Jobs, Jobs, Jobs

October 8, 2010 at 9:18 pm | Posted in Political Economy | Leave a comment
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Just released reports show that the unemployment rate in the United States has been above 9 percent for over 37 months, the longest period since the 1930s

Compounding matters, the number of people working part-time because they cannot find full-time work increased by 612,000 in September 2010 and stood at 9.5 million.

Not surprisingly, hourly wages has remained stagnant at $22.67 and provided no stability to family budgets.

Much of the unemployment problems in the United States has been blamed on the outsourcing of jobs to China where it is alleged the government keeps wages low by artificially holding down the value of its currency, the renminbi. This has animated support for the “Currency Reform for Fair Trade Act” passed last week by the US Congress.

Yet, what this overlooks is that China too has been losing employees in its formal sector for several years now. Since the Chinese economy is dependent on export–and has recently surpassed Germany to be the leading export economy in the world–it has to constantly upgrade its manufacturing facilities which implies using machines, computers, and numerically controlled tools in place of labor. In absolute numbers, the International Labor Organization estimates that the formal industrial sector in China laid off some 35.1 million workers between 1990 and 2002.

Underlying this collapse of formal sector employment in the manufacturing sector. not only in China and the United States, but world-wide is a downgrading of industrial activities in the global divisioning of labor.

Historically, as companies start to follow in the footsteps of pioneer enterprises, profit margins begin to shrink and competitive pressures lead to an accumulation of larger volumes of capital than could be invested in the production of sale of commodities without driving profit margins down even further. This leads to a phase of speculation and ‘financial capitalism,’ that Fernand Braudel and Giovanni Arrighi identified as a “sign of autum” of one world-wide system of accumulation and the transition to another.

It is this historical cycle rather than currency manipulation by the Chinese government or the short-sightedness of previous and current US administrations that lies at the root of the current crisis.

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