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[...] the windfall profits that accru ed to U.S. automakers helped them underwrite a stable lab or-capital accord and mass consumption social contract that lasted for more than four decades after the CIO struggles of the 1930s. In contrast, the lower profit levels associated with the intense competitive pressures toward the end of the life cycle (and the relative national poverty of the favored new sites of production) make such social contracts increasingly difficult to sustain economically. In other words, late-developers of mass production automobile industries have experienced the social contradictions of capitalist development (including strong working classes) without the benefits that might allow them to deal with those social contradictions successfully. Elsewhere, we have labeled this phenomenon "the contradictions of semiperipheral success" (Silver 1990; see also Arrighi 1990b).
The combination of these strategies - the spatial fix and the technological/organizational fix - may be leading to the re-consolidation of a spatially bifurcated process. On the one hand, new innovations in organization and technology, to the extent they can be monopolized by the innovators, provide the basis for more consensual labor-capital-state social contracts, allowing legitimacy to be combined with profitability, albeit for a shrinking labor force. On the other hand, in poorer countries, where competitive advantage is based on a continuous drive to lower costs, profitability requirements lead to continuous crises of legitimacy. [...]
The ability of both textile and auto workers to make substantial and durable gains at the end of the innovation phase suggests that the monopolistic windfall profits reaped by the innovator in any given product cycle also creates favorable conditions (at least the material resources) for stable labor-capital compromises. Yet, as in the automobile industry, so in textiles, once the labor movement made a show of force, capitalists responded with a spatial-fix strategy that accelerated the diffusion of production to new sites, initiating the mature phase of the industry. [...]
Moreover, in transportation industries, it is not easy to devise (much less practically carry out) spatial fixes as counterweights to labor's strong workplace bargaining power. Particularly troublesome nodes might be eliminated entirely fr om the distribution network - that is, unruly or otherwise unprofitable nodes can be cut off from networks of trade and production. But the upstream and downstream ramifications for all other industries of such a spatial fix in transportation makes it a heavy-handed solution at best (especially if the region as a whole to be cut off is not plagued by generalized problems of profitability and control). Moreover, "roads, railways, canals, airports, etc., cannot be moved without the value embodied in them being lost," creating the paradoxical situation whereby the mobility of capital requires relatively immobile investments in the transportation industries (Harvey 1999: 380). Thus, the disincentives to geographical relocation facing the transportation industries are on average significantly higher than the deterrents facing even the most capital-intensive manufacturing industries. Indeed, the fact that the reports of transportation workers' unrest in the WLG database are consistently spread widely across the globe throughout the 1870-1996 period suggests that spatial fixes have not been the main response to transport worker unrest.
Technological fixes have, on the other hand, been far more significant in the arsenal of employer responses to transportation worker labor unrest. The most widely studied case is that of containerization and dock automation in the shipping industry. These process innovations dramatically downsized the historically militant dock labor force in the second half of the twentieth century and in large part account for the dramatic decline in labor unrest mentions discussed earlier. Where substantial transformations in the transport labor process have been less forthcoming, product fixes have been the more prominent response. Thus, for example, railroads and railroad workers have come under increasing competitive pressure from new alternatives: trucking and aviation for cargo and the automobile and aviation for passengers.
Thus, in the 1970s, when faced with the choice between meeting the demands from below for the fulfillment of the hegemonic promises or the demands fr om capitalists for a restoration of favorable conditions for capital accumulation, metropolitan states attempted not to choose. In response, capital went "on strike." An increasingly mobile capital "voted with its feet, " not only by intensifying and deepening the geographical relocation of productive capital to lower-wage areas but also by accumulating capital in liquid form in proliferating offshore tax havens. And to the extent that industrial production still took place in the core, technological fixes and a growing reliance on immigrant labor became increasingly important capitalist strategies.
Initially, the financial fix further strengthened the bargaining power of workers in the Second and Third World states. In the 1970s (in sharp contrast to what would happen in the 1980s), loan capital flowed freely to Second and Third World countries. With capital "on strike" in the First World, and with an excess accumulation of petrodollars to recycle, First World bankers were eager to make loans on easy terms to Second and Third World governments. Thus, for example, in 1981 (the eve of the debt crisis), First World banks loaned approximately $40 billion (net) to Second and Third World countries (UNDP 1992). Debt became an important mechanism through which the contradictions of the postwar developmentalist social contracts were managed in the short run. In Poland, for example, extensive overseas borrowing allowed the Polish government to promote rapid industrialization. At the same time, borrowed funds were used by the Polish government to accommodate the periodic upsurges of labor militancy in the 1970s, making it possible for the government simultaneously to increase wages and food subsides, expand employment, and maintain high levels of capital investments. In the 1970s, the Polish government expected that industrialization would lead to a surge in exports, allowing the government not only to pay back the loans but also to increase national wealth and finally deliver on the promises of socialism to a restive working class (Silver 1992: chapter 2; Singer 1982).
Needless to say, managing the contradictions of the developmentalist social contract through debt was a highly unstable solution. To the extent that Second and Third World states used the borrowed funds to promote further industrialization and/or expand state employment in social services, the marketplace bargaining power (and potentially the workplace bargaining power) of labor was strengthened. If they attempted to accommodate this growing strength of labor, they risked losing further access to foreign investment funds and/or becoming internationally uncompetitive and thus unable to pay the accumulated debt service through exports. If they failed to accommodate the growing strength of labor, they risked a crisis of legitimacy for having failed to deliver to the masses the expected benefits of national sovereignty (or social revolution) and industrialization! modernization. The social compacts in Second and Third World countries thus faced contradictions analogous to those plaguing core social contracts.
More generally, there has been a systemic tendency for technological and product fixes to recurrently produce monopoly windfall profits in high income countries where innovations concentrate, while low-income countries rarely share in the windfall. Moreover, protectionism has also played a prominent role in maintaining or restoring the global competitive position of high-wage sites of production. To put it differently, we found that while spatial fixes tended to erode the North-South divide, technological fixes, product fixes, and protectionism tended to reconstitute the divide continually.
The financial fix and the shift in international regimes are critical explanatory factors because they are the two elements that distinguish the late-nineteenth- and late-twentieth-century periods of globalization from the thirty to forty years following the Second World War. As we argued in Chapter 4, the Golden Age of Capitalism in the 195 Os and 1960s was characterized by continual spatial, technological, and product fixes that weakened labor movements at specific points in time and space, but that overall produced a trend of labor movement strengthening that lasted until the 1970s. The turning point was in the 1980s, with the intertwined take-off of the financial fix and dismantling of the labor-friendly international regime.
World labor unrest in the twentieth century, we argued in Chapter 4, has been embedded in a pendulum swing between crises of profitability and crises of social legitimacy. The crisis of profitability marked by the Great Depression of the late nineteenth century was resolved through a series of fixes that undermined livelihoods and established ways of life throughout the world. The outcome was a deep crisis of social legitimacy and a vicious circle of mounting labor unrest, revolutionary crises, and world war. After a half century of increasing systemic chaos, the postwar social contracts involved an explicit recognition that workers had to be protected from unregulated global market forces. Although profits were never completely subordinated to livelihood, there was a widespread recognition that unless capitalism could be shown to be capable of providing physical and economic security, it would not survive the growing revolutionary challenges from below. Workers could not be treated as simple commodities to be used or left unused according to market forces. Nevertheless, such a philosophical and policy stance by the 1970s had come to be seen as a growing fetter on profits, and in the 1980s it was abandoned by the world's elites. The world-scale dislocations of established ways of life and livelihood caused by this late-twentieth-century swing toward unregulated markets is once again producing a deep crisis of social legitimacy for world capitalism. Whether the crisis of social legitimacy is (will become) sufficiently troublesome to the world's elites so as to provoke a new swing of the pendulum back toward an emphasis on livelihood and security remains to be seen.
Well, Marx certainly didn’t view them as separate phenomena. In the first volume of Capital, he argued that the accumulation of capital went hand in hand with the accumulation of a surplus population — that wealth was being created through exploitation, but at the same time big chunks of the working class were excluded or made superfluous to the needs of capital.
just keeping here for reference, idk why really (question on exclusion vs exploitation being separate phenomena)