Capitalists of the world united

Skilled and mobile workers benefit from a united front but it cannot last forever

Karl Marx tried to kick start a revolution with the catch cry of “workers of the world unite”. But in this, as in many other things, the father of modern communism was wrong in his reading of history. Instead it is the capitalists that seem closer to unifying around a shared ethos, whereas workers around the globe seem increasingly at odds with each other. The solidarity among the well-off have put them on the front foot as they continue to grab a growing share of global output, but they are unlikely to continue to get their own way.

Capitalists of old were the owners of factories and other businesses who made their living off employing others. Ownership of the means to produce goods put them at an advantage in relation to workers who could only make a living by earning a wage. The status of labourers only improved as the level of their skills became more important to production which put them in a better position to demand higher wages and improved working conditions.

The structure of ownership changed as growing scale meant that businesses could no longer be run by individual capitalist. Instead, corporations that issued shares on financial markets took over, and everyone, whether the chairman or the cleaner, worked for such companies. The level of pay was relatively flat with even the lowest rank of workers able to earn a decent wage (but only in the industrialized countries).

Globalization broke up this relatively harmonious arrangement on two fronts. Due to an increase in the supply of (typically low-skilled) workers across the globe, the higher levels of pay for everyone in the West could no longer be sustained. Yet, skilled workers from the West were now spread thin across the entire global market and so could demand a premium for their labour. In this way, it is not what you own but what you know that has become what defines your status within the economy.

The university-educated are thus now the holders of the valuable productive assets and could be seen as the modern-day capitalists of our time. But different to the capitalist of old, their assets are often put together in combination with each other rather than by employing others with fewer skills (as a factory owner might have done). The result of this has been that skilled workers tend to work together in big cities linked to the global economy but partially separated from the rest of the national economy.

This concentration of productivity in specific locations has resulted in many losing out at the hands of globalization. Previously, manufacturing jobs might have provided a route for people with fewer skills to earn higher wages. As many of the goods produced were destined for export, manufacturing was a means to tap into the gains from globalization. This path to prosperity has been cut off with such production being shipped off to low wage countries. What was left in terms of work for low-skilled workers typically tended to be service jobs supplied to the local economy.

The result of this has been diverging interests between those benefiting from globalization and those who want the domestic economy to be given priority. The differing views have also fed through into contrasting political outlooks. Those with more skills are likely to be happy with the status quo where globalization continues to dominate, while low-skilled workers have become open to options for change. For those wanting something new, populist politicians have risen to prominence through promoting national interest against external threats.

Populist from the left and right have offered up differing approaches, while mainstream politicians struggle to come up with a suitable middle ground. Whatever the policies, the manufacturing industry in the West has continued to be eroded away. With only so many factory jobs to go around, the battle has become a zero-sum game where some workers can only benefit while others miss out. Low-skilled workers in different places are thus pitted against each other in the fight for a brighter future.

The opposite is true of the winners from globalization who are not only benefiting themselves but also tend to have opportunities open up when their peers do well. Thus, the share of the economic pie for skilled workers thus  grows as it feeds off itself. The situation is further enhanced as the high cost of living in the large prospering cities tends to shut out others. Cultural differences between city and country folk adds to the sense of separation. Residents of large metropolises often share more in common with each other, irrespective of location, rather than their countrymen and women.

The low-skilled workers share a similar plight with others in the same situation but who live in other countries. Yet, the reliance on their local economy prevents any common bonds. Their identities too are more rooted in regional traditions, making them more nationalistic in outlook. So even if the number of those left behind by globalization continue to rise, their mounting number may not translate into political strength on a global scale. Instead, they may be left at the mercy of populists, whereby any victories will come with some feel-good factor but no respite.

In this way, it is through populist and the political system that the left behind will fight back even as capitalists continue to pile up the economic gains. United as the global skilled workforce might be, they look likely to lose out as the numbers in opposition mount up in their individual countries. And then any cross-border solidarity will not amount to much if the winners from globalization cannot keep their fellow nationals on side.