How capitalism's great relocation pauperised America's 'middle class'
As long as workers could wrest gains from capitalism, the system was
safe. But with production offshored, that bargain blew up
DETROIT'S STRUGGLE WITH bankruptcy might find some relief, or at least
distraction, by presenting its desperate economic and social
conditions as a tourist attraction. "Visit Detroit," today's
advertisement might begin, "see your region's future here and now: the
streets, neighborhoods, abandoned buildings, and the desolation.
Scary, yes, but more gripping than any imaginary ghost story."
Detroit, Cleveland, Camden and many other cities display what
capitalism left behind after it became profitable for capitalists to
relocate and for new capital investments to happen more elsewhere.
Capitalism and its driving profit motive first developed in England
before spreading to western Europe, north America and then Japan. Over
the last two centuries, those areas endured a growing capitalism's mix
of horrific working conditions, urban slums, environmental
degradation, and cyclical instability. Capitalism also brought
economic growth, wealth for a minority, labor unions and other
workers' organizations. Writers like Dickens, Zola, Steinbeck, and
Gorky saw that capitalism's workings clearly, while those like Marx,
Mill and Bakunin understood it critically.
Workers' struggles eventually forced capitalists to pay rising wages,
enabling higher living standards for large sections of the working
classes (so-called "middle classes"). Capitalists and their economist
spokespersons later rewrote that history to suggest instead that
rising wages were blessings intrinsic to the capitalist system. How
wrong that was, as I describe below.
Capitalists eventually had to reach beyond their original bases in
Europe, North America, and Japan to the rest of the world.
Capitalism's growth required enlarging its hinterland from the
agricultural regions near the industrial centers where modern
capitalism began. That initial hinterland had provided food, raw
materials and markets for the commodities flowing increasingly from
the growing urban capitalist centers. The hinterland also sent
refugees fleeing from declining job opportunities there to work in and
crowd those centers.
As capitalist growth accelerated across the 18th and 19th centuries,
more hinterland was required. The response included formal and
informal colonialisms that encompassed much of the planet outside its
capitalist centers. Capitalism thereby reorganized the whole world's
economy to serve as provider of raw materials, food, labor supplies
Starting especially in the 1970s, several historical trends coalesced
to provoke a massive, historic relocation of capitalists and of
capitalism's growth. One trend grew out of a US growth spurt after the
war ended in 1945. That spurt renewed capitalists' self-confidence and
determination to roll back the New Deal and to secure better control
of government. They systematically destroyed the social forces
(unions, socialists, and communists) that had produced the New Deal
and the greatest wave of criticism of capitalism in US history.
Meanwhile, competition among major capitalist countries renewed as
Germany and Japan recovered from the war. Capitalists everywhere
redoubled efforts to cut costs. Postwar technical revolutions in jet
air travel and telecommunications offered competitive advantages to
those relocating from older, high cost to newer, distant, low-cost
At the same time, former formal and informal colonies – recently
become relatively more independent nations – also lured capitalists to
relocate and invest by offering low wages, tax holidays, subsidies,
and other supports. Formerly colonized people were pressing their
leaders for significant, sustained increases in mass standards of
living. Those leaders' early efforts to use development-oriented
government intervention, guided by Keynesian economics, to achieve
rapid economic growth had not satisfied those mass pressures.
Across the 1970s, many of those leaders shifted to the neoliberal
focus on private capitalist development. This not only represented a
strategic change of course but also pandered to the neo-liberalism
that swept the old capitalist centers at that time.
Different from the earlier colonialism, after the 1970s the private
capital that flowed in from capitalist centers in Europe, North
America and Japan did not aim primarily at producing raw materials and
food for export. Instead, it increasingly financed the relocation of
capitalists and capitalist growth away from the former centers of
Manufacturing moved first, but within two decades, service capitalism
joined the exodus. Capital first abandoned the Detroits, Clevelands,
and Camdens of the US. Now, it abandons the country more generally.
Similar moves afflict the more developed countries in Europe and Japan
as well, although in ways that reflect their different histories,
including the greater strengths of their working-class organizations.
Even Germany, despite its special price, legal and other advantages
within the European Union, confronts growing pressures from German
capitalists relocating to places with lower wages, benefits, and
government social services.
Capitalism is now reconfiguring centers and their hinterlands on a
truly global scale. The US increasingly approaches the formerly "third
world" pattern of a few centers surrounded by vast layers of more or
less desperate hinterland dwellers. In the language of US politics,
its "middle class" disappears.
Capitalism's great relocation places a remarkable political question
on history's agenda today: can the system survive its relocation?
Capitalism grew successfully in its old centers despite working-class
oppositions, expressed by labor unions, socialist and communist
parties, anti-capitalist intellectuals and artists and by the
resistances of its colonized subordinates. Part of that success – a
basis of its 200-year global hegemony – was the ability of its working
classes to wrest rising wages and/or standards of living.
In sharp contrast, capitalism's great relocation now underway both
presses and enables capitalists to cease raising wages and standards
of living in its former, old centers (Europe, North America and
Japan). Indeed, it is lowering them.
Competition requires capitalists to raise wages instead in the newer,
growing centers, where new sections of better-paid workers arise.
Will capitalism in its old centers of North America, Europe and Japan
be able to hold the grudging support of their working classes, as it
now delivers long-term declines of wages, working conditions, and
living standards? Can capitalism achieve the social acceptance in the
new centers that its first 200 years found in the old centers?
Even if it can, the working classes in the old centers may soon
withdraw their traditional acceptance. If they do, monumental social
struggles pitting supporters against opponents of capitalism are our