Capitalism distinctive trends in contemporary history have been:
(1) slowing down of the overall economic growth rate; (2) internationalisation of monopolistic transnational corporations (TNCs); and (3) emergence of the “capital accumulation process” or financialization capitalism
Since the 1974-1975 recession, there is an economic slowdown in advanced capitalist economies with impactful economic effects on the poorest countries. Scouting for wider markets to sustain capitalism, a proliferation of corporations – with neoliberalism policies – begins setting up assembly lines across borders in different geographical locations, especially inside developing countries – the Global South – where by 2010, more than half of all foreign direct investment (FDI) went to third world and transition and emerging economies. With this strategic positioning in place, and world production dominated by a relatively few transnational corporations (TNC) exercising considerable monopoly power over states and labour, the migration towards the international concentration of capital clearly reflected on the work of Lenin (Imperialism, the Highest Stage of Capitalism, New York: International Publishers, 1939) and, on the other hand, confirms Amin’s imperialism of generalized-monopoly capitalism and Emmanuel’s unequal exchange under Neo-Imperialism that widened underdevelopment under monopoly-capitalism practice through sheer economic expropriation and labour exploitation.
2]INTERNATIONALISATION OF FINANCE CAPITAL
The international concentration of capital invertibly gives birth to international monopoly-finance capital that ensues the emergence of financialization capitalism (see John Bellamy Foster, The Financialization of Accumulation, Monthly Review vol:62, issue 05 October 2010). Financialization capitalism becomes prominent because the TNCs are unable to find sufficient investment outlets for their huge economic surpluses from production, increasingly turn to speculation within the global financial sphere, (see John Bellamy Foster and Fred Magdoff, The Great Financial Crisis (New York: Monthly Review Press, 2009).
Even households had become financialized, (see Costas Lapavitsas, Financialised Capitalism: Crisis and Financial Expropriation, Historical Materialism 17 (2009), School of Oriental and African Studies, London and Costas Lapavitsas, The Era of Financialization, Part 3, TripleCrisis).
The inevitable collusion of monopoly-capitalism with clientel capitalism is clearly evident during the acquisition, distribution and Covid19 vaccination processes; seeSTORM 2021, A case of ownership and control of vaccines distribution.
Fifty years ago, the penetration of neoimperialism is distinctively sharpened because during the 1970s, Malaysia went through an industrialisation initiative though did not employ as many workers as projected, but FDI still created an underdevelopment in monopoly-capitalism environment that inevitably invited these TNCs exploiting precarious labour. Presently, the few TNCs dominating particular industries or in the sectors of electrical and electronic production are confronted with a dialectic of rivalry and collusion: the mobile phone industry and a infrastructural platform, like Google, are prime examples of the control of telecommunication services:
b) There is a “competition” between firms in search for low labour cost (economics term: labour arbitrage) and low-cost production processes (operations management from lean to just-in-time and flexible production), competition for resources and markets (strategic management term: competitive advantages) and marketing principles on product differentiation (varied products with many features and multi-functionalities at various price structures in different marketspheres).
By 2008, those top one hundred global corporations which had shifted their production to foreign affiliates or subsidiaries accounted worldwide for 60 percent of their total assets and employment, and more than 60 percent of their total sales.
c) During an era of global monopoly-finance capital, financial capital is part of the transnational migration of capital with Information Technology augmenting the monopolisation trends primarily, (see John Bellamy Foster and Robert W. McChesney, The Internet’s Unholy Marriage to Capitalism, Monthly Review 62, no. 10 (March 2011): 1-30).
Increasingly, capital accumulation – real capital formation in the realm of goods and services – has become widely subordinate to finance, including the public healthcare and pharmaceutical providers, housings development through Real Estate Investment Trust (REIT) and many other entities.
Whereas labour ( owing to a combination of cultural, political, economic, legal and geographical reasons ) is rooted in particular nations – ensuring a constant and growing supply to the global reserve army of workers – capital is globally mobile, thus consolidating the Global Labour Arbitrage advantages with Global Value Chains bounding TNCs conglomerates cohesively and binding the global commodity supply chainings completely.
Therefore, one would present Amin’s arguments that as a system, generalized and globalised monopoly capitalism ensures that these monopolies derive a monopoly rent levied on the mass of surplus value (transformed into profits) that capital extracts from the exploitation of labour. Even though these monopolies operate in the peripheries of the globalised system, this monopoly rent becomes an imperialist rent. The capital accumulation process is consequently governed by the maximization of monopolistic/imperialist rent.
The 1990s’ unrestricted movement of international finance capital, public sector enterprises and even the government-link companies (GLCs) increasingly are controlled by the hounds of financialization capitalism. The metropolitan capital-as-finance (Patnaik 1999), gets control over Third World resources and enterprises to see the rise to international finance capital in league with the local neocomprador class becoming crony capitalism through the force of accumulation as articulated by Samir Amin (2019) in The New Imperialist Structure, Monthly Review, July 01, 2019.
This Capital Internationalisation fragments, and weakens, labour organizations, and during the Covid19 pandemic especially in union bursting regionally, including Malaysia – specifically in the electrical and electronic industrial sector.
To separate the physical outputs in manufactured productions, one has to distinguish the soft elements in the digital economy, too.
Firstly, the Intellectual Property Rights (IPR) is a monopoly regime. Intellectual property includes product design, brand names, and symbols and images used in marketing. These are protected by rules and laws covering patents, copyrights, and trademarks. Figures from the UN Conference on Trade and Development (UNCTAD) show that royalties and licensing fees paid to multinational corporations increased from US$31 billion in 1990 to US$333 billion in 2017, (United Nations Conference on Trade and Development, World Investment Report 2018).
According to the figures from Science and Engineering Indicators 2018 Digest, released by the National Science Council of America in January 2018, the total global cross-border licensing income from intellectual property in 2016 was worth US$272 billion alone. The United States was the largest exporter of intellectual property, with income from this source comprising as much as 45 percent of the global total.
With the TRIPs/WTO (Agreement on Trade-Related Aspects of Intellectual Property Rights and the World Trade Organization as an international legal agreement between all the member nations of the World Trade Organization), the intellectual property regime has only strengthened monopoly-capital stronghold, (Cédric Durand, William Milberg, Intellectual Monopoly in Global Value Chains, 2018).
Through the ownership and control of information, monopoly-capital dominates the digital capital, too. Capital accumulation permeates the entire production chain but through soft elements in the ownership of patents, copyrights, brands and logistical systems impoverishing the poors but enrich the bourgeoisie class by way of financialisation capitalism.
Secondly, the tech-venture capital bloc’s reducing capital gains taxes in 1978 from 50% to 28% became known as the Silicon Valley model, now emulated much all over the world (Marxist Sociology April 2021).
Thirdly, without promulgated regulations, financial monopoly capital is very likely to work against the vision and goals set by any country for her industrialisation initiatives. The insurgent of capital financialization in the late 1990s had already created an increased circulation of paper instruments and their associated debts:
Malaysia increasingly national debts: 1970-2014
Indeed, three Swiss scholar-researchers had uncovered that a core of 147 MNCs multinational corporations controlled nearly 40 percent of the economic value; out of the 147 corporations, some three-quarters were regarded as financial intermediaries, (Stefania Vitali, James B. Glattfelder, and Stefano Battiston, “The Network of Global Corporate Control,” PLoS ONE 6, no. 10 (2011): e25995). The empirical study undertaken by them has further indicated that a relatively small number of multinational banks effectively dominate the whole global economy.
“Based on their analysis of 43,060 multinational corporations all over the world and the shareholding relationships between them, they found that the top 737 multinational corporations controlled 80 percent of total global output,” as cited by (Cheng Enfu and Lu Baolin in Monthly Review May 2021).
4]
THE VALUE CHAIN EXTRACTIONS
There is a new battle on unequal exchange – not merely or only in the Production-exchange-Consumption model in physical goods – but in the soft digital arena presence in the infrastructural platforms horizon: Digital generation-exchange-Usage model which is equally expropriational besides sheer exploitative, too.
That under an e-commerce environment, digitally neo-imperialism is routed onto a refreshed monopoly-capital commodity supply chain pathway that shall have these ramifications :
Instead of exerting downward pressure in the middle of the curve – the part on processes of production – intellectual monopoly has inadvertently points to an upward pressure at both ends of the smiley curve where the control over intangible assets (like R&D and design, and e-commerce marketing and post-sales interfaces) is most concentrated.
This upward pressure on both left and right sides of the curve is a resultant outcome from dynamics arising from the growing role of intangible assets in the value chain processes, and also from tighter Intellectual Property Rights. This means that the market power of leading firms – the product/service initiators or front-runners – is often enhanced by intellectual monopoly endorsement which is fueled on one part by the dynamic advantages arising from global value chains network externalities, and on the other side, by the increasing returns on intangibles and legally-enforced proprietary control over standards, technologies and brands, (UNCTAD, The Digital Economy Report 2019: Value Creation and Capture: Implications for Developing Countries; Jomo 2020; Jomo 2021).
The implications for third world countries are that due to the monopoly-capital competition dynamics in the Global North, developing-country platforms that are trying to scale up typically face an uphill battle. The dominance of global digital platforms, their control of data, as well as their capacity to create and capture the ensuing value, tend to further accentuate concentration and consolidation rather than reduce inequalities between and within countries.
Secondly, in the global “data value chain”, many countries are already entrenched in subordinate positions, with value and data being concentrated in the few global platforms and other leading transnational corporations. One only have to peel away the infrastructural TNCs platforms like Microsoft, Alphabet and Meta to view the extensive intrusion of neoimperialism design in the digital economy; seeSTORM 2023, tigtheningInfrastructural platforms stronghold.
For Global North workers, today’s real average wage (that is, the wage after accounting for inflation) in USA has about the same purchasing power it did 40 years ago; and, what wage gains there have been have mostly flowed to the highest-paid tier of workers, of workers, (PewResearch 2018) :
with mitigated effect on “contingent workers”, (Fortune 2019).
Between 1982 and 2006, the average annual growth of the real wages of production workers in nonfinancial corporations in the United States was just 1.1 percent, not only much lower than the 2.43 percent recorded from 1958 to 1966, but also lower than the 1.68 percent during the economic downturn from 1966 to 1982. The slowing of wage growth allowed the corporations’ profit share to rise by 4.6 percent during this period and accounted for 82 percent of the recovery in the rate of profit.
Further, Noam Chomsky had once explained that “what you find is that US$47 trillion were taken from the bottom 90%, the middle class and the working class, and put in the hands of the top 10%. But if you look closely, it’s a fraction of the top 10% which takes the greatest wealth. Since Reagan, they have doubled their ownership of society’s wealth from 10% to 20%.”
Indeed, the profits of U.S. corporations increased from 5 percent in 1950 to 35 percent in 2008. The proportion of overseas-retained profits increased from 2 percent in 1950 to 113 percent in 2000. The proportion of overseas profits within the total profits of Japanese corporations increased from 23.4 percent in 1997 to 52.5 percent in 2008, (Cui Xuedong, “Is the Contemporary Capitalist Crisis a Minsky-Type Crisis or a Marxist Crisis?” [in Chinese], Studies on Marxism 9 (2018).
In a slightly different accounting, the share of foreign profits of U.S. corporations as a percent of U.S. domestic corporate profits increased from 4 percent in 1950 to 29 percent in 2019, (John Bellamy Foster, R. Jamil Jonna, and Brett Clark, “The Contagion of Capital,” Monthly Review 72, no. 8 (January 2021): 9).
6] CONCLUSION
The penetration of neoimperialism design in the Global South emerging economies are real, and realistically uncomfortable and unaccommodating to the poverty poors of the world.
i) Emmanuel’s premised that unequal exchange characterises the trade relation between the Global North centre and Global South periphery whereby ‘the inequality of wages as such, all other things being equal, is alone the cause of the inequality of exchange.’
ii) Capital accumulation is immense on a global scale because of the existence of a large, low-cost global workforce. According to data from the International Labor Organization, the world’s total workforce grew from 1.9 to 3.1 billion between 1980 and 2007. Of these people, 73 percent were from developing countries, with China and India accounting for 40 percent, (John Bellamy Foster, Robert W. McChesney, and R. Jamil Jonna, “The Global Reserve Army of Labor and the New Imperialism,” Monthly Review 63, no. 6 (November 2011): 3).
iii) With the advent and advancement in the financial liberalization process, finance capital is thus no longer just serving industrial capital, but has far overtaken it. The financial oligarchs and capital rentiers are now dominant; more so, with an ethnocapital assertion in the national banking sector, too, as in the case of Malaysia.
iv) World-wide, within twenty years since 1987, debt in the international credit market soared from just under US$11 billion to $48 billion, with a rate of growth far exceeding that of the world economy as a whole, (Cheng Enfu and Hou Weimin, “The Root of the Western Financial Crisis Lies in the Intensification of the Basic Contradiction of Capitalism” [in Chinese], Hongqi Wengao 7 (2018).
v) As a corollary, Emmanuel had argued that “by transferring through non-equivalent exchange, a large part of its surplus to the rich countries, the periphery deprives itself of the means of accumulation and growth.” Thus, an important implication of Emmanuel’s theory is that a widening wage gap leads to a deterioration of the periphery’s terms of trade, and a subsequent reduction in its rate of economic growth, seeEmmanuel’s formulation of his theory; STORM 2021, Unequal Exchanges and STORM 2020, Gross Inequality in Global Wealth.
1. CLIENTEL CAPITALISM in collusion with STATE GOVERNMENTS
At the Parliament’s first session in 2022, the National Forestry Act 1984 was amended to make public consultations on any proposed forest degazetting exercise mandatory.
A] Yet an ecological existential threat has arisen because the Malaysian Islamic Party (Parti Islam Se-Malaysia) PAS-led Kelantan state government has allowed logging in the Nenggiri permanent forest reserve in Gua Musangwithout such prior public consultations.
It needs to be that many of the logged trees in the 292ha of special forest reserve, gazetted as virgin jungle under the National Forestry Act 1984, are the merbau species which are valued at RM4,000 per log. An estimate of such illegal logging activities would likely ensure RM7 million in profits to the pockets of clientel capitalism.
The Kelantan state government had, in fact, suspended a certification requirement that would have compelled logging companies to meet sustainable forest management standards since 2016, according to an eco-activist NGO: Sahabat Alam.
The environmental watchdog said the PAS led administration had put a stop to the ‘Malaysian Criteria and Indicators for Sustainable Forest Management’ (MC&I) indefinitely for six years now, a policy that casts serious doubts over its forest conservation pledge.
The MCI, a programme under the Malaysian Timber Certification System for six years, was introduced as a way to bind logging firms to sustainable practices by reserving licences for those that meet the certification standards.
“If the Kelantan government is genuinely committed to ensure all permanent forest reserves are managed under the Sustainable Forest Management (PHSB) and meeting the annual logging quota target, then why is the MC suspended by the Kelantan Forest Management Unit since 2016?” Meor Razak Meor Abdul Rahman, an activist with the group, asked.
“Was the certification by the Kelantan UPH suspended because they have transgressed the logging quota and raised monoculture farms in forest reserves that are supposed to practice selective management system (SMS)”
B] Not forgetting that Nenggiri is also facing the construction of a RM$5 billion hydroelectric power plant which the local Orang Asli villagers have protested for fear of losing their ancestral land. The villagers are concerned the dam, slated to be developed at Mukim Ulu Nenggiri, would submerge four Orang Asli settlements as well as inundate 5,384ha of forest land.
Indeed, one hundred villagers had submitted a memorandum to the Prime Minister’s Office amid their concerns, while Tenaga Nasional Berhad had vowed to address the issues raised.
C] Similarly, massive forest conversions are occurring in Pahang, peninsular Malaysia, second only to Kelantan in magnitude, raising the concurrent issue of the possible abuse of the environmental impact assessment (EIA) process when Big Farms’ plantation companies are dividing the size of their projects to not exceed 500 hectares. This practice, by permitting monoculture plantation project between 100 and 500 hectares in size, the EIA process would be bypassed as it does not require mandatory public consultation, (malaysiakini, March 22 2022).
D] Then, there is the emerging issue of illegal gold mining activities in the Tersang Forest Reserve in Raub located in Ulu Renggol, at the heart of Pahang forest reserve. The Pahang Forestry Department director had not deny that an experienced gold mining syndicate likely behind the illegal activities.
Peninsular Malaysia will see deforestation amounting to a minimum of 72,584.73ha in the near future, says an environmental group. This is about three times the size of Kuala Lumpur or nearly the size of Singapore.
E] A total of 1,547 lots of land in Kelantan needed for phase one of the East Coast Rail Link (ECRL) project have been acquired and gazetted under Section 8 of the Land Acquisition Act 1960, said energy and natural resources minister Takiyuddin Hassan, malaysiakini 17/06/2022.
He said the land acquisition in the districts of Kota Bharu, Machang, Bachok and Pasir Puteh were undertaken by the department of the director general of lands and mines (JKPTG) of Kelantan.
Neither is an attempt to avoid the EIA process a new matter. State and Federal governments have to be held responsible in failing to ensure that such manipulation does not take place. That it exists is because increasingly fewer hands (belonging to clientel capital for instance, and ethnocapital specifically with its dominance on economic affairs and activities – assuming entitled positions – that enforce political power to redefine economic dominance) that are incapable of balancing the needs of profit with the genuine needs of society as a whole; read STORM, PLACE POSITION POWER – A CLASS ANALYSIS OF ETHNOCAPITAL RELATIONSHIP, April 2021.
While we try to move forward to amend the forestry law to enforce mandatory consultations, at the same time, our existing consultation spaces are being circumvented through sheer capitalism encroachment,influence and manipulation.
The existing Ecological-Epidemiological-Economic crisis can be related to “the global ecological rift,” where the disruption and destabilization of the human relationship to nature on a planetary scale, emerging from the process of capital accumulation without end, (Foster, Clark, and York, The Ecological Rift, 14–15, 18). In The Return of Nature, Foster has explored how socialist analysts and materialist scientists of various disciplines, first in Britain, then the United States, from William Morris and Frederick Engels to Joseph Needham, Rachel Carson, and Stephen Jay Gould, sought to develop a dialectical naturalism, rooted in a critique of capitalism. In the process, Forster delivers a far-reaching and the fascinating exploration in reinterpretation of the radical and socialist origins of ecology.
This argument is reinforced by Japanese Marxist-author, Kohei Saito who has shown from researching on Marx-Engels Gesamtausgabe (MEGA) Volume IV/18, that the nature-human interaction and Marx pointed critique of the ecological harm produced by capital accumulation. This concept of ‘metabolic rift’ (Stoffwechsel) lies in the understanding on circulation of soil nutrients between countryside and town thereby contributing to human disharmonies from the natural world, (Kohei Saito).
It is in this context that Marx’s central concepts of the “universal metabolism of nature,” “social metabolism,” and the metabolic “rift” have come to define his critical-ecological worldview, (Karl Marx, Capital, vol. 3, London: Penguin, 1981), 949; Marx and Engels, Collected Works, vol. 30, 54–66).
The totality of ecological Marxism elsewhere: in China as explained by Zhihe Wang and expanded by Zhihe Wang, Huili He and Meijun Fan; and the extension to Iran with Persi interest in John Bellamy Foster’s The Ecological Revolution: Making Peace with the Planet bears witness to a need in this country of that rising consciousness in preserving our Mother Earth.
In reality, Global North monopoly-capital investment in Global South is little more than a collaborating strategy for profiting on planetary destruction.
“Agribusinesses,” Rob Wallace writes, “are moving their companies into the Global South to take advantage of cheap labor and cheap land,” and “spreading their entire production line across the world.”
For instance, soy has become one of the world’s most important agroindustrial commodities – serving as the nexus for the production of food, animal feed, fuel and hundreds of industrial products – and South America has become its leading production region. However, the soy boom on this continent entangles transnational capital and commodity flows and disrupted social relations deeply in contested ecologies and economies, seeThe Journal of Peasant Studies Soy Production in South America: Globalization and New Agroindustrial Landscapes and John Wilkinson, The Globalization of Agribusiness and Developing World Food Systems, Monthly Review, Sep 01, 2009.
The outcome is that, for instance, prominent transnationals have had an important presence in the Brazilian agrifood industry since its birth; players that include: Nestlé, Unilever, Anderson Clayton, Corn Products Company, Dreyfus, and the Argentine transnational Bunge y Borne (now simply Bunge). They were later followed, as different markets matured, by Kraft, Nabisco, General Foods, and Cargill from the United States, and United Biscuits, Bongrain, Danone, Parmalat, and Carrefour from Europe.
The consequences are that uneven and often uncoordinated foray of metropolitan corporate capital is subjugating the agriculture and domestic food markets of many developing countries, particularly smaller, peripheral ones undergoing rapid urbanization, to the needs of global agribusiness monopoly-capital.
Indeed, it seems the Brazilian government remains firm in its objective of handing over indigenous lands, which make up 12% of Brazilian territory, to private hands, preferably agribusiness and mining. In other words: it is not enough to steal, it has to destroy. Since he took office, Jair Bolsonaro has accumulated a long history of attacks on indigenous peoples with the argument that they do not offer any benefit to society, so they have to be “integrated” to become workers. With that logic, the government dismantled the Funai (the body that should protect the indigenous people) and has turned a blind eye to all the attacks by grileiros (landowners thanks to false documents), jagunços (gunmen) and fazendeiros (landowners) on indigenous lands. The clandestine mining continues at full steam.
Munduruku people gather along the Tapajós River to protest a proposed dam on Nov. 27, 2014, in Pará, Brazil.“We are protecting our land and the life on it. We have to preserve this life for our children’s future.”
Similarly, in our country, for every far-sighted decision that has been made in previous years that can ensure the greater protection of forests, there had been contradictory direction leading to further forestry degradation and forest destruction.
In the past years, we witnessed, and many rakyat2 had experienced, floods, landslides, logjams and mudflows, in particular during monsoon seasons. From rural Kedah to rural Pahang, across urban parts of Selangor and the suburbans of Negeri Sembilan, these natural disasters have their roots in rampant deforestation and the failure in appropriate economic development planning. If state governments continue to allow forest conversions despite our international commitments on forests, biodiversity and climate change; and Big Farms elements of the plantation sector continue to disrespect the law and community rights, how can international climate funds be sufficient to protect us from future climate impacts – and the imminent existential ecological extinction in our tanah-ku?
EPILOGUE
Inherent to capitalism is inequality, social exclusion and environmental degradation by abuses to the soil as much as it exploits the worker. Under the Global North domain, with monopoly-capital supporting repressive states in Global South, the transnational corporations are applying destructive patterns of resource extraction to perpetuated their neo-imperialism domination indefinitely.
Bibliographies
LH Aun, Fifty Years of Malaysia’s New Economic Policy, ISEAS-Yusof 2021, Singapore
James Chin, ‘NEW’ MALAYSIA: FOUR KEY CHALLENGES IN THE NEAR TERM, Lowly Institute 2019, Australia
Edmund Terence Gomez, New Economic Policy @50: Looking back and forward, Economic History of Malaya: Asia-Eutope Institute 2022
KS Jomo, The New Economic Policy and Interethnic Relations in Malaysia, United Nations Research Institute for Social Development 2004
Lim Teck Ghee, Deconstructing the bumiputera construct, malaysiakini March 11 2021
Since the premature de-industrialisation beginning in 1990s, and the insurgence of financialization capitalism with state-incorporated capital in GLCs (government-linked companies) as majority intermediaries in the transnational corporations (TNCs) global monopoly-capital supply chain, there is a change from the export-oriented anchor to one of domestic-generated economy where domestic demand growing – since 2011- at a compounded annual growth rate of 9.1%, contributing a significant 74% of GDP growth. With this economic development approach, the state corporations have enthrusted with, and encasted in, rentier capitalism being pervasive in the economic activities of compradore capital enterprises.
The circuitry of capitalism is facilitated with GLCs and or local compradore capital as the intermediary to collude and conclude transactions between monopoly-capital of the Global North and the nation’s ethnocapital as representative in the Global South.
Ethnocapital is a (malay) bumiputra owned and controlled entity performing under a rentier or clientel capitalism as a public agency, a government-linked company (GLC) or as a government-linked investment corporation (GLIC), and it can also be a privatised and or commercial enterprise like Pharmanagia or a telecommunications service provider like TM, the digital knight as an intermediary to the throne of Global North-dominated infrastructural platforms.
Capitalism is driven by the determined goal of enterprises for ever-greater accumulation of capital through an increase in the value and a return on that investment, whether as or part of appreciation, rent, capital gains or interest.
2. CONSEQUENCY OF COMPRADORE CAPITAL WITH MONOPOLY CAPITAL
The principles of economic development includes a theory of value and distribution and a theory of accumulation on a world scale. Emmanuel’s theory of unequal exchange has explained the general character of the process of uneven development of the capitalist countries and backward economies which surround the capitalist world. In this way, Emmanuel’s theory of unequal exchange as inseparably linked to the original economic insights of Prebish, Singer, Lewis and Baron on trade and development.
It is “by transferring through non-equivalent exchange, a large part of its surplus to the rich countries, the periphery deprives itself of the means of accumulation and growth.” Thus, an important implication of Emmanuel’s Unequal Exchange theory – in the application of unequal exchange characterises the trade relation between the centre (Global North) and periphery (Global South consisting of developing countries or newly emerging countries) – that a widening wage gap leads to a deterioration of the periphery’s terms of trade, and a subsequent reduction in its rate of economic growth.
Broadly, the unequal exchange occurs due to differences in the organic composition of capital. This type of unequal exchange can also exist within a country if there are differences in the organic composites of capital among sectors. In Malaysia case, the share of the TNCs together with the political-endowed clientelship in GLCS constitute the major ownership and control of a national economy. This block of capital, the likes of Digi, Nestles and British American Tobacco are, by market capitalisation, leading the list of foreign companies that dominate local businesses nowadays, seeSTORM 2021, Dominance of Financial-Monopoly Capitalism, whereas the GLCs and GLICs (government-linked investment corporations) controlled 68% of the Kuala Luimpur Stock Exchange: commanding more than RM$440billion in total assets. Further, this overwhelming overall control of government agencies and state corporations is connected to the Prime Minister Department and the Ministry of Finance :
The second premise of uneven, and unequal, economic development, rests on ‘the inequality of wages as such, all other things being equal, is alone the cause of the inequality of exchange.’
In a world capitalist system consisting of the centre (A) and periphery (B) consisting of collaborating partners, unequal exchange is defined as the difference (d) between the Marxist product prices and values:
di = Pi – ti ; i = A, B
A positive ‘d’ denotes a surplus gain for exporters, while a negative ‘d’ denotes a surplus loss.
If there is a surplus extracted, thus a surplus loss because
(i) owing to international capital mobility, there exists a single worldwide profit rate;
(ii) owing to immobility of labour from the periphery to the centre, there exists a wage gap between the two areas.
(iii) The wage rate is an independent variate.
Based on these assumptions, that unequal exchange depends on a country’s rate of surplus value and on its organic composition of capital (that is, the ratio of fixed to variable capital):
machinery used in production would be considered fixed capital; whereas variable capital is the cost and level of which change over time, andwith the scale of a company’s output.
Three Definitions:
.
To reinterate, there will be surplus gain through trade where the world average rate of surplus value exceeds the individual rate.
The periphery (countries in the Global South) tends to transfer surplus through trade because its rate of surplus value is higher than the world average due to an international wage gap, which favours workers in the centre (the Global North). Therefore, even if the organic composites of capital are equalised, unequal exchange results from the existence of a wage gap between the centre and the periphery.
This gets reflected in the fact that the rate of surplus value is lower in the centre (due to higher wage) than is the periphery (where the wage rate is much lower) as the rate of surplus value can be expressed as
where, w = the wage rate, q = output, w = wL = total wage bill, p = price of product. Here we derive that 1 unit of labour is required to produce 1 unit of output therefore q = L. Thus we get
This is visualised demonstratively by the presentation of wage component of an earlier generation of a Apple’s manufacture as:
where labour cost in China is one-quarter of US labour cost, and constitutes just 1.6% of product sales price.
The high profit margin is due to the gain associated in the global value chain process, see STORM, GLOBAL LABOUR ARBITRAGE IN GLOBAL VALUE CHAINS, 6th June, 2021.
The third element lies in the fact that not only considerable profit margins for the transnational corporations leading to the amassing of wealth in the Global North centre in a transactional unequal exchange process of profiting through and by sheer exploitation of resources, but also a reality that it is not uncommon for TNCs to advocate alternative assembly sites or state departure from invested country. Indeed, recently Apple had asked its major suppliers to evaluate the cost implications of shifting 15-30% of their production capacity from China to Southeast Asia as reported by Li, K, and T Cheng , “Apple weighs 15%-30% capacity shift out of China amid trade war”, Nikkei Asian Review, 19 June, 2019, and also due to the changing dynamics of global value chain analysis as illustrated by Yuqing Xing in Decoding China’s Export Miracle, April 2021.
The fourth factor is that contemporary imperialism has a new face and direction (Suwandi, Jonna and Foster, 2019) with global monopolies capturing the value generated by labour in the periphery on an unequal exchange basis. Labour has to be organised to fight for its rights; read further : STORM, UNEQUAL BASKING IN UNION BUSTING, 1st June, 2021.
The fifth dynamics are the employment, and the related labour productivity factors that have contributed to capitalism dilemma, and the continuing clientel capitalism crisis which has a class-based narrative within.
Increasingly, as the national economy is dependent on its domestic productions, duly the circuitry of capital is now tightly linked to GLCs’ appropriate performance. The acute processes demanded is connected tightly to their supply chains of transnational corporations’ monopoly-capital. On one side, MIDA (the Malaysia Investment Development Authority) has noted that foreign direct investments (FDI) 2021 contributed RM27.8 billion (65%) of total approved investments, while domestic direct investments (DDI) accounted for RM$15 billion (35%); the top five sources of FDIs are Germany (RM$8.9 billion), followed by Brunei (RM$5.1 billion), the US (RM$3.9 billion), Hong Kong (RM$3.3 billion) and Japan (RM$3.2 billion); the latter had decreased substantially since the 1970s, (theedgemarkets 14/06/2022).
However, the approved investments for this period have created only 24,906 new jobs in the country not unlike in the 1970s industrialisation initiatives that the uneven labour employment as can be seen in the Second Malaysia Plan, 1971-1975, where it had proposed that 22% of the 495,000 new jobs to be created in peninsular Malaysia would be in the manufacturing sector. This means a three folds increase in employment in the manufacturing sector from the 1960 figure of 121,000 to 378,000 by 1975. Past performance had shown that the low employment absorption capacity in the manufacturing sector, especially in the pioneer companies; in fact, the manufacturing sector provided only 5,500 new jobs per year during 1966/67,(Lo Sum-Yee, The Development Performance of West Malaysia, 1955-1967, with special reference to the industrial sector, Heinemann, Kuala Lumpur, 1972, Chapter 7, pp.66-73 and E.L. Wheelwright, Industrialisation in Malaysia, University of Melbourne Press, 1965, Chapter 4, pp.62-70).
Furthermore, it has to be said often than not, there is this ‘stalling’ effect – when there might be MOUs between enterprises but no ramping up or even the temporarily or complete closure of factories – of the many Malaysian industrial projects that could have weakened workers employment, (Jeffrey Henderson et. al., Capitalism and Industrialization in Malaysia in Economy and Society, Volume 36, 2007 – Issue 1).
Then, the issue of unemployment, or even the contending issue of ‘unemployables’ due to graduad mismatched between educational institutions and the private sector. Already the civil service is stuffed with unproductive staff especially as it constitutes 1 in 5 labour in the country.
The various World Bank, IMF and UNICEF reports have dissected the various inadequacies in the labour market to which, on a refreshing, here are those persistent problems:
i) Compared to many other countries that have graduated from middle-income status, Malaysia has a lower share of employment at high skill levels and higher levels of inequality;
ii) There is a growing sense that despite economic growth, the aspirations of Malaysia’s middle-class are not being met and that the economy did not produced enough well-paying and sufficient high-quality jobs. There is a widespread sense that the proceeds of growth have not been equitably shared and that increases in the cost-of-living are outstripping incomes, especially in urban areas, where three-fourths of Malaysians reside. The UNICEF 2020 Report has shown that low income female-headed households are exceptionally vulnerable;
iii) The country shall, increasingly, need to depend upon more knowledge-intensive and productivity-driven growth, closer to the technological frontier and with a greater emphasis on achieving inclusive and sustainable development;
iv) According to the World Bank’s Human Capital Index, Malaysia ranks 55th out of 157 countries. To fully realize its human potential and fulfil the country’s aspiration of achieving the high-income and developed country status, Malaysia will need to advance further in education, health and nutrition, and social protection outcomes;
v) Key priority areas include enhancing the quality of schooling to improve learning outcomes, rethinking nutritional interventions to reduce childhood stunting, and providing adequate social welfare protection for household investments in human capital formation.
[ Key issues towards higher growth rate may be previewed in a STORM, May 2021 paper ]
There is emerging discourse on a sixth dimension that was not pointed out during the covid-19 pandemic because of then extraordinary implementation of ordnanced lock-downs that limited young Malaysians seeking for jobs (and even among migrant labour).
This, along with a number of public policy presentations, indicates that many governments did not conduct the costs and benefits analysis before imposing lockdowns upon the general population and closing of the economy: what were the collateral health effects from a lockdown?, and the related question of what would be the financial effects to families? and, also whar are the aggregate economic effects of such lockdowns? All these uncertainties appear to have not been examined appropriately, and again, appeared to have been even neglected by relevant financial institutions and other government agencies during the three succeeding governments, post-Sheraton (ISEAS, April 27, 2022) political maneuvers (Asia Times, February 24, 2021).
3. UNEQUAL EXCHANGE UNEVEN DEVELOPMENT
The consequences are that the Malaysian economy is in a bad shape and rakyat2 are understandably seeking solutions. Many, confrounded by capitalism crisis after crisis to believe succeeding ruling regimes’ policies through the last six decades had not completely execute the recommended proposals – even by such neoliberal entities consultancy like the Development Advisory Service Harvard (DASH) or the World Bamk/IMF twin – that structural decadence in our economy not only remains, but persisted.
On one plane, taking a flight to financialization capitalism had enabled a core of rentier capital to suck in the FIRE (extracting inappropriate surplus values from working rakyat2 through financial interests, insurance premiums and real-estate amortisations). It also signifies, unequivocally, that this clientel capital cohort are maximising capital accumumulation through a hive of rent-seeking economic activities across various sectors of the economy – from plantations to petroleum, (STORM, Rentier Capitalism in Accumulation, 22/01/2021).
Then, to the despaired disadvantages of Malaysian workers, is the role of clientelship capitalism that had inserted into the monopoly-capital supply chain in an age of new economic imperialism, (Suwandi, 2018). Corporate capital in the small manufacturing enterprises (SMEs) collaborates with Global North to tighten the commodity supply chain with monopoly-capital with M&E vendors like AIDA, SKF, Cohu, VAT, Oerlikon Balzers, Favelle Favco, Bromma, Vitrox, etc. The recent banning of unprocessed chickens to Singapore, but later the embargo was lifted only points to the vested and connected supply chains of clientelship in the ethnocapital political-economy. Similar incidents, in the past and presently, on the import of halal beef also displayed the close collusion between clientel capitalism and monopoly-capital in their corrupted collaboration to extract surplus value.
Succeeding oligarchy regimes had continued maintaining a clientel ethnocapitalism domitnation over the working class rakyat2 with 1% of the bumiputera population (seeKhalid lse.blog, 2019) or about 40,000 ethnocapital political families running and looting –and ruining – the national economy. The undeniable fact as to why many bumiputera had not attained parity despite +60 years of neo-liberal-enforced economic development is the existence of a new class of compradore capitalist which – in the pursuance of capitalism expropriation – has aligned with monopoly-capital to exploit the nation’s resources, and to underdevelop her economic development potentialities.
Rentier capitalism, therefore needs be underscored as part of political clientelism where over time, “citizens came to expect and rely on patron-client relationships, nested within party machines, albeit reinforced by carefully structured distributive and development policies”, (Meredith L. Weiss, The Roots of Resilience: Party Machines and Grassroots Politics in Southeast Asia, Cornell University Press and the National University of Singapore Press, 2020, p.76), where clientelism is the feature of Malaysian politics, fostered forcefully by the BN and UMNO ruling elites, whence even opposition parties had began to replicate that behaviour, too.The central outcome of such rentier capitalism is introduction of economic inequality and injustice in the country thus deepening the class power struggle within.
In a sense, the ruling class is part of a kleptocractic governance. An ethnocratic governance is where representatives of an ethnic group is holding a disproportionately large number of public posts to advance their ethnic group to the disfranchisement of others, (see Winter, J.A., Oligarchy, Cambridge University Press, 2011 and Wade, G., The Origins and Evolution of Ethnocracy in Malaysia, Asia Research Institute, National University of Singapore, Working Paper Series 112, April 2009).
Oligarchy in Malaysia consists of wealthy individuals and unmeritorious groups with political influence and/or economic power who construct public policies primarily to benefit themselves financially whether through direct subsidies to their agricultural estates (for examples, FGVH and Rimbunan Hijau, Cahaya Mata Sarawak Berhad), business firms (YTL, NAZA, the Petra Group and Ananda Krishnan conglomerates), lucrative government contracts (UEM-Sunrise, Gamuda), and protectionist measures (as Sapura-Kencana in the oil and gas sector) while displaying no concern for the marginalized Malaysian.
They – as conduits to Global North monopoly-capital and intermediaries to compradore capital varied supply chains – are pure and unadulterated rentier capitalists.
The rentier capitalism ecosystem is dominated by a few wealthy companies and individuals with amble access to key scarce assets (such as land, natural resources, financial means, licences, intellectual properties and digital platforms) and, in doing so, siphoning national wealth without societal care nor contributions to rakyat2 wholesome wellbeing.
1947, in the Swiss Resort named after: Mount Pelerin Society (MPS) held its first conference. The 39 members were economists, historians, philosophers, businessmen and where nine members later became Nobel Laureates — Hayek, George Stigler, Maurice Allais, Gary Becker, Milton Friedman, James Buchanan, Ronald Coase and Vernon Smith in Economics, and Mario Vargas Llosa in Literature.
1] INTRODUCTION
The MPS’s influence is to spread through opinion makers in journalism and think-tanks, supported by billionaire like Charles Koch. The think-tanks included the Institute of Economic Affairs (UK), Council on Foreign Relations, the Atlantic Economic Research Foundation, the Heritage Foundation and Ford Foundation, Hoover Institution, Foundation for Economic Education, American Enterprise Institute, Center for American Progress, Canadian Fraser Institute and Australian Institute of Public Affairs supported by plutonic billionaire families-like of George Soros, Michael Bloomberg, and Glenn Hutchins, (seeLaurence H. Shoup, Monthly Review, May 2021 on key policy formulation and outcomes of major USA think-tanks).
However, much of the intellectual work was completed by University of Chicago’s Milton Friedman, Ronald Coase and George Stigler – working on free trade, the importance of property rights, political freedom and minimal state interference and low taxes.
These neo-liberal views were taken up by UK prime minister Margaret Thatcher (1925-2013) and US president Ronald Reagan (1911-2004), with nearly one third of latter economic advisers being MPS members. The neo-liberal philosophy and its application in economic policy eventually morphed into as the Washington Consensus, first articulated by World Bank economist John Williamson.
The concentration of neoliberal elites and circulation of neoliberal ideals amongst the political class.
2] NEO-IMPERIALISM AS NEW MONOPOLY IN PRODUCTION AND CIRCULATION
The internationalization of production and circulation, together with the intensified concentration of capital, monopolostic transnational corporations (TNCs) whose wealth is nearly as huge as that of many countries, for examples, in 2017 Walmart earned more than the whole of Belgium; Netflix had a greater revenue in 2017 than Malta’s GDP; Apple would be 47th in the world by GDP if it were a country.
The tendency towards the international concentration of capitalism is clearly reflected from Lenin’s contestaton (Imperialism, the Highest Stage of Capitalism, New York: International Publishers, 1939) which points out that imperialism is the monopoly stage of capitalism where markets became competitive stages for global and regional hegemony.
To broaden capital intrusion there is “competition” between firms to seek low labour cost (economic term: labour arbitrage) and low-cost production processes (lean to just-in-time and flexible production), competition for resources and markets (strategic competitive advantages) and marketing on product differentiation (varied products with many features and multi-functionalities at various price structures in different marketspheres).
By 2008, the top one hundred global corporations which had shifted their production foreign affiliates or subsidiaries accounted for 60 percent of their total assets and employment and more than 60 percent of their total sales. The foreign direct investment (FDI) to developing economies was US$694 billion in 2018 making up 58% global FDI share. By engaging in contractual relationships with partner firms but without equity involvement, mostly in the Global South, TNCs were generating about US$2trillion in sales in 2010 (UNCTAD, World Investment Report: Non-Equity Modes of International Production and Development (Geneva: United Nations, 2011), 131).
Between 1980 and 2013, benefiting from the expansion of markets and the decline in production factor costs, the profits of the world’s largest 28,000 companies increased from US$2 trillion to US$7.2 trillion, representing an increase from 7.6 percent to approximately 10 percent of gross world product, (see Richard Dobbs et al., Playing to Win: The New Global Competition for Corporate Profits (New York: McKinsey & Company, 2015).
Under capitalism, the capitalists are dominant at each level of society, the working proletarians are dominated at each and every stage of labouring activities. When class exists at each economic, political, and ideological (or cultural) level, the understanding of class relationship is to identify where the controlling power ensues. As an instance, the stronghold in the Free Trade Zone (FTZ) or the Export Free Trade Zone (EFTZ) is that of monopoly-capitalism [place] that has aligned with the political elites and compradore capital of a developing country [positions], and by ownership and control of assembly workers [power] is able to extract the surplus value through their labouring tasks.
Those were the resultant outcomes of neoliberalism “free trade” ethos.
3] NEW MONOPOLY OF FINANCE CAPITAL
Secondly, the progress of capitalism to control and concentration generates a malformed development process towards economic financialization.
The international concentration of capital invertibly gives birth to international monopoly-finance capital that ensues the emergence of financialization capitalism (see John Bellamy Foster, The Financialization of Accumulation, Monthly Review vol:62, issue 05 October 2010). Financialization capitalism becomes prominent because the TNCs are unable to find sufficient investment outlets for their huge economic surpluses from production, increasingly turn to speculation within the global financial sphere, (see John Bellamy Foster and Fred Magdoff, The Great Financial Crisis (New York: Monthly Review Press, 2009). Even households had began to be financialized, too (seeCostas Lapavitsas, The Era of Financialization, Part 3, TripleCrisis).
From the research of Cheng Enfu and Lu Baolin (Monthly Review May 2021), it is found that the proportion of overseas profits within total profits of U.S. corporations increased from 5 percent in 1950 to 35 percent in 2008. The proportion of overseas-retained profits increased from 2 percent in 1950 to 113 percent in 2000. The proportion of overseas profits within the total profits of Japanese corporations increased from 23.4 percent in 1997 to 52.5 percent in 2008, (Cui Xuedong, “Is the Contemporary Capitalist Crisis a Minsky-Type Crisis or a Marxist Crisis?” [in Chinese], Studies on Marxism 9 (2018).
By a slightly different accounting approach, it was acknowledged that the share of foreign profits of U.S. corporations as a percent of U.S. domestic corporate profits had increased from 4 percent in 1950 to 29 percent by 2019, (John Bellamy Foster, R. Jamil Jonna, and Brett Clark, “The Contagion of Capital,” Monthly Review 72, no. 8 (January 2021): 9).
Further, world wide, within twenty years since 1987, debt in the international credit market soared from just under $11 billion to $48 billion, with a rate of growth far exceeding that of the world economy as a whole, (Cheng Enfu and Hou Weimin, “The Root of the Western Financial Crisis Lies in the Intensification of the Basic Contradiction of Capitalism” [in Chinese], Hongqi Wengao 7 (2018).
4] MONOPOLY OF US$ DOLLAR AND INTELLECTUAL PROPERTY
Again, in Imperialism: The Highest Stage of Capitalism, Lenin stated: “Typical of the old capitalism, when free competition held undivided sway, was the export of goods. Typical of the latest stage of capitalism, when monopolies rule, is the export of capital.” (Lenin, Selected Works, 212).
July 1944, on the initiative of the U.S. and British governments, representatives of forty-four countries gathered in Bretton Woods, New Hampshire, to discuss plans for a postwar monetary system. The documents Final Act of the United Nations Monetary and Financial Conference, Articles of Agreement of the International Monetary Fund, and Articles of Agreement of the International Bank for Reconstruction and Development – collectively known as the Bretton Woods Agreements – were adopted. The Bretton Woods main focus was to construct an international monetary order centered on the U.S. dollar. Other currencies were to be pegged to the US dollar, which was in turn pegged to gold.
The U.S. dollar thus plays the prominent role in world currency, while replacing the British sterling pound but designating the U.S. a special position compared to the rest of the world. Henceforth, U.S. dollar makes up 70 percent of global currency reserves, accounting for 68 percent of international trade settlements, 80 percent of foreign exchange transactions, and 90 percent of international banking transactions. Owing to this financial dominance, the U.S. dollar becomes the internationally recognized reserve currency and trade settlement currency. On one aspect, not only the United States is able to exchange it for real commodities, resources, and labour, and thus to cover its long-term trade deficit and fiscal deficit, but can also make cross-border investments, mergers and acquisitions of enterprises using U.S. dollars.
In a sense, the U.S. dollar hegemony provides one good example of the predatory nature of neoimperialism. The United States can also obtain international seigniorage by exporting U.S. dollars. She can reduce its foreign debt by depreciating the U.S. dollar or assets that are priced in U.S. dollars. The hegemony of the U.S. dollar has also caused the transfer of wealth from debtor countries to creditor countries. This would, in fact, mean that poor countries would subsidize the rich, which is completely and utterly unfair.
The other related financial instrument is the Intellectual Property Rights (IPR) which is a monopoly property. Intellectual property includes product design, brand names, and symbols and images used in marketing. These are protected by rules and laws covering patents, copyrights, and trademarks. Figures from the UN Conference on Trade and Development show that royalties and licensing fees paid to multinational corporations increased from $31 billion in 1990 to $333 billion in 2017, (United Nations Conference on Trade and Development, World Investment Report 2018).
According to figures from Science and Engineering Indicators 2018 Digest, released by the National Science Council of America in January 2018, the total global cross-border licensing income from intellectual property in 2016 was $272 billion. The United States was the largest exporter of intellectual property, with such source income at 45 percent of the global total.
With the TRIPs/WTO (Agreement on Trade-Related Aspects of Intellectual Property Rights) as an international legal agreement between all the member nations of the World Trade Organization), the intellectual property regime has only strengthened, henceforth, (Cédric Durand, William Milberg, Intellectual Monopoly in Global Varlue Chains, 2018).
5] NEW MONOPOLY OF INTERNATIONAL OLIGARCHIC ALLIANCE
The fourth point is that with permeability of neoliberal thinkings prod a string of international monopoly alliance of oligarchic capitalism, featuring thereby a hegemonic ruler and several other great powers. This introduction is to provide the economic foundation for the money politics, vulgar culture, and military threats that exploit and oppress on the basis of the monopoly, as articulated by Cheng Enfu and Lu Baolin in Monthly Review May 2021, ibid).
Examples of international monopoly economic alliance as dominated by the United States are the 1975-formed G6 group with the United States, United Kingdom, Germany, France, Japan, and Italy, and became G7 when Canada joined the following year. G7 and its monopoly organizations are the coordination platforms, while the International Monetary Fund (IMF), the World Bank, and the World Trade Organization are the functional bodies of the new Bretton Woods global order of economic governance international capitalist monopoly alliance manipulated by the United States to serve its strategic economic and political interests, (Youzhi and Zha Junhong, “The Evolution and Influence of the G7 Group after the Cold War” [in Chinese], Chinese Journal of European Studies 6, 2002).
Other hegemony entities shall comprise the North Atlantic Treaty Organisation (NATO) and regional collections like ANZUS — the Australia, New Zealand and U.S. Security Treaty, Moroccan-American Treaty of Friendship, The US-Israel Strategic Partnership, The U.S.–Afghanistan Strategic Partnership Agreement, the QUAD in an India-Pacific coalition, PRISM and the Five-Eye program as part of multilateral UKUSA Agreement – a treaty for joint cooperation in signals intelligence.
6] ECONOMIC ESSENCE AND TREND
The final characteristic of neoliberalism is the globalized contradictions of capitalism and its various crises of the system creating contemporary capitalism as late imperialism (Patnaik 2016), where U.S. political scientist like Joseph Nye had articulated that soft power may be applied to accomplish one’s desires through attraction rather than force or purchase.
It is often presented that the soft power of a country is constituted mainly of three resources, namely, culture (which functions where it is attractive to the local population), political values (which function when they can actually be practiced both at home and abroad), and foreign policy (which functions when it is regarded as conforming to legality and as enhancing moral prestige), see Wang Yan, “Review of Research on the Index System of Cultural Soft Power” [in Chinese], Research on Marxist Culture 1 (2019).
The United States subjugates the cultural markets and information spaces of other countries, especially developing countries, by exporting to them U.S. values and Hollywood lifestyles, with the goal of making its culture the “mainstream culture” of the world, (see Hao Shucui, Research on Marxist Culture 1, 2018) from Ford Foundation, Rockefeller Foundation, Mont Pelerin Society, and Center for International Private Enterprise to promotion of “color revolutions” – through Albert Einstein Institute (AEI), National Endowment for Democracy (NED), International Republican Institute (IRI), National Democratic Institute (NDI) – by controlling the field of international public opinion via the promotion of neoliberal values by funding seminars and academic organizations, and through broadcasts by Voice of America and CNN or publications in Bloomberg, USAToday, New York Times, and increasingly since 2009, the US Agency for Inter-national Development (USAID)’s Interagency Counterinsurgency Initiative became official doctrine in the US. Now, USAID is the principal entity that promotes the economic and strategic interests of the US across the globe as part of its counterinsurgency operations.
The British assisted in scripting an economic policy known as the Draft Development Plan that would became the Malaya Plans (1955-60); also implemented was the Second Malaya Plan 1961-65.
There seems to be a greater deference to foreign economic advisers who not only represent the neoliberal interests of international economic agencies but also enhancing the foreign business interests that successed in penetrating wholesomely the national economy.
a) Then, the subsequent three Malaysia Plans that followed were said to be crafty masterminded by foreigners from the United States of America. In fact, the earliest Malaysia Plan was drafted with the advice of Warren Hansbuger from USA; the second plan was completed by Prof. V.M. Bernett, Dr. D. Snodgrass and Prof. H.J. Bruton, all from the USA; though Snodgrass had pointedly admitted that these programmes were to gain “support from the rural Malays, if not indeed for the leadership of UMNO itself” rather than as a wholesome beneficiary to the rakyat-rakyat. The third plan had the advice of Prof. B. Higgins, also from the USA. The Development Advisory Service of Harvard (DASH) was heavily involved with the Prime Minister Economic Planning Unit (EPU) in drafting and promotion of this suite of development programmes.
Later in 2010, the government think-tank – Performance Management on Delivery Units (Pemandu) – even had allocated RM66 on “external consultants”, including American consultancy firm McKinsey and Co, which took the lion’s share of an estimated RM36 million; other foreign consultants included the Hay Group (which was paid RM11 million), Ethos & Co (RM1.5 million) and Alpha Platform (M) Sdn Bhd (RM1.5 million); an undisclosed “external consultant” named “Tarmidzi” had also received RM3 million for work done in setting up Pemandu as part of a neoliberalism economic development collaboration.
During 1997 currency crisis, and the eventual financial meltdown in 1998, the Malaysian government initial response was to rely on the International Monetary Fund consultancy response requiring expenditure reduction policies, that is, tighter fiscal and monetary control, which most unfortunately exacerbated the recessionary situation within the country concurrent with sharp portfolio capital outflow (see Athukorala 2000, “Capital Accounts Regime, Crisis, and Adjustments in Malaysia”, Asian Development Review 18, No:1 ,pp:17-48 and Bird & Rajan 2000, besides Kaplan and Rodrik 2001, “Did the Malaysian Capital Controls Work?”, NBER Working Paper No:8142).
b) TNCs deployment abroad is a manifestation towards capitalism late imperialism notation of labour arbitrage. On one side, the political economies of newly independent countries encourage foreign investment from Global North monopoly-capital. On the other perspective, through the application of global labour arbitrage where, as a result of the removal of or through the disintegration of barriers to international trade, jobs and industries have since moved to nations where labour and the cost of doing business is with low-pay and operational costs are inexpensive, respectively. This approach, together with labour value commodity chains, contributes to the enlarged capital accumulation by the transnational corporations, deepening the extracting surplus value from the labouring class.
However the uneven labour employment was to be seen in the Second Malaysia Plan, 1971-1975, where it had proposed that 22% of the 495,000 new jobs to be created in peninsular Malaysia would be in the manufacturing sector. This means a three folds increase in employment in the manufacturing sector from the 1960 figure of 121,000 to 378,000 by 1975. Past performance had shown that the low employment absorption capacity in the manufacturing sector, especially in the pioneer companies; in fact, the manufacturing sector provided only 5,500 new jobs per year during 1966/67,(Lo Sum-Yee, The Development Performance of West Malaysia, 1955-1967, with special reference to the industrial sector, Heinemann, Kuala Lumpur, 1972, Chapter 7, pp.66-73 and E.L. Wheelwright, Industrialisation in Malaysia, University of Melbourne Press, 1965, Chapter 4, pp.62-70).
c) Thirdly, without promulgated regulations, financial monopoly capital is very likely to work against the vision and goals set by country for her industrialisation initiatives. The insurgent of capital financialization in the late 1990s had already created an increased circulation of paper instruments and their associated debts :
Government issuance of new debit papers: floated upward in the AFC1997, then another sitcom burst splurge 2001, followed by the GFC2018 spike with “helicopters’ monies” circulating in the market since AFC1997; seeSTORM 2020
d) Forty-five years after the New Economic Policy (NEP) implementation, by 2002, Malaysia’s inequality remains extremely high: its top 1 per cent income share was 19 per cent and the corresponding number for the top 10 per cent was 44 per cent which is higher than those of the US and substantially even higher than those of China :
where it is deduced that the top 1% of Bumiputera is way above the national income, and other communities incomes, (as extracted from a decomposition of growth rate of real income per adult, 2002 to 2014 (pre-tax national income) : Khalid 2019
e) The unpleasantness on why many Malays had not attained parity despite +60 years of neo-liberal-enforced economic development is the emergence of a new class of compradore capitalist. With post-industrialidation and the introduction of financialization capitalism, the role of clientelship capitalism had inserted into the monopoly-capital supply chain in an age of imperialism. Corporate capital in the SMEs collaborates with Global North to tighten the commodity supply chain with monopoly-capital M&E vendors like AIDA, SKF, Cohu, VAT, Oerlikon Balzers, Favelle Favco, Bromma, Vitrox, etc.; recently, Digi, Nestles and British American Tobacco are, by market capitalisation, leading the list of foreign companies that dominate our local businesses.
According to the UNDP 1997 Human Development Report, and the 2004 United Nations Human Development Report, Malaysia has the highest income disparity between the rich and poor in Southeast Asia, greater than that of Philippines, Thailand, Singapore, Vietnam and Indonesia.
h) That what is widely referred to as neoliberal globalization in the twenty-first century is in fact a historical product of the shift to global monopoly-finance capital.
Jason Hickel, Dylan Sullivan and Huzaifa Zoomkawala contended in the New Political Economy– published online: 30 Mar 2021 – that wealth drain from the Global South remains a significant feature of the world economy in the post-colonial era; rich countries continue to rely on imperial forms of appropriation to sustain their high levels of income and consumption. The Global North appropriated from the Global South commodities worth US$2.2 trillion in Northern prices that are enough to end extreme poverty 15 times over; and we are unfortunately one of the politico-economic victims in this neoliberalism niche.
8] CONCLUSI0N
The character of neoimperialism is that it is a monopolistic financial capitalism established on the business model of giant and expansive transborder multinationals. The production monopoly and financial monopoly of the transnational corporations have higher stage of production and capital concentration, whereby “nearly every industry is concentrated into fewer and fewer hands.” (see John Bellamy Foster, Robert W. McChesney, and R. Jamil Jonna, “Monopoly and Competition in Twenty-First Century Capitalism,” Monthly Review 62, no. 11, 2011 :1).
International monopolistic financial capital not only controls the world’s major industries, but also monopolizes almost all sources of raw materials, scientific and technological talent, and skilled physical labour in all fields, controlling the transportation hubs and infrastructural platforms by various modes and means of production. It owns, controls and dominates capital, global financial functions and associated derivatives and information technologies through vast culutural and military shareholding systems, (Li Shenming, “Finance, Technology, Culture, and Military Hegemony Are New Features of Today’s Capital Empire” [in Chinese], Hongqi Wengao 20, 2012).
October 1984, Deng Xiaoping stated: “There are two major problems in the world that are very prominent. One is the issue of peace and the other is the North-South issue. Deng emphasized that “peace and development” were the two major questions to be resolved, (Li Shenming, “An Analysis of the Age and Its Theme” [in Chinese], Hongqi Wengao 22, 2015), not perpetuating endless wars and destructive extractions upon Mother Earth.
EPILOGUE
Progressive nations working together to build a shared socialist community for the better future for humankind.
The New Political Economy (NPE 2021 cited henceforth) published online: 30 Mar 2021 by the Jason Hickel, Dylan Sullivan and Huzaifa Zoomkawala research team presents that wealth drain from the Global South remains a substantial feature in post-colonial global economy; rich countries continue to indulge in imperial forms of appropriation to sustain their high levels of income and spending.
The 1990s’ unrestricted movement of international finance capital, public sector enterprises or government-link companies (GLCs) increasingly are subjected under the hound of financialization capitalism. The metropolitan capital-as-finance (Patnaik 1999), gets control over Third World resources and enterprises to see the rise to international finance capital in league with the local neocomprador class becoming crony capitalism through the force of accumulation as articulated by Samir Amin (2019) in The New Imperialist Structure, Monthly Review, July 01, 2019. Anchored upon a capital-market system, this leads to the emergence to, and the pervasion of, financialization capitalism in Malaysia.
2] THE TECH-VENTURE CAPITALCOLLUSION
Firstly, the Intellectual Property Rights (IPR) is a monopoly regime. Intellectual property includes product design, brand names, and symbols and images used in marketing. These are protected by rules and laws covering patents, copyrights, and trademarks. Figures from the UN Conference on Trade and Development show that royalties and licensing fees paid to multinational corporations increased from $31 billion in 1990 to $333 billion in 2017, (United Nations Conference on Trade and Development, World Investment Report 2018).
According to figures from Science and Engineering Indicators 2018 Digest, released by the National Science Council of America in January 2018, the total global cross-border licensing income from intellectual property in 2016 was $272 billion. The United States was the largest exporter of intellectual property, with income from this source comprising as much as 45 percent of the global total.
With the TRIPs/WTO (Agreement on Trade-Related Aspects of Intellectual Property Rights) as an international legal agreement between all the member nations of the World Trade Organization), the intellectual property regime has only strengthened, (Cédric Durand, William Milberg, Intellectual Monopoly in Global Value Chains, 2018).
Through the ownership and control of information, monopoly-capital dominates the digital capital, too. Capital accumulation permeates the entire production chain but through soft elements in the ownership of patents, copyrights, brands and logistical systems impoverishing the poors but enrich the bourgeoisie class by way of financialization capitalism.
Secondly, the tech-venture capital bloc’s reducing capital gains taxes in 1978 from 50% to 28% became known as the Silicon Valley model, now emulated much all over the world (Marxist Sociology April 2021).
Thirdly, without promulgated regulations, financial monopoly capital is very likely to work against the vision and goals set by country for her industrialisation initiatives. The insurgent of capital financialization in the late 1990s had already created an increased circulation of paper instruments and their associated debts:
Indeed, three Swiss scholar-researchers had uncovered that a core of 147 multinational corporations controlled nearly 40 percent of the economic value; out of the 147 corporations, some three-quarters were regarded as financial intermediaries, (Stefania Vitali, James B. Glattfelder, and Stefano Battiston, “The Network of Global Corporate Control,” PLoS ONE 6, no. 10 (2011): e25995). The empirical study undertaken by them has further indicated that a relatively small number of multinational banks effectively dominate the whole global economy.
“Based on their analysis of 43,060 multinational corporations all over the world and the shareholding relationships between them, they found that the top 737 multinational corporations controlled 80 percent of total global output,” as cited by (Cheng Enfu and Lu Baolin in Monthly Review May 2021).
3] THE VALUE CHAIN EXTRACTIONS
There is a new battle on unequal exchange – not merely or only in the Production-exchange-Consumption model in physical goods – but in the soft digital arena presence in the infrastructural horizon: Digital generation-exchange-Usage which is surely expropriation and sheer exploitative.
That under an e-commerce environment, digitally neo-imperialism is routed onto a refreshed monopoly-capital commodity supply chain pathway that shall have these ramifications :
Instead of exerting downward pressure in the middle of the curve – the part on processes of production – intellectual monopoly has inadvertently points to an upward pressure at both ends of the smiley curve where the control over intangible assets (like R&D and design, and e-commerce marketing and post-sales interfaces) is most concentrated.
This upward pressure on both left and right sides of the curve is a resultant outcome from dynamics arising from the growing role of intangible assets in the value chain processes, and also from tighter Intellectual Property Rights. This means that the market power of leading firms – the product/service initiators or front-runners – is often enhanced by intellectual monopoly endorsement which is fueled on one part by the dynamic advantages arising from global value chains network externalities, and on the other side, by the increasing returns on intangibles and legally-enforced proprietary control over standards, technologies and brands, (UNCTAD, The Digital Economy Report 2019: Value Creation and Capture: Implications for Developing Countries; Jomo 2020; Jomo 2021).
The implications for third world countries are that due to the monopoly-capital competition dynamics in the Global North, developing-country platforms that are trying to scale up typically face an uphill battle. The dominance of global digital platforms, their control of data, as well as their capacity to create and capture the ensuing value, tend to further accentuate concentration and consolidation rather than reduce inequalities between and within countries.
Secondly, in the global “data value chain”, many countries are already entrenched in subordinate positions, with value and data being concentrated in the few global platforms and other leading transnational corporations.
For Global North workers, today’s real average wage (that is, the wage after accounting for inflation) in USA has about the same purchasing power it did 40 years ago; and, what wage gains there have been have mostly flowed to the highest-paid tier of workers, (PewResearch 2018) :
with mitigated effect on “contingent workers”, (Fortune 2019). Between 1982 and 2006, the average annual growth of the real wages of production workers in nonfinancial corporations in the United States was just 1.1 percent, not only much lower than the 2.43 percent recorded from 1958 to 1966, but also lower than the 1.68 percent during the economic downturn from 1966 to 1982. The slowing of wage growth allowed the corporations’ profit share to rise by 4.6 percent during this period and accounted for 82 percent of the recovery in the rate of profit. Further, Noam Chomsky elaborated that “what you find is that $47 trillion were taken from the bottom 90%, the middle class and the working class, and put in the hands of the top 10%. But if you look closely, it’s a fraction of the top 10% which takes the greatest wealth. Since Reagan, they have doubled their ownership of society’s wealth from 10% to 20%.”
Though transnational corporations are able to use their monopoly of intellectual property to generate huge returns, the share of wealth is not equally distributed amongst labour in Global North.
In Global South, workers are engaged in labour-intensive activities like production, processing, and assembly, and are responsible for producing simple parts in mass quantities. Performing typically in unspecialized factory operations for these TNCs, workers earn only meagre wages.
From the research of Cheng Enfu and Lu Baolin (Monthly Review May 2021), it is found that the proportion of overseas profits within total profits of U.S. corporations increased from 5 percent in 1950 to 35 percent in 2008. The proportion of overseas-retained profits increased from 2 percent in 1950 to 113 percent in 2000. The proportion of overseas profits within the total profits of Japanese corporations increased from 23.4 percent in 1997 to 52.5 percent in 2008, (Cui Xuedong, “Is the Contemporary Capitalist Crisis a Minsky-Type Crisis or a Marxist Crisis?” [in Chinese], Studies on Marxism 9 (2018).
In a slightly different accounting, the share of foreign profits of U.S. corporations as a percent of U.S. domestic corporate profits increased from 4 percent in 1950 to 29 percent in 2019, (John Bellamy Foster, R. Jamil Jonna, and Brett Clark, “The Contagion of Capital,” Monthly Review 72, no. 8 (January 2021): 9).
5]CONCLUSION
i) Emmanuel’s premised that unequal exchange characterises the trade relation between the Global North centre and Global South periphery whereby ‘the inequality of wages as such, all other things being equal, is alone the cause of the inequality of exchange.’
ii) Capital accumulation is immense on a global scale because of the existence of a large, low-cost global workforce. According to data from the International Labor Organization, the world’s total workforce grew from 1.9 to 3.1 billion between 1980 and 2007. Of these people, 73 percent were from developing countries, with China and India accounting for 40 percent, (John Bellamy Foster, Robert W. McChesney, and R. Jamil Jonna, “The Global Reserve Army of Labor and the New Imperialism,” Monthly Review 63, no. 6 (November 2011): 3).
iii) With the advance of financial liberalization, finance capital no longer just serving industrial capital, but has far overtaken it. The financial oligarchs and capital rentiers are now dominant; more so, with an ethnocapital assertion in the national banking sector.
iv) World wide, within twenty years since 1987, debt in the international credit market soared from just under $11 billion to $48 billion, with a rate of growth far exceeding that of the world economy as a whole, (Cheng Enfu and Hou Weimin, “The Root of the Western Financial Crisis Lies in the Intensification of the Basic Contradiction of Capitalism” [in Chinese], Hongqi Wengao 7 (2018).
v) As a corollary, Emmanuel had argued that “by transferring through non-equivalent exchange, a large part of its surplus to the rich countries, the periphery deprives itself of the means of accumulation and growth.” Thus, an important implication of Emmanuel’s theory is that a widening wage gap leads to a deterioration of the periphery’s terms of trade, and a subsequent reduction in its rate of economic growth, seeEmmanuel’s formulation on his theory.
(1) slowing down of the overall rate of growth; (2) internationalisation of monopolistic transnational corporations (TNCs); and (3) emergence of the “capital accumulation process” or financialization capitalism
a) Since the 1974-1975 recession, there is a growth rate slowdown in advanced capitalist economies with impactful economic effects on the poorest countries. Scouting for wider markets to sustain capitalism, a proliferation of corporations – with neoliberalism policies – begins setting up assembly lines across borders in different geographical locations, especially inside developing countries – the Global South – where in 2010, more than half of all foreign direct investment (FDI) went to third world and transition economies. With this strategic positioning in place, and world production dominated by a relatively few transnational corporations (TNC) exercising considerable monopoly power over states and labour, the migration towards the international concentration of capital clearly reflected on the work of Lenin (Imperialism, the Highest Stage of Capitalism, New York: International Publishers, 1939) and, on the other hand, confirms Amin’s imperialism of generalized-monopoly capitalism and Emmanuel’s unequal exchange under Neo-Imperialism that initiated underdevelopment under monopoly-capitalism through sheer exploitation.
The international concentration of capital invertibly gives birth to international monopoly-finance capital that ensues the emergence of financialization capitalism (see John Bellamy Foster, The Financialization of Accumulation, Monthly Review vol:62, issue 05 October 2010). Financialization capitalism becomes prominent because the TNCs are unable to find sufficient investment outlets for their huge economic surpluses from production, increasingly turn to speculation within the global financial sphere, (see John Bellamy Foster and Fred Magdoff, The Great Financial Crisis (New York: Monthly Review Press, 2009). Even households had become financialized, (see Costas Lapavitsas, Financialised Capitalism: Crisis and Financial Expropriation, Historical Materialism 17 (2009), School of Oriental and African Studies, London and Costas Lapavitsas, The Era of Financialization, Part 3, TripleCrisis). In the country, financialization capitalism is engaging – and entangling – the political economy of Malaysia even during a Covid19 pandemic situation when such capitalism is as contiguousas the virus itself, and became the dominance of financial monopoly-capitalism in the nation, and consequently indebted the country. The urban poors are distressing in debts as reported by UNICEF 2020. The collusion of monopoly-capitalism with clientel capitalism is clearly evident during the acquisition, distribution and Covid19 vaccination processes.
c) That what is widely referred to as neoliberal globalization in the twenty-first century is in fact a historical shift to global monopoly-finance capital (see Samir Amin imperialism of generalized-monopoly capitalism) taking on a new phase in the globalization of production and finance.
During the 1970s, Malaysia went through an industrialisation initiative though did not employ as many workers as projected, but FDI still created an underdevelopment in monopoly-capitalism environment that inevitably invited these TNCs exploiting precarious labour. Presently, the few TNCs dominating particular industries or in the sectors of electrical and electronic production are confronted with a dialectic of rivalry and collusion: the mobile phone industry and a infrastructural platform, like Google, are prime examples of the control of telecommunication services.
d) There is a “competition” between firms in search for low labour cost (economics term: labour arbitrage) and low-cost production processes (operations management from lean to just-in-time and flexible production), competition for resources and markets (strategic management term: competitive advantages) and marketing principles on product differentiation (varied products with many features and multi-functionalities at various price structures in different marketspheres).
By 2008, those top one hundred global corporations which had shifted their production to foreign affiliates or subsidiaries accounted worldwide for 60 percent of their total assets and employment, and more than 60 percent of their total sales.
e) During an era of global monopoly-finance capital, financial capital is part of the transnational migration of capital with Information Technology augmenting the monopolisation trends primarily, ( see John Bellamy Foster and Robert W. McChesney, The Internet’s Unholy Marriage to Capitalism, Monthly Review 62, no. 10 (March 2011): 1-30). Increasingly, capital accumulation – real capital formation in the realm of goods and services – has become widely subordinate to finance, including the public healthcare and pharmaceutical providers, housings development through Real Estate Investment Trust (REIT) and others.
b) Concurrently with the energetic endeavour in O&G exploitation is the promotion of the rural community FELDA scheme that was envisaged to forestall possible Urban-Agrarian collaboration and cooperation for revolutionary changes towards a new peasantry-proletariat political economy in Malaysia. Supposedly to be corridor sanitarian to corral rural Malay communities with modern built-in infrastructure – with clinics, schools, roads and bridges – ensuring subsistence dependence with loyalty to the ruling class and the transnational corporation presence in the FTZs and EFTZs (Exports Free Trade Zones) to mop-up precarious labour.
The country is a case in development of underdevelopment even to her member states so much so that besides stripping the nation’s endowed potentialities under the auspice of GLC’s ownership and control, she also sold out to Big Oil (see also Rob Urie, Oil Imperialism and Monetary Policy, 25/03/2015, counterpunch); the accompanying intra-state political intrigues and deft maneuverings (see James Chin 2020, 2018, 2016; MA63) have yet to subside.
4]CORPORATE CAPITAL , RENTIER CAPITALISM AND THE CLIENTEL CAPITAL CLASS
Linking the conduit of monopoly-capital connections, whether as in Apple Corp. case or HERE, and locally like the Top Grove, is that where financialization capitalism is playing a big role in gourging the financial domain than promoting productivity, research and development breakthroughs nor wider market coverage as under industrialisation.
The implementation of the enthnocratically-administrated National Economic Policy in 1970, (see, selectively: Navaratnam 2020, Zainuddin 2019, Jomo 2005,) where succeeding oligarchy regimes had continued maintaining a clientel ethnocapitalism domination over the working class rakyat2 with 1% of the bumiputera population (seeKhalid lse.blog) or about 40,000 ethnocapital political families running and looting – and ruining – the national economy in alliance with Global North monopoly-capital – all in furtherance of neo-imperialism penetration that by now the ownership of a failed state, (seeAliran 2021).
An ethnocratic governance is where representatives of an ethnic group is holding a disproportionately large number of public posts to advance their ethnic group to the disfranchisement of others, (see Winter, J.A., Oligarchy, Cambridge University Press, 2011 and Wade, G., The Origins and Evolution of Ethnocracy in Malaysia, Asia Research Institute, National University of Singapore, Working Paper Series 112, April 2009), including enforcng political Islam.
With entrenched political power wielding authority over or directing the behavior of rakyat2, whether in economic, social lives or cultural, the accumulation of capital to the ruling class continues expanding. The political economy of Malaysia needs to be analysed on a class basis because it entails producing, expropriating, and distributing surplus value of rakyat2 labour – by rent seekers in collusion with monopoly-capital.
Under capitalism, the capitalists are dominant at each level of society, the proletarians are dominated at each and every sector of labouring activities. Where class existing at each economic, political, and ideological (or cultural) level, the class relationship to where dominating power ensues could be identified from the stronghold of clientelism and the ensuring political clientel relationship where ruling elites in, say United Malay National Organisation (UMNO) [place] had aligned with economic oligarchs [positions] in accepting rentier capitalism to sustain their hold on [power]. They adopt this clientelism as solicitations for votes at the grassroots level, allowing division-level ruling elites [place] the party patronage [position] and political [power] to effectively partisanizing them and ensuring ground-level officials with whom most voters interacted with are political party loyalists, (seeWeiss 2020 and newmandala). The entrenched class even tried to own and control the banking sector just as government linked companies (GLCs) have administrative controls over various land distribution to landless cultivators. GLCs also have their hands full in many financial sectors including the Permodalan Nasional Berhad (PNB) which is the investment arm of the Bumiputra Investment Foundation (YPB) under financialization capitalism :
The web of the Prime Minister Office that is linked to the Prime Minister Economics Affair controlling government corporations, registered companies, trust and saving funds, cooperatives, state authorities, research and development departments
b) With the introduction of computerisation in the country during 1980s, and the inauguration of the Multimedia Supercorridor in Cyberjaya – more wide spread when the economy engages in e-commerce at the beginning of the twenty-first century – Workers in the digital-economy and zero-hour workers often found themselves underemployed, and alienated whether as the reserve army of labour looking for jobs or searching for unaffordable housing or as unsettling owners on Felda Venture Global’s FELDA plantations.
Indeed, the top 1% own 45% of all global personal wealth; 10% own 82%; whereas the bottom 50% own less than 1% according to Credit Suisse Global Wealth Report on the household wealth of 5.2 billion people across the world.
c) In a globalised world, activities are involved in the production of goods and services and later their supply, distribution, and post-sales activities are coordinated across geographical destinations; there are values in these activities because capital follows these processes during circuitry. Global Value Chain(GVC) has generated much inequalities that is dissonance with poverty’s poors with approaches of unequal exchange. Most unfortunately, the GVC world also enhances the dominance of transnational corporations (TNCs), concentrates wealth, represses the incomes of supplier firms in developing countries, and creates many bad jobs (degrading, dirty, dangerous)that demandforeign labour intake with deleterious outcomes for local workers, but if they do protest on working conditions whether through go-slow or collective strikes, union busting by TNCs becomes the directive norms.
7] ECOLOGICAL ECONOMICS
a) Since the accumulation of capital is paramount to the owners of capital, their prime objective is to obtain their returns of investment within a short period so they can accumulate profits faster. As a result, investors do not consider long term impacts of their actions on the environment nor Mother Earth’s biosphere, (seeIan Angus, Earth Science and Ecological Marxism)
b) Marx’s central concepts of the “universal metabolism of nature,” “social metabolism,” and the metabolic “rift” to define the ecological worldview, (Karl Marx, Capital, vol. 3, London: Penguin, 1981), 949; Marx and Engels, Collected Works, vol. 30, 54–66) means that an understanding of ecological economics and ecosocialism development for nation is a necessity towards attaining ecologically Engels.
Post-GE15, there is a serial of articles on MADANI economy Malaysia covering TheScript on capital accumulation and labour exploitation relations besides other economic elements in The Naratives and critical observations therein with The Conversation. The main components in a Madani Malaysia economic development are covered by various aspects like the vision of a democratic islamic view on politico-economic development as well as the parameters require to execute the endeavour: financialrequirements and means to secure them; the approaches including the Targeted Area in Poverty Alleviation Objectives (TAPAO), and the method to implement the PRAXIS, those identifiable constraining factors in deliverance from neoliberal policies as advocated by the World Bank/IMF to the inefficiency in the class-stratified public sector besides the limitations in fiscal tools to minimise debts and will power to restructure the government-link companies and their ensuing odious practices.
9] Other than the inherent weaknesses of capitalism are examined, the alternative economic model in socialism practice is proposed using US-CHINA case studies in an Incremental Capital Output Ratio analysis.
10] EARLY MALAYSIAN TRILOGY
Acknowledging that human evolution helps us to understand the biological and cultural expressions of these First People, with far-reaching implications for Man’s shared welfare, there is a need on the extension, and explanation, of a Malaysian consciousness towards a national identity, and firming the nation-bonding.
Therefore, only by being conscious about the role of various communities – with different ethnic, race and creed – that defines our Malaysian nation can help to challenge power holders who had distorted and reconstructed history based on self ethnocapital class interests by seducing society according to ethnicity, race and religion, (seeLim Teck Ghee 2021, Cheah Boon Kheng 1996).
EPILOGUE
One possible solution to these crises of capitalism, and that is, the demise of capitalism itself.
agency house British entity acting as an intermediary to merchants or cohort of traders in colonial England
alienation the process whereby the worker is made to feel foreign to the products of his/her own labour or the process of labour and a self consciousness on self-estrangement during the labouring effort
B40 represents the bottom 40% of income Malaysia
black swan an unpredictable or unforeseen event, typically one with extreme consequences
bourgeoisie rose at the end of the eighteenth century, and (in Marxist contexts) the capitalist class who own most of society’s wealth and means of production
bumiputra (Jawi: بوميڤوترا) is a term used in Malaysia to describe Malays and Orang Asli or indigenous peoples of Malaysia or Southeast Asia; officially, it recognised the “special position” of the Malays provided in the Constitution of Malaysia, in particular Article 153
capital wealth in the form of money or other assets owned by a person or organization to further generate higher rates of return to the initial capital outlay thereby creating capital accumulationhttps://youtu.be/DwyYzewiGh8
capital accumulation is an increase in assets from investments or profits and is one of the building blocks of a capitalist economy (capitalism) where the goal is to increase the value of an initial investment as a return on investment, whether that be through appreciation, rent, capital gains, or interest (that could also be part of financializationcapitalism)
capitalism an economic and political system in which a country’s trade and industry are controlled by private owners for profit, rather than by the state
capitalist class the group of people who own the means of production and employ workers
class where the ruling class (bourgeoisie) who own the means of production and the working class (proletariat) who are exploited
class struggle where in any society there is tension or antagonism that requires such conflict to be resolved
clientelcapitalism is rent-seeking capital in the monopolization of access to any kind of property (physical, financial, intellectual, etc.) to gain significant amounts of returns without any contribution to society
compradore capitalist an entrepreneur in colonial or THIRD WORLD countries who accumulates capital through acting as intermediary between indigenous producers and foreign merchants
coronavirus capitalism is a particular type of Malaysian corporate capitalism infecting and destabilising the national economy through cronyism and/or ethnocratic empowerment; can transmit transnationally across the South China Sea to the states of Sarawak and Sabah
cronyism the appointment of friends and associates to positions of authority, without proper regard to their qualifications
digital transactions seamless system involving one or more participants, where such transactions are effected without the need for cash
economic nationalism favors state interventionism over other market mechanisms, with policies such as domestic control of the national economy, labor, and capital formation
ethnocracy political structure in which the state apparatus is controlled by a dominant ethnic group (or groups) to further its interests, power and resources
ethnocapital where bumiputera is advancing the Malay community with capital to the disfranchisement of others
epidemiological relating to the branch of medicine which deals with the incidence, distribution, and control of diseases
FELDA the Federal Land Development Authority – a Malaysian government agency to handle the resettlement of rural poor and smallholders into newly developed areas to plant, grow and harvest cash crops like palm oil and rubber
FGVFelda Global Venture is the global, diversified and sustainable integrated agri-business corporatized from FELDA settlers’ schemes
FTZ free trade zone: a geographic area where goods are imported, stored, handled, manufactured, or reconfigured and re-exported without subjecting to customs duty
financialization development of financial capitalism during the 1980s to present, in which debt-to-equity ratios increased and financial services (derivatives. hire-purchases, insurance, leasings, rents, digital transactions and interests) accounted for an increasing share of national income relative to other sectors
fiscal stimulus (packages) a government cuts taxes or increases its spending or just gives out any money in a bid to revive the economy and placate rakyat
globalization the process by which businesses or other organizations develop international influence or start operating on an international scale
global capital is the interlinking of various investment exchanges around the world that enable individuals and entities to buy and sell financial securities and digital transactions at international level
global labor arbitrage is an economic phenomenon where, as a result of the removal of or disintegration of barriers to international trade, jobs move to nations where labor and the cost of doing business is inexpensive and/or impoverished labor moves to nations with higher paying jobs.
global north refers to those developed societies of Europe and north America with dominance of world trade and politics
global south identifying countries with one side of the underlying global North–South divide, the other side being the countries of the Global North; underdeveloped and developing countries which are not part of global north
global oligopolistic capitalism, in which finance capital has come to dominate worldwide production and distribution
global value chainin a globalised world, activities are involved in the production of goods and services and later their supply, distribution, and post-sales activities are coordinated across geographical destinations; there are values in these chained activities that are not accrued to labour in the producing countries
kleptocracy a government whose corrupt leaders (kleptocrats) use political power to appropriate the wealth of their nation, typically by embezzling or misappropriating government funds
labouring class comprises those engaged in waged or salaried labour, especially in manual-labour occupations and industrial work
M40 representing the middle 40% of income earners in Malaysia
malay dilemma is the particular question on the dilemmas of many a malay not understanding what are the problems of the malay community that has to be examined and analysed by a Dr. Mohammed Mahathir
means of production also termed as capital good, are physical and non-financial inputs used in the production of goods and services with economic value
monopoly capital greater centralization and concentration of capital by conglomerate of businesses along with the financial domination of industry
neoliberalism market-oriented reform policies through eliminating price controls, deregulating capital markets, lowering trade barriers besides reducing state influence with privatisation in the economy
neo-imperialism using cultural, commercial and/or political power and influence to dominate smaller countries. Neoimperialism is the specific contemporary phase of historical development that features the economic globalization and financialization of monopoly capitalism.
neo-liberalism economics market-oriented reform policies such as “eliminating price controls, deregulating capital markets, lowering trade barriers” and reducing state influence in the economy, especially through privatization and austerity.
oligarchic alliance an international monopoly alliance of oligarchic capitalism, featuring one hegemonic ruler and several other great powers, has come into being and provides the economic foundation for the money politics, vulgar culture, and military threats that exploit and oppress on the basis of the monopoly
pandemic an epidemic of an infectious disease that has spread across a large region, for instance multiple continents or worldwide often as a result of global capital that drove the deforestation for economic activities exposing emergence of new pathogens
political islam the ideology of Ketuanan Melayu Islam (Malay Islam Supremacy)
precarious labour to describe non-standard or temporary employment that may be poorly paid, insecure, unprotected, and unable to support a household
privatisation the transfer of businesses, industries or services from public ownership and or control to private ownership and control.
rakyat folks or ordinary people of Malaysia
rentier capitalism monopolization of access to any kind of property (physical, financial, intellectual, etc.) and gaining significant amounts of profit without contribution to society
socialism where there is no ownership nor private-property income, but when labour work for a share of firm’s profits or collect a share of dividends from society’s wealth which is equally shared
supply chain is a network between a company and its suppliers to produce and distribute a specific product or service. The entities in the supply chains include producers, vendors, warehouses, transportation companies, distribution centers, and retailers
surplus value the excess of value produced by the labour of workers over the wages they are paid
T20 represents the top 20% of income earners in Malaysia
third world countries included nations in Asia and Africa that were not aligned with either the United States or the Soviet Union
transnational an entity going beyond national boundaries or interests; often, the term MNC multinational corporation is used where it is a large organisation incorporated in one country that produces or sells goods or services in various countries. The two main characteristics of MNCs are their large size and the fact that their worldwide activities are centrally controlled by the parent companies
value chain is formed of primary activities that add value to the final product directly and support activities that add value indirectly
zero hour type of employment contract between an employer and worker whereby the employer is not obliged to provide any minimum number of working hours to the employee
A paper in the New Political Economy (NPE 2021 henceforth referred) published online: 30 Mar 2021 Jason Hickel, Dylan Sullivan and Huzaifa Zoomkawala contended that wealth drain from the Global South remains a significant feature of the world economy in the post-colonial era; rich countries continue to rely on imperial forms of appropriation to sustain their high levels of income and consumption.
The researcher-authors discover that the Global North appropriated from the Global South commodities worth US$2.2 trillion in Northern prices that are enough to end extreme poverty 15 times over. Over the 1960–2018 period studied, the value drain from the Global South totalled US$62 trillion (constant 2011 dollars), or UD$152 trillion when accounting for the Global South countries’ lost growth. Indeed, it is found that the appropriation through unequal exchange represents up to 7% of Global North’s GDP and 9% of Global South GDP.
Net appropriation occurs because prices are extremely low in the Global South averaging one-fifth of Global North workers’ wages, seeTNC Labour ExploitationMANUSCRIPT. Samir Amin and Arghiri Emmanuel had described this as a “hidden transfer of value” from the Global South to sustain high levels of income and consumption in the Global North.
Indeed, according to the NPE 2021 authors, the Global South losses even outstrip foreign aids by a huge margin, for instance, every dollar of aid to the developing countries would they lose US$14 through unequal exchange rates, transfer pricing, price trading, illicit financial outflows from corruption, tax evasion, profit repatriation or money laundering through smuggling.
2] NEO-IMPERIALISM WITH MONOPOLY CAPITALSTRONGHOLDS
Even before the Federation of Malaya gained independence, the International Bank for Reconstruction and Development (IBRD) Mission of 1954, had already schemed definitive proposals to propel the country’s industrialization program towards a neo-imperialism orbit. Its platform’s The Report of the Industrial Development Working Party, Kuala Lumpur, 1957 bound succeeding ruling regimes to monopoly-capitalism till today.
That enactment in August 1958 gave tax incentives to pioneer industries and permitted assurances to remit profits and capital, and against nationalization to foreign investors. The Foreign Investments Guarantee Agreement provides protection against the risk of expropriation without adequate compensation and non-convertibility of profits; this Agreement was signed with USA, Germany, Canada and The Netherlands. Further, double-tax agreements have been signed with the United Kingdom, Japan, Singapore, Sweden, Norway and Denmark.
IBRD was the original World Bank institution where it works closely with the rest of the World Bank Group to help ostensibly developing countries reduce poverty, promote economic growth, and build prosperity. However, there are often ‘conditionalities’ imposed on borrower countries where loans are based on what is termed the ‘Washington Consensus’, focusing on a neo-liberalization thrust in trade, investment and the financial sector and the deregulation and privatization of nationalized industries. Often the conditionalities are attached without due regard for the borrower countries’ individual resulting in the loss of a state’s authority to govern its own economy as national economic policies are predetermined under The World Bank and its International Monetary Fund packages, and where most developing countries hold little voting power. These “packages” have also been associated with negative social outcomes such as reduced investment in public health and education, but still have sufficient capital expenditure beneficial to local compradors, industrial-capitalists and later ruling regimes’ ethnocapital as well as monopoly-capitalists globally.
As expressed in NPE 2021, during the 1980s and 1990s, IMF structural adjustment programmes cut public sector wages and employment, while rolling back labour rights and other protective regulations that cheapened labour and resources immensely. Presently, all poor countries are structurally dependent on foreign investment but have to compete with one another “to offer cheap labour and resources in order to please the barons of international finance”.
There is no lack of investments in the manufacturing sector in the case of Malaysia. In 1957, 60% of share capital was then owned by transnational corporations (TNCs). There was a growth of 12% per annum by value added in manufacturing, but direct employment in the manufacturing sector grew less than 9% annually. The predominantly inward-oriented industrialization strategy catered the ruling class consumption and bourgeois middle income consumers. The protection and incentive schemes in the pioneer industry entrenched industrial enclaves and extended monopoly-capitalists exploitation process thereon and henceforth.
3] MONOPOLY-CAPITALISMEXPLOITATION
Monopoly-capitalist exploitation in the manufacturing sector is empirically demonstrated in the following findings. British firms, for example, which constituted 1% of the manufacturing establishment but 19% of the total sale, hired only 8% of the employees in the manufacturing sector; American firms constituted 0.2% of the manufacturing establishment with 16 firms, took 5% of the sale, but only 1.1% of workers hired, (Federation of Malaysia, Census of Manufacturing Industries, West Malaysia 1958, p.38).
An analysis of these limited companies’ reinvestment rates found that Japanese firms had a low 10%, American firms were. 11%, British 14% and Singapore 22%, (Charles Hirschman, Ownership and Control in the Manufacturing Sector in West Malaysia, UMBC Economic Review, United Malayan Banking Corporation, Kuala Lumpur, Vol.7 No.1, 1971, p.26).
Hence, TNCs invested sparingly, employed lowly, tech transfer minimally, but produced and profited highly.
Indeed, in 1980, for example, the average profit rates on US direct investment abroad in developing countries were about 30% where the profit equals income plus fees and royalties as percentage of total investment, (as cited from Robin Broad, identifiable as the U.S. Department of Commerce computer print-outs, Unequal Alliance: The World Bank, the International Monetary Fund and the Philippines, University of California Press, 1988).
The outflow of profits and capital gushes unceasingly since the implementation of tax exemptions and other favorable pioneer status inducements. For example, the tax reliefs on profit, amounting to 40%, and dividends paid out of profits, under the 1958 Pioneer Industries Ordinance come at a time when the country’s development and social expenditure needs are growing, but the protection and incentive systems have eroded national revenues. The introduction of the Investment Incentives (Amendment) Act in 1971 accelerated the rate of capital exploitation and capital repatriation processes. By this legislation, manufacturers of electronics and electrical companies can claim 10 years of tax relief; TNCs do not request the maximum period as this entails employing more personnel as a condition under this claim.
Further, companies granted investment tax credits are able to deduct from their taxable incomes a sum not less than 25% of capital expenditure incurred on factory, building or machinery. The contradictions in Malaysia’s industrialization program are clear: on one hand, there is a policy to increase employment through labor-intensive industries, but on the other hand, there is a concurrent incentive scheme which favors a capital-intensive strategy.
There is even a capital allowance scheme for building and plant expenditures incurred, and when incorporated with the accelerated depreciation allowance incentive, companies will virtually have 90% of eligible capital expenditure completely written off within 5 years.
4] THE UNEQUALEXCHANGEINTERMEDIARIES
The perpetuation of Neo-Imperialism would not, and cannot come about if the pervasive middlemen and the networks of rent-seeking cohorts in the plantation, mining, commerce sectors were dismantled.
However, the ownership and control have not changed substantially, and though local capitalists and the intermediaries are not necessarily those of Chinese middlemen or Indian compradors nowadays, but kleptocrats that serve as the most obvious link in an exploitative economic system. Owing to the imposed ethnocentric nature of economic activities, any present economic discourse has often tended to deflect rakyat2 attention and hostility away from those more powerful and central actors that are looting the country’s tills, (seeSTORM 2013: Illicit Capital, Illegal Trade and Inequality – Kleptocracy in Malaysia).
The emergence, and roles, of ethnocapital have evolved since independence gained, and with the New Economic Policy (NEP) implemented has only reconstructed the political process of economic nationalism.
Historically, the country has been a place where many, and large, fortunes were amassed. Whereas the majority of businesses built during the prewar period were found in the tin and rubber industries that comprised illustrious family firms built by Low Yat, Loke Yew, Chong Yoke Choy, H.S. Lee, Tan Chay Yan and Lau Pak Khuan who colluded with colonial British plantation interests to build their empires, the 1980s “new money-capital” entities like YTL Corp’s Yeoh Tiong Lay, Berjaya’s Vincent Tan, Genting’s Lim Goh Tong, Sunway’s Jeffrey Cheah, Lion’s William Cheng and the Ananda Krishnan groups and business stables attempted the forging of more Sino-Indo-Malay corporations, that is, a co-opetition strategy whereby Chinese and Indian capitals can compete as well as co-operate with Malay interests. Those Kuoks, Tehs and Queks were the pioneers in the sugar and palm oil, property and banking sectors during the British Empire, whereas the YTLs’ and Berjayas’ and Annans’ were maintained and retained by transnational connections in the post-independence neo-colonialism period, and the GLCs (government-linked companies) and GLIC (government-linked investment corporations) formulated were sustained with, and by, various ethnocracy kleptocratic regimes ever since.
What Gomez and Saravanamuttu in The New Economic Policy in Malaysia Affirmative Action, Ethnic Inequalities and Social Justice, ISEAS 2013) had indicated is that economic situations have worsened after the New Economic Policy (NEP) was implemented. They faulted upon the preferences designed to encourage Bumiputera entrepreneurship were sadly disproportionately utilized by members of the targeted group in urban and the more prosperous rural areas. The present policies of protecting Malay special rights are often regarded as a mere pretence intended to prevent bold and modern economic activities in rural society, by suceeding ruling regimes, following the colonial practice of divide and rule.
Indeed, the issues are relating to the concentration of economic power (as driven by a stronghold of clientelism) and the ensuring political clientel relationship where ruling elites in the United Malay National Organisation (UMNO) had aligned with economic oligarchs in accepting rentier capitalism to sustain their hold on power. They adopt this clientelism as solicitations for votes at the grassroots level, allowing ruling elites the party patronage and political power to “effectively partisanizing them and ensuring ground-level officials with whom most voters interacted with ……are political party loyalists” (Weiss, 2020), resulting in the skewed distribution of profits by political stakeholders and the stark inequality of wealth permeating in the country (Khalid 2019).
There is every reason to say that patronage position is ever in the prescence of ruling elites and the political power that oozes dominating control therefrom. Indeed, ruling elites are the biggest “owners” of divisional-level of UMNO constituency places with the office-bearing posts that defined political positioning posts with the ensuing power distributing spoils that emit therefrom. The ownership of ruling regime’s divisional-level [place], by situating in a office-bearing [position], with the control of vested distributing [power] spoil elements is, thus, explicit.
Now with the advent of infrastructural platforms, the role of ethnocapital has changed from managing physical assets in a GLC to that as intermediaries to IT service providers. Not only the ecosystem responsibilities have enlarged, the asset management is huge, too.
JENDELA as part of the 12th Malaysia Plan (2021-2025) with RM$21 billion of which 40 per cent is derived from Malaysian Communications and Multimedia Commission (Universal Service Provision (USP) funds with the remaining 60 per cent to be funded by industry players; tender for infrastructure works at 1,661 sites involving an investment value of RM4.6 billion under JENDELA, closed on March 31, 2021, during a time of when capitalism is colliding into an Ecological-Epidemiological-Economic crisis.
In 2021, both the telecommunications industry and MCMC will be working together to track the migration from 3G to 4G, as Jendela aims to build a solid foundation through the optimisation of the 4G network and fiberising of premises in Malaysia , besides increasing mobile broadband speeds from 25Mbps to 35Mbps and enabling up to 7.5 million premises to access gigabit speeds with fixed broadband services.
5] CONCLUSION
i) With 1990s’ unrestricted movement of international finance capital, public sector enterprises or government-link companies (GLCs) increasingly are subjected under the bound of financialization capitalism. The metropolitan capital-as-finance, expressed by Patnaik, gets control over Third World resources and enterprises to see the rise to international finance capital in league with the local neocomprador class becoming crony capitalism through the force of accumulation as articulated by Samir Amin (2019) in The New Imperialist Structure, Monthly Review, July 01, 2019. Anchored upon a capital-market system, this leads to the emergence to, and the pervasion of, financialization capitalism in Malaysia, and the consequence of continuance of indebting the nation:
ii) According to Emmanuel’s premise is that , unequal exchange in the ‘strict sense’ characterises the trade relation between the centre and periphery whereby ‘the inequality of wages as such, all other things being equal, is alone the cause of the inequality of exchange.’
As a corollary, Emmanuel had argued that “by transferring through non-equivalent exchange, a large part of its surplus to the rich countries, the periphery deprives itself of the means of accumulation and growth.” Thus, an important implication of Emmanuel’s theory is that a widening wage gap leads to a deterioration of the periphery’s terms of trade, and a subsequent reduction in its rate of economic growth, seeEmmanuel’s formulation on his theory.
A glaring scenario is presented in the case of Malaysia tied to the financialization capitalism of, and closely connected to, monopoly-capital in the Global North with the dire aftermath repercussions from the Asia Financial Crisis 1997 and the Global Financial Crisis 2008 era (seePost-1997 Political Economy and Underdevelopment under Monopoly-capitalism, May 2021).
iii) Applied, there is a growing centralisation of political and eonomic power in the Office of the Prime Minister and the Minister of Finance with a confluence of influence of the state over the GLCs that have the concentration of capital and accumulation of capital as Gomez laid out in Minister of Finance Incorporated: Ownership and Control of Corporate Malaysia:
The web of the Prime Minister Office that is linked to the Prime Minister Economics Affair controlling government corporations, registered companies, trust and saving funds, cooperatives, state authorities, research and development departments The Political Economy of Malaysia
iv) And more importantly, by offering higher dividend returns, cooperating closely with those local corporate capital that have connections to Global North monopoly capitalists and through internationalising their operations, they successfully link up electrical and electronic small manufacturing enterprises (SME) with products assembly, supplies and logistics competitiveness into the Global North supply chains where an exemplary entity can be seen in the pharmaceutical industry at times of a pandemic in Pharmaniaga.
v) TM, similarly, has the franchised monopoly as a GLC, owning the national digital telecommunications sector and controlling upstream and downstream the supply chain. With the unveiling of the Malaysia Digital Economy Blueprint (MyDigital) on 19th. February 2021, TM will be given relevant spectrum to own, execute and manage the 5G infrastructure.
Most investment analysts agree that Telekom Malaysia Bhd (TM) is a key beneficiary given its global network of over 20 submarine cable systems and over 560,000km of fibre network across Malaysia. “We raise our FY20-FY22 earnings forecasts for TM by 4% to 16% after factoring in higher data and internet revenue”, so said PublicInvest. (theedgemalaysia, 2021).
vi) The hardening of corporate capital monopoly tied to external resources sourcing from monopoly-capital only accentuate the depth of Neo-Imperialism penetration into the country, even in midst of a Covid19 pandemic ;
TM together with Microsoft, Google and Amazon as cloud service providers (CSPs) have been given conditional approval by the government to manage and build hyperscale data centres and cloud services for the public sector. TM, as the only home-based CSP, stands to benefit from the public sector’s recurring and growing revenue base, said Kenanga Research; the CSPs will total between RM12 billion and RM15 billion over the next five years. Strong fiber adoption from the national digital network (Jendela) project, net additions for Unifi and overall a higher growth for wholesale and data revenues are expected to lift Telekom Malaysia Bhd
vii) On those above-mentioned situational scenarios, what we have, according to Fitch Solutions, is that due to potential lack of transparency because the JENDELA rollout is through a Special Purpose Vehicle, there are three crony ICT companies being appointed as management service providers (MSP) whereby ethnocapital maintains and tightens ownership and control on new enterprise ventures.
viii) At a wider perspective is the spectre of unequal exchanges between Global North’s infrastructural platforms and Global South’s information technologies and information systems dependency :
In 2013 Apple had about 80,000 employees worldwide, Google around 40,000, and Facebook about 4,600; when Facebook purchased WhatsApp – for US$19 billion – it had only 55 employees. In fact, all these industrial-tech models eliminated jobs (by sacking people directly or by replacing or resideningoffshoring from their Global North businesses), and through the circuitry in monopoly-capital (Foster 2000; 2014; 2020) most of the jobs directly created predominatly in the Global South are call-centres, cloud-servers, systems integrators, routers distributors. [To read the job of a Google contractual worker, Fortune]
Within the two decades before the end of the millennium, digital monopolies have overtaken the older oil, automobile and financial monopolies in terms of capital capitalisation. Computers, networks, data centres and servers become the new technologies of capitalism roaming globally: the emergence of a digital system basing on gigantic infrastructural platforms becomes a reality for many bionic businesses, (BCG, Is Your Technology Ready for the New Digital Reality?, Boston Consultancy Group, May 08, 2020, and its The Bionic Company).
ix) Referring to NPE 2021, the periphery tends to transfer surplus through trade because its rate of surplus value is higher than the world average due to an international wage gap, which favours workers in the centre. Therefore, even if the organic composites of capital are equalised, unequal exchange results from the existence of a wage gap between the centre and the periphery, and within a nation the disparity in wealth distribution :
According to the UNDP 1997 Human Development Report, and the 2004 United Nations Human Development Report, Malaysia has the highest income disparity between the rich and poor in Southeast Asia, greater than that of Philippines, Thailand, Singapore, Vietnam and Indonesia.
It creates, therefore, a permanent tendency of lagged development in the Global South and a subsidized, superannuated Global North, (seeISR issue 107).
Labour, under an e-commerce environment, becomes digital-dehumanised workers where they are mere inputs in an Azeem Azhar’s AI interfacing intermediaries loop as conduits to big data storage and retrieval. A gig-worker daily experience and personal assets are exposed to financialisation or value extraction.
Thirdly, the USA tech-venture capital bloc’s reducing capital gains taxes in 1978 from 50% to 28% became known as the Silicon Valley model, now emulated all over the world (Marxist Sociology April 2021) with mitigated effect on “contingent workers”, (Fortune 2019). For Global North workers, today’s real average wage (that is, the wage after accounting for inflation) in USA has about the same purchasing power it did 40 years ago; and, what wage gains there have been have mostly flowed to the highest-paid tier of workers, (PewResearch 2018) :
Noam Chomsky once stated on the US economy structure “what you find is that $47 trillion were taken from the bottom 90%, the middle class and the working class, and put in the hands of the top 10%. But if you look closely, it’s a fraction of the top 10% which takes the greatest wealth. Since Reagan, they have doubled their ownership of society’s wealth from 10% to 20%.”
The consequential manipulation of such raw data into timely, accurate, relevant and complete information – by infrastructural capitalism platforms that are so overwhelmingly powerful in exploiting not only surplus value of labour but in the regal accumulation of capital relentlessly, too, (Social Europe, Gig Workers Guinea Pigs of the New World of Work, February, 2021, and also seeFoundation for European Progressive Studies, Governing Online Gatekeepers: Taking Power Seriously, 2021).
x) Through the ownership and control of information, this emergent class dominates not only labour but digital capital, too. Capital accumulation permeates the entire production chain but through soft elements in the ownership of patents, copyrights, brands and logistical systems – typically known as the Intellectual Property Rights -impoverishing the poors but enrich the bourgeoisie class by way of financialization capitalism that digitally routed neo-imperialism onto a refreshed monopoly-capital commodity supply chain pathway:
Instead of exerting downward pressure in the middle of the curve – the part on processes of production – intellectual monopoly has inadvertently points to an upward pressure at both ends of the smiley curve where the control over intangible assets (like R&D and design, and e-commerce marketing and post-sales interfaces) is most concentrated.
xi) One can say that this upward pressure on both left and right sides of the curve is a resultant outcome from dynamics arising from the growing role of intangible assets in the value chain processes, and also from tighter Intellectual Property Rights. This means that the market power of leading firms – the product/service initiators or front-runners – is often enhanced by intellectual monopoly endorsement which is fueled on one part by the dynamic advantages arising from global value chains network externalities, and on the other side, by the increasing returns on intangibles and legally-enforced proprietary control over standards, technologies and brands, (UNCTAD, The Digital Economy Report 2019: Value Creation and Capture: Implications for Developing Countries; Jomo 2020; Jomo 2021).
xii) There is a new battle on unequal exchange – not merely or only in the Production-exchange-Consumption model in physical goods – but in the soft digital arena presence in the infrastructural horizon: Digital generation-exchange-Usage which is still sheer expropriation and surely exploitative.
The implications for third world countries are that due to the monopoly-capital competition dynamics in the Global North, developing-country platforms that are trying to scale up typically face an uphill battle. The dominance of global digital platforms, their control of data, as well as their capacity to create and capture the ensuing value, tend to further accentuate concentration and consolidation rather than reduce inequalities between and within countries.
Secondly, in the global “data value chain”, many countries are already entrenched in subordinate positions, with value and data being concentrated in the few global platforms and other leading transnational corporations.
The Covid19 pandemic is destined to bequeath a high social welfare price on Global South populations and their economics. The breakdown of global supply chains due to disrupted and canceled orders from the Global North – as well as social distancing and lockdowns around the globe – is realigning commodity chains affecting capitalism, and the specific corporate capital in Malaysia, in crisis.
By capitalism, we mean a system that pursues accumulation and growth for its own sake, whatever the consequences; the single-minded goal of business for ever-greater accumulation of capital where the prime objective is to increase the return of value from an initial investment whether through appreciation, rent, capital gains or interest.
1] INTRODUCTION
COVID-19 has underlined as never before the fusion of epidemiological and economic weaknesses imposed by capitalism. As we enter the twenty-first century, the emergence of cataclysmic capitalism takes on an ecological dimension, too, especially with the advent of globalization.
With globalisation of capital, the commodity chains – controlled by transnational corporations (TNCs) in connecting production zones in the Global South, but with the apex of world consumption, finance, and accumulation primarily in the Global North – constituting a global circuits of capital in the rise of generalized monopoly-finance capital, defined as a late imperialism episide, (John Bellamy Foster, Late Imperialism, Monthly Review, 71 No 3, July-August 2019).
Under globalisation, exorbitant imperial rents from the control of global production are obtained by TNCs not only from the global labour arbitrage, by overexploiting industrial labour in the periphery, but also increasingly through the global land arbitrage, in which Big Farm agribusinesses expropriate cheap land in the Global South so as to produce export crops mainly for sale in the Global North, (Intan Suwandi, Value Chains, Monthly Review Press, 2019).
On emphasizing these circuits of capital in the global economy, corporate capital shall refer both to supply chains and value chains, with supply chains representing the movement of the physical product, and value chains directed at the “value added” at each node of production, from raw materials to the final product.
This dual emphasis on supply chains and value chains resembles in some ways the more dialectical approach developed by Marx’s analysis of the commodity chains in production and exchange, encompassing both use values and exchange values. In the first volume of Capital, Marx highlighted the dual reality of natural-material use values (the “natural form”) and exchange values (the “value form”) present in each link of “the general chain of metamorphoses taking place in the world of commodities”, (Karl Marx, Capital, vol.2, Penguin, London, 1978). Marx’s approach was carried forward by Hilferding in his Finance Capital, where he wrote of the “links in the chain of commodity exchanges.” (Rudolf Hilferding, Finance Capital, Routledge, London 1981).
Marx never lost sight of the natural-material limits in which the circuit of capital took place and had stressed the destructive side of capitalist valorization with respect to the natural conditions giving rise to the “irreparable rift in the interdependent process of social metabolism” (the metabolic rift) that constituted capitalism’s destructive relation to the earth, whereby it “exhausted the soil” and was equally evident in “periodical epidemics,” inducing organic contradictions of the system, (Karl Marx, Capital, vol.1 & 3, Penguin, London, 1981).
2] COVID19 INSURGENCE AND CAPITALISMCRISES
The circuit of capital is tied to the etiology of disease via agribusiness that generated the COVID-19 pandemic. Also, by focusing on the commodity chains also allows us to understand how the disruption of the flow of use values in the form of material goods and the resulting interruption of the flow of value have generated a severe and lasting economic crisis. The result is to push our already stagnant economy to an edge, threatening the financial superstructure of the political system which depends on the rentier capitalism core.
The capital-driven surge in global land arbitrage by transnational agribusiness corporations is promoted by the various international development banks of what is euphemistically known as “territorial restructuring” that removes subsistence farmers and small cultivators from the land at the behest of TNCs, agribusinesses and government linked companies (GLCs). The deforestation for industrial estates and highway development is ecosystem destructive. The “land development for resettlement” like the FELDA schemes is no more than modern-day land grabs, accelerated by accompanying high prices for basic foods in 2008 and again in 2011, as well as private wealth funds seeking tangible assets in the face of uncertainty after the Great Financial Crisis of 2007–09. The result is settlers being thrown off the land in a process of depeasantization, altering the agroecology of vast hinterlands, replacing traditional agriculture with monocultures, and pushing next generation of ANAK FELDA into urban slums, (seeSTORM, The Struggle for Shelter – the Class Struggle in Housing).
According to Eric Holt-Giménez in A Foodie’s Guide to Capitalism, “the price of land” in much of the Global South “is so low in relation to its land rent (what it is worth for what it can produce) that the capture of the difference (arbitrage) between low price and high land rent will provide investors with a handsome profit. Any benefits from actually growing crops are secondary to the deal.… Land arbitrage opportunities come about by bringing new land – with an attractive land rent – into the global land market where rents can actually be capitalized.” Much of this was fed by what is called the Livestock Revolution that remake livestock into a globalized and commercialised commodity based on giant feedlots and genetic monocultures, (Philip McMichael, Feeding the World in Socialist Register 2007: Coming to Terms with Nature, ed: Leo Panitch and Colin Leys, Monthly Review Press, 2007).
Rob Wallace and his colleagues have also observed that historian and critical-urban theorist Mike Davis and others “have identified how these newly urbanizing landscapes act as both local markets and regional hubs for global agricultural commodities passing through.… As a result, forest disease dynamics, the pathogens’ primeval sources, are no longer constrained to the hinterlands alone. Their associated epidemiologies have themselves turned relational, felt across time and space.” A consequent instance is whence a Nipah Virus or SARS can suddenly find itself spilling over into humans in Sungai Nipah or a big city like Kuala Lumpur – only a few minutes out of Batu Caves, (seeWallace et.al., Covid19 and Circuits of Capital).
A 41-year old man from Selangor – on a special Air Asia flight bringing Malaysians and non-citizen family members home from epic centre Wuhan, China, landed in KLIA at 5:57 am Tuesday 4 February 2020 – became the first Malaysiam tested positive for Covid19.
After a local largest cluster linked to a Tablighi Jamaat religious gathering held in Sri Petaling, Kuala Lumpur in late February and early March, leading to massive spikes – then, the largest cumulative number of confirmed COVID-19 infections in Southeast Asia – a nationwide Movement of Control Order (MCO) was promulgated on 16th March 2020, that eventually with the Conditional MCO, covering the federal territory island of Labuan, too.
Across the South China Sea, by the month of September 2020, public health experts expressed that the coronavirus may have begun to reside not only in, but beyond Sabah, had spread to Sarawak, and the rest of the country in peninsular Malaysia.
3] CAPITAL AND CLASS CONTRADICTIONS
SARS-CoV-2, like other dangerous pathogens that have emerged or reemerged in recent years, is related to a set of factors including:
(1) the development of global agribusiness with its expanding genetic monocultures that increase susceptibility to the contraction of zoonotic diseases from wild to domestic animals to humans;
Global commodity chains, and their interlinkages to connectivity, have become vectors for the rapid transmission of such disease, exposing the globally exploitative pattern of development of underdevelopment.
Stephen Roach (Yale School of Management) – the former chief economist of Morgan Stanley and the principal originator of the global labor arbitrage concept, has said that TNCs’ financial capitalism wants “low-cost goods irrespective of what those cost efficiencies entailed in terms of [the lack of] investing in public health, or I would also say [the lack of] investing in environmental protection and the quality of the climate” ……whereby the result of such an unsustainable approach to “cost efficiencies” is the contemporary global ecological and epidemiological crises and their financial consequences, further destabilizing an economy that was already exhibiting an “excessive surge” characteristic of financial bubbles, (Stephen Roach, This is Not the Usual Buys-on-Dips Market, Economic Times, March 18, 2020).
The COVID-19 pandemic epidemiological and financial fallout will hit poor countries harder as filtered through the imperial-class system.
In March 2020, the COVID-19 Response Team of Imperial College, London, issued a report indicating that basing on certain assumptions regarding malnutrition, poverty, and the greater susceptibility to infectious diseases, the poor countries would contribute number of deaths in the range of 15 million in East Asia and the Pacific, 7.6 million people in South Asia, 3 million people in Latin America and the Caribbean, 2.5 million people in sub-Saharan Africa, and 1.7 million in the Middle East and North Africa – as compared with 7.2 million in Europe and Central Asia and around 3 million in North America, (COVID19 Response Team, Report 12: The Global Impact of COVID19 and Strategies for Mitigation and Suppression, Imperial College, London, 2020).
The argument is, on one side, the greater prevalence of chronic illnesses, respiratory conditions, pollution, and malnutrition in low-income countries, which could increase the fatality rates from coronavirus outbreaks. As such, given the impoverishment and vast unemployment and underemployment in these countries, it is advisable, according to supporters of this line of reasoning, that poorer populations not to practice social distancing or aggressive testing and suppression, and to put their efforts into economic production, that is, to continue in support of the monopoly-capitalism global supply chains system.
As Mike Davis once argues, twenty-first-century capitalism points to “a permanent triage of humanity…dooming part of the human race to eventual extinction.”
The millions of people in the Global South is considered by these proponents to be a reasonable tradeoff for the continued growth of, and on, the empire of capital.
The other argument is that social distancing measures that “flatten the curve” of the disease is considered to be less effective in poor countries with younger populations less susceptible to COVID-19, and with limited healthcare systems which were already overwhelmed even before the onslaught of the pandemic.
Moreover, social distancing lowers disease risk by limiting people’s economic opportunities. Poorer people are less willing to make those economic sacrifices. They place relatively greater value on their livelihood concerns compared to contracting COVID-19. Not only are the epidemiological and economic benefits of social distancing much smaller in poorer countries, such policies may exact a heavy toll on the poorest and most vulnerable.
Indeed, workers in the informal sector (like the Gig-economy) lack the resources and social protections to isolate themselves and sacrifice economic opportunities until the virus passes. By limiting their ability to earn a living, social distancing can lead to an increase in hunger, deprivation, and related mortality and morbidity.
Already, in the Gig-economy, the class contradiction between labour and capital is glaring, especially those working under zero-hour contracts.
Zero Hour is a term used to hide abuse of workers by businesses using a contract which do not specify set conditions of work like working hours or guaranteed income.
These businesses are firms performing from car-hailing’s taxi apps to food, mail and parcel delivery services by hiring workers on flexible contracts that allow them to work simultaneously for different companies but provide no guarantee of minimum work hours or pay.
Businesses say the model offers flexibility to both sides, but it is exploitative and creates a sub-class of low-paid and insecure jobs.
It is fear of unemployment and of economic necessity that drives people to work under such underemployment conditions.
Therefore, it is exploitation of psychological fear, and of work, that is a fundamental and necessary fact of the capitalist system. The avowed aim of most of Marx’s writings is the path to proletarian class consciousness to eradicate capitalism to be supplanted with a socialist victory and destiny.
Rather than a blanket adoption of social distancing measures, we advocate for the exploration of alternative harm-reduction strategies, including universal mask adoption and increased hygiene measures, including an appropriately rollout of community testing, (seeSTORM, The Covid19 Commodity Supply Change Challenge).
4] MONOPOLY-CAPITAL ANDCOMMODITY CHAINS
Giovanni Arrighi, once say that ‘the spread of industrialization appears not as a development of the semi-periphery but as peripheralization of industrial activities’ .
With the rise of generalized monopoly-finance capital, this system exerts exorbitant imperial rents from the control of global production where not only from the global labor arbitrage, but through which transnational corporations with their headquarters in the center of the system overexploit industrial labor around and in the periphery.
With an emphasis on cost efficiencies (another name for cheap labor and cheap land with preference-rated utilities available in the Free Trade Zone and Export Trade Zone industrial parks) have led local capital to create a complex system of localised commodity chains – in the case of the rubber glove industry, 90% of supply inputs are available locally – to maximize the superexploitation of labor on a national basis, while targeting the globalised world market-sphere across transborder as its marketplace. Concurrent with industrial production of physical goods, there is also a tapping upon capital from the Kuala Lumpur Stock Exchange when an opportunity like the pandemic Covid19 emerges. The consequent locked downs through various phases of the Mandatory Control Order have spurred an incremental online share-tradings. The negative resultant outcome is a huge siphoning of surplus from the national economic system (where cheap land and infrastructure construction, easily-available labour, and prefrenced utility rates in electricity and water supplies are readily available) coupled with that frenzy on stock retailing thus plundering the national common wealth, and widening the gaps between classes:
Income Gaps, Malaysia
A) THE HEALTHCARE INDUSTRY
The dire effects of the disruption of global supply chains during the pandemic have been particularly evident with respect to medical equipment. Premier, one of the chief general purchasing organizations for hospitals in the United States, indicated that it normally purchases up to twenty-four million N95 respirators (masks) per year for its member health care providers and organizations, while in January and February 2020 alone its members used fifty-six million respirators. In late March, Premier was ordering 110 to 150 million respirators, while its member organizations such as hospitals and nursing homes when surveyed indicated they had barely more than a week’s supply. The demand for medical masks soared while the global supply froze up. COVID-19 test kits were also in chronically short supply globally until China revved up her production in late March, 2020.
Nationally, the seriousness of the pandemic situation is that the Covid-19 outbreak in Selangor involves many migrant workers, including the largest cluster reported in Malaysia, the Teratai cluster, which originated from the Top Glove Corp’s migrant workers’ dormitories in Meru, Klang. (This entity had labour recruit and employment issues with UK and Australia authorities, seeSTORM, The Top Gloves and the Bottom Doves – Capital and Labour during Covid19).
The biggest manufacturer, Top Glove workers churn out 16,000 gloves per capita each day. Malaysia is the world’s largest source of medical gloves, with a market share of about 65% according to the Malaysian Rubber Glove Manufacturers Association (MARGMA). In 2019, Malaysia exported about 182 billion glove pieces, accounting for $4.31 billion in revenue; in year 2020, according to MARGMA, the figure could go as high as 240 billion pieces. Top Glove Corp Bhd has recorded its best-ever quarterly net profit at RM1.29 billion in the fourth quarter ended Aug 31, 2020 (4QFY20), which is almost 18 times the RM74.17 million posted last year, (theedgemarkets.com, September 17th. 2020).
As by January 5, 2021, the Teratai cluster has recorded 6,289 Covid-19 cases out of 9,353 people who have been screened. This shows that for every 100 people who undergo Covid-19 screening, more than 67 people are being infected with the coronavirus in this cluster.
This episode only shows that value chains are based upon, and deepen, the exploitation of labour by capitalism whereby the transnational corporations (TNCs as intermediaries to say respective US hospitals, old folks homes’ and the Federal Emergency Management Agency – FEMA) collude with local corporate capital to use global labour arbitrage to create “global labour value chains” to protect their profit margins, so that supposedly decentralised global production is associated with the growing concentration of profits and economic power in the Global North.
At Top Glove, say 16,000 single-glove @ price value of RM$1 each produced by one worker per day with a paid salary of RM$80/day including overtime, a single worker is basically generating RM$200 value worth out of his ringgit/dollar effort.
The central aspect is that the surplus value – the added value created by workers in excess of their own labour-cost – is being appropriated by the manufacturing producers and the new share-trading financial capitalists as source of profits, (Marx, Capital, chapter 8); the percentage of surplus value gained by Top Glove is exactly similar to labour’s added value but expropriated by such TNCs like Apple, Nike, Swedish retailer Hennes & Mauritz and Spice Girl’s T-shirt under Global North monopoly-capital system, (STORM, 2021).
Contrast this to the approach adopted in socialist-led Venezuela, the country in Latin America with the least number of deaths per capita from COVID-19, where collectively organized social distancing and social provisioning is combined with expanded personalized screening to determine who is most vulnerable, widespread testing, and expansion of hospitals and health care, developing on the Chinese and Cuban models.
B) BIG FARMS SMALL CILTIVATORS
There is this dual-economy: the FELDA (Federal Land Development Authority) schemes with a corridor sanitarian to corral rural Malay communities with modern built-in infrastructure – with clinics, schools, roads and bridges – ensuring subsistence dependence loyalty to the ruling class and a transnational corporation domain that is technological-based in FTZs and EFTZs to mop-up precarious labour to forestall possible Urban-Agrarian collaboration and cooperation for revolutionary changes towards a new political economy in Malaysia, see STORM, October 2020 and STORM September 2020, and Hao Qi, (Sept 2019), Semi-proletarianization in a Dual Economy: the Case of China, Review of Radical Political Economics.
Federal Land Development Authority (FELDA) role as a model of land settlement has ceased following a major policy change in 1991 that ended the recruitment of more settlers. FELDA has since function as an agribusiness land development agency, more on the lines of a plantation company aiming for commercial efficiency – when it corporatised as FGV – than a state organisation with social development objectives. About 100,000 settler families remain within the FELDA structure but all new schemes employ labourers, not infrequently, migrant workers.
Land is a commodity in a Malay village; it is a “living” commodity. It has both a historical and a socio-economic value. It has a historical value in the sense that the cultivated territory as a whole tells the story of a settlement process for a given community, and each particular lot tells the story of a long line of individuals, of their efforts and their failures. Moreover, land has socio-economic aspects because it can and does circulate; it can be divided, taken away, accumulated, or rented, and as such it is a medium of communication between villagers. However, if he decides to move out of the scheme, he forfeits any right to the land, both plantation and house lot, as well as to the house itself.
In these settlements,the youth population remain at about 10-15%. Thus, the scheme deprived of able bodied persons to pursue the program of agricultural and rural modernization. At this time approximately 2.0 million acres of agricultural land are not being cultivated and, to a certain extent, this is because of a labour shortage. The shortage of low cost housing for low income workers; the emergence of urban slum areas in the cities and the suburbs implying lack of public utilities, services, and so forth; and a high unemployment rate can be seen that household monthly income in rural areas was substantially low in 1970s (on average, MYR 345 per month). On the other hand, the average monthly income of the urban households was below MYR 1,000 during the 1970s, and yet this cohort of urban labour faced housing problems, (seeSTORM, The Struggle for Shelter – the Class Struggle in Housing).
C) MONOPOLY-FINANCE CAPITALISM
The COVID-19 pandemic has occurred in the context of a global regime of monopoly-finance capital that has imposed worldwide austerity, including on public health. The universal adoption of just-in-time production and time-based competition in the regulation of global commodity chains has left corporations and facilities such as hospitals with few inventories. The result is extraordinary dislocation of the entire global economy.
Today’s global commodity chains – also termed as labour-value chains – are organized primarily in order to exploit lower unit labor costs in the poorer countries of the Global South where world industrial production is now predominantly located. For examples,unit labour costs in India in 2014 were 37 percent of the U.S. level, while China’s and Mexico’s were 46 and 43 percent, respectively; Indonesia was higher with unit labor costs at 62 percent of the U.S. level. Much of this is due to the extremely low wages in countries in the South, which are only a small fraction of the wage levels of those in the North. The result is an integrated global system of exploitation in which the differences in wages between countries in the Global North and the Global South are greater than the difference in productivities, leading to very low unit labor costs in countries in the South and generating enormous gross profit margins (or economic surplus) on the export price of goods from the poorer countries.
The enormous economic surpluses generated in the Global South are logged in gross domestic product accounting as value added in the North. However, they are better understood as value captured from the South. This whole new system of international exploitation associated with the globalization of production constitutes the deep structure of late imperialism in the twenty-first century. It is a system of world exploitation/expropriation formed around the global labour arbitrage, resulting in a vast drain of value generated from the poor to the rich countries.
With the financialization capitalism generating more revenue than physical production, seeTop Groves and their competitors share market frenzied brokeage takings, and one shall acknowledge, and understand, the extensive splurging of funds than long-tern investment in the economy, (see STORM, Post-1997 Politucal Economy).
There is only a transfer of existing wealth from one person to another or fromone class of people to another. In transactions by these financial institutions, they are only stimulating demand through the impact of asset appreciation (the wealth effect) rather than performing investment in the form of capital reproduction or capital formation.
COVID19, anditsspikes, in an epidemiological and ecological spread has introduced new dimensions to the political economy of nation. The civil disgust and oppositions to leaders seeking political entitlements have only prised open the can of capitalism to display the vagaries of financialization capitalism : the enrichment of political appointees in the non-government companies (GLCs), tbe extravagance remunerations of non-government organisations (NGOs) board members, and the ruling regime seeking a declaration of Emergency to avoid debating on the 2021 Budget fearing outvoted whereby the PM has to resign; the creation of 5 billionaires within a 6-month lockdown period just as many precarious workers are unemployed, underemployed or seeking employment in the gig economy as drivers for Grab or Shopee; the poorer M40 householders depleting their savings or selling off prematurely their family trust units; the partial operations of small manufacturing enterprises as the Global North monopoly-capital supply chain got disrupted, and some are closing their factories whereas bigger players are strategizing to list overseas from the given government-handout stimuli fund to earn better returns on investment with financialization capitalism model than to rely on a production model.
The disruption of the whole chain – because of the linkages the country have through the years since industrialization in the 1970s – to the Global North metamorphosing in the global labour arbitrage would likely threaten to engender a financial meltdown in national economy still characterized by stagnation, debt, and financialization.
D) LARGE PLATFORMS LITTLE EMPLOYMENT
All of this was facilitated by revolutions in computers and communication. Communication technologies such as fiber-optic cables, mobile phones, the Internet, broadband, cloud computing, AI, 5G and video conferencing altered global connectivity. Out of these dynamic conditions, generating an increasingly integrated, hierarchical international accumulation structure, that the present global commodity-chain structure solidified with digital platforms assisting in this tightly-knit and consolidated digital commodity chaining of networks.
Infrastructural platforms of firms and of markets have empowered – through production and exchange of information by computer technologies – a new class of digital kingdoms. Through the ownership and control of information, this emergent class dominates not only labour but also capital, bending entire markets and social systems as traditionally understood. This new ecosystem of digital platforms that has emerged over the past decade is transforming the very infrastructures of capitalism. It is the emergence of a new business model of large monopolistic firms through sheer size and resources that are capable of extracting immense amounts of data overwhelming legacy enterprises and suppressing labour empowerment, (Paul Langley and Andrew Leyshon, Platform capitalism:The intermediation and capitalisation of digital economic circulation, 2020). Some termed this production, exchange and accumulation process as “netarchical capitalism” where the infrastructure is “in the hands of centralized privately owned platforms”, (seeNick Srnicek, Platform Capitalism, 2017).
The result was the connecting of all parts of the globe within a world system of oppression, a connectivity that is now showing signs of destabilizing under the impacts of the U.S. trade war against China and the global economic effects of the COVID-19 pandemic.
The COVID-19 pandemic, with its lockdowns and social distancing, is the first global supply-chain crisis, (Stefano Feltri, Why Coronavirus Triggered the First Global Supply Chain Crisis, Pro-Market, March 5, 2020).
This has led to losses in economic value, vast unemployment and underemployment, corporate collapse, increased exploitation, and widespread hunger and deprivation. On February 27, 2020, when the supply chain disruption was still largely centered on China, the World Economic Forum declared that more than 90 percent of the Fortune 1000 multinational corporations had a tier-one or tier-two supplier affected by the virus. According to the estimates in early April 2020 by the World Trade Organization, the economic fallout from the COVID-19 pandemic would lead to a drop in annual world trade in 2020 by 13 percent in the more optimistic scenario, and by 32 percent in the more pessimistic scenario. In the latter case, the collapse of world trade would equal in one year what happened in the Great Depression of the 1930s over a three-year period, (Workd Trade Organisation, Trade set to Plunge as Covid-19 Pandemic Upends Global Economy, WTO, April 8, 2020).
By mid–April 2020, 81 percent of global manufacturing firms were experiencing supply shortages, evident in a 44 percent increase in force majeure declarations by March from the beginning of the year before the emergence of the novel coronavirus, and a 38 percent increase in production shutdowns. The result is not only material shortfalls but a crisis in cash flow and hence a huge “spike in financial risks”, (Future of Sourcing, COVID19: Where is Your Supply Chain Disruption, April 3, 2020, as referenced in John Bellamy Foster and Intan Suwandi, COVID19 and Catastrophe Capitalism, Monthly Review, June 1, 2020).
For today’s multinational corporations, which care little about the use values they sell provided they generate exchange value, the real economic impact of the disruption of supply chains is their effect on value chains, that is, on exchange value flows. From past researches on hundreds of companies, including entities like Boeing, Nike, Hershey, Sun Microsystems, and Cisco, these studies have indicated critical commodity chain disruptions, and market distortions, in the last couple of decades.
Studies based on some eight hundred cases have shown that the average effect for firms of such a supply chain disruption includes: a “107 percent drop in operating income; 114 percent drop in return on sales; 93 percent drop in return on assets; 7 percent lower sales growth; 11 percent growth in cost; and 14 percent growth in inventories,” with the negative effects normally lasting for two years. The same research indicates that “companies suffering from supply chain disruptions experience between 33 to 40 percent lower stock returns relative to their industry benchmarks over a three-year time period that starts one year before and ends two years after the disruption announcement date. Also, share price volatility in the year after the disruption is 13.50 percent higher when compared to the volatility in the year before the disruption”, (Thomas A. Foster, Risky Business: The True Cost of Supply-Side Disruptions, Supply Chain Brain, May 1, 2005).
E) BIG DEBTS BAD ECONOMY
A supply-chain finance allows corporations to defer payments to suppliers, with the help of bank finance; some corporations have supply-chain financing obligations that are sizeable larger than their reported net debt. These debts owed to suppliers are sold by other financial interests in the form of short-term notes. Credit Suisse owns notes that are owed by large U.S. corporations such as Kellogg and General Mills. With a general disruption of commodity chains, this intricate chain of finance, which is itself the object of speculation, is inherently placed in a crisis mode itself, creating additional vulnerabilities in an already fragile financial system, (Wall Street Journal, Supply-Chain Finance is New Risk in Crisis, April 4, 2020).
In Malaysia,we have Rentier Capitalismwhich is dominated by a few wealthy companies and individuals with access to key scarce assets (such as land, natural resources, financial means, licences, intellectual properties and digital platforms) and, in doing so, siphoning national wealth without societal care nor contributions to rakyat2 wellbeing.
The twenty-first century rentiers are everywhere, scooping returns accruing from natural resources, investments, from land, from housing, monopolistic utilities, consumer credit, long-term contracts and infrastructural platforms’ data. The core feature of rentier capitalism is the resurgent capitalistic power that spans cultivated resources, fossil fuels, mined resources, finance, housing and the public sector out-sourcing rackets that generated surplus values being expropriated.
This operational system is in place because of the CLIENTELISM being practised by the ruling regimes in their political hold on power through the years.
Throughout Malaysia’s political history, over time, bumi rakyat2 had came to expect – and rely on – patron-client relationships, nested within the UMNO political party machines, carefully reinforced by structured distributive and development policies (Meredith Weiss), see also her Payoffs, Parties, or Policies: “Money Politics” and Electoral Authoritarian Resilience in Critical Asian Studies, Volume 48, 2016 – Issue 1, and Duelling networks: relational clientelism in electoral-authoritarian Malaysia, Democratization, Volume 27, 2020, Issue 1.
This clientelism was enabled at the grassroots level, allowing ruling elites – already with the abolishment of direct local elections – in the UMNO political party in particular, to develop a system whereby welfare policies acted as through they were party patronage, “effectively partisanizing them and ensuring ground-level officials with whom most voters interacted were Alliance (BN) loyalists” (Weiss, op. cit., p74). UMNO built mosques, schools, and health facilities, and other village development projects, to solidify its political base built on clientelism. This feature of Malaysian politics, promoted and fostered forcefully under BN and UMNO in particular, but to certain extent that even opposition parties replicate that repugnant behaviour, too (Weiss, ibid., p.76).
The overall outcome during the Covid19 pandemic is that the country shall be heading towards a K-shaped recovery where the lower-income group and unskilled workers would be most affected because it shall take some time before they are better employed.
K-shape is where those at the top who are seeing opportunities and salaries are going up while those at the middle and below are seeing things going down – and getting worse. This phenomena is exacerbating income and wealth inequality in the country.
Further, the losers under an ethnocratic-ruling regime means allocation of resources in this big budget is not according to means nor resting upon a national well-being agenda but racially, and non-secularly, biased.
The inability of the unelected PN regime to manage the third wave of Covid-19 cases has resulted in the second movement control order (MCO) in January 2021. The crisis in political mismanagement is compounded by lack of confidence even on monopoly-capital from the Global North where new data has emerged that shows a significant decline in foreign investor confidence in Malaysia.
According to the United Nations Conference on Trade and Development (UNCTAD), FDI inflows to Southeast Asia fell by 31% to US$107 billion in 2020. While a fall in FDI inflows into the region in 2020 was not surprising given the impact of the Covid-19 pandemic, what are appalling and horrendous is the fact that FDI inflows to Malaysia fell by 68% compared to Singapore (-37%), Indonesia (-24%) and Thailand (-50%).
The present economic situation is dire with fluidity (that is, while curbing the virus spread concurrently attempting to do an economic recovery) indicates the severity of the current crisis which is a consequential ecological-epidemiological resultant in the propogation of the COVID-19 virus. However, enveloping this epidemiological dimension is the economic stagnation already in existence where the COVID-19 only accentuated as never before the interlinked ecological, epidemiological, and economic vulnerabilities that the country is confronting without overcoming the structural political economy deformation arena wholesomely nor thoroughly during preceding economic crises.
Lockdown with a State of Emergency, political hucksters peddling atmospheric droplets shall continue to ensure that wealth at the top of society will become ever more concentrated and consolidated because of the back-door entrance wherethey are thrusted in the social-class hierarchy to reinforce capitalism as the economic development agenda, and financialization capitalism as pathway towards the widening accumulation of capital.
The ensuing profit generated in companies, and the rent elements received by oligarchy individuals, shall perpetuate the extraction of outsized surplus values relative to capital “invested”. Never before has the conflict between private appropriation and the social needs (the daily uncomfortable livelihood, and even harsh survival) of rakyat2 been so clear. Consequently, never before has the need, and the clamour, for drastic changes has been so intense. In place of an ethnocratc-oligarchical economic system endowed entirely to selfish monetary gain, we need to create a new society directed at substantive equality and sustainable human development.
EPILOGUE
The base of capitalism is introduction, and perpetuation, of economic inequality and injustice in the country. To be deconstructed and dismantled is this capitalism mode entrapped within the monopoly-capital dominated neo-imperialism politico-economic policy that has been the main centripetal and disunifying force in the nation since “gained independence”.
Firmly believing that there is only one possible solution to this epidemiological and economic crises,and that is, the demise of capitalism.
There needs a surge towards socialism in the twenty-first century.
To understand twenty-first-century economic imperialism we must go beyond analysis of the nation-state to a comprehension of the increasing global reach of transnational corporations on global labour force. At issue is the way in which today’s global monopolies in the center of the world economy – the Global North – have captured value generated by labour in the periphery – the Global South – under a process of unequal exchange, thereby extracting more labour effort in exchange for less wages. The ramifications are a changing of the global structure of industrial (and, increasingly, infrastructural digital) production while maintaining, and often intensifying, the global means of exploitation and value transfer.
1] TRANSNATIONAL CORPORATIONS
The transnational corporation (TNC) is the product of a process of concentration and centralization of capital that had created monopoly capital itself where the accumulation of capita has meant wider, and in furtherance of, expansion. This very process of growing and spreading is global in scope and, most importantly, imperialistic in its characteristics accompanying a widening qualitative transformation in the forms of organizational structure, and deepening dominance of monopoly capital that can be based on capital financialization, the sacking of peripheral countries’ natural resources and the comparative advantages derived from global labor arbitrage, that is, the perpetuation of significant wage differentials between states, countries and regions. In essence, this is a restructuring of monopoly capital on a world scale, with a scope that has given contemporary imperialism a new facet (Suwandi and Foster, 2016).
By late twentieth century, industrial capitalism has not changed, but evolved into globalized capitalism that increasingly adopted the form of interlinked commodity chains controlled by transnational corporations, connecting diversified production zones, primarily in the Global South, with peak consumption, swirling finance, and capital accumulation mainly in the Global North. These commodity chains constitute primarily the circuits of capital globally that is identified as late imperialism with the rise of generalized monopoly-finance capital, (John Bellamy Foster, Late Imperialism, Monthly Review 71, no. 3 (July–August 2019): 1–19; Samir Amin, Modern Imperialism, Monopoly Finance Capital, and Marx’s Law of Value).
Through a system of global commodity chains, monopoly-capital enters into the determination and structuring of production worldwide on different commodities and subcomponent parts. With flexibility in a lean production, linked in global commodity chains, assembly plants are mainly located in the Global South. These are the sites where the reserve army of labor is larger, unit labor costs are lower, and rates of exploitation are correspondingly higher. The result is much higher profit margins for the transnational corporations leading to the amassing of wealth in the Global North centre through transactional process in “profit by expropriation”.
2] GLOBAL LABOUR ARBITRAGE
Under this neo-imperialistic system, exorbitant imperial rents from the control of global production are obtained not only from the global labour arbitrage, through which transnational corporations with their headquarters in the Global North overexploit industrial labour, (and presently, digital labour in the gig-economy) in the periphery Global South, but also increasingly through the global land arbitrage, in which agribusiness transnationals expropriate cheap frontier land in the developing and emerging-developed countries so as to produce export edible crops mainly for consumption in the developed and post-industrialized countries, seeIntan Suwandi, Value Chains: the New Economic Imperialism (New York: Monthly Review Press, 2019), 32–33, 53–54.
As Paul Sweezy argues, while “every class society is characterized by the necessary/surplus labor dichotomy, hence by an implicit rate of exploitation…only in capitalism does this take the value form, with the rate of exploitation expressing itself as a rate of surplus value.” (Paul Sweezy, “Marxian Value Theory and Crises,” in The Faltering Economy, ed. John Bellamy Foster and Henryk Szlajfer (New York: Monthly Review Press, 1984), 238).
It is impossible to examine the capitalist economy, and the class struggles central to it, without focusing on the issue of exploitation, analyzed through the labor theory of value. This remains equally true when examining the economy at a global level.
The framework is known as labor-value commodity chains, or labor-value chains for short. Unlike mainstream theories on this subject, this framework takes into account the questions of power, class, and control.
The concept of unit labor costs, in this sense, is an operationalization of the rate of exploitation, which considers not only the question of wages but also the question of productivity.
The labor-value chains framework, empirically operationalized through the examination of unit labour costs, thus allows us to see that, behind the complexities of global commodity chains, exploitation persists. Global capital (that is, the TNC transnational corporations) engages in the search for low unit labor costs around the globe to accrue higher profit margins and overall profits. Data on unit labour costs had shown those countries with the highest participation in labour-value chains, for examples, the top three being China, India, and Indonesia have very low unit labour costs.
The global capital’s goal is to make sure that unit labor costs are stably low, even in cases where wage costs are increasing (such as the increase in minimum wage issued through governmental policies). Control mechanisms through legislations – like gazetted laws on union busting and defuncting – are instituted to allow global capital to maintain a low unit labor cost by making sure that productivity can be increased. In May 2014, one of Apple’s most important suppliers, NXP Semiconductors, dismissed all 24 elected union officials from IndustriALL affiliate MWAP at its plant in a special economic zone in Cabuyao, Philippines. NXP claimed the union’s peaceful industrial actions were illegal. It was clear that the company’s persistent acts of intimidation and harassment were aimed at weakening the bargaining power of the union.
Similarly, in Malaysia, there were industrial conflict cases encountered with AMD and Harris Semiconductor, seeMhinder Bhopal, US Union Busting in Contemporary Malaysia: 1970-2000, University of North London; and STORM, Zero Hour Underemployment – Surplus Value Exploitation.
3] LABOUR EXPLOITATION
In Marxian economics, the rate of exploitation is the ratio of the total amount of unpaid labor done (surplus-value) to the total amount of wages paid (the value of labour power). The rate of exploitation is known as the rate of surplus-value.
Workers under capitalism are compelled by their lack of ownership of the means of production to sell their labour power to capitalists for less than the full value of the goods they produce. Capitalists, in turn, need not produce anything themselves but are able to live instead off the productive energies of each and every worker effort.
Monopoly capital enforces these differences in labour costs through a variety of mechanisms, from their monopoly control either through technology (for example: infrastructural platform) or to their ability to use competition (by adopting Porter’s competitive advantages and/or levying hypercompetition or even adapting Noorda’s co-opetition approaches) to enforce ‘flexibility’ in manufacturing process (for instance on accepting lean production). Thus Apple, through its subcontractor Foxconn, switched assembly of its products to India after there was a mere 9-12% rise in labour costs in China and Indonesia. Companies like Apple are actually not real manufacturers, but merely merchandisers, yet they are able to absorb a great share of the surplus value created by subordinated manufacturers.
Behind such dirt wages in the periphery lies the whole history of imperialism and the fact that in 2011 the global reserve army of labor (adding up the unemployed, vulnerably employed, and economically inactive population) numbered some 2.4 billion people, compared to a global active labor army of only 1.4 billion. It is this global reserve army – predominantly in the Global South, but also growing in the Global North – which holds down the labour income in both center and periphery, keeping wages in the periphery well below the average value of labour power worldwide, as articulated by John Bellamy Foster, Robert W. McChesney and R. Jamil Jonna in The Global Reserve Army of Labor and the New Imperialism, Monthly Review, November 01, 2011.
It is projected that by 2030, 60% of the world’s population is to be urban; an additional 590,000 square miles of the planet will be urbanised occupying a land surface more than twice the size of Texas, swelling an additional 1.47 billion urban dwellers; many of whom will bolster the ranks of a latent reserve army. They will thus, offer sustained nourishment for expanded capitalism accumulation anywhere and everywhere on planet earth.
Thus, what has FELDA gone through – indebted settlers in search of industrial works – is, but a microcosm what had occurred in China during the 1980s when the latter undertook a massive reform that dismantled its social rural collectives – the communes – and divided the land among millions of small peasant families. This decollectivation campaign (Monthly Review: From Commune to Capitalism) ushered the consequential politico-economic foundation of China neoliberal labour reforms to feed the newly industrial sites along the banks of Yellow River and the South China Sea seaport enclaves.
Similarly, after 1989, with the tumbling of the Berlin Wall, another reservoir of latent labour flooded the capitalist marketplace in Europe. A freshly-proletarianised workforce initiated a primitive accumulation of capital, transforming former Eastern European state employees into freelance wage-labourers, set free to pit their wits on the flexible European labour market. The Eastern bloc’s headlong embrace of Western-style neoliberalism prised open a whole new array of market niches, together with a rojak latent labour reserve: both at home, in some newly-formed nation-states, and in the European Economic Area (EEA).
Emerging was an ideology of dictatorial personality morphed into an ideological dictatorship of the free market, with its attendant rights of consumerist man, seeAndy Merrifield, Dialectical Urbanism: Social Struggles in the Capitalist City, and alienated, residue labour in industrial estates in Malaysia, seeSTORM, The Struggle for Shelter – the Class Struggle in Housing. Stimulated by the European Union’s freedom of labour movement (2004), labour found low-grade jobs in powerhouses like Britain, Germany and France. Pay is better than before, yet a lot less than homegrown workers’. For instance, British businesses have prospered enormously from this influx of Eastern European labour, especially the Polish migrant workers.
In fact, there are a lot of British enterprises that have been able to valorise a cheap labour they had not had since the 1950s when many Caribbean immigrants landed on her East Dockland shore.
In many cases, the British agricultural sector has been a big gainer. Prior to 2004, crops like asparagus, cherries, raspberries and strawberries were suffering long-term decline. The pay in these sectors was little: the hard work backbreaking; few locals accepted these jobs. Yet since 2004, rather than invest in expensive new berry-picking technology, growers have exploited Eastern European labour reserves, latent labour-power, which has rekindled agricultural capital.
The modern day slavery as experienced by the Caribbean Afros, Pakistanis, east African Indians or Eastern Europeans is no different from the British ‘ forward movement ‘ during colonial political intervention into then Malaya.
The British plantation system was based on the super-exploitation of labour so much so that migrant South Indian workers became “orphans of the empire”. The wages were so low that the English assistant Leopold Ainsworth once wondered how the Tamil workers and their families could “possibly exist as ordinary human beings” on the boss’s pays in a Malayan plantation. In 1926, the cost of a Papuan indentured laborer was 20 percent of that of a white worker, 25 percent of that of an employed estate manager, and 10 percent of that of a white unskilled laborer. Racist humiliation, insult, and cruelty were part of the everyday lives of the coolies (a degorating term given to the local inhabitants), while the pale-skin estate owner sipped on a stengah (whisky and sodas) clad in sweatstained khakis, summoning a “boy” with a teapot or gin bottle to the veranda at the end of another hot and humid day with the topee on his head – a surreal scene of a Somerset Maugham novel of the Orient.
Consequently, big winners are the transnational corporations. Apple subcontracts the production of the component parts of its iPhones in a number of countries with the final assembly in China subcontracted to Foxconn. Owing to low-end wages paid for labour-intensive assembly operations, Apple’s profits on its iPhone 4 in 2010 were found to be 59 percent of the final sales price.
For each iPhone 4 imported from China to the United States in 2010, retailing at $549, about $10 went to labor costs for production of components and assembly in China, amounting to 1.8 percent of the final sales price, (Jason Dedrick, Capturing Value in Global Networks: Apple’s iPad and iPhone, Paul Merage School of Business, University of California, Irvine, July 2011), http://pcic.merage.uci.edu, 5, 11.
In the context of the Marxian labour theory of value, the global labor arbitrage is quest for valorization. It is a strategy for both reducing socially necessary labour costs and maximizing the appropriation of surplus value. It extracts, as stated, more out of workers through various means, including repressive work environments in periphery-economy factories, state-enforced bans on unionization or union-busting by the TNCs themselves, and quota systems or by means of unfair piece-rate work payments.
The global labor arbitrage is a fact because the industrial reserve army of the unemployed which, on a global scale, is the a global reserve army of labour. Central to the creation of this reserve army is the depeasantization of a large portion of the global periphery through the spread of agribusiness like, as stated in, our FELDA schemes. The resettlement of rural communities had indebted the peasantry contributing a movement from the rural areas to the growth of urban povert, seeSTORM, op.cit. Marx connected the “freeing” of peasants (the “latent” part of the reserve army) from the land to the process of “so-called primitive accumulation.”
Reproducing the global reserve army of labor not only serves to increase shorter-term profits; it serves as a divide-and-rule approach to labor on a global scale in the interest of long-term accumulation by transnationals corporations and the state structures like government-linked companies (GLCs) aligning, and colluding, with them. The consequent competition among industrial workers in the Global South is greatly intensified by increasing the relative surplus population. This divide-and-rule strategy serves to integrate “disparate labour surpluses, ensuring a constant and growing supply of recruits to the global reserve army” who are “made less recalcitrant by insecure employment and the continual threat of unemployment.”
The extreme system of imperialist exploitation unleashed by the linkages in the global commodity chains, (Intan Suwandi, Value Chains: The New Economic Imperialism, Monthly Review,2019).
Suwandi shows how transnational corporations use global labour arbitrage to create “global labour value chains” to protect their profit margins, so that supposedly decentralised global production is associated with the growing concentration of profits and economic power.
Another way of putting it is that with the difference in average wages between advanced economies and the rest being very much greater than differences in productivity. This points to higher rates of surplus value being created in the economic ‘periphery’, compared to the imperialist ‘core’. Suwandi’s argument is that it is the structural power of multinationals which enable them to enforce a regime upon production in dependent economies which propel the transfer of very significant quantities of value into their hands, through ‘labour-value commodity chains’ (p.17).
On the global labor arbitrage and commodity chains, Suwandi in Value Chains, ibid. stated whereby “the shifting of production activities to third world countries with lower wages entails an appropriation of surplus value from these countries which is camouflaged because the act of distribution of this surplus among the various claimants in the metropolis appears in an inverted form as value addition by these different claimants.“
(The analysis of unit labour costs is by R. Jamil Jonna, as published in “Global Commodity Chains and the New Imperialism,” Monthly Review 70, no. 10 (March 2019): 1–24.)
.
4] LABOUR SURPLUS VALUE
Some notable aspects of manufactured products assembled in Global South sites are presented here.
For instance, when the Apple’s California plant is compared with overseas factories, the fact is that the cost, excluding the materials, of building a $1,500 computer in Elk Grove was US$22 a machine. In Singapore, it was US$6; in Taiwan, US$4.85; see figure below on costs of production, capital accumulation and the surplus value extracted from the production of a typical iPad in the 2010s:
Surplus Value Extracted
Companies like Apple are not the real manufacturers, but merely merchandisers, and through image-product branding they are able to absorb a huge share of the surplus value created by subcontractors and component manufacturers.
It is not the ordinary workers in the Global South, but the Gobal North executives and corporate capital who are benefiting from the structural power of the global commodity supply chains. While Apple’s iPod is made entirely overseas, but ‘52 percent of the final sale price is counted as value added in the United States and is added to U.S. GDP‘ (Suwandi, op. cit. p.158). The surplus value, the source of profit, entirely comes from in the production process, and therefore originates completely outside the USA. However, the finance and administrative procedures take place in the core centre of Global North. In a capitalist society, under a capitalistic accounting method, the ‘surplus-value’ is regarded as ‘value added’, while in Marxist terms, these activities add no value at all (Suwandi, ibid.,p.160). With all this value accruing in the imperial centre, it is the middle-class professionals ‘including the outsized “compensation” of corporate executives – [who capture] more than two-thirds of the total wage bill associated with iPod production’, (Suwandi, ibid., p.158).
Similarly, in the international garment industry, in which production takes place almost exclusively in the Global South, direct labor cost per garment is typically around 1–3 percent of the final retail price, according to senior World Bank economist Zahid Hussain. Wage costs for an embroidered logo sweatshirt produced in the Dominican Republic run at around 1.3 percent of the final retail price in the United States, while the labor cost (including the wages of floor supervisors) of a knit shirt produced in the Philippines is 1.6 percent. Labor costs in countries such as China, India, Indonesia, Vietnam, Cambodia, and Bangladesh were even considerably lower than in the above cases. The surplus value captured from such workers is thus enormous, while being disguised by the fact that the lion’s share of so-called “value added” is attributed to activities (marketing, distribution, corporate salaries) in the wealthy importing country, removed from direct production costs.
In 2010, the Swedish retailer Hennes & Mauritz was purchasing T-shirts from subcontractors in Bangladesh, paying the workers on the order of 2–5 cents (euro) per shirt produced.
Nike, a pioneer in Non-Equity Modes of International Production, outsources all of its production to subcontractors in countries such as South Korea, China, Indonesia, Thailand, and Vietnam. In 1996, a single Nike shoe consisting of fifty-two components was manufactured by subcontractors in five different countries. The entire direct labour cost for the production of a pair of Nike basketball shoes retailing for $149.50 in the United States in the late 1990s was 1 percent, or $1.50.
Similarly, in Top Glove, Malaysia, a migrant worker is paid RM$80/day, including overtime, a single worker is basically generating RM$200 value worth of production out of his single ringgit-dollar labour effort. In the case of a crew staff at McDonald’s, paid RM$70/day in the Melawati-Setiawangsa-Ulu Kelang precinct, may promote 100 servings per day at an average RM$14 worth/serving is generating the company’s revenue of RM$20 per single ringgit-dollar of a crew member’s daily work effort, see APPENDIX A: Production Cost and Surplus Value in STORM, The Top Gloves and the Bottom Doves – Capital and Labour during Covid-19.
It would be interesting to note that Apple’s official list of its top 200 suppliers, accounting for 97 per cent of materials and manufacturing costs, includes just two companies in Brazil: Foxconn and fellow Taiwanese electronics company Lite-On Technology Corp. Foxconn currently have five facilities in the country that make products under contract for various technology companies, including just one unit producing Apple devices in Jundiai, about 30 miles east of Itu.
A worker testing iPhones earn about US$80 per week, just US$15 above the minimum wage, and a fourth strike in as many years had since been brewing again.
5] INFRASTRUCTURAL IMPERIALISM
With the advent of technology, improvements in telecommunications, introduction of computers and associated network topologies, the emergence of infrastructural platforms with seamless routers and cloud servers have taken new dimensions in prevalence of monopoly-capital, and the ensuing and deepening exploitation of digital labour.
Corporate capital solidified respective infrastructural platforms they acquired and through IT/IS competitive endowment, they have undue advantages over labour: labour control and supervision, labour harvest and deployment, maximal labour usage and exclusive exploitation thereon.
Digital technology has already transformed the world economy; the decade leading up to 2019, the largest 100 firms in the world had increased their total market capitalisation by US$12.7 trillion. A third of that increase (US$4.2 trillion) can be said to be accounted for by just seven firms: Facebook, Amazon, Apple, Alphabet, Microsoft (the famous quintet ‘FAAAM’), Tencent and Alibaba. The aggressive rally of tech stocks during the COVID-19 pandemic had given due recognition that an entirely new model of value creation was enabled by digital technology.
In 2019, even Business Insider reported with a note of horror the Jeff Bezos Amazon factor. The “Bezos’ rate is equivalent to US$149,353 a minute. To put things in perspective, Bezos makes more than three times what the medianU.S. worker makes in year – US$45,552, according to data by the Bureau of Labour Statistics – in one minute.”
That the wealthiest figures tend to be tech capitalists are not unsurprising. The top nine wealthiest people include in their ranks: Elon Musk, Jeff Bezos, Bill Gates, Mark Zuckerberg and Larry Page. Their obscene, excessive wealth points to the tensions within private ownership of the means of production, where competition leads to monopolies and oligopolies.
Digital technology has a profound effect on workers during COVID-19. From Amazon warehouses and Top Grove living quarters with unsafe and unhygienic conditions to an increased workload that comes from working from home or GRABing a hail-car for a living, we see that it is the capitalist elite that benefits from digital accumulation.
The fact is that those who harvest our data and profit from surveilling us are rewarded, while many lives and much Gig-economy livelihoods have been lost.
This model is what technology expert Azeem Azhar calls the ‘AI lock in loop’ where, as the tech companies deploy products and services, they also collect data about their consumers’ use of those products and services. Through machine-learning processes performed on those collated data, entities would present opportunities towards the development of better products and services. It is by integration of multiple data-rich digital assets into a single platform that gives such tech companies access to the entire vertical product chains (examples like Amazon or Grab) and the supply-chain capacity to expand horizontally into new products and services with relative ease and effectiveness (examples: Google, Facebook, WeChat or Grab becoming cloud-servers, WhatsApp communications, website-e-commerce internationally, investment data mining, respectively).
Already in Capital, Marxnotes how technology does not necessarily make life easier for workers. He quoted John Stuart Mill’s observation that “It is questionable if all the mechanical inventions yet made have lightened the day’s toil of any human being”, with a disagreement.
Marx writes that “like every other increase in the productiveness of labour, machinery is intended to cheapen commodities and, by shortening that portion of the working day, in which the labourer works for himself, to lengthen the other portion that he gives, without an equivalent, to the capitalist”.
In his 1878 book Anti-Dühring, Engels quotes Marx to describe the way machinery threatens and coerces workers. “Machinery becomes the most powerful weapon in the war of capital against the working class; that the instruments of labour constantly tear the means of subsistence out of the hands of the labourer, that the very product of the worker is turned into an instrument for his subjugation.”
It’s not capitalism, it’s not neoliberalism – what is then?
In a radical departure from neoliberalism analysis, in a visionary new book, McKenzie Wark‘s Capitalism is Dead, argues that information has empowered a new kind of ruling class. Through the ownership and control of information, this emergent class dominates not only labour but capital as traditionally understood as well. And it’s not just tech companies like Amazon and Google. Even Walmart and Nike can now dominate the entire production chain through the ownership of not much more than brands, patents, copyrights, and logistical systems – all “soft” elements than physical products, all accumulated through financialization capitalism.
Some techno-utopian may praise these innovations as an improvement on capitalism, but for workers – the global labour of the world – monopoly-capital has a new model in the guise of digital imperialism. The emergence of a new ruling class will use the pulsating powers of information to route around any obstacle labour and social movements may like to erect.
The emerging ruling class shall be the digital feudal lords overseeing a landscape of digital infrastructure over a peasantry as digital gig-slaves, (Nick Srnicek, author of Platform Capitalism).
EPILOGUE
In this digitalized business mode, returns do not diminish as businesses scale up. Rather, they increase exponentially; only that the accumulation of capital would be geared towards the exploitation of digital-dehumanised workers where they are mere interfacing intermediaries as conduits to big data storage and retrieval – and the consequential manipulation of raw data into timely, accurate, relevant and complete information – by such infrastructural capitalism platforms that are so overwhelmingly powerful in exploiting surplus value of labour but also the accumulation of capital relentlessly, and brutally.
In 2007 – a digital time not spatially long ago – a month before the iPhone was production scheduled, the late Steven Jobs took some of his staff to an office. He had been carrying a prototype of the device in his pocket daily for weeks.
Mr. Jobs angrily held up his iPhone so that everyone could see the dozens of tiny scratches marring its plastic screen. He then pulled his keys from his jeans.
People will carry this phone in their pocket, he was quoted to say. “I won’t sell a product that gets scratched,” he said tensely.
The only solution was to use unscratchable glass instead.
“I want a glass screen, and I want it perfect in six weeks.”
(Duhigg, C and Bradsher, K. “How the U.S. Lost Out on iPhone Work“, The New York Times, published January 21st., 2012).
1] INTRODUCTION
An executive left that meeting and booked a flight to Shenzhen, China. If Mr. Jobs wanted a perfection, there was nowhere else to go.
Malik, Y, Niemeyer, A. and Ruwadi,B. “Building the supply chain of the future“, McKinsey Quarterly, January 2011; see also, Aminpour, S. and Woetzel, “Applying lean manufacturing in China” , The McKinsey Quarterly, 2006 Special Edition, pp. 106-115). To compare the underlying leadership philosophy in operations management, see Kim, M.(2012), “Samsung’s crisis culture: a driver and a drawback”, Sep. 2, 2012 (Reuters).
It was often argued that such material production like the glass panels could make in the USA, and then ship it by boat, but that would take 35 days. “Or, we could ship it by air, but that’s 10 times as expensive. So we build our glass factories next door to assembly factories, and those are overseas.” Wingfield, N and Duhigg, C. “Apple Lists Its Suppliers for 1st Time”, The New York Times, published January 13th, 2012).
The transnational corporation (TNC) is the product of concentration and centralization of capital that created monopoly capital where the accumulation of capital has always meant expansion.
Furthermore, this present process of growing and spreading is global in scale and, most importantly, economic imperialistic in its characteristics. It has an intensed transformative quality of organization and dominance of monopoly capital based on the rampage of peripheral countries’ natural resources. It has also the gained comparative advantages from global labor arbitrage, that is, the significant wage differentials between various countries and regions, in this global chain of business activities, (Suwandi and Foster, 2016, Global Commodity Chains and the New Imperialism).
Through these global commodity chains, monopoly-capital signals the determination and structuring of production worldwide on different commodities and subcomponent parts. With flexibility in a lean production, linked in global commodity chains, various and varied assembly plants are located in different geographical locations in the Global South. These are the sites where the reserve army of labor is larger, unit labor costs are lower, and rates of exploitation are correspondingly higher. The result is much higher profit margins for the transnational corporations leading to the amassing of wealth in the Global North centre, via a kind “profit by expropriation”.
2] GLOBAL COMMODITY CHAINS
The term global commodity chain referred to the material and logistical aspects of organizing production involving numerous components brought together over spatially dispersed global production platforms and or assembly sites.
With a global footprint, iPhone manufacturers stakes to a global supply chain. Apple contracts with major carriers including FedEx and UPS to ship iPhones around the world. One Boeing 747 flight can carry 150,000 iPhones.
For phones bound for the U.S., flights depart from Zhengzhou, China, and head to Anchorage, Alaska, where the jets are refuelled. Then, these flights are mostly routed to Louisville, Kentucky, where logistics personnel sort and reroute the iPhones to their final destinations.
Terence Hopkins and Immanuel Wallerstein advanced the commodity chain concept in the 1980s as part of the world-systems perspective – with an emphasis on the “historical reconstruction of industries during the long sixteenth century.” (Terence Hopkins and Immanuel Wallerstein, “Commodity Chains in the World Economy Prior to 1800,” Review 10, no. 1 (1986): 157–70). The global commodity-chain framework was further popularized in the mid–1990s, marked by the publication of Commodity Chains and Global Capitalism edited by Gary Gereffi and Miguel Korzeniewicz. Later, Gereffi also became a prominent figure in the forming of the global value-chain/global supply-chain research network in 2000.
Economic researchers at the Institut de Recherches Économiques et Sociales in France indicate that global commodity chains have three different elements: (1) a production element linking parts and commodities in complex production chains; (2) a value element, which focuses on their role as “value chains,” transferring value between and within firms globally; and (3) a monopoly element, reflecting the fact that such commodity chains are controlled by the centralized financial headquarters of monopolistic multinational corporations and garner massive monopoly rents, as theorized by Stephen Hymer in the 1970s, (Stephen Hymer, The Multinational Corporation, Cambridge: Cambridge University Press, 1979).
The common distinction between global supply chains and global value chains is mainly between what Karl Marx called the material or “natural form” of the commodity, “use value” as opposed to its “value form,” or exchange value. All of this, however, needs to be united within a general theory of global commodity production, (Karl Marx, “The Value-Form,” Capital and Class 2, no. 1 (1978): 134).
According to one recent pioneering study of global financial flows by the Centre for Applied Economics of the Norwegian School of Economics and the United States-based Global Financial Integrity, net resource transfers from developing and emerging economies to rich countries were estimated at $2 trillion in 2012 alone, (Centre for Applied Research, Financial Flows and Tax Havens, Norwegian School of Economics and Global Financial Integrity, Bergen, Norway 2015).
The component manufacturers create the memory chips, glass screen interfaces, casings, cameras, and everything in between. A former executive had described how the Apple company depended upon a Chinese factory to revamp the iPhone manufacturing just weeks before the device was due to be marketed. Apple had redesigned the iPhone’s screen at the last minute thereby enforcing an assembly line overhaul. New screens began arriving at the plant close to midnight.
A) The Labour
A foreman immediately roused 8,000 workers inside the company’s dormitories, according to the executive. Each employee was given a biscuit and a cup of tea, guided to a workstation and within half an hour started a 12-hour shift fitting glass screens into beveled frames. Within 96 hours, the plant was producing over 10,000 iPhones a day.
The question is not just about how the transnationals control the commodity chains, but also how they facilitate the extraction of surplus from the Global South. The underlying concept of the global labor arbitrage, famously defined by Stephen Roach, the former chief economist of Morgan Stanley, as the replacement of high-wage workers in the United States and other rich economies “with like-quality, low-wage workers abroad.” The global labor arbitrage is often rationalized as “an urgent survival tactic” for Global North companies to cut costs and to “search for new efficiencies”, (Stephen Roach, “How Global Labor Arbitrage Will Shape the World Economy”, Global Agenda Magazine, 2004).
In the context of the Marxian labour theory of value, the global labor arbitrage is quest for valorization. It is a strategy for both reducing socially necessary labor costs and maximizing the appropriation of surplus value. It extracts more out of workers through various means, including repressive work environments in periphery-economy factories, state-enforced bans on unionization or union-busting by the TNCs themselves, and quota systems or by means of unfair piece-rate work payments, (seeMhinder Bhopal, US Union Busting in Contemporary Malaysia: 1970-2000, University of North London; and STORM, Zero Hour Underemployment – Surplus Value Exploitation).
The global labor arbitrage is a factual existence because the industrial reserve army of the unemployed which on a global scale, this is the a global reserve army of labour. Central to the creation of this reserve army is the depeasantization of a large portion of the global periphery through the spread of agribusiness, like our FELDA schemes. The resettlement of rural communities had indebted the peasantry contributing a movement from the rural areas to the growth of urban poverty. Marx connected the “freeing” of peasants (the “latent” part of the reserve army) from the land to the process of “so-called primitive accumulation.” (Intan Suwandi, R. Jamil Jonna and John Bellamy Foster, Global Commodity Chains and the New Imperialism, Monthly Review, March 01 2019).
Reproducing the global reserve army of labor not only serves to increase shorter-term profits; it serves as a divide-and-rule approach to labour on a global scale in the interest of long-term accumulation by transnationals corporations and with the collaboration of state apparatus like GLCs aligned with them. The consequent competition among industrial workers in the Global South is greatly intensified by increasing the relative surplus population. This divide-and-rule strategy serves to integrate “disparate labour surpluses, ensuring a constant and growing supply of recruits to the global reserve army” who are “made less recalcitrant by insecure employment and the continual threat of unemployment.” (Intan Suwandi, Behind the Veil of Globalization, Monthly Review, July 01, 2015).
B) The Process
The focus on Asia “came down to two things,” said one former high-ranking Apple executive. Factories in Asia “can scale up and down faster” and “Asian supply chains have surpassed what’s in the U.S.”, (Bruce Constantine, Brian D. Ruwadi, and Joshua Wine article on “Management practices that drive supply chain success“, McKinsey Quarterly, February 2009).
The speed and flexibility is breathtaking,” the executive said. “There’s no American plant that can match that.” (to compare this statement with Stefan Knupfer and Glenn Mercer article on Can US auto suppliers stay ahead of Chinese rivals?, McKinsey Quarterly, September 2005).
When an Apple team eventually visited its new site, the Chinese plant’s owners were already constructing a new wing. “This is in case you give us the contract,” the manager said, according to a former Apple executive. The Chinese government had agreed to underwrite costs for numerous industries, and those subsidies had trickled down to the glass-cutting factory. It had a warehouse filled with glass samples available to Apple, free of charge. The owners made engineers available at almost no cost. They had built on-site dormitories so employees would be available 24 hours a day.
“The entire supply chain is in China now,” said another former high-ranking Apple executive. “You need a thousand rubber gaskets? That’s the factory next door. You need a million screws? That factory is a block away. You need that screw made a little bit different? It will take three hours.”
The dynamic change in the electronic and electrical supply chain is also a reflection on innovative technologies that enable, and enhance, the digital production, and the enhancement of a digital economy. Look at the pre-iTune environment and the cutting off sub-contracting intermediaries in subsequent operational management:
Processes of traditional record making
The conventional mode in the production of a music record is transformed whereby the intermediary subcontracting from arranging an orchestra to the recording of a music to production of the vinyl record is controlled, and monopolized, by a dominant entity through a change in the operational mode of the new supply chain:
Business model changes : multiplayers to 3 entities
Under this new way of doing business, monopoly capitalism has evolved, but the mode of capital accumulation persists; the exploitation of labour remains. In Marxian economics, the rate of exploitation is the ratio of the total amount of unpaid labor done (surplus-value) to the total amount of wages paid (the value of labour power). The rate of exploitation is known as the rate of surplus-value.
Workers under capitalism are compelled by their lack of ownership of the means of production to sell their labor power to capitalists for less than the full value of the goods they produce. Capitalists, in turn, need not produce anything themselves but are able to live instead off the productive energies of each and every worker effort.
C] The Capital
Foxconn, the world’s largest Apple subcontractor, once had more than 200,000 workers in one facility in Longhua, a factory district of Shenzhen in south China also known as “iPod City” (Webster, Nick. 2006, “Welcome to iPod City: The ‘Robot’ Workers on 15-hour Days”). In a few years, the Longhua factory grew to about a 400,000 population and the total number of Foxconn employees in China exceeded one million by 2012.
An eight-hour drive from that glass factory mentioned above, is a complex, known informally as Foxconn City, where the iPhone is assembled. To Apple executives, Foxconn City was further evidence that China could deliver hard-working workers — and diligence — that could and would outpace their American counterparts.
Nothing like Foxconn City, China, ever exists in the United States of America.
The facility has 230,000 employees, many working six days a week 12 hours a day at the plant. Over a quarter of Foxconn’s work force lives in company barracks; many workers earn less than US$17 a day. When one Apple executive arrived during a shift change, his car was stuck in a river of employees streaming past. “The scale is unimaginable,” he was quoted to utter.
(It was reported that Foxconn employs nearly 300 guards to direct foot traffic so workers are not crushed in doorway bottlenecks. The facility’s central kitchen was stated to be to cook an average of three tons of pork and boiled 13 tons of rice daily).
Another critical advantage for Apple was that China provided engineers at a scale the United States could not match. In fact, Apple’s executives had estimated that about 8,700 industrial engineers were needed to oversee and guide the 200,000 assembly-line workers eventually involved in manufacturing iPhones. The company’s analysts had forecast it would take as long as nine months to find that many qualified engineers in the United States.
In China, it took 15 days.
Similarly. many companies moved their manufacturing from countries like China and Singapore to more affordable ones like Malaysia to localise their supply chain and procurement teams. Alongside this, many large global organizations are also moving towards centralizing their support for procurement and supply chain functions in Malaysia to consolidate business processes in search of lower labour cost. However, this has contributed to more companies exploring, and exploiting, flexible recruitment solutions like using zero-hour contracts or hiring contractors or temporary workers on a project basis.
3] MONOPOLY CAPITAL TOXICITY
Near to scenic Jiuzhaigou is Chengdu which, as a city in norhwest China, is a pulsating IT hub, with all the imperfect ramifications of capitalism expansiveness powering the largest, fastest and most sophisticated manufacturing system on earth, but with the excess of predatory capitalism at its worst. Within a seven-month period, two explosions at iPad factories, including in Chengdu, killed four people and injured 77, (refer to Duhigg and Barboza article on “Human Costs Are Built Into an iPad”, published in The New York Times, January 25th, 2012 where cleaning Pad screens with n-hexane, a toxic chemical that can cause nerve damage and paralysis; other negative reports include the Taiyun assembly plant rioting (Reuter, Sep 2012, ENGADGET.com, Oct 6th. 2012).
On one aspect, it was stated that Foxconn has a notorious “military-style” management system, which abused workers and caused at least 17 workers attempting suicide in the first eight months of 2010, an unprecedented tragedy in the history of electronics (Chan and Pun 2010); also Pun, Ngai, Huilin Lu, Yuhua Guo and Yuan Shen, edits., Suicides behind the Glory of Foxconn, Commercial Press, Hong Kong, 2011, (in Chinese).
For instance, during the worker uprising at Foxconn’s Taiyuan plant in September 2012, police and guards reportedly targeted workers who tried to record the event with their mobile phones (Mozur 2012b), showing that the short circuits move in both directions and Foxconn was significantly concerned about the consequences of these circulating video “rumours”.
In May 2014, one of Apple’s most important suppliers, NXP Semiconductors, dismissed all 24 elected union officials from IndustriALL affiliate MWAP at its plant in a special economic zone in Cabuyao, Philippines. NXP claimed the union’s peaceful industrial actions were illegal. It was clear that the company’s persistent acts of intimidation and harassment were aimed at weakening the bargaining power of the union.
Similar incidents of union busting by AMD (Advanced Micro Devices), Motorola and Harris Semiconductor are well documented in Malaysia, too, with Henry Kissinger (then an inward investment advisor to the Indonesian Government) and Jack Welsh of GE and the AFL-CIO meddling the industrial actions by Malaysian labour. The stronghold by TNC monopoly capital is such that by 1995 manufacturing goods accounted for 76.7% of all Malaysia’s exports. Just two sectors accounted for 70.2% of manufactured exports with electrical and electronic goods and electrical machinery, appliances and parts accounting for 50.3%, 16.9% respectively (Source: Department of Statistics1996). Such is the significance of semiconductors and the component electronics sector in general, and the US investments in particular, that 14 US electronics firms accounted for 21.1% of manufactured exports and employed 31.5% of the estimated 130,000 electronics employees in 1990 (Malaysian-American Electronics Industries, 1993). In 1996, eighteen US electronics companies accounted for almost ten per cent of Malaysia’s gross manufactured exports and employed 65,000 people (Malaysian American Electronics Industry, 1998).
According to local labour activists, Foxconn was once responsible for about half of all finger-related work injuries in key hospitals of Shenzhen’s factory zones in Longhua and Guanlan. To contextualize this datum, in Shenzhen and the surrounding Pearl River Delta of south China, factory workers lose or break about 40,000 fingers on the job each year.(nytimes. “In Many Chinese Factories, Loss of Fingers and Low Pay“.
Foxconn resolved many of the injury or suicide cases through extra-legal means, including several cases that was followed closely (Pun 2011; Qiu 2012). Since 2010, it has also used large number of “student interns”, including child labour, to generate more profit by evading China’s labor contract law, thus offering yet another illustration for the informalization process: formal circuits cannot be sustained for long without tapping into informal circuits, (Ngai Pun and Jenny Chan, “Global Capital, the State, and Chinese Workers: The Foxconn Experience“, Modern China, 38, number 4, 2013, pp. 383-410).
4] THE SURPLUS VALUE
Other notable aspects of the iPhone monopoly capital saga are related here. It is uniquely American. The device’s software, for instance, and its innovative marketing campaigns were largely created in the United States. Apple recently built a $500 million data center in North Carolina. Crucial semiconductors inside the iPhone 4 and 4S are manufactured in an Austin, Texas, factory by Samsung, of South Korea.
Companies like Apple are not the real manufacturers, but merely merchandisers, and through image-product branding they are able to absorb a huge share of the surplus value created by subcontractors and component manufacturers.
It is not the ordinary workers in the Global South, but the Gobal North executives and corporate capital who are benefiting from the structural power of the global commodity supply chains. While Apple’s iPod is made entirely overseas, but ‘52 percent of the final sale price is counted as value added in the United States and is added to U.S. GDP’ (Intan Suwandi, Value Chains: The New Economic Imperialism, p.158). The surplus value, the source of profit, entirely comes from in the production process, and therefore originates completely outside the USA. However, the finance and administrative procedures take place in the core centre of Global North. In a capitalist society, under a capitalistic accounting method, the ‘surplus-value’ is regarded as ‘value added’, while in Marxist terms, these activities add no value at all (Suwandi, ibid.,p.160). With all this value accruing in the imperial centre, it is the middle-class professionals ‘including the outsized “compensation” and bonuses, commissions of corporate executives – [who capture] more than two-thirds of the total wage bill associated with iPod production’ (Suwandi, op.cit.,p.158):
where China’s labour cost is only 1.6% of product sales price
Similarly, in the international garment industry, in which production takes place almost exclusively in the Global South, direct labor cost per garment is typically around 1–3 percent of the final retail price, according to senior World Bank economist Zahid Hussain. Wage costs for an embroidered logo sweatshirt produced in the Dominican Republic run at around 1.3 percent of the final retail price in the United States, while the labor cost (including the wages of floor supervisors) of a knit shirt produced in the Philippines is 1.6 percent. Labor costs in countries such as China, India, Indonesia, Vietnam, Cambodia, and Bangladesh were even considerably lower than in the above cases. The surplus value captured from such workers is thus enormous, while being disguised by the fact that the lion’s share of so-called “value added” is attributed to activities (marketing, distribution, corporate salaries) in the wealthy importing country, removed from direct production costs.
Nike, a pioneer in Non-Equity Modes of International Production, outsources all of its production to subcontractors in countries such as South Korea, China, Indonesia, Thailand, and Vietnam. In 1996, a single Nike shoe consisting of fifty-two components was manufactured by subcontractors in five different countries. The entire direct labor cost for the production of a pair of Nike basketball shoes retailing for $149.50 in the United States in the late 1990s was 1 percent, or $1.50.
Wages might not be the only reason for the disparities, but other costs like inventory and how long it takes workers to finish a job-task. Whereas General Motors had to go half a decade between major automobile redesigns, by comparison, Apple has released five iPhones in four years, maybe doubling the devices’ speed and memory yet the price has remained high for the money any consumer has to pay for a product assembled by precarious labour under exploitative workplace environment.
5] MONOPOLY-CAPITAL IMPERIALISM
And in the monopoly capitalism relentless pursuit towards product perfection (acquiring rare earth resources), shrinking the supply chain (through global commodity value chain), and ultimately the standardization of components (in different outsourced manufacturing sites), Apple is scouring new technological advancement like requesting Japanese liquid-crystal-display makers like Sharp Corporation and Japan Display Inc. as well as South Korea’s LG’s Display Co. in mass producing panels for the next iPhone using so-called in-cell technology, the people said.
This new technology integrates touch sensors into the LCD, making it unnecessary to have a separate touch-screen layer. The absence of the layer, usually about half-a-millimeter thick, not only makes the whole screen thinner, but improves the quality of displayed images, said DisplaySearch analyst Hiroshi Hayase. (Jessica E. Vascellaro, Wall Street Journal, 2012).
By June 2012, Foxconn had expressed an interest, and planning, to build a factory in Indonesia. TheJakarta Globe, (June 28th. 2012), was reported to state that Indonesia Industry Minister M.S. Hidayat spoke about Foxconn’s intentions to enter Indonesia, “bringing along technology, and [needing] some 1 million workers…….and if they do so, I will give them incentives of tax holiday, tax allowance and other facilities,” he said”. The investment is estimated to be worth more than US$1 billion, the minister added. With an expression into perspective is that Apple’s iPhones and iPads now commands for nearly three-quarter of its revenue-generation, (The Star, 21st. January 2013). However, that plant in Indonesia remains in a limbo due to political snags.
Now, the iPhones are rolling off an assembly line near Sao Paulo, Brazil; the other Apple manufacturing plants, outside China, include the Czech Republic, Malaysia, Thailand, and South Korea among others. Foxconn ramped up the Sao Paulo assembly of iPhones and iPads during late 2012 , with an initial investment of 1 billion reais (US$325 million) to anchor an industrial park producing components locally. The Itu site, situated in the sleepy tourist town in Sao Paulo stated – nicknamed “The City of Exaggeration” – remains an empty expanse of dirt where bulldozers have been leveling the land since late last year. The City Council that had donated the 100-acre of land to Foxconn, has since turned against the project. “People are really frustrated, “ said Givanildo Soares da Silva the City councilor. “We were expecting all these jobs by now and it is still just empty promises.”
Foxconn had prepared a statement indicating the facility should be operational by the end of this year, (Reuters, 13th. April 2015), bringing its Brazilian workforce to more than 10,000.
Apple’s official list of its top 200 suppliers, accounting for 97 per cent of materials and manufacturing costs, includes just two companies in Brazil: Foxconn and fellow Taiwanese electronics company Lite-On Technology Corp.
Foxconn currently have five facilities in the country that make products under contract for various technology companies, including just one unit producing Apple devices in Jundiai, about 30 miles east of Itu.
A worker testing iPhones earn about US$80 per week, just US$15 above the minimum wage, and a fourth strike in as many years was brewing again.
However, Terry Guo, the founder and chairman of Foxconn, had discussed Brazilian labor rather witheringly, “….as soon as they hear ‘soccer’, they stop working. And there’s all the dancing. It’s crazy,” he had once told the Wall Street Journal in 2010.
The steep cost of consumer goods in Brazil, along with high tariffs and interest rates, has contributed to the low productivity, too. The iPhones rolling off the assembly line in Sao Paulo carry a retail price tag of nearly US$1000 for a 32-gigabyte iPhone 5S without a contract – among the highest prices in the world and about twice what they sell in the U.S.
EPILOGUE
Terry Guo, Foxconn owner and CEO once publicly stated, “as human beings are also animals, to manage one million animals gives me a headache”. Calling workers “animals” is a candid reflection that the factory only values the bodily input of its labor force, not other aspects of its humanity, (Markoff, John. 2012. “Skilled Work, Without the workers“, New York Times).
What such a transnational corporation does is not unlike an estate manager did in a settlement plantation during colonial administration in then Malaya.
Racist humiliation, insult, and inflicted cruelty were part of the everyday lives of the “coolies” (a deratorating term thrown at the local inhabitants), while the pale-skin estate owner sipped “stengahs” (whisky and sodas), clad in sweatstained khakis, summoning a “boy” to bring a teapot or gin bottle to the veranda at the end of another hot and humid day with the topee on his head.
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Chan, Pun and Selden, “The Politics of Global Production: Apple, Foxconn and China’s new working class”, New Technology, Work and Employment, Volume 28, Issue 2, pp. 100-115, July 2013. Christian Fuchs, “Digital Labor and Imperialism”, Monthly Review, Volume:67, Issue 08, January 2016.”
Foster and McChesney, “The Endless Crisis“, Monthly Review, Volume 64, issue 01, May 1, 2012.
Torkil Lauesen and Zak Cope, “Imperialism and the Transformation of Values into Prices”, Monthly Review, July 1st. 2015.
Marisol Sandoval, “Foxconned: labor as the Dark Side of the Information Age”, tripleC, 11, number 2 (2013); 318-47.
Jack L. Qiu, “Goodbye iSlave: Rethinking Labor, Capitalism, and Digital Media” ,University of Illinois Press, 2016).
Jenny Chan, “A Suicide Survivor: The Life of a Chinese Worker,” New Technology, Work and Employmen, no. 2 (2013): 84–99.
Chan, Pun, and Selden, “The Politics of Global Production”; Foster and McChesney, The Endless Crisis, 119–20, 139–40, 173.
Ngai Pun and Jenny Chan, “Global Capital, the State, and Chinese Workers: The Foxconn Experience,” Modern China, 38, no. 4 (2012): 383–410; Jack L. Qiu, “Network Labor: Beyond the Shadow of Foxconn,” in Larissa Hjorth, Jean Burgess and Ingrid Richardson, eds., Studying Mobile Media: Cultural Technologies, Mobile Communication, and the iPhone, (New York: Routledge, 2012), 173–89; Jack L. Qiu, Goodbye iSlave: Rethinking Labor, Capitalism, and Digital Media, Champaign, IL: University of Illinois Press, 2016).
Thousands of Foxconn Workers Strike Again in Chongqing for Better Wages, Benefits, China Labor Watch, October 8, 2014, http://chinalaborwatch.org
Towards The Malaysia Narrative 
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