Date: Sat, 04 Oct 1997 08:15:28 +0200 From: "W.A. Patterson" <patters-AT-clnet.cz> Subject: AUT: East is West: Posting 1 This is a bit long, but if you read to the end you might find it interesting... if it is your kind of thing. Alex Carey, Australian Social Scientist, in 1978 wrote "the twentieth century has been characterized by three great developements of political importance: the growth of democracy; the growth of corporate power; and the growth of corporate propaganda as a means of protecting corporate power against democracy." So I want to go into some details implied. I start with the deregulation of the financial markets in the early 70s. 1978, ecomomist Jamem s Tobin "proposed that foreign exchange transactions be taxed to slow the hemmorrhage of capital from the real economy (investment and trade) to financial manipulations that now constitute 95 percent of foreign exchange transactions (as compared with 10 per cent of a far smaller total in 1970). Tobin observed that "these processes would drive the world toward a low-growth, low-wage economy." Paul Volcker, former head of the Fed, "attributes about half of the substantial slowdown in growth since the early 70s to this factor". So, this was the dismantling of the post War Bretton Woods international economic system (thank you Richard Nixon). This has lead to a huge increase in unregulated capital. World Bank now estimates (i.e. did in 1993) the total resources of international financial institutions at about 14 trillion USD. This leaves governments virtually powerless to " defend national currencies in the face of unprecedented private power." Intenatinal economist David Felix observed that even the productive secotors (i.e. the manufacturing, distribution, other operations private sector) "that would benefit from the Tobin tax have joined financial capital in resisting it." (Take heed here, if you are still reading.) He suggests a class-element as a likely explanation: "elites are generally bonded by a common objective...to shrink, perhaps even to liquidate, the welfare state." But this should not appear so surprising given one common demominator between the two sectors: the instant mobility of huge sums of financial capital (not asset- capital) as a weapon to force governements (theoretically responsive to the mass of citizens -- not even theoretically, let's say rhetorically, what you will) to follow "fiscally responsible policies" ON THE ONE HAND AND on the other hand the closely matching or correlated requirements for centrally manipulated buying and selling transactions in modern supply-chain mechanics management --- on the manufacturing and distrubtion end. The global manuf,distribution,operations priviate sector, concentrated on modern and neoliberal supply chain mechanics, is less transparen than the corresponding activities of the global financial sector (important!). This is an area of the global economy which it seems is perhaps not known in full perspective even to too many, but is nonetheless The essential structural (setting it up) and operational (making it work) of a global manufacturing,distribution base. (I'm not going to even touch the evils of the marketting which is equally culpable here.) This area which I am speaking of is known as the Just-In-Time (JIT) logistical phislophy of supply chaing mechanics: Spelling JIT out: I) Under JIT philosophy suppliers must be able to respond quickly, flexibly, and efficiently to the buyers demands - deliverying smaller and smaller quantities (as MRP gets more sophisticated) directly and frequently to the point of us. The suppliers need to adopt JIT approaches, information and quality management sysems. This involves the dominant customer (the buyer, usually a very large coprporation) who HELPS the smaller and weaker supplier in consultancy capacity. (Important!), e.g. to review their management practices and systems. The buyer thus helpes the supplier find ways of delivering on time and to quality. A strategic buyer-supplier partnership is very often, if not usually the case. II) In a trusing, collaborative relationsip (typical of practices between Japanese companies) supply chain management extends to the sharing of planning data - operational, tactical, and strategic. Integration is possible using short term data (Kanban), medium term materials reqpuirements planning and scheduling and longer-term plans. Buyer and supplier computer systems can communicate using EDI (Electronic Data Interchange). III) Ordinarily buyers want suppliers to deliver at the lowest price, highest quality and with maximum reliability. Getting into bed with suppliers means complacency may set in. Tied-in suppliers and buyers are hooked into a dependency relationship and may take things for granted. In a "market situation" why should a business reveal its costs and margins to buyers? Collaboration and sharing of information may enable buyers to obtain advantage in negotiations. IV) Suppliers want orders at the highest price, true with an eye for customer quality and reliability requirements, but knowing that these cost. "Business sense" has it that if a buyer wants premium quality and service then these costs must, wherever possible, be paid for by the customer. V) Adherence to "market forces" means that if demand is high and supplies are short - then suppliers will want freedom to improve profit margins by increasing prices. Buyers face a situation of accepting what they can get unless they can move quickly to alternaive sources of supply (substitutes). VI) The opposite is also true. In a "buyers maket", buyers (fewer or with less to spend) face an excess of supply capacity. Internationally, as more countries bring capacity on stream - there is more competition for market share. In a "recessionary climate", suppliers desperately compete for contracts to maintain production and grab/retain "market share." "Market conditions" are right for buyers to pressurize suppliers into offering lower prices and caryy the costs of quality, reliability, delivery and stock holding themselves. VII) The eager adoption by Western firms of JIT and associated practices has been "competition" and "market driven." VIII) If a boom economy returns, the balance shifts back to suppliers who may then neglect relationships with buyers; suppliers in the driving seat, therefore, will force buyers to accept the additional quality, storage and delivery costs that JIT systems require; strategic collaboration will disintegrate and independence of action on the part of suppliers will destroy the otherwise "safeguarded" quality assurance systems of regulation." BOOM VS. RECESSIONARY MODELS After having reviewed the JIT philosophy in logistical and economic terms (recessionary vs. boom economies), I wish to argue that the proper globalization of productives forces entails the "recessionary model" of JIT as opposed to the "boom economy model". It must be observed that globalization depends on optimal relationships of collaboration and information-sharing between buyer and supplier, permitting the "most efficient" use of resources and capital - as well as enforcing quality, quick delivery, and a balanced shift of carrying costs from the bigger (and more proactive) buyer to the smaller (and more reacitve) supplier. What we see is that in a "boom economy", all of these points are derogated, de-emphasized, or negated, as point VII shows: "If a boom economy returns, the balance shifts back to suppliers who may then neglect relationships with buyers; the suppliers (less proactive than the buyers) in the driving seat, therefore, will force buyers to accept the additional quality, storage and delivery costs that JIT systems require; strategic collaboration will disintegrate and independence of action on the part of suppliers will destroy the otherwise "safeguarded" quality assurance systems of regulation." In other words, communication breaks down, collaboration breaks down, the economic weight on which the dominance of the more proactive buyer breaks down. All of these are subversive of creating a global network of economies and work-forces, since such a network (or network of networks) depends on instantaneous electronic communication (commond to the financial sector also) and tight-logistical JIT collaborative initiatives. In addition, it becomes more difficult to create intra-corporate or intra-company transaction-status between buyer and supplier on a total or even quasi model, admittedly another goal of globaliztion. (EXPLOIT THIS) The conclusion is that, as regards globalization, the "recessionary model" is obviously the only one that is suitable to a global manufacturing/distribution/operations base, and that JIT has very little to do with a "boom economy model." It could also be added that since the buyers have the proactive advantage, they also have the advantage of directing the courses economies will take. This then defines the "common denominator" between the financial sector and the manufacturing sector. THIS IS ROPE TO HANG THE BASTARDS WITH. And just see some of the key areas which can be exploited. And then if you do an analysis of how wages are calculated in the "labour - routings" in modern business information systems, many more areas of exploitability can be found. E.g., JIT has direct effect on prices of material which are then imputed to the "Bills of Materials" ("master recipes") i.e. material is cheaper to buy -- this make the large corporation more able invest in automation, and when the workers know this, the corporation knows it can make the wages in the "labour-routings" in the infosystems low with low risk to itself. And so on. But a truly thorough analysis along these lines can be done, and from it can issue such things as -- MANIFESTOS. Also: I shall return to Lenin and point out why I quoted him, since I did quote him in the context of the conflicts which exist within the corporate elite themselves, competitive or moral. I quoted Lenin a couple of months ago, and I do it again: "A more powerful enemy can only be conquered only by exerting the utmost effort and by necessarily, most carefully, solicitously, cautiously, and skillfully taking advantage of every 'rift', even smallest, among the enemies, of every antangonism of intersts among the bourgeoisie of various countries (Okay), between various groups or types of bourgeoisie within different countries (Yes), by taking advantage of every, even the smallest, opportunity of gaining a mass ally, even though this ally be only temporary (middle management, say?), vacillating (people in Eastern Europe vacillating between the promised paradise of capitalism and venting in the pubs their frutruation at how they have been left behind), unstable, unreliable and conditional. Those who have not understood this have not understood a particle of Marxism, or for that matter of scientific contempory socialism in general." All () parantheses are mine in this quotation. WA --- from list aut-op-sy-AT-lists.village.virginia.edu ---
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