. In the medical devices industry continuous up-grading is relatively easy, but considerable on the job training is required: the largely skilled/semi-skilled nature of the workforce and its acquired sector-specific expertise make retention desirable, and less than 1 per cent of workers are on temporary contracts (ibid: 17). As a result, upgrading is associated with stable or increasing female intensity of employment (ibid: 12), and as the level of sophistication of production increases, women are favoured for technician and quality control roles (ibid: 16). The Costa Rican case is profiled in WDR 2020 (Box 7.8, pp. 188-9).
These are, you might say, straws in the wind. But the strategic direction of World Bank thinking is clear. States should promote integration into global value chains, giving particular attention to their potential for offering 'good jobs' to female workers, and accordingly making reforms that remove obstacles to increased female participation in waged work in order to increase their ability to compete globally for tasks.
From this point, the report turns to the broader issue of the way a world market structured by GVCs should be managed, and here the Bank sees a major role for itself. On the grounds that in a world of GVCs 'countries are increasingly related through rigid production linkages that bind them to a common fate', the Bank argues that they have an interest in cooperating to synchronise their economic activity, control inflation, maintain currency stability, and facilitate and extend opportunities for trade, so that: 'In view of their rigid ties, GVCs would benefit from multilateral institutions helping to coordinate policy worldwide, including through the formulation of product standards, investment and intellectual property protections, or the timing of fiscal adjustments' (103). As noted above, the key driver here is downward pressure on wages arising from 'heightened competition to attract tasks' (106), and this is the governing idea of the report as a whole. What the Bank has in mind, evidently, is a comprehensive global regime, in which it would itself play a leading role, through which this would shape the world market as a whole. A rather awkwardly inserted but still very informative chapter on environmental issues that highlights both negative and positive aspects of GVCs is followed by a review of technological change that concedes that while new technologies are likely to change GVCs and the trade and jobs they create, 'forecasting exactly how is fraught with uncertainty, not least because technological progress is difficult to predict' (137). Regardless, though, it argues that 'increasing tariffs to shield domestic industries from intensified competition associated with the adoption of new production technologies in other countries is likely counterproductive because it lowers efficiency, raises the prices of both inputs and outputs, and undermines incentives to innovate' (137), and suggests that 'investments in reducing barriers to competition and minimising frictions may ... be especially beneficial for developing countries' (139). At the same time, it recognises that 'as automation improves productivity, it also compresses labour's share of income in advanced economies' (149), and that although it is not clear whether automation ultimately helps or hurts net job creation, 'it certainly causes significant, and costly, labour market adjustments' (151). The closing sections of the chapter usefully spell out the Bank's commitment to continued development of the world market, the challenges posed by intensified competition, and the shape of its proposed policy response:
'[Protectionism] likely prevents efficiency-enhancing specialisation across countries. By contrast, by opening up opportunities in new markets and fostering competition in domestic markets, trade liberalisation tends to incentivise competition and scale and, by implication, innovation ... Inflating the costs of international sourcing by raising trade protection could thus undermine gains from specialisation and stunt productivity growth. ... The positive impacts of trade openness on technological progress are an often overlooked source of gains from trade (153).
'Although predicting the future is a treacherous exercise, new technologies will likely reduce trade costs and make it easier to participate in global markets. Such outcomes may offer developing countries new opportunities to link into GVCs. However, the attendant intensification of competition may make it more challenging for countries to succeed' (153).
'Among the countries adopting these technologies, labor market disruptions are likely to be significant, skill premiums are likely to rise, and labor’s share of income may decline further. These outcomes point to the importance of sound social safety nets and redistributive and tax policies to ensure that gains are widely shared without distorting incentives to innovate' (154).
From this point on (two chapters on domestic policies that facilitate fruitful participation, and two more on how international cooperation can help), a clearly articulated global liberal developmental policy agenda unfolds, with the imperative to draw women, youth and informal sector workers into the world market at its heart. Countries 'should exploit their comparative advantage by eliminating barriers to investment and ensuring that labor is competitively priced, by avoiding overvalued exchange rates and restrictive regulations'; they should follow the precepts of the Bank's Doing Business reports, and 'facilitate GVC-oriented FDI and support investors through the investment life cycle', adopting 'well-planned investment promotion strategies' of the kind introduced by Costa Rica, Malaysia, and Morocco; they should liberalise trade in goods and services to expand access to markets and inputs; they should 'overcome remoteness by improving their connectivity and lowering trade costs'; and they should 'strengthen enforcement of contracts, protection of property rights, and regulatory standards'. They should then proactively 'promote linkages between domestic small and medium enterprises (SMEs) and GVC lead firms by coordinating local suppliers, providing access to information about supply opportunities, and supporting training and capacity building of SMEs'; 'help domestic suppliers gain access to finance and technology to support raising productivity and meeting global standards'; 'strengthen sector-specific human capital through targeted workforce development strategies, involving close coordination between the public and private sectors'; 'support firms in their efforts to upgrade management capabilities and strengthen the capacity for innovation'; and 'strengthen national innovation systems to support upgrading in GVCs' (161-2, and 186-9).
As this approach is not in itself guaranteed to be either inclusive or sustainable, it should be combined in developing countries with policies that 'spread the jobs and earnings gains from GVC participation across society, thereby helping to lift the bottom 40 per cent'; in agriculture value chains, the integration of smallholders is particularly important; policies should also 'support the inclusion of women and youth in GVCs, including by providing access to child care and training programmes and by addressing legal and social barriers to employment and earnings'; and compliance with labour standards should be improved, not least because this can lead to higher productivity and profits. In the advanced countries, where the welfare of workers left behind in communities where factories have closed is the primary threat to the sustainability of trade and GVCs, 'labour adjustment policies can be used to ensure that workers have the skills to move to new industries and places'. A price should be set on environmental degradation, regulation should be introduced for specific pollutants and industries, trade agreements should be consistent with environmental goals, and standardised international data should be used to expose poor production practices and incentivise firms to improve (195). Again, the focus quickly turns to women and youth: 'the potential of GVCs to employ large numbers of young female workers means they may play a major role in supporting many countries’ efforts to increase female labor force participation and reduce youth NEETs (not in employment, education, or training)' (197), and the material dovetails perfectly with that of The Changing Nature of Work (cited 197-8, 202), reasserting the strategic value of GVCs, in the eyes of the Bank, for its agenda of competitiveness-enhancing 'inclusion'. GVCs become the focal point of policy, and governments are urged to reform policies across the board - from skills development and employability to quality child care and public-private pathways to GVC-specific employment.
Marx expected, of course, as did Adam Smith, that under conditions of competition in the world market, wages would tend to settle at the level of subsistence, defined in relative social terms, and could easily fall below it for periods of time. Viewed from this perspective, the Bank's agenda of 'inclusion' is an attempt to develop the global proletariat to a point where labour markets around the world do operate on the basis of subsistence-level wages, and it embraces GVCs based upon the breaking down of production processes into discrete tasks as the key mechanism to structure global labour markets in this way. So the Bank is candid in pointing out the reality of global competitiveness:
'Because many of the most prominent GVCs involve outsourcing of low-skill, labor-intensive activities, the very low nominal wages in some countries often grab the world’s attention. For example, recent news articles have noted that t-shirts are being produced for charities or high-profile brands in factories paying less than 50 cents an hour. Certainly, to readers in high-income countries where even the lowest-skilled factory jobs pay 20–30 times that level, this is a shockingly low wage. However, this does not necessarily
mean that low wages are a problem in GVCs' (198, emphasis mine).
'What matters more,' the Bank goes on 'is whether the wages on offer are in line with productivity and whether they offer a reasonable “living wage” for workers' (ibid). What is a problem for the Bank, in this context, is a situation where the process of constant investment and innovation to raise productivity is absent, as this in turn impairs both local and global dynamics of competitiveness. So, as noted above, 'GVCs can be problematic if they contribute to the emergence of "low wage traps" - that is, where wage suppression is used to maintain international competitiveness' (198). Ideally, the Bank goes on, 'policies should protect workers’ earnings while maintaining competitiveness to attract GVC investment. ... Minimum wages should be set at a level that, at the very least, protects workers from poverty and vulnerability, while also keeping an eye on firm competitiveness' - and raised at regular intervals, through a transparent process, and linking 'to both productivity growth and the cost of living, avoiding excessively sharp increases during significant economic downturns' (199). There is an obvious problem here, of course, in that a wage that makes for competitiveness might not protect workers from poverty and vulnerability, and the Bank takes it up immediately: 'In some countries,' it suggests, 'distortions in the domestic market may drive a significant wedge between a living wage for workers and the wage at which firms can remain competitive in international markets' (200).
From a critical perspective this stems not from 'distortions in the domestic market' but from the structure of the world market. The Bank's solution is as always to press on to make markets work better, but this overlooks, as it must in order to make the case, that the better markets work, the more they expel workers, continually creating and recreating a reserve army of labour, and a layer of workers in menial and unskilled jobs on rock-bottom wages - and as available to GVCs at to any other employer. And if GVCs do not abuse the human rights of precarious workers, there will always be somebody, driven by the demands of competitiveness, who will. So although the Bank goes on to acknowledge the problems that exist 'in global commodity chains such as agriculture and even in high-technology value chains, as confirmed by recent news reports documenting the casualisation, discrimination, harassment, and retaliation encountered in some of the world’s largest technology multinationals' (ibid), it treats this as evidence of a need for regulation and enforcement, rather than as an intrinsic feature of global capitalist labour markets. Similarly, when it turns to adjustment in the advanced countries, it assumes that for the foreseeable future - if not indefinitely - it is possible for these countries to combine flexible labour markets with 'a generous, broad-based unemployment benefit system that cushions the negative income effects on displaced workers' (202). There is no reason to believe any of this. On the contrary, Marx as usual 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 (Grundrisse, Pelican, 1973: 650, 652).
References
Andrews, Dan, Peter Gal, and William Witheridge. 2018. 'A Genie in a Bottle? Globalisation, Competition, and Inflation', OECD Economics Department Working Paper 1462, Document ECO/WKP(2018)10 (March 20), OECD, Paris.
Bamber, Penny, and Danny Hamrick. 2019. 'Gender Dynamics and Upgrading in Global Value Chains: The Case of Medical Devices', Duke Global Value Chains Center, January.
Bamber, Penny, and Cornelia Staritz. 2016. The Gender Dimensions of Global Value Chains, International Centre for Trade and Sustainable Development, Geneva.
Farole, Thomas, Claire Hollweg and Deborah Winkler. 2018. 'Trade in Global Value Chains: An Assessment of Labor Market implications', Jobs Working Paper, 18, World Bank.
Fernandez-Stark, Karina, Vivian Couto, and Penny Bamber. 2019. Industry 4.0 in Developing Countries: The Mine of the Future and the Role of Women, Duke Global Value Chains Center on Globalization, Governance & Competitiveness, January.
Robalino, David Alejandro, and David Ian Walker. 2017. 'Guidance Note: Economic Analysis of Jobs Investment Projects', Jobs Working Paper 7 (August), World Bank.
Staritz, Cornelia, and José Guilherme Reis, eds. 2013. Global Value Chains, Economic Upgrading, and Gender: Case Studies of the Horticulture, Tourism, and Call Center Industries, World Bank.
'Around the world, the process of delivering goods and services to consumers has become specialized to a degree no one could have ever imagined. Businesses focus on what they do best in their home markets and outsource the rest. Samsung makes its mobile phones with parts from 2,500 suppliers across the globe. One country - Vietnam - produces more than a third of those phones, and it has reaped the benefits. The provinces in which the phones are produced, Thai Nguyen and Bac Ninh, have become two of the richest in Vietnam, and poverty there has fallen dramatically as a result' (xi).
Its focus - global value chains - is on production as much as on trade, and by exploring the spatial organisation of production and its domination by a minority of large firms involved in both importing and exporting, and focusing particularly on dynamic change in labour markets, it complements last year's Changing Nature of Work, a seminal document that spelled out an ambitious programme for the thoroughgoing proletarianisation of the world's poor. In doing so, it returns, in new circumstances, to long-standing themes: the goal of proletarianisation itself, and the significance of trade as a means to global competitiveness and the disciplines it entails. As the Bank argued over thirty years ago:
‘The experience of developing countries over the past three decades suggests that when direct controls replace market mechanisms, economies work less efficiently. An economy that imposes few barriers to trade and encourages domestic competition is likely to develop an industrial sector that is more efficient in its use of resources and more competitive in international markets. Domestic policy also interacts with trade policy. The success of trade reforms hinges on the ability of firms to expand export production and meet the challenge of increased import competition. The speed of that adjustment depends on the flexibility of domestic product and factor markets. Government policies can aid flexibility by removing barriers to resource reallocation and by encouraging competition in the domestic economy. Outward-oriented trade strategies and government policies encouraging domestic competition are therefore complementary’ (World Bank, 1987, p. 131).
So the Bank has not privileged 'Western' corporations or capital, but the worldwide hegemony of capital under a regime of global competitiveness to which all states must conform. This is the significance of its long-standing argument that speed of adjustment 'depends on the flexibility of domestic product and factor markets', and its insistence on 'removing barriers to resource reallocation and ... encouraging competition in the domestic economy'. It is still grounded in a classical liberal perspective based upon the idea of comparative advantage, but with a twist that is central to the argument developed in WDR 2020. It does not take a static view of comparative advantage based narrowly upon trade, but a dynamic view that is focused primarily on a different factor of production - labour - and active state intervention aimed at addressing imperfections in labour markets that hinder integration into global value chains:
'At the heart of policies that reinforce comparative advantage are those that minimize distortions of market prices—of land, labor, and capital—so that factors flow smoothly to the sectors and places where comparative advantage can be best exploited. These
include economy-wide policies to support land market reforms, competition, open labor markets, and access to finance, along with investments in critical infrastructure. In low-income, labor surplus countries with large pools of unskilled labor transitioning from the agriculture sector, externalities arising from the divergence between the market price and the opportunity cost of labor may call for additional targeted incentives for the private sector to invest in labor-intensive activities' (196; see also Robalino and Walker, 2017).
The imperative here, according to the Bank, is to adopt policies that will avoid 'low-wage traps', and instead facilitate 'transitioning up the GVC typology' successively from specialisation in commodities to light manufacturing, then to advanced manufacturing and services, and finally to innovative GVC activities; the Czech Republic is identified as a successful case (54-5, 74; 186-9). Can the Bank be serious? Yes. Its ambition has always been to develop as productive a global proletariat as possible, and it now sees the successive technological revolutions that have given rise to the fragmentation of production on a global scale as transforming the potential for this process. The Bank favours free trade because it imposes competitiveness: first, cheaper imports of finished goods subject domestic producers to competition, forcing them to become more competitive themselves or go out of business, while imports of intermediate goods (goods used in the production process) have the same effect on domestic suppliers of those goods, while reducing the production costs of the firms they supply, and raising their competitiveness. But what the Bank values above all is competitiveness in labour markets - the first response of firms facing increased competition is not to go out of business, but to replace labour with capital and/or reduce wages, in order to restore profitability. So a flexible labour market (one in which wages can be reduced and workers laid off with relative ease) is brought about by liberalisation, deregulation and privatisation, which remove barriers to resource allocation and encourage competition in the domestic economy. Only when these two go together, and are pursued in advanced and developing countries alike, will workers be subjected to the discipline of competition in the world market. All of this is restated in detail in a recent OECD paper which summarises extensive recent research (Andrews, Gal and Witherage, 2018: 7-10); WDR 2020 draws on it to argue that 'GVCs have contributed to lower inflation via downward pressures on labor through heightened competition across countries to attract tasks, in particular when low-wage countries are integrated in supply chains' (106). This is the key idea on which the logic of the report depends, and it is supported further by an important body of recent work, originating in studies of FDI in global value chains, which argues as follows:
'Global trade integrates not only markets for products, services, finance and technology, but also, directly and indirectly, markets for labour. ... Economists are largely in agreement that, at least at the aggregate level and over the long term, trade plays an important role in driving economic growth, job creation, and wage growth. However, the process of trade-induced growth entails the continual reallocation of resources away from less productive activities to more productive ones. This inevitably creates winners and losers, at the level of countries, sectors, and firms, as well as across groups of workers, as trade results in changes in the relative demand for certain skills. ... Specifically, the emergence of global value chains (GVCs) – whereby activities that used to be produced under one roof are now fragmented and distributed across networks spanning many countries (‘offshored’) – means the trade and technology nexus is increasingly merged. Producers play off trade, investment, and technology to maximize profits. This has fundamental impacts on where jobs go, who gets them, and what types of jobs they are' (Farole et al., 2018: 6).
This paper is one of a flood of 62 publications that have emerged since 2017 from the Bank's Jobs Group, all specifically intended to influence programmes and policies in client countries. Its three authors are all members of the core team that produced WDR 2020, and no doubt, like Banerjee, Duflo and Kremer before them, future recipients of the Nobel Prize for services to the extraction of surplus value from the poor. Essentially, the Bank wants to have it both ways. It encourages governments to subsidise the creation of unskilled jobs in the lowest tier of GVCs in order to draw the poor in, in order to maximise the size of the proletariat available for exploitation, while trusting to a competition-driven process of 'creative destruction' both to drive up the global productivity of capital, and to continually reproduce available surplus labour at the base.
In short, then, the Bank and the OECD agree that global value chains are to be encouraged because they provide the best means to the goal of 'downward pressures on labour through heightened competition across countries to attract tasks'. This presupposes two developments that are both relatively recent: the fragmentation of production down to the level of separate individual tasks, and advances in transport, logistics and communications to a point where low-wage countries all around the world can participate, and these together underpin a regime of genuine global competitiveness. So WDR 2020 'sets out a comprehensive domestic agenda for governments: investments in connectivity, improvements in business climate, and unilateral reductions in trade and investment barriers', combined with an international agenda of coordinated trade liberalisation, a universal regime for foreign investment, and the subjection of state-owned enterprises to rules of competition. Crucially, as always, this entails complementary programmes of reform in advanced and developing countries. First, 'reinvigorating the international trade system will require governments in certain advanced countries to first look inward to address the discontent and inequality associated with openness. More generally, advanced economies need to rethink the priorities of the welfare state to better help workers adjust to structural change'; second, developing countries 'need to expand social assistance and improve compliance with labor regulations in order to extend the jobs and earnings gains from participation in GVCs to more people across society. They also need to take steps to ensure that their domestic firms benefit from knowledge transfer from lead global firms' (xiii). Set out right at the start by Chief Economist Pinelopi Koujianou Goldberg in the preface to the report proper, along with the admonition that 'all countries need to ensure that the growth associated with trade does not lead to environmental degradation', this is the basis of the World Bank prescription for a genuinely global capitalist economy. And she concludes with a thumbnail sketch of broader complementary areas of global regulation:
Cooperation on corporate taxes will enable governments to better tax capital in a global, digitalized economy, so that they have the resources to finance infrastructure projects and social policies. Improved cooperation on competition issues is needed to ensure that firms enjoy a level playing field globally. And finally, new models of cooperation are needed for data flows to strike a balance between the privacy of citizens and the needs of business and innovators' (xiv).
The report takes for granted, then, that the fragmentation of production across global value chains is a good thing. GVCs, it argues, 'are associated with structural transformation in developing countries, drawing people out of less productive activities and into more productive manufacturing and services activities' (3); they are more likely than non-GVC firms to employ women; and are associated with a reduction in poverty. Even so, they can also increase inequality within and between countries, and cause environmental damage. Continued reform is necessary, therefore, to avoid or mitigate negative consequences, and the key word here is 'adjustment' - adjustment to the logic of global competitiveness, that is, through policies that smooth the path of change in its favour, such as 'labour market policies to help workers who may be hurt by structural change; mechanisms to ensure compliance with labour regulations; and environmental protection measures': 'Adjustment assistance, which is especially important in middle- and high-income countries, will help workers adapt to the changing patterns of production and distribution that GVCs bring about. Adjustment policies can include facilitating labor mobility and equipping workers to find new jobs' (6). This in turn is the point of intersection with 2019's Changing Nature of Work, and the global agenda of skills training and labour activation in response to changing demands for labour (a connection that is made directly here, 151-3).
As noted, not all of this is new. The mapping out of the requisites for a comprehensive regime of global competitiveness and the means by which it can be brought to bear on the attitudes and behaviour of the world's poor has largely been accomplished over the period from the late 1980s on, while other forces have brought about a genuinely global world market. What is new is that the regime that was already envisaged in the late 1980s can now be realised in practice, while more fine-grained sources of data make it possible to explore policy areas such female employment in more strategic detail than in the past. In the meantime, just as the material content of trade has changed as it has become dominated by goods that did not exist four decades ago, so has the world in which trade takes place. The latest IMF World Economic Outlook (2019: 126) attributes 40.8 per cent of world GDP (PPP) and 63 per cent of world exports of goods and services to the advanced economies (which now include Singapore, Korea, Hong Kong and Taiwan, as well as the Czech Republic, Estonia, Latvia, Lithuania, the Slovak Republic and Slovenia) and 59.2 per cent and 37 per cent respectively to emerging market and developing economies, while China heads the US in both (18.7 and 10.7 to 15.2 and 10.1 per cent respectively). The G7 economies that were dominant in the post-war period command only 30 per cent of world GDP (though still 44 per cent of world exports), a shift that is largely a consequence of growth in 'emerging and developing Asia', and that continues: while world growth barely surpassed an average of 3.5 per cent per annum from 2012 to 2018, and is projected to hover around that mark for the next five years, the advanced economies averaged under 2 per cent and are projected to settle at a rate of 1.7 per cent from 2019 on (with the Euro area slipping back to 1.3 per cent, and Japan even lower), while emerging and developing Asia grew at more than 6.7 per cent per annum, and is projected to continue to grow at 6 per cent per annum (ibid: 147).
At the same time, the World Bank is concerned that renewed protectionism is threatening the relative freedom of trade, and thereby hindering the operation of the competitive pressures it brings about. Both the expansion of trade and the advancing global division of labour are slowing; and the distribution of GVC production across the developing world remains uneven. It responds first by looking for means to press the development of global value chains further, and second by addressing the factors that are slowing their expansion.
On the first of these issues, the emphasis is heavily on the prospects for and means towards the increased employment of women in 'good jobs' in GVCs, and the Bank has been assiduous, along with the WTO, in exploring this area in detail. It observes first that the most successful developing world firms integrated into GVCs not only increase their productivity through greater capital intensity (more investment per worker), but also employ increasing numbers of workers, especially if they are involved in both exporting and importing. So 'GVCs are associated with structural transformation, with exports pulling people out of less productive activities and into more productive manufacturing jobs' (78). Noting that female workers tend to predominate (and specifically, that GVC firms are more likely than non-GVC firms to hire women), it illustrates the potential positive effects with the example of Bangladesh, where 'young women in villages exposed to the garment sector delay marriage and childbirth, and young girls gain an additional 1.5 years of schooling' (a common phenomenon, noted by Ong in Malaysia over thirty years ago), and suggests similar trends in India, Kenya and Senegal (Box 3.5, 79-80). But it identifies at the same time a persistent gender gap in wages, as 'women are generally in lower-value-added segments of the value chain, mostly in labor-intensive production jobs and in occupations that require lower skills and pay less' (90, esp. Fig. 3.18). It attributes this, and the fact that very few women own or run GVC firms, to familiar causes: 'disadvantages in endowments, such as assets, education, skills, experience, networks, and social capital, as well as gender-biased regulations or discriminatory social norms' (90), drawing particularly on a previous World Bank study (Staritz and Reis, 2013) for support. The focus of the Staritz and Reis collection of case studies was on the extent to which these aspects were not only barriers to the advance of women, but also restraints on competitiveness in the global economy, and WDR 2020 takes up the same theme, arguing that 'gender-intensified constraints can restrict a country’s ability to remain competitive and upgrade to higher-value segments of the chain,' and identifying this as 'a topic discussed in a forthcoming report by the World Bank and World Trade Organization on trade and gender, “How Can 21st Century Trade Help to Close the Gender Gap?”' (91). The two studies from this project that are currently available show how keen the Bank is to find and promote global value chains in which women enjoy better career opportunities. The first, a case study of Chile, argues that even in the 'worst case' of the mining industry, technologically advanced large-scale mining offers more opportunities for women as jobs shift from manual labour on site to automated and remotely operated techniques of production. Its focus is directly on 'understanding the important role women should have as a strategic asset for competitiveness' (Fernandez-Stark et al, 2019: 2-3), in a context in which the Chilean Mining Skills Council estimates that new projects in the pipeline will increase remote-operated and automated job profiles to 71 per cent of those in extraction, 90 per cent in processing, and 58 per cent in the currently lagging sector of maintenance (ibid: 9). As the skills requirement increases to an anticipated norm of a four-year technical degree, the largest current obstacle to increased female employment is the small number of women in such programmes, making this a particular focus of World Bank attention. In the meantime, the state-owned copper company CODELCO has led the way not only in introducing digital technologies, but in aiming to make the strategically named Gabriela Mistral Mine (commissioned 2008) a showcase for social innovation with the highest proportion of female workers anywhere, and adopting a range of initiatives to raise female employment (ibid: 13). As yet, however, these initiatives have had limited impact on the sector overall: 'gender stereotypes remain strong and mining is still considered to be male work' (ibid: 17). The second paper offers a marked contrast. It examines the rapidly expanding high value medical devices industry (anything from syringes and sutures to pacemakers) in Costa Rica and the Dominican Republic, and similarly addresses 'the relative opportunities for men and women in these higher value GVCs, and what, if any, gender sensitive policies are required to enhance a country’s competitiveness in these sector' (Bamber and Hamrick, 2019: 2; see also Bamber and Staritz, 2016). It paints a much brighter picture than in mining: women account for more than half the workforce, and 'this female participation holds steady as the sector grows, upgrades into new, higher value products and as wages rise; and ... these predominantly female jobs are good quality jobs despite being primarily in production stages; that is, they are sustainable and characterised by permanent contracts and higher than average wages' (ibid). This relatively unusual situation is explained, for these authors, by a number of factors. In the medical devices industry continuous up-grading is relatively easy, but considerable on the job training is required: the largely skilled/semi-skilled nature of the workforce and its acquired sector-specific expertise make retention desirable, and less than 1 per cent of workers are on temporary contracts (ibid: 17). As a result, upgrading is associated with stable or increasing female intensity of employment (ibid: 12), and as the level of sophistication of production increases, women are favoured for technician and quality control roles (ibid: 16). The Costa Rican case is profiled in WDR 2020 (Box 7.8, pp. 188-9).
These are, you might say, straws in the wind. But the strategic direction of World Bank thinking is clear. States should promote integration into global value chains, giving particular attention to their potential for offering 'good jobs' to female workers, and accordingly making reforms that remove obstacles to increased female participation in waged work in order to increase their ability to compete globally for tasks.
From this point, the report turns to the broader issue of the way a world market structured by GVCs should be managed, and here the Bank sees a major role for itself. On the grounds that in a world of GVCs 'countries are increasingly related through rigid production linkages that bind them to a common fate', the Bank argues that they have an interest in cooperating to synchronise their economic activity, control inflation, maintain currency stability, and facilitate and extend opportunities for trade, so that: 'In view of their rigid ties, GVCs would benefit from multilateral institutions helping to coordinate policy worldwide, including through the formulation of product standards, investment and intellectual property protections, or the timing of fiscal adjustments' (103). As noted above, the key driver here is downward pressure on wages arising from 'heightened competition to attract tasks' (106), and this is the governing idea of the report as a whole. What the Bank has in mind, evidently, is a comprehensive global regime, in which it would itself play a leading role, through which this would shape the world market as a whole. A rather awkwardly inserted but still very informative chapter on environmental issues that highlights both negative and positive aspects of GVCs is followed by a review of technological change that concedes that while new technologies are likely to change GVCs and the trade and jobs they create, 'forecasting exactly how is fraught with uncertainty, not least because technological progress is difficult to predict' (137). Regardless, though, it argues that 'increasing tariffs to shield domestic industries from intensified competition associated with the adoption of new production technologies in other countries is likely counterproductive because it lowers efficiency, raises the prices of both inputs and outputs, and undermines incentives to innovate' (137), and suggests that 'investments in reducing barriers to competition and minimising frictions may ... be especially beneficial for developing countries' (139). At the same time, it recognises that 'as automation improves productivity, it also compresses labour's share of income in advanced economies' (149), and that although it is not clear whether automation ultimately helps or hurts net job creation, 'it certainly causes significant, and costly, labour market adjustments' (151). The closing sections of the chapter usefully spell out the Bank's commitment to continued development of the world market, the challenges posed by intensified competition, and the shape of its proposed policy response:
'[Protectionism] likely prevents efficiency-enhancing specialisation across countries. By contrast, by opening up opportunities in new markets and fostering competition in domestic markets, trade liberalisation tends to incentivise competition and scale and, by implication, innovation ... Inflating the costs of international sourcing by raising trade protection could thus undermine gains from specialisation and stunt productivity growth. ... The positive impacts of trade openness on technological progress are an often overlooked source of gains from trade (153).
'Although predicting the future is a treacherous exercise, new technologies will likely reduce trade costs and make it easier to participate in global markets. Such outcomes may offer developing countries new opportunities to link into GVCs. However, the attendant intensification of competition may make it more challenging for countries to succeed' (153).
'Among the countries adopting these technologies, labor market disruptions are likely to be significant, skill premiums are likely to rise, and labor’s share of income may decline further. These outcomes point to the importance of sound social safety nets and redistributive and tax policies to ensure that gains are widely shared without distorting incentives to innovate' (154).
From this point on (two chapters on domestic policies that facilitate fruitful participation, and two more on how international cooperation can help), a clearly articulated global liberal developmental policy agenda unfolds, with the imperative to draw women, youth and informal sector workers into the world market at its heart. Countries 'should exploit their comparative advantage by eliminating barriers to investment and ensuring that labor is competitively priced, by avoiding overvalued exchange rates and restrictive regulations'; they should follow the precepts of the Bank's Doing Business reports, and 'facilitate GVC-oriented FDI and support investors through the investment life cycle', adopting 'well-planned investment promotion strategies' of the kind introduced by Costa Rica, Malaysia, and Morocco; they should liberalise trade in goods and services to expand access to markets and inputs; they should 'overcome remoteness by improving their connectivity and lowering trade costs'; and they should 'strengthen enforcement of contracts, protection of property rights, and regulatory standards'. They should then proactively 'promote linkages between domestic small and medium enterprises (SMEs) and GVC lead firms by coordinating local suppliers, providing access to information about supply opportunities, and supporting training and capacity building of SMEs'; 'help domestic suppliers gain access to finance and technology to support raising productivity and meeting global standards'; 'strengthen sector-specific human capital through targeted workforce development strategies, involving close coordination between the public and private sectors'; 'support firms in their efforts to upgrade management capabilities and strengthen the capacity for innovation'; and 'strengthen national innovation systems to support upgrading in GVCs' (161-2, and 186-9).
As this approach is not in itself guaranteed to be either inclusive or sustainable, it should be combined in developing countries with policies that 'spread the jobs and earnings gains from GVC participation across society, thereby helping to lift the bottom 40 per cent'; in agriculture value chains, the integration of smallholders is particularly important; policies should also 'support the inclusion of women and youth in GVCs, including by providing access to child care and training programmes and by addressing legal and social barriers to employment and earnings'; and compliance with labour standards should be improved, not least because this can lead to higher productivity and profits. In the advanced countries, where the welfare of workers left behind in communities where factories have closed is the primary threat to the sustainability of trade and GVCs, 'labour adjustment policies can be used to ensure that workers have the skills to move to new industries and places'. A price should be set on environmental degradation, regulation should be introduced for specific pollutants and industries, trade agreements should be consistent with environmental goals, and standardised international data should be used to expose poor production practices and incentivise firms to improve (195). Again, the focus quickly turns to women and youth: 'the potential of GVCs to employ large numbers of young female workers means they may play a major role in supporting many countries’ efforts to increase female labor force participation and reduce youth NEETs (not in employment, education, or training)' (197), and the material dovetails perfectly with that of The Changing Nature of Work (cited 197-8, 202), reasserting the strategic value of GVCs, in the eyes of the Bank, for its agenda of competitiveness-enhancing 'inclusion'. GVCs become the focal point of policy, and governments are urged to reform policies across the board - from skills development and employability to quality child care and public-private pathways to GVC-specific employment.
Marx expected, of course, as did Adam Smith, that under conditions of competition in the world market, wages would tend to settle at the level of subsistence, defined in relative social terms, and could easily fall below it for periods of time. Viewed from this perspective, the Bank's agenda of 'inclusion' is an attempt to develop the global proletariat to a point where labour markets around the world do operate on the basis of subsistence-level wages, and it embraces GVCs based upon the breaking down of production processes into discrete tasks as the key mechanism to structure global labour markets in this way. So the Bank is candid in pointing out the reality of global competitiveness:
'Because many of the most prominent GVCs involve outsourcing of low-skill, labor-intensive activities, the very low nominal wages in some countries often grab the world’s attention. For example, recent news articles have noted that t-shirts are being produced for charities or high-profile brands in factories paying less than 50 cents an hour. Certainly, to readers in high-income countries where even the lowest-skilled factory jobs pay 20–30 times that level, this is a shockingly low wage. However, this does not necessarily
mean that low wages are a problem in GVCs' (198, emphasis mine).
'What matters more,' the Bank goes on 'is whether the wages on offer are in line with productivity and whether they offer a reasonable “living wage” for workers' (ibid). What is a problem for the Bank, in this context, is a situation where the process of constant investment and innovation to raise productivity is absent, as this in turn impairs both local and global dynamics of competitiveness. So, as noted above, 'GVCs can be problematic if they contribute to the emergence of "low wage traps" - that is, where wage suppression is used to maintain international competitiveness' (198). Ideally, the Bank goes on, 'policies should protect workers’ earnings while maintaining competitiveness to attract GVC investment. ... Minimum wages should be set at a level that, at the very least, protects workers from poverty and vulnerability, while also keeping an eye on firm competitiveness' - and raised at regular intervals, through a transparent process, and linking 'to both productivity growth and the cost of living, avoiding excessively sharp increases during significant economic downturns' (199). There is an obvious problem here, of course, in that a wage that makes for competitiveness might not protect workers from poverty and vulnerability, and the Bank takes it up immediately: 'In some countries,' it suggests, 'distortions in the domestic market may drive a significant wedge between a living wage for workers and the wage at which firms can remain competitive in international markets' (200).
From a critical perspective this stems not from 'distortions in the domestic market' but from the structure of the world market. The Bank's solution is as always to press on to make markets work better, but this overlooks, as it must in order to make the case, that the better markets work, the more they expel workers, continually creating and recreating a reserve army of labour, and a layer of workers in menial and unskilled jobs on rock-bottom wages - and as available to GVCs at to any other employer. And if GVCs do not abuse the human rights of precarious workers, there will always be somebody, driven by the demands of competitiveness, who will. So although the Bank goes on to acknowledge the problems that exist 'in global commodity chains such as agriculture and even in high-technology value chains, as confirmed by recent news reports documenting the casualisation, discrimination, harassment, and retaliation encountered in some of the world’s largest technology multinationals' (ibid), it treats this as evidence of a need for regulation and enforcement, rather than as an intrinsic feature of global capitalist labour markets. Similarly, when it turns to adjustment in the advanced countries, it assumes that for the foreseeable future - if not indefinitely - it is possible for these countries to combine flexible labour markets with 'a generous, broad-based unemployment benefit system that cushions the negative income effects on displaced workers' (202). There is no reason to believe any of this. On the contrary, Marx as usual 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 (Grundrisse, Pelican, 1973: 650, 652).
References
Andrews, Dan, Peter Gal, and William Witheridge. 2018. 'A Genie in a Bottle? Globalisation, Competition, and Inflation', OECD Economics Department Working Paper 1462, Document ECO/WKP(2018)10 (March 20), OECD, Paris.
Bamber, Penny, and Danny Hamrick. 2019. 'Gender Dynamics and Upgrading in Global Value Chains: The Case of Medical Devices', Duke Global Value Chains Center, January.
Bamber, Penny, and Cornelia Staritz. 2016. The Gender Dimensions of Global Value Chains, International Centre for Trade and Sustainable Development, Geneva.
Farole, Thomas, Claire Hollweg and Deborah Winkler. 2018. 'Trade in Global Value Chains: An Assessment of Labor Market implications', Jobs Working Paper, 18, World Bank.
Fernandez-Stark, Karina, Vivian Couto, and Penny Bamber. 2019. Industry 4.0 in Developing Countries: The Mine of the Future and the Role of Women, Duke Global Value Chains Center on Globalization, Governance & Competitiveness, January.
Robalino, David Alejandro, and David Ian Walker. 2017. 'Guidance Note: Economic Analysis of Jobs Investment Projects', Jobs Working Paper 7 (August), World Bank.
Staritz, Cornelia, and José Guilherme Reis, eds. 2013. Global Value Chains, Economic Upgrading, and Gender: Case Studies of the Horticulture, Tourism, and Call Center Industries, World Bank.