Limits to Supply Chain Resilience: A Monopoly Capital Critique

As the COVID-19 pandemic expanded across the world in early 2020, it generated the “first global supply chain crisis.”1 Global supply chains represent the integrative structure of contemporary global capitalism, and any disruption to them potentially threatens the functioning of the system itself.

In response to the crisis, the global supply chain community, encompassing academics and policymakers keen to promote their purported benefits, are proposing ways to increase supply chain “resilience.” The notion has been defined by the World Trade Organization and Asian Development Bank as “the ability of these chains to anticipate and prepare for severe disruptions in a way that maximizes capacity to absorb shocks, adapt to new realities, and re-establish optimized operations in the shortest possible time.”2 Enhanced global supply chain resilience is to be pursued through a range of policies to be implemented by lead firm managers and supported by states.

While global supply chains are promoted as generating positive gains—for firms and workers, North and South—there is mounting evidence to suggest that they represent organizational forms of capitalism designed to raise the rate of surplus value extraction from labor by capital and facilitate its geographic transfer from the Global South to the Global North. As demonstrated in a previous Monthly Review article (“World Development under Monopoly Capitalism,” November 2021), global supply chains have contributed to dynamics of concentration in leading firms, and a marked shift in national income from labor to capital across much of the world.3

Capitalism, as Karl Marx observed, is rooted in the exploitation of labor by capital through the latter’s ability to extract surplus value from the former.4 It is characterized by dynamics of concentration and centralization of capital, where fewer and larger firms increasingly dominate each economic sector. These dynamics are intrinsically related to capitalism’s uneven geographical development and the reproduction of geopolitical tensions and rivalries. As Harry Magdoff once wrote:

Centrifugal and centripetal forces have always coexisted at the very core of the capitalist process.… Periods of peace and harmony have alternated with periods of discord and violence. Generally the mechanism of this alternation involves both economic and military forms of struggle, with the strongest power emerging victorious and enforcing acquiescence on the losers. But uneven development soon takes over, and a period of renewed struggle for hegemony emerges.5

In fact, a recent World Bank publication explicates how the COVID-19 crisis is exacerbating capitalism’s inner monopolistic tendencies:

COVID-19 could cause a further rise in corporations’ market power because large corporations are in the best position to withstand the economic downturn and deploy new technologies.… In the past three recessions, the share prices of US firms in the top quartile across 10 sectors rose by an average of 6 percent whereas the share prices of those in the bottom quartile fell by 44 percent. The same divergence has been evident since the start of the COVID-19 outbreak.6

This article argues that the resilience agenda represents an ideological justification and fortification of these very same tendencies—of labor exploitation, of concentration and centralization of capital, and of an increasingly geopolitical dimension to capitalist competition.

Following this introduction, the first section of this article outlines the emerging notion of resilience as formulated within the global supply chain community. The next section discusses how the first response by firms and states to the COVID-19 crisis was to make workers bear the brunt of the crisis. The concluding section identifies the geopolitical dynamics of resilience, focusing on the White House’s 2021 report, Building Resilient Supply Chains, Revitalizing American Manufacturing, and Fostering Broad-Based Growth.7

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World Development under Monopoly Capitalism

Photo: do bicycles come from? Source: WDR2020, Figure 1.1, pp. 16.

One of the main effects (I will not say purposes) of orthodox traditional economics was…a plan for explaining to the privileged class that their position was morally right and was necessary for the welfare of society.

—Joan Robinson1

The recent period of globalization—following the collapse of the Eastern bloc and the reintegration of China into the world economy—is one where global value chains have become the dominant organizational form of capitalism. From low to high tech, basic consumer goods to heavy capital equipment, food to services, goods are now produced across many countries, integrated through global value chains. According to the International Labour Organization, between 1995 and 2013 the number of people employed in global value chains rose from 296 to 453 million, amounting to one in five jobs in the global economy.2 We are living in a global value chain world.3

The big question is whether this global value chain world is contributing to, or detracting from, real human development. Is it establishing a more equal, less exploitative, less poverty-ridden world? Which political economic frameworks are best placed to illuminate and explain the workings of this world?

Recent critical scholarship has applied monopoly capital concepts and categories to the analysis of global value chains. John Bellamy Foster and others have illuminated how global value chains represent the latest form of monopoly capital on a world scale.4 John Smith shows how surplus-value transfer and capture—from workers in poorer countries to lead firms in northern countries—is portrayed by mainstream economists as “value added” by those firms.5 Intan Suwandi analyzes how global value chains are enabled by, and also intensify, differential rates of worldwide labor exploitation.6

Mainstream advocates of global value chain-based development tend to ignore such critical analyses, and continue to preach the benefits of global value chain integration by drawing on examples and data that support their claims. However, it says much about the anti-developmental dynamics generated by global value chains when a World Bank report advocating global value chain-based development actually provides data that supports the analyses of the aforementioned critical authors.

Here, we interrogate the data used and the claims made in the World Bank’s World Development Report 2020, titled Trading for Development in the Age of Global Value Chains (WDR2020, or “the report”).7 While the report portrays global value chains as contributing to poor countries’ development through job creation, poverty alleviation, and economic growth, we reveal how its data shows the opposite.8

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Understanding development in a Global Value Chain World: Comparative Advantage or Monopoly Capital Theory?

By Benjamin Selwyn and Dara Leyden

The recent period of globalisation – following the collapse of the Eastern bloc and the integration of China into the world economy – is in essence the period of global value chains (GVCs). From low to high-tech, basic consumer goods to heavy capital equipment, food to services, goods are now produced across many countries, integrated through GVCs.

The big question in development studies is whether this globalised reconfiguration of production is contributing to, or detracting from, real human development? Is it establishing a more equal, less exploitative, less poverty-ridden world? To understand these complex dynamics, scholars rely on economic theories. These theories must be relevant to the GVC-world and equipped to tackle these pertinent questions.

In 2020 the World Bank published its World Development Report Trading for Development in the Age of Global Value Chains (WDR2020, or ‘the Report’) to address these questions. It confidently proclaimed that ‘GVCs boost incomes, create better jobs and reduce poverty’ (WDR2020: 3). Given the World Bank’s promotion of neoliberal globalisation, this conclusion is unsurprising.

However, before accepting the Report’s claims at face value, we should reflect on the findings of Robert Wade (2002: 220). These annual World Bank reports serve as “both a research-based document and a political document…. the Bank’s flagship message must reflect back the ideological preference of key constituencies and not offend them too much, but the message must also be backed by empirical evidence and made to look technical”.

When globalisation is booming it may be possible for the report’s liberal bias to appear to complement its data. However, the GVC world has generated such inequalities that the dissonance between the report’s liberal bias and its own data is stretched to breaking point.

Drawing on our recently published article, this blog post uses the Report’s own data to undermine its core claims. It shows that the GVC world enhances the dominance of transnational corporations (TNCs), concentrates wealth, represses the incomes of supplier firms in developing countries, and creates many bad jobs – with deleterious outcomes for workers.

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