Basics of economics don't change
BY WILLIAM Keegan
FOR all the talk of `globalisation' and `outsourcing', the
fundamentals of economics such as keeping the consumer happy and
companies seeking to cut costs remain unchanged.
Modern capitalism - or rather, capitalism - never ceases to amaze me.
After several years when one of the big stories has been the way British
companies have been making use of cheap labour in India for their "call
centres," we now learn that British workers are being sent out to Mumbai
to man those centres.
Companies are evidently concerned about high turnover at some of
these call centres. Certainly one hears disturbing reports about the
'battery hen' conditions in which many people have to work; there is
also the little problem that, educated and skilled though the indigenous
workers in such centres may be, they often do not have the local
knowledge required by their distant callers when queries rise above the
very straightforward.
With due respect to those distant workers, it is difficult to resist
a quiet laugh when companies' schemes for saving money run into trouble.
The natural desire of the entrepreneurs Marx designated as
"capitalists" is to sew up their markets and their sources of supply, to
charge as much as they can get away with, and to minimise their costs.
Until societies and governments reacted with the birth of trades
unions and legislation to outlaw the worst abuses, the "capitalists" so
vividly described by Marx and Engels in 19th century Britain would go to
great lengths to argue that, to coin a phrase, there was "no
alternative" to the way they operated.
Since the collapse of the Soviet Union people have come to realise
that capitalism is not so much a system (as communism was) but rather
the way the world actually works.
The people who run multinational enterprises are always bellyaching
about excess "regulation," and sometimes regulation does get out of
hand. But there is usually a good reason why regulation became such a
growth industry in the first place.
There are different approaches as to how, if at all, capitalism
should be managed. One of the interesting anomalies is that the
capitalist model implies free movement of capital and labour (the third
"factor of production" economists like to talk about, namely land, is
not obviously mobile).
Yet while billions of pounds sterling, dollars and euros fly across
the foreign exchanges every day, and multinationals site factories
anywhere in the world where they think they can get the best "return",
migration is strictly controlled.
Indeed, as in many other nations, immigration was an unpleasantly hot
topic during the U.K.'s election campaign.
Not new
The way modern capitalism works is often called "globalisation", but
there is nothing new about enterprises having a worldwide reach. During
the 19th century and in the early 20th century, British manufacturers
would scour the world for the raw materials used for production in their
home market. This kind of thing still goes on of course.
The different feature of modern capitalism is that manufacturers in
the advanced industrial countries will typically "outsource"
manufacturing and services (eg: call centres) if they see an opportunity
to cut costs.
The so-called "single market" in the European Union is supposed to
make it easier for people, as well as capital, to move around Europe,
but we have recently seen, as a feature of the French referendum
campaign, that "Polish plumbers" are not popular in France because they
allegedly deprive the locals of jobs.
It is usually because they need jobs that people migrate. Obviously
some of the ancestors of U.S. citizens were fleeing persecution in
Europe, and some simply had the spirit of adventure. But most migrants
went there for jobs - as did most migrants from Ireland to England in
the 20th century.
So far the "outsourcing" of jobs in call centres overseas has not
provoked a huge outcry for the simple reason that unemployment is low in
the U.K. at present - indeed jobs are plentiful. This could change of
course.
The objection to the use of call centres - especially when they are
so far away - is that they don't always produce the standard of service
the consumer wants. In their desire to cut costs many modern businesses
are forgetting that, however they treat their workforce, in the end it
is the consumer who keeps them in business. -
(Guardian Newspapers Limited 2004) |