Globalisation

[mac11]

Richard D. Wolff explained in a video that US wages increased steadily together with corporate profits, until modern communications and travel allowed the capitalists to see they could make bigger profits by shipping the jobs to Asia.

I heard a Libertarian argue lately, not responding to Wolff but responding to the same point, that it's not the capitalists that don't want to pay US workers 15 dollars an hour, and pay foreigners less because it's the consumers that pay wages. He then went on a big rant trying to highlight that there are big costs and problems in moving a business to Asia - the cost of travel, different language and timezone etc.

I heard the following argument from a Libertarian.

"Moving production to Asia drives down the unit cost of production to a small fraction of the unit cost of production in the US. Oftentimes, producing in the US is so expensive that there just isnt adequate demand for your pricey product. Thus, moving production to China actually increases demand because the end-product is cheaper. Thus, the company grows much quicker, and has much healthier finances."


My question is I guess, under capitalism was it necessary to ship the jobs to Asia? Could profits and wages have increased steadily if they hadn't 30 years ago?
I read that if corporate profits and wages had kept on increasing together, the minimum wage would be around 50 dollars per hour. Would prices increase then?

[Tim Cornelis]

Wages certainly impact prices. https://www.youtube.com/watch?v=vAcaeLmybCY

As for the libertarian's argument, I'm not sure what point we should take away. The first, that consumers want to pay less, and this motivates business to move where production costs are lower, sure. That's logical. Not sure how it attacks us, or undermines our position.

In neoclassical economics, demand curves don't shift because of prices alterations. Demand isn't increased when the price becomes lower, rather when the price is lowered a movement along the demand curve (which remains unchanged) occurs. Consumers don't increase demand, they are more likely to act upon existing demand when prices are lowered. Anyway, that aside.

I suppose it wasn't "necessary" in the sense that capitalism could have continued to exist, but it was 'inevitable' to a large extent. The increased mobility of capital, which is what globalisation is, allowed for capitalists to search out lower wages in other regions of the world, and this undermined the bargaining power of labour. The consequence of this all, neoliberalism, therefore was also inevitable, and pretty much irreversible. A non-neoliberal capitalism, today, is utopian.

Not sure if this answers your question because I'm a little thrown off by the point you're trying to make by citing that libertarian.

[tuwix]

My question is I guess, under capitalism was it necessary to ship the jobs to Asia? Could profits and wages have increased steadily if they hadn't 30 years ago?
I read that if corporate profits and wages had kept on increasing together, the minimum wage would be around 50 dollars per hour. Would prices increase then?

You must know that main corporate purpose is to maximize an income. But it is not necessary to ship jobs anywhere. A corporation can automatize a production and increase profit this way. And in my opinion, increasing wages would mean an increasing prices on average. However, it doesn't mean on the same level. A part of commodity's cost is work put in it, but the rest isn't. And the this rest may not be subject of inflation. So in my opinion prices would increase but not as fast as wages.

[mac11]

Yes, I get that increasing prices doesn't exactly matter to consumers whose wages have, which I think you mean.

But would high prices effect when it comes to exporting good? For example exporting high price goods to Europe who can't afford them and could get them cheaper from countries who have exploited poor workers abroad?

[ckaihatsu]

Let's just cut-to-the-chase, at the national / international level....





Currency war, also known as competitive devaluation, is a condition in international affairs where countries compete against each other to achieve a relatively low exchange rate for their own currency. As the price to buy a country's currency falls so too does the price of exports. Imports to the country become more expensive.




https://en.wikipedia.org/wiki/Currency_war