The International Labour System

Friday, 12 March 2021, 4:41 pm
Opinion: Keith Rankin

Historical Background

Societies split into two strata following the post ice age (Neolithic) agricultural revolution. The new split, between ruling 'beneficiaries' and subservient 'workers', was made possible by the creation of food surpluses. (It did not have to be this way; more equitable distribution mechanisms could have been followed.) Thus exploited farmer labourers would feed the new warlord/landlord/emperor beneficiaries, and their ensuing dynasties. Also, workers came to be able to work on projects other than food production; that is, with increased productivity (yields per farmer), workers came to be able to produce capital goods (eg economic infrastructure) and monuments as vanity projects for their privileged masters. And, increasingly, farmer workers could support armies.

Rulers could command public works projects. To the extent that capital goods were created, the 'beneficiary class' became a 'proto-capitalist' class as well as a landlord class; the social division between capital and labour was born.

In a few cases in antiquity, a wider beneficiary class became a citizen class with established citizen rights; protodemocracies were established. The obvious examples in European history were classical Athens and the Roman Republic.

In Athens and Rome, the beneficiary class was made up of households, of which the male head had the status of citizen. All members of those households assumed a status of privileged superiority, even if the formal rights only belonged to those household heads. The working class – labour – was essentially a slave class, the essence of which was people born outside of Athens or Rome (or whose parents, grandparents etc were such outsiders). It was their 'outsidedness' which facilitated their identification as denizens rather than citizens, as subservient workers with minimal rights.

Following the collapse of the Roman Empire – which followed the Roman Republic – Europe moved into a system of mainly Christianled feudalism; the Orthodox east and the Catholic west. Feudalism was a highly decentralised order, in which the beneficiary class was defined principally by their possession of land, but also by the accumulation of money ('treasure'). In these feudal times, the equivalent of the slave class were the serfs, who were legally bound to their lands rather than to particular beneficiary lords.

There was also a petit beneficiary class, the rural peasantry, whose allegiance was more to kings and princes – their overlords – than to local lords and bishops. They paid taxes. There was also an emerging uber-peasantry of merchants and financiers (and a few other 'professions', such as physicians), and a middle peasantry of urban artisans. Together, these formed a proto middle class, with the uber group in particular forming the basis of a proto 'bourgeoisie'.

Merchant Capitalism

Capitalism emerged in Europe in the wake of the fourteenth century Black Death, a time when labour gained a high degree of bargaining power (a result of scarcity through mortality), and the landed beneficiary class could not easily enforce rents at the level they had been accustomed to.

This period of turmoil also coincided with diminishing returns in gold and silver mining in Europe, creating substantial monetary shortages just at a time when money became a preferred medium for peasants to meet their established obligations to the beneficiary class. There were already-established merchant capitalist trade routes, the most important being the Silk Road from China, controlled in Europe by Venice; indeed, this was the route that brought the Black Death to Europe.

The conditions for European imperialism were now favoured, and – along with technological breakthroughs in oceanic transport – international capitalism was born. One of these conditions was competition within Europe for the high value commodity trade with Asia, with Portugal in particular challenging and eventually usurping Venice. Another was the need to locate gold and silver – the lubricants of commerce – from further afield than established but depleted sources. A new mercantile European beneficiary class, and a new global labouring class, were progressively established. This order, of commerce and conflict, reached its heyday in the eighteenth century.

The new labour class was most overtly synthesised in the Americas, firstly under the auspices of Spanish imperial control; but also competitively between all the emerging European powers. In this new era of merchant capitalism, slavery in America became more overt and more brutal than ever. While slave denizens were somebody else's property, their 'owners' did have some minimal obligations towards them. The exploitation labour system from that era never really went away, however. It remains with us, and the global ratio of denizens to citizens increased markedly in the 2010s.

Our understanding of socially stratified life in the United States in the century from around 1760 to 1860 gives us the most overt picture of a privileged slave-owning beneficiary class versus a cruelly exploited labour class. The simplicity of this picture was enhanced by the fact that the beneficiary class had white skin and the labouring class had black skin. While both classes had different foreign origins, there was no question about which was which.

Of course, even in that society, it was not so simple. There was a range of privilege among 'white' people in the export-focussed south; indeed, stories prominent in the United States today – coming to a head on 6 January this year – hark back to a range of impoverished 'poor white' cultures; cultures that have a long history in the United States.

We can think today of a global denizen class, of labouring people who do not have democratic rights. They cannot vote in the countries in which they live; they cannot access social security; and many are perpetually subject to deportation to another country or to their ancestral rohe. Not all denizens are immigrants; many labouring people have no beneficiary rights because the countries they live in and work in are not democratic countries.

Industrialisation and Democracy

The industrial revolution – initially in Great Britain, and soon after in the northern United States' states – was powered on 'free' migrant labour. But how 'free' is free? Capitalism in the form of land enclosures created a dispossessed peasantry who had little choice but to migrate to the emerging industrial cities. 'Citizens' of Shropshire – and many other shires – became denizens of Manchester and Birmingham and New York.

After the emancipation of the slaves in the United States, and elsewhere in the Americas, because captive labour could no longer be transported to privileged capital, so capital migrated to labour. Thus, the new imperialism in Africa and India and Southeast Asia. Labour conditions in Africa and India in Victorian times were only marginally better than they had previously been in the slave economies of America. Migration was internal to those 'countries', as indeed it had become elsewhere. Many descendants of slaves in America migrated en masse to the industrial cities of the north. 'Liberated' citizens of Alabama became denizens of Chicago.

Then there were the indentured labourers from China and India, debt-slaves who were taken to employment hotspots all around the world. And not forgetting the Melanesian slaves working the sugar plantations of Queensland; a labour trade that involved New Zealand capital. Chinese labour built the railways in Peru and western United States. Irish workers built the London Underground, and no doubt the Glasgow Underground as well, and the Manchester Ship Canal.

The industrial revolution extended the 'bourgeoisie' to 'captains of industry', and to further professions, especially that of 'engineer'. The aristocracy and the bourgeoisie together became the fully-entitled beneficiary class. While the labour force in the classic industrial revolution were all denizens, subsequent democratic reforms – such as those in the United Kingdom in 1832 and 1867 – converted many denizens into second-class citizens; citizens with limited rights to access the benefits of capitalism.

Over the last 100 years, 'first world' industrial workers gained a greater degree of effective citizenship, in part as a return for war service. But new rules of denizenship were already emerging in the 1920s; eg Hispanic guest workers in 1920s' California and dust-bowl refugees from Oklahoma and Texas working there as fruit-pickers in the 1930s.

Living in London in the 1970s showed me first hand just how few of London's workers were born in London. (Many were born in other parts of the British Isles, and from all over Europe. My close workmates in London – I was an early 'IT' worker – included people born in Kenya, Cyprus, Poland, East Germany, Slovakia, Iran, and Yorkshire.) And much of the industrial labour force in the north of England was born in 'South Asia'; I remember when the English cricket team lost to India at Leeds, the English captain commented about India having home-crowd advantage. Everywhere in the industrialised economies were guest workers; Turks in Germany, Italians in Switzerland, Moluccans in Netherlands, Africans in France, Catalonians in Devonshire, New Zealanders in Australia. And many more.

In the 1970s, most of these migrant workers were on a relatively simple track from denizenship to second class citizenship. This mobility was the first step towards entry into the modern beneficiary class; I note that, in the United Kingdom today, both the Chancellor and the Home Secretary are of South Asian ancestry. Immigrant workers guided their children into professional occupations; 'careers' were their passports to privilege.

In the 1960s, John Kenneth Galbraith – in The New Industrial State – had identified the emergence of a clear beneficiary class, which he called the 'planning system' (as distinct from the Market System) of big transnational business corporations. The new privileged capitalist lords were distinguished from the petit capitalist peasants. The petit capitalists were second class beneficiaries, whose lives were increasingly constrained by the discipline of market competition. We understand this today when we think of big supermarkets, and the buying power they exert over their suppliers. (Galbraith contrasted the 'planning system' with the 'market system'. Yanis Varoufakis sees this today as essentially a system of 'techno-feudalism'.)

It was from the neoliberal 1980s that the true outlines of the renewed international labour order started to crystalise. Labour became, unambiguously, a cost. Low wages would facilitate economic growth, allegedly, in the same way that any other reduction of costs would. The new public policy framework represented global coup d'états by the privileged beneficiary class; the first-class citizenry. Labourers came to depend more than ever on a single category of income, and their market power was markedly curtailed by the deunionisation of labour. Second-class citizens were increasingly competing with denizens. The main difference was, for second-class citizens, the presence of a social security safety net. All the world's workers without access to safety nets can be classed as denizens; they move to wherever there is work. The two principal safety nets are access to social security, and being established property owners. (In the Great Depression of the 1930s, many people survived in large part by tilling their own small landholdings.)

Thus, one of the features of economic citizenship in the decades from the 1940s to the 1970s was access to social security benefits. From the 1980s, these were curtailed, by reductions in the amounts payable, by diminishing eligibility criteria, and by increasingly bureaucratising the processes for accessing such benefits. The overall effect has been to create, for the majority of humanity, an increased dependence on an increasingly precarious income stream; that of wages – low wages.

In these neoliberal times, societies with established social security systems have created an immobile third-class citizenry dependent on access to mediocre and highly targeted benefits. It is quite understandable that employers should favour internationallysourced denizen immigrants over these third-class citizens. Most 'first world' third class citizens are young people lacking the skills and incentives to travel to find work.

In order to remain in business, peasant capitalists – subject to intense competition – must keep their labour costs low. Whereas in the 1960s and 1970s workers had also been customers for a wide range of products, from 2000 labourers have increasingly been one group of people, and consumers another group. This is how it was in the slave days of the American south; by contrast in the American north industrial businesses depended on workers as customers.

Since 2001, New Zealanders living and working in Australia have become denizens there, workers without any citizenship rights. And subject to deportation, no matter how old they were when they arrived in Australia. This also includes children who arrived in Australia before 2001, but whose parents neglected to apply for citizenship.

Denizenship is increasing in capitalist societies (though is not yet the rule for Australian-born New Zealand residents). In New Zealand it was only during Covid19 that we learned the extent that New Zealand businesses rely for labour on foreign born 'visa holders'; people earning minimal wages, not eligible for social security benefits, perpetually subject to deportation (including deportation by accident for those denizens who happened not to be in New Zealand on 23 March 2020), and reliant on private charity when unemployed.

Indeed, what we have now are international labour 'pipelines', which make it much easier for capitalist employers anywhere to recruit through these pipelines than to recruit from bureaucratically immobilised local labour stocks. Back in the American slave days, the pipeline was the 'middle passage', the second leg of the prevailing three-leg North Atlantic trade route.

In India and China, the labour migration pipelines are largely 'domestic'. With Covid19 lockdowns introduced in India in March 2020, we saw clearly how large India's denizen workforce is, and how India's privileged political leaders really had negligent understandings of their own country's labour system.

Denizen labour is most easily sourced from countries without social security safety nets, though also may be sourced from countries with dilapidated social security systems. Further, many workers recruited through the international labour pipeline must incur substantial debts – eg to 'agents' at the reputable end of the spectrum, to 'traffickers' at the disreputable end.

The situation today is very comparable to the era of indentured servitude prior to World War One. And the economic circumstances of people in New Zealand – and other labour-importing countries – is not as different from that of slave times as we might think. Employers prefer mobile immigrant denizens to immobile third-class citizens, in part because denizens have agents through which recruitment can take place. And in part because many employers – essentially smaller scale 'peasant' employers who are not in the 'planning system' – are tightly subject to the cost discipline of competitive market forces; they have small profit margins.

The epitome of the post-1980s' international system may still be the Arabian Gulf states, which have clearly demarked foreign workers, citizen beneficiaries, and only a very small domestic 'precariat'.

The Precariat

We can think of a country's third-class citizens as its precariat. In countries without social security these people are, in reality, domestic denizens, working in places such as Bangladesh's clothing factories. For perhaps most young people in the world today, the choice is between the precariat at home, and denizenship abroad. At least New Zealanders living and working in Australia are first class denizens. For many in the world today, the choice is between extremely precarious circumstances at home and second-class denizenship abroad. Second-class denizenship means living in a host country as an illegal immigrant, most likely in substantial debt to human traffickers. Or dying in an attempt to emigrate.

Increasingly the first-world precariat is made up of young people living in their parents' homes in bedroom techno-bubbles, and receiving money through a yo-yoing mix of precarious local service employment and social security transfers.

The capitalist beneficiary class is much larger than the "one percent" as designated by relatively privileged anti-capitalist protesters, and is characterised by access to 'capital' income (including home owner-occupier rents). It also includes people in receipt of career incomes, but less so for some careers than others; for example, in academia there are now substantially fewer tenured positions, and an increasingly large denizen workforce.

International capitalism has a substantial but diminishing privileged 'beneficiary class', an unprivileged international labouring class disrupted by Covid19, and an expanding young domestic precariat which sits uneasily between the two clearly defined capitalist classes.

We may note that, in the past, the emergence of 'third class' citizens has resolved through military employment (and deployment). The returning survivors of military ventures became second-class citizens.

Capitalism need not be like this, with a beneficiary class juxtaposed against a working class. A reimagined capitalism could follow democratic principles, with everyone being a beneficiary, either of their home country's economy or their host country's economy. (Host countries could be obligated to provide social security benefits to unemployed or sick immigrant workers at least comparable to those workers' entitlements in their home countries; an acknowledgment that they are people and not just 'labour units'.)

Workers are valuable people, not expendable units of livestock who can be cancelled when no longer required. All people should have recourse to citizenship rights.

Keith Rankin, trained as an economic historian, is a retired lecturer in Economics and Statistics. He lives in Auckland. Contact: keith at rankin.nz

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Keith Rankin

Political Economist, Scoop Columnist

Keith Rankin taught economics at Unitec in Mt Albert since 1999. An economic historian by training, his research has included an analysis of labour supply in the Great Depression of the 1930s, and has included estimates of New Zealand's GNP going back to the 1850s.

Keith believes that many of the economic issues that beguile us cannot be understood by relying on the orthodox interpretations of our social science disciplines. Keith favours a critical approach that emphasises new perspectives rather than simply opposing those practices and policies that we don't like.

Keith retired in 2020 and lives with his family in Glen Eden, Auckland.

Contact Keith Rankin

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