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Genre = Economics
Intriguing Connections = 1) Capitalism, Socialism, their Alternatives and Critiques,
It used to be imperialist nations set up colonies for the production of goods via cheap labor. Now, corporation use contacts to gain the same economic set up of being able to produce goods in cheap labor countries. Corporate contracts have the same appeal as colonies, but without the negative connotations. The corporations do not claim responsibility for the poor conditions in which their contracted firm employs the labor. Control via contacts means that the transnational corporation does not have an ownership stake in the firms’ production operations. The contracted firm become depended on the corporation for which they produce products, creating poor working conditions to keep the corporation satisfied with the timely production, no matter how late a change to the product comes in.
Companies outsource production to cheapest country. As labor is a huge cost of production, the decision is usually based on labor. Cheapest labor usually comes from developing countries (poor countries), as they have poor regulations for safety and labor does not have many other options. This creates an awkward economic reality, were the people responsible for production of the products are paid way less than the non-production components. Non-production may sometimes be necessary for the production, but even the unnecessary non-production earn more than the production components. Part of the price of the product is the tariff on imports, a non-production labor of checking the tariffs are paid more than those who actually create the product.
GDP is supposed to be about production, but it is neither domestic or about production. The countries which actually produce the products are developing economies, with low GDP. What counts for production is the value-added. Based on GDP accounting, there is more value-added where the product is consumed, not produced. A GDP illusion emerges, where what counts more is the value-added of non-production, than the actual production of products.
This book takes the perspective of the classic economics. In this case, Marxist assumptions. For the author, value means labor time. Taking more time for production is supposed to have a more valued product. Which creates a definition problem, because the same product can be valued differently based on how quickly it can be produce, with the longer production time having more value. For Marx, spending more time than necessary would be considered useless labor.
There is no iota of contribution to capital. Capital which decreases time that people can complete tasks does not get credit. Capital is what aids production, gives even poor countries the ability to produce more and diversify their incomes. With this author, spending more time than necessary to sustain is exploitation. Exploitation is a pseudonym for surplus value. The distribution of surplus value was a problem for Marx, not its creation.
This book has an anti-corporation theme. Imperialist countries create incentives for corporations to outsource their costs while poor countries create legal incentive for those low costs. Corporations are blamed for taking the incentives and for being competitive. Not the incentives which create the need to outsource, but the façade. Corporations should take accountability for the conditions of the production operations but blaming the symptoms without getting rid of the root causes, will just let the problem persist with different names. Although the author goes against perfect competition in which corporations know how to best allocate resources, the author has an underlying assumption which is not mentioned, is that the countries know what is best for their people or are victims to corporations. Quoting leaders of communist countries, but no mention of communist countries who strove for equality and committed genocide on their own people. No mention of the poor working conditions in communist countries.
The hard realities which are usually denied by the major international organizations are shown in this book. A decently written book with chapters devoted the complexity and different views on classical economic. Some parts, especially the basic definitions, are contradictory and are poorly explained. To understand much of this book, required prior knowledge on a lot of topics.
Pages to read: 307
1st Edition: 2016
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