University of Washington
Geography 349 :  Geography of International Business
Professor Harrington
Supplemental notes on social policy and international competition
 

These notes (optional for Geography 349 students, Spring 2001) supplement the assigned readings and on-line notes that define and critique the concept of international competitiveness.
 

SOCIAL  POLICY  FOR  THE  NEW  AGE

A key question before us:
Can nations or sub-national regions maintain redistributive or protective social policies in the face of global competition?
 • No, because the international spread of capitalism and the mobility of capital reduce social policy to the lowest common denominator.
 • Yes, because social investment is the primary class of investment that remains within a given country (and to a lesser extent, region), and furthermore is the primary basis for national economic advancement.


background, from:
Reich, R.B.  1991.  The Work of Nations.  Part Four: The Meaning of a Nation.
Policy propositions, given his analysis of the determinants and nature of international competition:

1.  Given the widening split in the returns to symbolic-analyst labor and routine-production labor, a nation can maintain internal peace by explicit income redistribution.

2.  Countries should promote policies that maximize the number and proportion of their populations that can make a living as symbolic analysts:  childhood education, adult training, infrastructural investment.

3.  The tendency of privatizing a range of services — from security to telecommunications and transportation to education — increases the social and labor dualism of advanced societies.

4.  Public investment in human capital and fixed infrastructure are more likely to remain within a given country (are thus more place-specific) than is private investment in financial capital, or even than private fixed-capital investment, which can be abandoned as soon as it is depreciated for accounting and tax purposes.
 


background, from
Danièle Leborgne and Alain Lipietz (1991), "Two social strategies in the production of new industrial spaces," Ch. 2 in Industrial Change and Regional Development, ed. by G. Benko and M. Dunford.

The authors establish opposing types of societal adjustment, using the rubric of "flexibility":  offensive versus defensive flexibility.

Leborgne and Lipietz's elements of a "model of development":
regime of accumulation:  a set of compatible "norms of production, distribution and use" within an exchange economy [28]
mode of regulation:  "the collection of norms ["routines"]... of institutions, of compensatory mechanisms and of information systems, which constantly adjust the expectations and behavior of individuals to the general logic of the regime of accumulation" [28]
social bloc:  "a stable system of relations of domination, of alliances, and of concessions among different social groups (dominant and subordinate)" [28]
hegemonic bloc: a social bloc that "secures recognition of its plan of action as one that conforms with the interests of the great majority of the inhabitants of a 'territory'" [28]

The authors see Fordism as the dominant post-war model of development, entailing the production, consumption, and institutional characteristics that we've discussed earlier.

Leborgne and Lipietz recognize that there are alternatives in post-Fordist accumulation and regulation.  Within the sphere of wage relations, these alternatives are expressed in Table 2.1, and encapsulated below (in black).

On the organizational front, they suggest a rise in "vertical near integration" (VNI) to spread risk while maintaining mutual control:  networks of joint ventures, strategic alliances, technology exchange, joint development, supplier responsibility, etc.  Geographically, this VNI can be


The crisis of Fordism (unit wage increases in excess of price increases, falling rates of profit, and the eventual institutional response of reduction in real wages, reduction of capital and credit) will lead to new rules for accumulation (production/ consumption) and regulation.  Which rules are developed depend in part on the relations that develop in the evolving social bloc (political interaction among groups).
[What follows is an interpretation of Danièle Leborgne and Alain Lipietz (1991), "Two social strategies in the production of new industrial spaces," Ch. 2 in Industrial Change and Regional Development, ed. by G. Benko and M. Dunford.]

1.  "The defensive option" (Hell)
 a) labor flexibility is gained by reducing wages, benefits, and job security
 b) supplier flexibility is gained by one-sided relationships between dependent suppliers and large companies that thereby maintain "flexibility" on the part of the large company
 c) corporate flexibility is gained by leaving social issues to the state
 d) locational flexibility is maintained by a competition among spatial units for privately financed fixed capital investment (which thereby becomes increasingly publicly subsidized)
 e) sectoral flexibility in the abandonment of particular sectors within particular territories, with great adjustment costs
 f) results include spatial and social dualism, matching the spatial and social division of labor

2.  "The offensive option" (Utopia)
 a) labor flexibility is gained by stabilizing the wage and employment package, making employees willing to be multiply skilled and deployed as needed  (and by the possibility of international labor standards)
 b) supplier flexibility is gained by demanding that a stable, but potentially competing set of suppliers engage in continuous product and process improvement, amortized by the promise of sustained relationships ("strong vertical near integration")
 c) corporate-state flexibility is gained by explicit negotiation of roles (social compact, degree of competition, public investment, etc.)
 d) locational flexibility is the ability of local economies to adapt or to push technological and market change because of the adaptability that comes from strong networks of adaptive firms and integrated public-sector response;  firms do maintain some flexibility in the location of particular activities, but the competition among places is based more on specialized capabilities than on minimized labor and social costs
 e) the geographic results:  rather than a sequential spatial division of labor into control and production regions, with a rotation of production among ever-lower-cost regions, flexibility accrues from the development of functionally integrated regions with core competence in a mix of related technologies


copyright James W. Harrington, Jr.
revised 23 March 2001