The Politics of Global Value Chains

Abstract

Most Fortune 500 corporations have transformed their production systems over the past 30 years of global capitalism. Instead of producing a product from start to finish, the dominant corporations in every major sector of the world economy have taken advantage of technological revolutions in computers and microprocessors to contract and subcontract the production of products to a range of firms whose activities cross the borders of states. High-tech firms have been in a unique position to profit from this qualitative and quantitative shift in global production strategies, because the products of these firms have been integrated systematically within the networks of global supply chains that link producers, suppliers, retailers, and consumers across state borders. Firms that profit the most from global supply chains are those that have been able to patent ownership rights over high-technology, automated processes embedded in global production. At the same time, the dominant Fortune 500 firms use this new automated technology to exercise greater control over their suppliers and producers, creating a pyramid structure of production that privileges ownership rights at the top of the system while expanding the tools to increase exploitation of small-scale producers and workers at the base of the pyramid. Ownership of high-technology, though, is rarely a product of private sector innovation alone, but instead is often derived from extensive public spending on research and development which is transferred from society to corporations that exercise disproportionate political and market power in their home states and in global capitalism. Future battles over the use of high-technology are likely to pit privileged quasi-monopoly firms against suppliers and workers who may be in a position to demand a larger share of the profits from global production.