The missing force in globalisation

HSBC to move 4,000 call-centre jobs to Asia, says a headline. And British unions scream murder. H1-B visas are axed to a third of their previous levels. It's meant to be a message from the US administration to its own people that Uncle Sam wants to retain high-paying software jobs in America.

At Cancun and Seattle, anti-globalisation groups celebrate victory when talks fail to progress. In India, the failure of WTO talks makes Arun Jaitley a hero, despite his normally pro-globalisation inclinations.

India and the WTO: News and views

Political parties, from Left to Right, remain deeply suspicious of globalisation not only in India, but all over. The old political consensus in the developed West about free trade is breaking down because, for the first time ever, they are losing high-quality jobs that they believed they had a permanent lock on.

The wholesale shift of manufacturing jobs -- to South-east Asia and then China -- passed by without a major crisis because services had started becoming the main job engine when that started happening. But today, there is no new job engine in sight as service jobs migrate to India and elsewhere. Little wonder, old-fashioned protectionism is looking attractive to politicians in the West.

That's what it looks like from afar. But look closely, and the truth is more subtle. What has really happened in the six decades after the end of the second World War is a steady growth of corporate power. It has come at the expense of labour -- largely because of the short-sightedness of labour leadership everywhere.

Consider what has happened with capital and labour in the march towards globalisation. To go global, companies have to battle one main enemy -- regional and local capitalists, whose markets suddenly become vulnerable. But over the last 25-30 years, capitalists have successfully fought, partnered, co-opted or otherwise defanged regional and local capitalists.

Even in India, the so-called Bombay Club had less than three years of active life before it shrank back into oblivion. Capital is now truly global everywhere. It can go anywhere it pleases, more or less on terms it is happy with.

Having achieved that first milestone, the big multinationals used the power of competition and consumer interest to defeat their own unions by moving production offshore -- mostly to Asia and Latin America. Barring Europe, unions are on the retreat everywhere. Even in Europe, it is only a matter of time before they lose their teeth completely.

I am by no means a card-carrying unionist (in fact, quite the opposite). However, even I cannot but regret the fact that an important stakeholder in the productive process is losing its share of voice.

This is largely the unions' own fault, for labour was in fact the original globalising force. The concept of labour solidarity across the globe is older than the idea of solidarity among capitalists.

In the first half of the 20th century, when capital cowered behind nationalistic walls, the Marxists were asking workers of the world to unite -- in an apparent bid to globalise worker power. But today, it is workers who are cowering behind protectionist walls, not capitalists. How did this happen?

Quite obviously, the unions have failed in their job of building links across nations to sustain their own power. Faced with major shifts in jobs from West to East, they should have been busy establishing links with unions and workers across the globe.

This would have given them some say in the orderly transition of jobs to more economically efficient places. They could even have found ways to counter MNCs who were playing off one nation against another, one group of national workers against another.

Not only that, western unions could have employed cheaper teachers from newly industrialising countries to retrain their own members for higher-paying jobs. But what really happened was that these unions became more nationalistic than capitalists.

As long as the going was good, and globalisation affected mostly other people's jobs, they were happy to let American MNCs do what they will. Now they are paying the price.

The bottom line is simple: globalisation so far has happened largely on terms set by the big MNCs in the West. Driven by the need to serve shareholder interests and pressured by consumer power, the MNCs relentlessly drove costs down by moving production offshore and defeated the unions.

This shift has temporarily benefited countries in South-east Asia, China and India, but it cannot last. The ultimate logic of globalisation is a net increase in collective benefits to all trading nations. A prerequisite for balanced globalisation is a balance of power.

In the last two decades of the 20th century, power shifted away from national governments, civil society and the unions, in favour of the global MNCs. The backlash one sees now is primarily a corrective to this powershift.

We need more enlightened unions and politicians to ensure that the balance of power swings back to the middle. Without that, we are heading towards more protectionism and tension. Labour, the missing force in globalisation, must find it voice.

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