The Political Economy of Outsourcing

Abstract

The globalisation of production is the most significant, dynamic and transformative development of the neoliberal era. Its fundamental driving force is what some economists call ‘global labour arbitrage’: efforts by firms in Europe, North America and Japan to cut costs and boost profits by replacing higher-waged domestic labour with cheaper foreign labour, achieved either through emigration of production to low-wage countries (‘outsourcing’, otherwise known as ‘offshoring’) or through immigration of workers from those countries. Reduction in tariffs, removal of barriers to capital flows and advances in telecommunications and transport technology have facilitated the migration of production to low-wage countries, but militarisation of borders and rising xenophobia have had the opposite effect on this migration — not stopping migrants altogether, but inhibiting their flow and reinforcing their vulnerable, second-class status. As a result, factories freely cross the US-Mexican border and pass with ease through the walls of Fortress Europe, as do the commodities produced in them and the capitalists who own them, but the human beings who work in them have no right of passage. This is not globalisation but a travesty of globalisation: a world without borders to everything and everyone — except for workers.