File spoon-archives/aut-op-sy.archive/aut-op-sy_1997/aut-op-sy.9710, message 31


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


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