Globalization, Precarity and the Role of the Nation State

By Devika Dutt

On April 13, Verizon workers began a strike to demand that Verizon give them a fair contract. The workers were on strike for about six-and-a-half weeks, despite losing their health insurance. They demanded that, among other things, Verizon keep more jobs in the country instead of outsourcing them to save on labor costs, especially since Verizon is a company that makes billions of dollars in profits annually and can afford to do so.


Filipino migrant workers in Hong Kong. (Source: Wikipedia)

This sentiment has become a growing concern among workers in the United States as is evidenced by the strength of the presidential campaigns of both Bernie Sanders and Donald Trump (with widely differing degrees of racism and xenophobia, of course). And it seems that this concern is not entirely unfounded. We’ve gone from one in four American workers having well-paying jobs in manufacturing in 1960, to today less than one in ten workers have such jobs. While, this is not entirely due to jobs moving overseas and international trade, and also has to do with technical change, the fact remains that the fastest growing jobs in the United States are now nurses, personal care aides, cooks, waiters, retail salespersons and operations managers. Being a nurse or a personal care aide requires higher education, acquiring which is becoming more and more expensive. On the other hand, working in retail is becoming more and more precarious. The median annual wage in the retail industry was $22,980, which in many parts of the country is lower than the living wage for an individual, much less a family. Moreover, more and more workers in the retail industry are paid by the hour at abysmally low minimum wages. Basically, things are not looking good for the average worker in the US. In this context, Trump’s xenophobia and racism against immigrants who steal good American jobs has found resonance.

Another spectacular display of xenophobia was the recent referendum in the United Kingdom as per which voters in the United Kingdom voted to leave the EU. The main argument that the Leave campaign seems to have won is acquiring the policy space to erect barriers to the free movement of labor from the European Union. The Leave campaign argued that more and more immigrants from the EU were coming into the UK and adding to the pressure on the public services like the National Health Service (NHS), and public education system. The pressure on the NHS may have more to do with the declining trend in funding to the NHS as a proportion of GDP, which incidentally has fallen behind its European counterparts, even lagging behind poorer countries like Greece, Italy, and Slovenia . In addition, the gap in the rate of employment among the migrant population and the UK born population has narrowed, suggesting that the immigrant population is making gains in employment relative to the UK-born population. However, immigration has not increased unemployment as a whole or pushed down wages in the UK.

These movements and events are symptoms of a larger trend. As globalization has progressed, more and more jobs that were providing employment in developed countries have either disappeared or moved to the developing world. Additionally, migrants from developing countries are also moving to the developed world for better opportunities. While the racist xenophobia against immigrants is misguided and not based in fact, the data shows there is something to the fears expressed by the people living in these developed countries. For several reasons, it is the case that firms find it cheaper and/or more profitable to conduct their operations by employing immigrants or outsourcing jobs to the developing world. Labor is cheaper in the developing world, and this is closely related to colonial loot and plunder, and the occupations and wars, through which these nations were impoverished. It only makes sense in an economy run with a keen manic eye on the bottom line for operations to be moved wherever or with whomever they are the cheapest. It is also clear that large firms often use (whether intentionally or not) the threat of moving their operations elsewhere as a mechanism to discipline workers and undermine collective action that is national.

What then, should be done? Should the rapid march of globalization be stopped? I don’t think that it is desirable or even possible. Globalization has made borders more porous and made the world more connected and smaller. While it is true that borders are more porous for peoples for some countries than others (the refugee crisis in Europe is a particularly striking example), globalization has the potential to bring people closer. After all, one of the reasons for the creation of the European Union was to try and keep the continent from ravaging itself and the rest of world through war. However, the way globalization has been constructed has not been beneficial for everyone. The losers from globalization have not necessarily gained, and lives for the average workers in even the developed nations of the world have become increasingly precarious.

National governments have the capacity to make sure that this is not the case. However, neoliberal governments all over the world have sought to protect the profits of capitalists more than they have tried to protect the interest of workers, at least in the context of trade treaties. The recent signing of the Trans Pacific Partnership is a clear example of it. Moreover, neoliberal first world states, and international organizations such as the IMF and World Bank have been advocating liberalizing labor markets in developing countries, ensuring that we are in a global race to the bottom in terms of conditions of the average worker. This has led to growing discontent among the working class all over the world. We are therefore in a situation in which globalization undermines the nation state, which in turn undermines globalization.

There is no easy solution to this Catch 22 situation. The clearest path to resisting the globalized transnational pursuit of profits by corporations facilitated by multinational agreement between nation states would be to make the resistance to and demands from this coalition international as well. A truly international labor movement that could potentially increase solidarity among the working class all over the world and allow the working class to collectively bargain for a higher share of the pie that they help create. However, it is not entirely clear how such cross-border solidarity can come about.