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Labour needs a global vision when it comes to jobs

Watson & CorbynTom Watson, in a recent speech at the Cooperative Conference to launch his new Future of Work Commission, suggested that it is imperative for Labour to keep an open mind about Trump.  In doing so he seems to have taken on board some of the anti-globalisation sentiment of America’s protectionists, setting the Commission off on the wrong foot.

Firstly, he falls into the error of seeing America’s ‘left behind’ rust belt workers as victims of cheap imports from China. Yet study after study has shown that new technologies have had a far, far greater impact on US job loss than trade. If the problem is not identified correctly, how is it possible to develop a sensible strategy for future employment?

Watson then goes so far as to question the fundamental assumption that free trade benefits all countries.  ‘Is this really true?’ he asks, ‘You can make a cogent case that the debt fuelled growth of China has given Chinese corporations who receive forms of hidden state subsidies an unfair advantage in Western markets’. Now this was exactly the point made by Wilbur Ross, Trump’s choice for commerce secretary, just days earlier.

China in fact should be given credit for contributing 30 percent to world economic growth since the 2008 financial crisis. Of course as a developing economy, China has so far controlled the pace of opening to global competition so as to catch up with the advanced economies. But precisely by opening gradually, its economy has maintained a fast pace of growth and this growth has been hugely beneficial.  China has lifted some 700 million of its own people out of poverty.  At the same time, for example, as trade between China and Latin America grew from $13bn in 2000 to $262bn in 2013, and left wing governments used the space to carry out radical social policies, poverty in Latin America fell from 44 per cent to 28 per cent. It is quite wrong to set the ‘win’ in falling poverty rates in developing countries against a ‘loss’ for blue collar workers in the West.  It is surely contrary to Labour’s internationalism to do so. And of course, those same workers have benefitted as consumers of white goods, mobile phones and so on.

Speaking at Davos in January, President Xi articulated his win-win vision: ‘China will do well only when the world does well, and vice versa.’ China’s economy is now rising up the value chain, rebalancing trade away from exports as it does so.  Production is orienting inward as the domestic market expands. There are huge opportunities here for other countries also which adapt to its demands. In the coming five years, Xi pledged, China will import $8 trillion of goods, attract $600 billion of foreign investment.  In addition, it will make $750 billion of outbound investment. And Chinese tourists will make 700 million overseas visits.

Xi’s speech was an effort to present an alternative agenda for a fairer, more cooperative style of globalisation. In highlighting the contradictions of a system that on the one hand produces material wealth as never before, whilst on the other leading to increasing and socially destabilising inequalities, Xi characterises globalisation as a ‘double edged sword.  Far from the untrammelled freedoms of TTIP and TPP, which aimed to strengthen the power of global business over governments, his idea puts governments in the driving seat in order to ‘adapt to and guide economic globalisation, cushion its negative impact, and deliver its benefits to all countries and all nations’.

The point is that today’s economic problems are way beyond the standard fix of monetary and fiscal policy.  New technologies are now opening up exciting prospects for growth, but the danger is that job loss will exacerbate inequalities even further.  So the fourth industrial revolution at its very nascence is held back from realising a huge leap in productive power by doubts and uncertainties. But just like climate change, the problems of growing inequalities and the disruptive effects to technology cannot be solved in isolation. These are grave threats but there are opportunities here to develop new industries and create new jobs. Also mentioned by Xi is the global problem of ageing populations. Altogether these demand that governments collectively take the bull by the horns.  What Xi conceives is a world working together, innovating new ways of growing the global economy to meet the challenges ahead, managing change through economic coordination.  Only in this way it would be possible to shape the way the world transitions to a new technological age in a more balanced, greener and inclusive way.

Xi’s speech also in effect gave notice that China aims to set the global pace of change in renewable energies and technologies of the future. Trump’s protectionism is simply a dead end – if advanced economies keep hanging on to the old traditional industries, they risk ending up in an economic backwater.

All this calls for new thinking on global industrial policy.  Clearly, economies restructure at different paces giving rise to disputes, but these should be handled through negotiation. The important thing is to consider more positively the opportunities China offers. Rather than banging on so much about the disadvantages of technology transfer and cheap imports, we should instead be creatively searching out the synergies between our economies at national, regional and local levels.

Tom Watson’s new commission should look again at the broader global context. More than this, Labour needs to take up more vigorously its debate on China and it has to get beyond the interminable ‘commerce versus human rights’ cycle.  Faced with the double uncertainties of Brexit and Trump’s isolationism, Britain needs to seriously consider its strategic choices. Trump is pulling towards confrontation with China whilst Europe is looking East to the Eurasian continent as China’s One Belt One Road project moves westward, leaving Britain’s transatlantic bridge collapsing in the middle. At the same time, not only is it the Paris climate change agreement and the Iran nuclear deal that are under threat from the Trump administration, but also the UN, and with it Britain’s claim to global status. What value for Labour then in looking to build a stronger relationship with China as a reliable partner, and not least on the UN Security Council, in working to uphold the multilateral order and to build a greener and more equitable world?

Dr Jenny Clegg is a former senior lecturer in Asia Pacific Studies at the University of Central Lancashire.  She continues to write and research on China.  She is a member of Withington CLP in Manchester.

19 Comments

  1. John Penney says:

    What a peculiar article for Left Futures ! The writer seems to be both an uncritical advocate of neoliberal globalisation, and in outright denial of the easily demonstrable that millions of jobs from the USA and Europe/UK have indeed been shifted , along with their industries, to the low wage, low organised labour , economies of Asia, including China, over the last 30 years. This was, and is, a key cost reduction strategy of neoliberalism.

    This is entirely separate to the issue of technological change which the writer wants to blame entirely for the disappearance of entire classes of skilled jobs in the USA and Europe directly caused by this deliberate “offshoring” of entire industries .

    The entire tone of the uncritical repetition of the current “line” of the vicious dictatorship that is the Chinese regime, is more akin to the output of a Chinese state PR agency handout than a serious socialist analysis. Much less of this type of dodgy article please.

    1. Rob Green says:

      The neo-liberal globalizers are trying to use a sleight of hand trick to defend their dead system. Ignore the fact that all those jobs were shifted to China, Eastern Europe, India, etc. then say Chinese competition hasn’t cost any American jobs. Of course it hasn’t because there were no jobs left in America and Western Europe for Chinese competition to cost. All the ones that could be moved had been moved.

    2. John Walsh says:

      … and with yet more dodgy links …

      “study after study has shown that …” – link to a comment piece in Fortune magazine

      “All this calls for new thinking on global industrial policy” – link to an obscure 2007 ‘think piece’

      “Labour needs to take up more vigorously its debate on China” – link to equally obscure Philadelphia book shop web page

      Presumably, authors feel it’s ok to substantiate their writing with dodgy links safe in the knowledge that nobody bothers to look?

      1. Jenny Clegg says:

        1. If you don’t like Fortune, try this article in the Financial Times http://www.ft.com/content/dec677c0-b7e6-11e6-ba85-95d1533d9a62

        2. Since when is UNCTAD obscure? For more on industrial policies in a global perspective try http://www.odi.org/events/2048-role-industrial-policy-development.

        3. The final link should have taken you to my article in the Spokesman journal (the Bertrand Russell Peace Foundation) on China, Britain, and Labour

  2. Terry McCarthy says:

    I think Tom Watson is getting confused with Maynard Keynes general theory in relation to reflation of the general economy and the economic strategy of Trump unlike the general theory the state will not be involved in trumps regeneration it will be corporate America much on the lines of national socialist economic ideology
    whose mantra was The basic feature of our economic theory is that we have no theory at all.

  3. Mervyn Hyde says:

    This is our current trading position and has been recording figures such as this on a monthly basis since 1998.

    http://www.tradingeconomics.com/united-kingdom/balance-of-trade

    Assuming we believe that trade imbalances are detrimental our economic well being, how do we function as a society if we only concentrate on trade with the rest of the world?

    Recent figures point to an improvement on our deficit due to the drop in value of the pound obviously making exports cheaper and imports dearer. (Brexit)

    It should be apparent that if one country makes a surplus another must be in deficit, or to be more specific weak economies without a manufacturing base will not be able to trade their way out of the trade imbalances they build up.

    This raises the problem about competition, if we all compete against each other, there will always be winners and losers, divisions and conflicts relating to scarce resources.

    It also requires thinking outside the box as to how we see ourselves as a country.

    It has occurred to me for a long time now, that we need to create new (nationalised) industries that serve our own needs and to maintain employment levels need a new trading agreement between all those developing nations that can’t afford to buy our finished goods.

    The principle behind my thinking is that we can’t compete against the industrial might of Germany and the cheap Labour costs of the far east, but we can give developing countries our money to buy our goods.

    Any given country would assess their economic needs and we would endeavour to meet those needs by funding the purchase of our own finished goods, this would transform their economies and create the need for us to continue developing our technologies.

    It would also mean in the long term, need to maintain the equipment supplied creating a relationship based on joint interests and not competition.

    A simple example just to explain how it could work, is a developing countries need to expand agriculture means they need tractors, we give them our currency, not a loan, to buy tractors which we then supply.

    It goes without saying that schools require educational equipment, we could apply the same principles and that the needs of these countries are the same as here and the world over.

    It would increase the need for well paid jobs here and build non adversarial relationships with countries that need our help. We call it charity today.

    How would we fund it, it’s called Money Creation.

    Poverty is political policy not a fact of life.

    1. John Penney says:

      Mervyn, if your “autarkist” economy model actually worked , the poverty wracked autarkist states of Enver Halil Hoxha ‘s Stalinist Albania , and North Korea could be socialist paradises of self sufficiency !

      You really need to do some serious background economic reading, Mervyn, this is total economic nonsense. You are not “thinking outside the box”. You are merely displaying your dire ignorance of the basic economics of a globalised capitalist economy, with market-driven relative currency valuations.

  4. Karl Stewart says:

    Thanks for the article Jenny,

    Now we’re out of the EU, why don’t we ban all imports of steel, renationalise steel in the UK and invest in new plant, equipment and training to expand this core industry as a foundation for rebuilding our domestic manufacturing sector.

    There’s no reason why these measure should impact negatively in Chinese people. Because they can then use their steel to improve their own infrastructure – which can lift their own people out of poverty through developing their own manufacturing base and developing their own infrastructure.

    I’m all for international co-operation – let’s do it at the level of meeting the needs of the people in the UK, in China and worldwide – rather than meeting the needs of capitalists and their ‘markets’.

    1. Jenny Clegg says:

      Thanks Karl. Yes I absolutely agree that international cooperation should meet the needs of people in the UK, China and world wide, especially in terms of creating jobs, tackling climate change etc and this means cooperation between governments not the dominance of multinational companies. On the steel issue you might be interested in my article in the Morning Star published last year https://www.morningstaronline.co.uk/a-a0ef-A-blame-game-hinders-highly-beneficial-co-operation-with-China#.WK3S9GSLSRs

  5. Bazza says:

    Yes whilst 98% of US business is US owned why would US capital pay more US car workers 60 dollars an hour when they can pay car workers in Mexico etc. 8 dollars an hour or less.
    Oh and US and Japanese TNCs are only in the UK because it is stable and it did offer immediate access to a 500m strong EC market.
    I think Trump’s kind hearted capitalism is all an act.
    Oh and apparently China holds 1 trillion of US debt plus 60% of its companies are mainly foreign owned and as The New Left Review pointed out its success is built on ruthlesly exploiting 200m rural Chinese Workers.
    Yes a democratic globalisation built around nation states (with control of labour supply and capital supply) sounds a good thing but perhaps I would hope working people in the big three would get together (poor whites, Black Lives Matters, and Bernie Sanders supporters in the US) and we get a US Labor, a China Labour, and a Russia Labour.
    But hopefully we with JC in the UK will have transformative policies and other countries follow suit.
    It is the working billions who create the wealth and make societies work yet we have right wing populist ‘fake champions of working people’ who are trying to set the agenda; hopefully we can get the pendulum to swing back to us, the genuine.

  6. Tim Pendry says:

    Yes, a peculiar article … I suspect it misses the point entirely of what Watson was on about. It was certainly not support for Trump nor should his comments be twisted to be the McGuffin for a strange ideological pro-globalisation article.

    Watson struck me as making a more general political point which is that Trump represents a more complex phenomenon than the arrival of traditional conservatism in the buggins turn between establishment conservatives and establishment liberals that has been going on since time immemorial and is clearly no longer fit for purpose.

    He is reflecting, as the intelligent man that he is, on the Left’s response to the fact that the Left is losing its working class base and that radical conservatives are offering radical solutions to problems that the pseudo-radical centre has failed to solve.

    The ‘open mind’ is simply one of being prepared to ask a number of questions – whether ‘experts’ (most especially economists) actually know anything very much in practice, whether globalisation’s costs have been factored into the panglossian estimate of its benefits, whether those costs have been dumped unfairly on the mass of the population to keep the liberal middle classes happy and whether liberal cultural politics may not have moved from being liberatory to being oppressive.

    There are genuine Left responses to all these questions but people ‘with an open mind’ are having to swim through a sea of ideological molasses offered by the liberal hegemony over the Left, one that distrusts ‘open minds’, likes to draw battle lines with the Right instead of understanding it and contesting it intelligently and whose battle lines include untenable positions on both globalisation and culture.

    Watson is actually saying little more than – ‘let’s stop and think before shooting our mouths off’. Let’s think about why national populism has appeared at this time with such power and why its constant denigration and the liberal assault on it seems to strengthen rather than weaken it. He is to be commended for the simple courage of saying that we should keep an ‘open mind’.

  7. Laurie Rhodes says:

    I remember the 1980’s well. The radical view that if those controlling the wealth of the nation were deshackled from laws, regulation and taxation, prosperity was assured from “export led growth” and innovation. It’s always been the same argument demonstrated by the same type of proof that once asserted that intelligence could be measured by the shape of your skull.

    I was young back then. I didn’t realise that the same arguments had prevailed as the world was plunged into the ever downward grind of the Great Depression – just like the previous Great Depression before that. Carlyle’s thunderous condemnation of the very same ideas from the 1830’s is a reminder of just how many times global free markets have been championed with the same disastrous results.

    “Protectionism” isn’t about restricting trade, limiting competition or protecting inefficiency. It’s about protecting the State (and Democracy) from the power of big money and impoverishment that’s always followed free market idealism.

  8. It’s worth remembering that industry suffered the most in the two countries that led the charge into Hayekian neoliberal economics, the US and UK. Countries like France and Germany who were slightly less gung ho managed to at least partly protect their industry from competition from low wage third world countries.

    One of the problems with being old is that one remembers things that younger people like maybe the author of this article, forget. During the 1975 EEC referendum Ted Heath was saying membership would protect British industries like ship-building from Taiwanese low cost competition.

    If Tom Watson is to be reported in an article perhaps a better subject would be the £300, 000 he has just been given by Max Mosley bringing Mosley’s total contribution to Tom’s wallet of a cool half a million. While the Israeli Embassy organizes antisemitism smear campaigns against the left, we should remember that young Max was a real antisemite helping his father in street fights after the war.

  9. Rob Green says:

    What is required is a regime of full-employment. Not a desire for full-employment, not a set of fiscal policies designed to maybe one-day achieve full-employment but an actual regime. Every school and college leaver and unemployed worker who cannot find their own job must be bought into the local workforce to share in the available productive work with each paid the minimum of a trades union living wage. In this way we can end the capitalists’ right to maintain a reserve army of unemployed and swiftly move to an ever-shorter working week whereby the benefits of increased productivity accrue to the worker in the form of a shorter working week rather than to the tiny super rich and corporate elite via job cuts and rationalisations.

  10. David Pavett says:

    Like John Penney I had the impression of reading a handout from the Chinese embassy while going through Jenny Clegg’s article. Tom Watson is far from being my favourite politician but he asks some reasonable question about the “freedoms” of free trade and who they benefit. Jenny Clegg responds be asserting that free trade and globalisation is always a good thing and with an absurd denial that jobs have moved from the West to countries such as China. The propagandist aspect of the article comes out most clearly in the claims that China is only interested in open and honest trade that benefits all. She appears not to be aware of Chinese support for ISDS agreements to enforce its trade pacts (i.e. agreements that go behind the backs of the people and even behind the backs of governments).

    1. Jenny Clegg says:

      Thanks David for drawing my attention to the ISDS aspect in the China- Australia Free Trade Agreement. You might note that the ISDS clauses in the agreement are drafted extremely narrowly, with the usual substantive protections contained in most investment treaties[3] completely absent given that.the governments of both countries have been at pains to limit, rather than expand, the substantive protections available to investors. http://www.kwm.com/en/uk/knowledge/insights/isds-in-chafta-wheres-the-beef-20151015

      1. David Pavett says:

        Thank you for the response. I am a long way from believing that a law firm (your reference) engaged in enforcement actions against states is going to be an objective source on this matter. You seem to take their view at face value as indeed you also seem to do with statements by the Chinese president to the assembled rich and powerful in Davos. Currently ISDS agreements have gained such a bad name (partly in the wake of TTIP) that the people devising them have tread carefully. Even so we need to look behind the bland assurances of top politicians and lawyers engaged in the profitable business of enforcing agreements.

        I notice this for example

        In a bizarre move, the Abbott Government has signed a treaty before it has finished negotiating key aspects of it. The investment chapter of the China-Australia Free Trade Agreement, signed in Canberra on Wednesday, is missing many provisions that have created controversy in other FTAs. Instead, the Government has agreed to set up a committee that will, in the future, negotiate these provisions.

        What does it mean? It seems the ChAFTA may eventually contain problematic clauses on “indirect expropriation” and the “minimum standard of treatment” – which are frequently used by investors to challenge public health and environmental measures – but Parliament will not be able to scrutinise them before ratifying the deal.

        The Chinese ruling elite has grown very rich in the process of the transition to a capitalist driven economy. I would view any assurances about fairness and openness from its spokespersons with a high degree of suspicion. This means that if the Chafta agreement is a non-toxic as you suggest then this needs to be established by showing the critics to be wrong rather than by simply relaying the views of those with an interest in claiming that it is so.

        1. Mervyn Hyde says:

          Well said David, the facts are why do they need this written in Law in the first place, Companies have recourse to industrial Law at the moment that fully covers any eventuality should they justifiably need redress?

          Why should they need secret tribunals with two corporate representatives against one civic?

          I think it’s obvious, that all is not what they want us to believe.

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