III.5 The new core-periphery structure

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III.5 The new core-periphery structure

C’est donc bel et bien, derrière l’écran de la mondialisation ou de la tertiarisation, une révolution des techniques de production qui est à l’origine de la formidable explosion d’inégalités qui s’observe aujourd’hui[45]. (Daniel Cohen 1997: 74)

III.5.1 The rise of inequality in the core

We described in section II.3.7 how the core-periphery structure was created through the establishment of a world-wide social division of labour, with a geographic hierarchisation of production processes. Some production operations are demoted in the commodity chain, from being high- to low-added value, and subsequently relocated into the periphery, that is, the Third World. In this section we argue that a new, non‑geographic, core-periphery structure is being created. Furthermore, we argue that it does not replace the old one, instead it is superimposed to it.

The rise of income inequality in modern industrialised (core) countries since the 1970s is well documented[46]. It is reflected in historically high unemployment or in workers earning less than a poverty level income (the ‘working poor’ who have ‘McDonalds jobs’). While unemployment is more common in Europe and low-paid jobs more common in the USA[47], a combination of both phenomena exists in the different core countries. Inequality has however broader consequences for those affected:

The new politics defines equality as inclusion and inequality as exclusion, although these terms need some spelling out. Inclusion refers in its broadest sense to citizenship, to the civil and political rights and obligations that all members of a society should have, not just formally, but as a reality of their lives. It also refers to opportunities and to involvement in public space. In a society where work remains central to self-esteem and standard of living, access to work is one main context of opportunity. (Anthony Giddens 1998: 102-103, stress in original)

The factors and processes that are shaping the rise of inequality in the core countries will now be studied.

III.5.2 Networks and inequality

As seen in section III.4.2, the new ICT leads to networks as the organising elements of the EwE SCA. The high degree of homogeneity of each cell in the economic network is achieved through out-sourcing, whereby services formerly carried out within a TNC are now done by an external enterprise (or indeed by several). This often involves a demotion of the activity involved[48], in what constitutes a typical process of peripheralisation. Very often, workers that leave a large company in a process of restructuring, find themselves doing the same tasks, but under an out-sourced company with lower pay and fewer rights and social protection (Santos 1998: 29).

It also leads to fragmentation of incomes and increase of inequality within each segment of workers, that is, within each age group, each qualification range, each economic sector: for whom one works, i.e. for a core cell (a TNC) or for a peripheral cell (an out-sourced unit), becomes a determining factor in one’s income (Rifkin 1995: 165-170, Cohen 1997: 78-81). “The effect of information technologies is to throw the social division of labour into a flux. Many occupations are disappearing and all jobs are less secure” (Gray 1998: 20), and inequality can be found within each individual’s career, resulting from a chaotic evolution of their income over time. Daniel Cohen has thus described the new inequality as being a fractal phenomenon, that is, the smallest part can represent the whole (Cohen 1997: 79).

The main difference when compared to previous SCAs is that the demoted processes are not all transferred to the Third World (it is difficult to conceive how e.g. cleaning of a US office could be done by a firm located in India). To a large extent, the networks of peripheral cells established around the few core cells are local.

III.5.3 Globalisation and inequality

One of the theses of ‘globalisation’ is that “[b]y facilitating or organizing the mobility of capital and ‘delocalization’ towards the countries with the lowest wages, neo-liberal policies have helped to extend competition among workers to a global level” (Bourdieu 1998: 85).

However, one should note that labour costs depend as much on productivity as on wage levels, and indeed can be lower in core than in peripheral countries. Other factors such as infrastructure and political stability are also important. Relocation of activity towards core countries is frequent (Gray 1998: 83-85, Der Spiegel 29/1998 p.88-90), and Cohen states that only about 2 to 3% of workers in core countries are directly affected by competition with low wage countries (Cohen 1997: 64), which tallies with the consensus amongst economists that only about 10% of the loss of manufacturing jobs in industrialised countries is directly traceable to relocation in other countries or to trade with underdeveloped countries (Fligstein 1998, PNUD 1997: 89):

Increases in inequality in advanced industrial societies have almost nothing to do with trade and almost everything to do with politics and the organized relationship between labor and capital. (Neil Fligstein 1998)

It thus seems that “insecurity is the product not of an economic inevitability, identified with the much-heralded ‘globalization’ but of a political will” (Bourdieu 1998: 84, stress in original), and as asserted in section III.4.4, nation-states still have considerable discretion on economic policy. Indeed, as mentioned in page 15, “capitalism only triumphs when it becomes identified with the state, when it is the state” (Braudel 1985: 68).

Nevertheless, a process that is fomented by capital allied to governments can later on acquire its own momentum. “Within a generation, the burgeoning Third World population will contain not only billions of unskilled workers, but hundreds of millions of scientists, engineers, architects and other professionals willing and able to do world-class work for a fraction of the payment their American counterparts expect” (Michael Lind, cited in Gray 1998: 86). That is to say, a small fraction of non-geographic core within the old geographic periphery can lead to a large fraction of non-geographic periphery within the old geographic core. This is a likely outcome of the processes already at play.

III.5.4 The non-geographic core-periphery structure

The final element is that the populations of the core countries are no longer required to fight major wars where all the resources of countries are pitted against each other, which had been one of the main reasons why twentieth century capitalism had assigned the nation-state a redistributive role in the core. “Because our wealth is linked less and less to the possession of territories, the invader has nothing to invade” (Guéhenno 1995: 119). Furthermore, “when deciding to wage war the state can no longer rely on automatic or universal compliance” (by its citizens) (Camilleri 1994: 155), and “war (is) to be taken back from the people, who (can) no longer be trusted with it” (Bellamy 1997: 69). Capital no longer needs the people to participate in ‘hostile take-overs of the markets or of the territories of competitors’: war by core nation-states is from now on to be conducted by highly efficient small professional armies, which are more appropriate for the localised conflicts of the long twenty-first century (see section IV.6).

Thus, not only the economic reasons for restricting the most blatant inequality to the old geographic periphery (the Third World) are weaker, the political reasons have also disappeared. In the EwE the people are no longer needed as producers or soldiers, but as consumers (Bauman 1998: 80). Although this is only a shift in emphasis (as it was already true, but to a much smaller extent, in the US SCA), it means that the growing inequality in the core countries can be tolerated, and in fact used, because it leads to a breaking up of labour solidarity (reflected e.g. in the waning membership of trade unions – see Rifkin 1995: 168). The result is that the core-periphery world-wide division of labour is now ‘permeating’ the world system, that is, its benefits for accumulation of capital are being internalised back in the core.

One should notice that the old, geographically-based, core-periphery structure is still in place. The UK will not become economically equivalent to India, nor will Mexico rival the USA. The benefits of coreness will still be concentrated in the Triad composed by the USA, Europe and Japan (Møller 1995: 63-65). The semi-periphery is located in traditional or newly-created hinterlands (e.g. Poland or the Czech Republic for Germany), or in the traditional core areas. Its main characteristic is that it is movable and has no special privileges, that is, semi-peripheral regions compete with each other to serve the core. The geographic periphery retains its traditional function of providing cheap raw materials (Møller 1995: 68-69).

However, a new, non-geographic, core-periphery structure is being superimposed to the old one. There will eventually be some pockets of (non-geographic) core, perhaps around 5% of the population, inserted within the (geographic) periphery (the Third World). And there will be a large amount, perhaps around one third of the population, of (non-geographic) periphery, that is, the excluded underclass of the unemployed and the underpaid, within the (geographic) core (the First World). This is represented in broad terms in Table III, where the core‑periphery structure of the US SCA is also given in broad terms.

Finally, one should notice that this ‘new’ non-geographic core-periphery structure is, for the most, based on previously existing foundations. There have been regional centres at least since 1945, but as the basic unit was the nation-state, redistribution and the benefits of coreness had perforce to be universal within the core nation-states. Now, with the decreasing centrality of nation-states, redistribution will be redirected towards the regional centres (and within those, excluding whole layers of the population) as well as, partially, to the hinterlands.

Table III. Broad distribution of the new non-geographic core and periphery within the old geographic core and periphery, in the US and EwE SCAs.

non-geographic core (%)

non-geographic periphery (%)

US SCA

geographic core

90

10

geographic periphery

1

99

EwE SCA

geographic core

65

35

geographic periphery

5

95

III.5.5 To know or not to know

What is the membership of the new non-geographic periphery? First, as mentioned above, it is the unemployed and the working poor. Then, all those who are ‘different’: the old, single mothers, non-heterosexual people, ethnic minorities, refugees, foreigners in general, and other groups that can be excluded from society with basis on their – generally easy to point out and recognise – difference.

Finally, what exactly is the membership of the new non-geographic core? First of all, and as usual, it is the less than 1% of the population that constitute Marx’s bourgeoisie, that is, the top executives that run the Fortune 500 companies, the multi-millionaire families and their like.

Secondly, the few good jobs that are available in the new high-tech global economy are in the knowledge sector, which is made up of “research scientists, design engineers, civil engineers, software analysts, biotechnology researchers, public relations specialists, lawyers, investment bankers, management consultants, financial and tax consultants, architects, strategic planners, marketing specialists, film producers and editors, art directors, publishers, writers, editors, and journalists” (Rifkin 1995: 36, 174). These are what ex-US Secretary of Labour Robert Reich described as “symbolic analysts” (in Rifkin 1995: 176). They amount to about 20% of the workforce, and their incomes are increasing steadily, not only in the USA but also in many European countries, even when the average income of the (US) bottom 60% fell 9.2% between 1973 and 1993[49] (Gray 1998: 115, Rifkin 1995: 174, Fligstein 1998).

Finally, a large fraction of the US SCA geographic core population is still core in the new non-geographic structure. These are the blue and white collar workers that have not been downsized, or that work for core cells (that is, units involved in high-value added activities). According to the US Census Bureau, the number of middle-income Americans fell from 71% to 63% of the population between 1969 and the 1990s, which is still a considerable figure (Rifkin 1995: 172).

All in all, and in simple terms, we could describe the new non-geographic core as being constituted by the ‘knows’ of the new society, and the new non-geographic periphery as the ‘know-nots’. This is the new defining distinction that divides the societies of core countries, as it becomes more important than the old division between ‘haves’ and ‘have-nots’:

[T]he important question – from the standpoint of national wealth – is not which citizens own what, but which citizens learn how to do what, so that they are capable of adding more value to the world economy and therefore increasing their own potential worth. (Robert Reich in Gray 1998: 68)

 

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[45] It is thus, simply, behind the smoke screen of globalisation or the growth of the service sector, a revolution in the techniques of production that originates the overwhelming explosion of inequalities that is observed nowadays (NPB translation).

[46] The list of works and facts than can be cited is endless. See e.g. the books cited in this section.

[47] The situation in Japan is more complex; while unemployment is relatively low, it is rising (and taking into account unrecorded and discouraged jobless, the figure could be around 7.5% in 1995 – see Rifkin 1995: 198). However, the Japanese social security system provides lower benefits than even the American one . As workers often live in company flats, loosing one’s job can lead directly to being homeless. In another core country, New Zealand, the neo-liberal restructuring of the economy undertaken since 1984 led to 18% of the population being under the poverty line and a deeply divided society (Gray 1998: 40-41).

[48] And also leads to the disappearance of whole categories of jobs, that become obsolete or automated Unemployment is then the consequence of the changes in technology (Fligstein 1998).

[49] From 34.9% to 31.7% of GDP.