Lecture 12 Global Inequality: (Dis)connecting Consumption from Production

Globalization: Connecting Production & Consumption Around the World The process of globalization changes how production and consumption are socially organized Through rationalization the capitalist system has created an interconnected global economy where producers and consumers around the world are linked to each other The process of rational, economic globalization has geographically separated production from consumption  The large “consumer economies” (like the US) are not the same as the large “producer economies” (like China), but they are dependent upon each other

Disconnecting Producers and Consumers Globalization has a great impact on both producers and consumers, as there is a growing distance between producers of goods and the consumers of those goods Consumers have limited knowledge about how products are made, where, and by whom In addition, as Collin’s discusses in Threads, producers have little knowledge about who is making the decisions about working conditions, wages, production methods

Global Consumption Inequality in global consumption  USA and Canada account for 31.5% of the world’s consumer spending, but only have 5.2% of the world’s population USA and Canada’s consumption increases 2.3% annually  South Asia account for 2% of consumer spending, and has 22.4% of the population Asian consumption grows over 6% annually  Sub-Saharan Africa accounts for 1.2% of consumer spending, but has 10.9% of the population Sub-Saharan Africa’s consumption has decreased 25% over the last 20 years

Icon of Global Consumption

Global Production Economic globalization has created an international division of labor, where:  Consumer economies such as the US, Japan, and the European Union are focused on jobs that are high skill, high technology, and high wages  Producer economies on the other hand, like China and Mexico are focused on “Cheap Labor” where jobs are low skill, low technology, and low wages Compare the minimum wage in these countries (in $):  France - 17,231  USA - 13,624  Mexico - 1,648  China – none set

World Factory World Factory: the DOL is based on geographic separation in an assembly line fashion  Commodities are not produced in one location or even one country, but around the world Global consumer and global labor force reproduced each other

Social Reproduction of Labor As firms (corporations) seek out the cheapest labor on the market they encounter social, political, and economic contexts that allow them to pay low wages  Social – culture, ideologies  Political – trade agreements, national laws, government enforcement of laws, unionization  Economic – supply and demand

Why Did Liz Claiborne Look for Workers in Aquascalientes? What made the social reproduction of cheap labor possible in Aquascalientes?  Greenfields – little or no labor experience  Trade agreements between countries  Gender and Racial Ideologies  Immigration and Migration  Low consumption levels Workers in Aquascalientes are producers, but not consumers  Only 1/5 th of the worlds population consumes global products

Social: Gender Ideologies "In the early days women made up as much as 80% of the assembly plant workforce, today they number close to 60%. While they can legally be hired at the age of 16, it is common for these girl-women to get false documents in order to go to work at ages as young as 12, 13 or 14.“ Separate Spheres Ideology reinforces women's association with domestic labor and their earning as supplemental  “What she is, not what she does”

Gender Ideologies and Workers Rights However, due to women’s domestic responsibilities they challenge the working conditions in different ways than men and ask for different things  Attempt to re-embed the economy in social relations When women organized in Aguascalientes what did they demand?  Gender equality, childcare, community development

Political: Free Trade Agreements Free trade: markets should be self-regulating allowing for the free flow of goods, capital, and services unhindered by government restrictions NAFTA: North American Free Trade Agreement  Founded in 1994 to promote free trade among US, Canada, and Mexico  Regulates flow of goods, services, and capital  Subordinates national regulation NAFTA deepens the International Division of Labor  Forced many Mexican farmers off the land, contributing the documented and undocumented migration into the US

Economic: Multi-national Corporate Organization Deterritorialization: workers and owners are separated by (1) space and (2) layers of subcontracting.  Firms pressure manufactures to produce goods at a cheaper rate, who in turn put pressure on workers Deskilled labor force, with no skill development  Quality = control and speed

Economic: Maquiladoras Maquiladora: factory that imports materials and equipment for assembly or manufacturing and then re-exports the assembled product  Export Processing Zones: assembly plants located in areas that have cheap labor and few if any labor and environmental laws Presented as first stage of economic development, however:  No stimulation to local/national industries  Wages are too low to support non-essential consumption

Foreign Owned Maquiladoras

Low Wages Minimum wage in Mexico is $3.40 PER DAY Hourly compensation for workers in manufacturing averages $1.21 in Mexico vs. $17.70 in the US Standard of Living: Auto Trim de Mexico  Weekly Salary = $58.09  Weekly Expenses = $54.00  Minimal amount leftover per week for clothes, shoes, entertainment and medical attention

How Rich Are You?

Global Inequality The process of globalization has created a large interconnected and interdependent global economy, whereby the high level of consumption in wealthy Western countries (like the US) is dependent on the low wages and low level of consumption in poorer developing countries (like in Asia, Latin America, and Africa)  To understand global inequality we need to understand the relationship between countries in a global economy