The globalization looked as an irreversible process, but it has been deeply upset by the crises of the last decade, and the classic international division of labor doesn’t work anymore. National states are coming back.
When the ad of Fiat and Chrysler, Sergio Marchionne, told the his Italian metalworkers and their Unions either give up the national contract and accept a severe worsening of work conditions, or to be laid off, as two factories (Pomigliano and Mirafiori) would have been displaced to Serbia or possibly to Canada, he arrogantly explained that it wasdue to the globalization and its imperatives. The strongest of the three main unions the militant FIOM-CGIL, rejected the diktat. In the following referendum organized by the company a tiny majority of workers was obtained because of the vote of the white collar workers. A foregone conclusion, since the alternative was the collective joblessness.
So globalization was again appearing as a powerful instrument to reduce the bargaining power of the unions and to worsen the working conditions. Fiat’s had, not surprisingly, the support of Berlusconi’s Government. But the globalization argument was accepted by a significant part of the Democratic Party and by quite a few intellectuals and commentators of the left-of-the-center political spectrum.
In other words, the evocation of globalization gave a wide consensus to Mr. Marchionne’ intention to upset the overall framework of the Italian industrial relations and to hit the unions’ bargaining power. An odd consensus, indeed, given that the head of the Fiat-Chrysler newco was able to impose his conditions but didn’t propose any plan to increase and improve car production in the Italian firms, reduced today to a mere 600,000 units. We have discussed this feature in a prior article (www.insightweb.it [1] – January 2011).
It may be useful to come back again to the relationship between globalization, manufacturing industry and labor relations. Globalization had a great success at the end of last century, but it appears today, after the events of the last decade, a broken totem. There are two main reasons.
Globalization was basically understood as the cancellation of national borders and the unification of the world under the control of international finance.But the first decade of the new century has shown its dramatic failure. The United States has experienced two financial crises. The first trough 2001-2002 showed the fragility of the U.S. financial system. The second, 2008-09, still on, has triggered off global and devastating effects. Fundamentally, globalization has been overwhelmed by the failure of its main ideological foundation, self-regulation of themarket. And Governments, long blamed as an impediment to the improvement of the globalized world, has had to intervene massively to cure the wounds of the broken financial system.
But this is not all. The most radical change has been happeing outside the area of finance. The rise of globalization was based on the division of the production process within the enterprises, on the relocation of the labor-intensive segments of the production chain into the peripheral countries - where labor was not only cheaper, but, crucially, free from legal protection and unions’ control. The old industrialized countries held the most technologically advanced and more profitable productions. In this scenario, the deindustrialization of the United States, already begun under Reagan, could find a practical justification in the classical principle of the international division of labor between countries at different levels of development.
Globalization looked like an irreversible process, fundamentally beneficial for the old industrialized countries. What went wrong? In short, the emerging economies, the BRICs, have gradually freed themselves from the strict traditional labor division. China provides the most striking example. Globalization made it the country to produce labor-intensive goods: from jeans, to shoes, toys and electronic gadgets. China continues, of course, to produce them. But now, having vast capitals, either their own or invested from abroad, and a huge domestic market, it has diversified into technologically advanced products, cancelling the division of production between poor and rich countries.
China has imposed on U.S. and European multinationals investing there an obligation to share their technology and know-how with local enterprises. Thus it is increasingly able to produce almost everything, usually a prerogative of the old industrial countries. It developed, in other words, an industrial policy, now repudiated by a large part of Western economic and political culture, in the name of globalization and post-industrial economy. Today the industrial policy is reappearing in Western countries, even without pronouncing its name.
The case of the car industry is indicative of this new trend. When Barack Obama decided to invest 60 billion dollars to bail-out General Motors and Chrysler, he had to defend its policy against the conservatives, but he knew that the U.S. could not abandon Detroit, the symbol of American industry. And when Obama committed huge resources to the development of the green economy, he was actually trying to open a new phase of American industrialization and new fields of technological innovation in which the government is called to play a vital role.
So the automobile industry got back as a renewed symbol of innovative technologies, from electronics, light materials, and energy-saving electric engines to protect the environment. This is a global challenge, but no industrial country is going to give up, leaving the emerging countries to play the game. It will not be an easy game. China, which has already outstripped the American car production, points to double its production over the next five years, reaching 30 million units, half the cars produced worldwide in 2010. Thus the competition is going to be increasingly fierce and global, but that does not mean that the old industrial countries should withdraw. As Dani Rodrik, from Harvard, has pointed out, the old national states are coming back on the scene.
The car industry already shows the increasing presence of national Governments. Obama’s choice toward the American car’s industry is not alone.Nikolas Sarkozy, the French President, has protected the national car industry, providing producers with important public resources and, at the same time, imposing the safeguard of national employment levels. It is all at odd with the free-market rules of globalization, but it is a matter of fact.
The German stance is even more interesting .In Germany, the automotive industry remains at the heart of a converging policy of government, businessess and unions. Volkswagen, fifteen years ago on the verge of bankruptcy, has become the most competitive company in the automotive world and plans to become the number one at world level. Yet in Germany the car is only one example of industrial policy. During the 2008-09 crises, it was decided to maintain full employment by cutting the working time with the support of the government, without laying off workers. The results have been impressive. German economic recovery is the highest in Europe. Exports are increasing. And unemployment has actually decreased compared to pre-crisis years.
We are faced with a lesson that only ideological myopia can ignore. The new map of globalization has no leader, and Nation States play in the global game. In the new framework the role of trade unions is becoming more, not less, important. In a country like Germany, where the performances of the big companies are outstanding, unions are not considered an obstacle, but a resource. Investment and employment level are determined through the Supervisory Boards half of which is made up of workers’ representatives.Work organization, its flexibility and efficiency, passes through the filter of works councils, instruments of collective knowledge and control by the workers. Large companies, such as Volkswagen and Siemens, are committed to preserve jobs for years to come.
To come back to the Fiat saga, we have to note that the Italian right wing government is the only one not interested in the future of the national car industry. However, globalization cannot be used anymore as a compelling argument to attack the labor movement and workers’ rights. The attack is rather the conditional reflex of the conservative, hard to die forces, which try to get out of the crisis by returning to their old failed politics.