4.

Globalization, Neoliberalism, and the

“Precarious Classes”: The Next Phase
David R. Cormier and Harry Targ

I nterest in “globalization” flowered after the collapse of the Soviet Union and
the concomitant transformation of international relations from a bipolar world to
a unipolar one. The interest followed the opening of the floodgates of investment,
financial speculation, and trade to parts of the world that had previously resisted
capitalist penetration.
“Globalization” was not just a subject of academic or journalistic concern.
Politicians celebrated the process and some, such as former President Bill
Clinton, made the advancement of the neoliberal globalization process a cen-
terpiece of U.S. foreign policy. Both the rhetoric and practice of the current
Bush Administration advance the pursuit of “market democracies” to even higher
levels. Forcing democracy and freedom, as defined uniquely in the neoliberal
context by this administration and its neoconservative supporters, onto countries
around the globe has become a hallmark of current foreign policy. Much of this
activity is conducted under the guise of fighting global terrorism. This is happen-
ing distinctively with those nations where U.S. economic interests are especially
strong such as in oil rich regions or in strategic military locations. This foreign
policy approach, while not always supported fully by the other G7 countries, has
been generally accepted by the major developed countries.
Market democracy is the concept of a society organized so that economic
activities occur with little or no government restrictions, i.e., free markets prevail in
all sectors, with corresponding open political and cultural exchanges. It serves

59

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 60 Philosophy Against Empire

as a convenient idealization for those who seek to maximize profits in domestic and
foreign transactions. This permits foreign as well as domestic finance to invest
freely in the society, engage in exploitation of its workers and extract profits to the
maximum possible extent. However, political and market constraints do arise from
competitive factors and the inherent instabilities of unregulated systems. Of course
the primary international financial institutions, the International Monetary Fund
(IMF), the World Bank (WB), and the World Trade Organization (WTO) further
promote capital penetration by demanding that all countries seeking membership
and/or their assistance adopt neoliberal economic policies.
Much of the first and second generation of academic literature on the subject
of globalization assumed that the international political economy had qualitatively
been transformed. Great debates ensued about the role of technology, the salience
of the state, the positive or negative impacts of the economic changes, and the
concomitant global economic and cultural transformations.
• Global celebrants proclaimed that the world was fundamentally changing; that
new technologies coupled with foreign investments were driving massively
increased economic exchanges across national boundaries. In the end, they said,
the world was heading toward a new global society, a society for which the planet’s
people would be net beneficiaries.
• Global determinists agreed that fundamental changes were occurring in global
life. While less enthusiastic about them, they believed that all nations needed
to subscribe to neoliberal economic policies to attract foreign capital and in turn
experience economic development. Again technology, investment, finance, and
trade were expanding across the globe and to survive and prosper nations had to
participate in the chase to attract foreign investors.
• Global pessimists also agreed that capital was traversing the globe as never before.
For these writers, however, the transformation was a disaster for humankind.
People were losing their personal autonomy, their potential political power, and
their cultural authenticity.
All three bodies of theory and data accepted the proposition that the global
political economy had been radically transformed. The density of interactions
across national boundaries was the new feature of this new age.1
An additional position on globalization began to appear motivated, in part, by
a skeptical reaction to the three positions sketched above. The global dialecticians
claimed that scholars and activists needed to question what was new about the
global political economy and what was not new. The dialecticians’ more nuanced
theoretical and historical assessment of the contemporary period suggested that

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 Cormier & Targ: The “Precarious Classes” 61

there were features that were new but that the general processes of capital accu-
mulation remained similar to those characterizing the modern era.
As evidence accumulated on the impact of neoliberal globalization, the dialecti-
cal perspective came to include more critical assessments in light of the negative
effects of this process experienced by a majority of the world’s populations and the
globe itself. Globalization has definitely benefited the owners and executives of the
transnational corporations, of the banks and other financial players, key persons
in the sympathetic international financial institutions, the local politicians and
business persons in developing countries who readily collaborate with this process,
and the many media and political supporters of globalization. At the same time,
indigenous peoples, peasant farmers and small land owners, and urban and rural
workers and their families, in both developed and underdeveloped countries, have
experienced major setbacks in their standard of living. Underdeveloped societies
are witnessing destruction of their cultures. The accompanying environmental
damage threatens major changes in the climate and natural processes worldwide
which, while serious in their own right, only aggravate the economic, political,
and cultural damage to the majority of the human population.

The Global Dialecticians’ View

The global dialecticians, drawing upon Marxist and other alternative theories,
argue that the capitalist system is based upon the drive to expand in order to
accumulate more capital, which is an essential feature of capitalism. This expansion
has been manifested in terms of size of economic actors, with small enterprises
being replaced by ever-larger ones. The end product of such a dynamic was the
emergence of small numbers of huge transnational corporations, banks, and financial
firms, dominating ever-larger shares of national and indeed global economies.
A system of small entrepreneurs has been replaced by a global economy in which
some 200 transnational corporations control about a quarter of all that is produced
on the face of the globe. So expansion meant greater control which is necessary
for improved returns. It also had a geographic component. The ever-growing
corporations and banks sought markets, cheap labor, and investment opportunities
all across the globe. Expansion, in the sense the size of players and of markets,
along with increased mobility of capital, has been an integral part of what is called
today “globalization.”
Expansion and capital accumulation, the dialecticians claim, is derived from
the extraction of value from goods and services produced by workers and ends
up as profits. Wherever work was cheapest, the rates of profit tended to be

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 62 Philosophy Against Empire

the greatest. Pursuit of increased profit rates and securing customers for goods and
services drove the system of imperial expansion. That, the dialecticians said, has
not changed.
What had changed was the extent of social interactions around the world,
the magnitude of the centralization of the global economy, and the breadth of
control by an ever-shrinking set of economic actors. In addition finance capital,
flowing through banks, insurance companies, and investment houses, controls a
greater share of all global economic transactions. The over-whelming extent of
financial speculation is a dramatic new feature of global exchange. But, in addition to
the economic and political developments under neoliberal globalization, a drastic
transformation in the condition of a majority of the world’s population, of the
global workforce, has been occurring as well. Little attention has been paid to
date to this development and its consequences. This ominous transformation is
the object of this paper.

Neoliberal Policy Shapes Globalization

If globalization is a process of increasingly dense economic, political, and

cultural interactions across traditional national boundaries, then there must be an
explanation of why it has occurred the way that it has. For the celebrants,
determinists, and pessimists the key to this explanation lies to varying degrees in
the application of new technology, particularly information processing and telecom-
munication technology. Each of these approaches is based upon a technological
determinism of some kind.2
By contrast, global dialecticians admit a role for technological development
but they place it within a broader range of causes underlying globalization. These
range from a modern version of the centuries-old desire to gain profit and accu-
mulate capital through international trade to seeking strategic advantage through
greater economic and political power. Dialecticians recognize that a new foreign
policy approach evolved in the U.S. following World War II, primarily from the
transition period of the 1970s onward. This policy focuses on insuring that
virtually all economies are open to capital investment, from productive capital to
financial capital, for the benefit of the owners of that capital. This policy, called
neoliberalism, forged the current form of globalization and facilitated penetration
of foreign markets by capital for eventual extraction of profit. Promoting “free
markets” and “market democracies” is essential to the neoliberal approach. The
political and cultural changes that accompany neoliberalism are part and parcel of
this approach as it is implemented around the globe.

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 Cormier & Targ: The “Precarious Classes” 63

Consistent with neoliberal beliefs, the United States, the other G7 countries,
the IMF, the WB, and the recently created WTO, have used all the pressure at their
disposal to force developing nations around the world to implement neoliberal-
ism. This includes reducing the amount (number of programs and dollar size) of
governmental economic activities, deregulating and privatizing their economies,
and shifting their productive base from domestic consumption to export markets.
The main basis of the leverage exerted by the developed capitalist world to demand
that countries embrace neoliberalism was the rapidly accelerating debt and the
debt service burden of developing nations beginning in the 1970s.3
While almost every developed and aggressive developing country in the world
adopted the neoliberal policy agenda to attract foreign investors and to earn scarce
foreign exchange through a growing export of key products during the 1970s and
1980s, much of the former Third World, or under-developed nations, remained
outside the global economy. Half of world trade, imports and exports, was carried
out by countries of the European Union, the United States, Canada, Japan, and
China (late 1990s data).4 Seven countries (Britain, China, France, Germany,
Japan, Russia, and the United States) represented about half the world’s gross
domestic product.5 Outside these major players another select group of smaller
economies received special attention; about 75 percent of all foreign investment
in developing countries in 1998 went to just twelve countries.6
In other words, while the world was opened up for capital penetration, the
main participants in the new system of neoliberal “globalization” remained a
small percentage of the world’s nations and peoples. Increasingly the remaining
majority were more vulnerable to capitalist expansion and exploitation while they
were no more the beneficiaries of it than before. And with declining government
supports under neoliberal policies (less funding for basic nutrition, potable water,
health care, education, access to land and other necessities), most people were
worse off than they had been.7

Globalization, Neoliberalism, and Workers

To better understand these conclusions, we examine these globalization processes

from the vantage point of the United States in both the U.S. and elsewhere in
the world. According to Bureau of Economic Analysis (BEA) data, during the
so-called “Golden Age” from 1946 to 1968, the economy went well for U.S.
corporations; it grew by over 4.0 percent per year.8 Real corporate investment
increased more than 2.5 times during that period (4.34 percent per year). Real

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 64 Philosophy Against Empire

profits got off to a fast start but began to slow down as the era ended. Workers
did relatively well on average as wages grew steadily along with benefits.
But by 1970, things began to go bad for businesses and workers in America.
The investment rate dropped noticeably at home, as did the domestic rate of
return. Foreign investments became more attractive to U.S. investors and foreign
opportunities for U.S. capital began to open up. The domestic rate of profit fell
sharply, triggering a political struggle between capital and labor which capital
eventually won. The arrival of the Reagan Presidency was the highpoint of that
first struggle. The 1970s was truly a decade of transition.

Corporate Response

In their efforts to overcome the declining rates of profit that occurred during
the transition following the Golden Age, corporate leaders and their political
allies brought about significant structural changes in the U.S. economy. First, as
Bluestone and Harrison described, in the 1970s a massive “deindustrialization of
America” began to take place in earnest as disinvestment in domestic productive
capacity occurred.9 In the 1970s alone about 30 million jobs were lost through
plant closings, capital flight, and shifting corporate investments across sectors and
borders. The trend was to relocate manufacturing in low wage areas such as the
southern states or in low-regulation developing countries. This led to lower labor
costs and higher profit margins.
Second, stimulated by President Nixon’s withdrawal in the early 1970s
from the Bretton Woods system of regulated international exchange rates and
President Reagan’s massive tax cuts for the rich of 1981, a radical shift occurred
in investments from the production of goods and services to financial speculation.
Investment dollars went into buying stocks and bonds, foreign currency purchases,
and junk bonds. There was a quantum shift from the “real” economy of jobs and
incomes to the “virtual” economy of electronic financial manipulation.
Third, the Reagan tax cuts also transferred huge amounts of capital back to
wealthy households, spurring a search for investment opportunities that led to a
surge in foreign investment by U.S. investors. In many cases, the returns on direct
foreign investment exceeded those for domestic investment, further encouraging
the movement of U.S. investment capital to overseas production, distribution, and
other businesses. Thus the demand for lucrative overseas investment opportunities
created pressure on American foreign policy to provide such favorable circumstances.
Fourth, domestic markets for products produced overseas and imported for
sale in the U.S. became stratified; some products were for consumption by low-

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 Cormier & Targ: The “Precarious Classes” 65

income consumers such as clothing and toys, while others, with higher unit profits,
were increasingly targeted to more selective consumers such as automobiles,
computers, and home electronics. The old “Fordist” economy in the U.S., which was
based upon high-output mass production, good paying jobs, and steadily increasing
levels of mass consumption, evolved in two directions. Some goods-production
began to go overseas or to non-union areas in the American South to capture
lower labor costs. Mass production, especially of durable goods, was replaced by
just-in-time, lean production for niche markets. Literally millions of lower-paying
jobs in service-providing industries, mainly in retail trade and services, replaced
the lost high-quality jobs. The new economy was based on the realization that
a sizable proportion of the population would become low-income, with limited
purchasing capability. Low-income workers became economically disenfranchised
and now are considered “redundant” by many policy-makers.
In the world of deindustrialization, financial speculation, and just-in-time
production, the returns on investment improved and real profits rose in the United
States from the mid-1980s onward. Real wages peaked during the 1970s and fell
or stagnated thereafter. Working conditions worsened as regulation of the work
process was reduced. This became a time of declining labor standards. Except for a
brief period in the late 1980s, the dollar rose in value compared with other currencies
throughout this period, which stimulated import growth relative to exports, creating
trade deficits which have continued to grow to massive levels.
The current account deficit, the gross measure of what the U.S. owes to the
rest of the world, is at a record level, over 6 percent of GDP.10 From 1983 onward,
the ratio of foreign assets in the United States was higher than that of the U.S.
investments overseas, a reversal of the historic trends of the twenty-five years
following World War II. This high debt to the rest of the world has put tremendous
pressure on the economy.

Consequences of these changes in the U.S.

Following the end of the American Civil War, manufacturing had become the
backbone of the U.S. economy. However, by the end of the Golden Era, economic
restructuring began to change this fundamental aspect of the economy. The out-
put of goods-production, in general, and manufacturing, in particular, as a share of
total output and private sector output declined by over half, more so since 1981,
according to the BEA. Manufacturing output as a percentage of the private sector
output has fallen since the 1950s. Goods-producing includes the natural resources,

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 66 Philosophy Against Empire

mining, construction, and manufacturing industries. Work in these sectors has

been replaced mainly by jobs in services and retail sales.
High-quality, goods-producing jobs made up almost half the private sector
workforce and manufacturing employment counted for 40 percent of private sector
employment in 1946. By 2003, the goods-producing share of employment was
down to 20 percent and manufacturing was at 13.5 percent of private sector jobs.
Correspondingly, service-providing industries now account for 80 percent of
private sector employment; retail trade and services industries together account
for almost three-quarters of service-providing jobs.11
This is the process of deindustrialization, the shift from investing in goods-
producing enterprises to other ventures and the accompanying change in the
nature of jobs. It has become a major trend since the late 1960s. Some manu-
facturing still happens in the U.S. but much has been shifted overseas to low-
cost labor markets, leading to fewer quality jobs in the U.S. but higher profits for
American corporations. As these job change data indicate, deindustrialization has
completely altered the industrial composition of employment in the U.S.
As the industrial distribution of jobs in the economy shifted to service-
providing, an additional trend appeared. Historically, goods-producing jobs averaged
substantially higher earnings, both hourly and weekly, than did service-providing
ones. As those goods-producing jobs disappeared, especially those in manufacturing,
a devaluation of labor occurred. Bureau of Labor Statistics (BLS) data on real
(inflation adjusted) average weekly earnings from 1964 through 2003 clearly show
this devaluation which is summarized on Table 1.12

Table 1
Real Average Weekly Earnings (2002 $ per week)

Peak Year 2003 Diff. ($/week) Diff. (percent)

Private sector (PS) 616.76 (1972) 504.94 -111.82 -18.1
Goods-producing (G-P) 710.31 (1978) 650.50 -59.81 -8.4
Service-providing (S-P) 574.76 (1972) 472.34 - 102.42 -17.8
Ratio G-P/PS 1.152 1.288
Ratio S-P/PS 0.932 0.935

Source: BLS, Establishment Data, Historical Hours and Earnings, Table B-2,
for years 1964 through 2003.

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 Cormier & Targ: The “Precarious Classes” 67

In general, real average weekly earnings in the private sector and for the
service-providing sector reached their post-World War II peaks in 1972-73 while
the goods-producing sector peaked in 1978. Then real earnings fell until 1995-96,
followed by a slight increase through 2003. These real average weekly earnings
values are summarized on Table 1, with the corresponding dollar value difference
and difference relative to the peak value (in percent).
Labor devaluation occurred in two ways during this period. First, all earnings
values fell from peak year to 2003 in dollars per week and relatively, by substantial
amounts. Second, while real average earnings in service-providing jobs stayed
essentially the same level relative to the average private sector earnings, real
average earnings in goods-producing jobs increased relative to the private sector
average. This is indicated by the ratios of earnings, of goods-producing to private
sector (G-P/PS) and of service-providing to private sector (S-P/PS), which are
also shown on Table 1.
This second point can be said differently. After four decades of deindustrial-
ization, by 2003 the goods-producing weekly earnings average was up to 28.8
percentage points above the private sector average compared to 15.2 percentage
points above in the peak year of 1978. On the other hand, the service-providing
weekly earnings average was 6.8 percentage points below the private sector average
in its peak year of 1972 and 6.5 percent-points below in 2003. Comparatively,
both goods-producing and service-providing jobs lost value in absolute terms but
relative to the private sector average, goods-producing earnings rose in relative
value while service-providing earnings stayed the same.
Since there are far more service-providing jobs today than goods-producing,
the net effect of this drastic shift in earnings is a substantial decline in real earnings
as evidenced by real average weekly earnings for the private sector falling by 18
percent. As one might expect with such declines in earnings, this plays out in
lower incomes for working families. As income inequality increases over the same
time frame, lower income brackets lose shares of total national income while
upper income categories gain.13 We go through this detailed discussion of data
to establish without question the devaluation of work here in the U.S. that has
accompanied deindustrialization over the past four decades.

Rise of the working poor in America

A major consequence of these two trends is the growth of the working poor
segment in the American workforce. The situation of the working poor has
received little play in the mainstream media and even less policy attention. But

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 68 Philosophy Against Empire

it has become a critical issue in the economy. In general, measuring the number of
working poor is a difficult task. A loose definition of working poor is those persons
who are employed, whether full-time or part-time, but who earn income less than
the poverty level. An article in Business Week estimates the present number of
working poor, defined there as those workers earning under the current poverty
level wage of $9.04 per hour, at over 28 million full-time and about 15 million
part-time.14 This is over 25 percent of the workforce between ages 18 and 64.
Researchers from the Economic Policy Institute estimate that 24.3 percent of all
workers in the U.S. earned wages below the poverty level in 2003; 17.4 percent of
men and 48.0 percent of women. Thus, roughly a quarter of the American work-
force now falls into this impoverished status.
The high wages of goods-producing workers during the 1950s and 1960s were
no accident. This sector historically had the highest percentage of workers organized
in labor unions and they used their bargaining power to win higher wages and
benefits and better working conditions. By the twenty-first century the percentage
of the workforce that belonged to a union had fallen from better than one in three
during the mid-1950s to below thirteen percent. Union density in the private sector
in 2004 was down to under 9 percent and was about 35 percent in the public
sector. Using union density as a surrogate measure for union strength, this trend
is evidence of the decline in the bargaining power of labor, leading naturally to a
decline in labor standards.
The “Fordist” economy of the twentieth century in the U.S. was based on
mass production of goods, generally high wages, and high mass consumption of
those goods. The downward trend of real wages has impacted income growth
which, in turn, affected the ability of consumers to purchase products. While
real median family income has grown since World War II, it did so much faster
from 1947 through 1973 compared with the period from 1973 through 2002.
Real median income actually fell from 2000 to 2004. This leads to two important
additional points.
First, not all families shared in the recent income growth that did occur. From
1947 to 1973, “a rising tide lifted all boats” and all income categories realized
substantial real income growth of approximately the same level. Lower-income
households, while experiencing lower annual incomes, actually saw noticeably
more of a net percent gain than did higher-income households. But from1973
to 2002, the distribution of national income shifted toward that of a two-tiered
society. This was due to several factors: the major economic and political shift to
supply-side policies during the early 1980s, the impact of deindustrialization,
deregulation in many industries including finance, privatization, and globalization.

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 Cormier & Targ: The “Precarious Classes” 69

Wealthy families became more so while lower-income families fell further behind.
Over this second period of time, the richest fifth of families experienced income
growth 5.5 times greater than that of the poorest fifth, a far cry from the 1947 to
1973 experience. Income inequality substantially worsened in the U.S.15
The second point deals with effect of declining real incomes on consumer
demand. The impact of this trend toward widely divergent income growth would
normally be expected to slow down the growth of consumer demand. Instead,
conditions changed to encourage massive consumer debt which helped to over-
come potential slack in aggregate demand due to lower incomes for the majority
of households. This naturally led to greatly increased consumer debt of all forms.
Consumer debt in the U.S. doubled from $1 to $2 trillion dollars between 1994 and
2004.16 By 1989, average family credit card debt alone was $2,697 per year, jump-
ing by 53 percent to $4,126 in 2001, according to the Economic Policy Institute.17
Bureau of Economic Analysis data show that total consumer credit exceeded $1.9
trillion or 18.9 percent of GDP by 2002. However, the limitations of borrowing
with declining real incomes have begun to appear. Personal bankruptcy rates have
soared to record levels in all states and nationally in 2004.
The decline in high-paying manufacturing jobs has a multiplier effect, as high
as 7:1 in some manufacturing sectors, that spread across the entire economy. This
“ripple effect” has led to many more jobs being lost in communities than just the
goods-producing jobs alone. For example, the rash of shuttered businesses of all
kinds in the downtown areas of many Midwestern cities that suffered automotive
parts plant closings attests to this effect. Replacement businesses like pizza parlors,
tanning salons, and antique stores provide relatively few jobs which are no substitute
for the lost high-quality, goods-producing jobs.
Additionally, the U.S. industrial infrastructure averaged 81.6 percent capacity
from 1967 to 2003, but dropped down to 74.9 percent in 2003 (25.1 percent greater
ability to produce goods and services than was actually utilized). This has led to
further cut-backs in production and lay-offs. With the cost burden of this excess
capacity, businesses continually search for ways to lower costs and typically turn to
cutting labor costs, where the response is most rapid. Investors shift production to
cheaper labor markets, usually in the southern, right-to-work states in the U.S. or
overseas in less developed countries. Neoliberal policies are designed to open the
doors to investors in countries where heretofore there had been barriers to invest-
ment, including rigid investment regulation. In the end, such liberalization policies
have moved much of the United States goods-producing system offshore.
Unfortunately, these changes in the U.S. economy have not benefited most
American workers, especially the working poor. We acknowledge that more than

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 70 Philosophy Against Empire

deindustrialization has contributed to these trends and that globalization alone is

not responsible for them all. Many policy-makers blame rapid productivity growth
and changes in consumer demand for these job trends. However, in a study by
Josh Bivens neoliberal trade policies were found to account for 59 percent of the
decline in manufacturing employment since 1998, while these other factors have a
much smaller impact.18 This is at the heart of the damage due to deindustrialization.
Similarly, as we shall see next, both rural and urban workers have also suffered in
the less developed countries impacted by neoliberalism.

Consequences of these changes in developing countries

Global data suggest a growing gap between rich and poor everywhere. As the data
on earnings described above imply, income inequality has risen dramatically in
the U.S. over the past four decades. As the effects of globalization spread across
the globe, the worsening of income inequality follows. Recent estimates indicate
that in 2004, 1.2 billion or a fifth of the world’s people live in extreme poverty, on
less than $1 a day.19 In addition, another 2.7 billion live in poverty on less than $2
per day. As the United Nations Development Program reports, of the 4.6 billion
people in developing countries, more than 850 million are illiterate, a billion lack
access to water, and 2.4 billion lack access to basic sanitation.20 Nearly 325 mil-
lion children are out of school and 11 million under the age of five die each year
from preventable diseases.
Weller, Scott, and Hersch report that in 1980 median income in the richest
countries (top 10 percent) was 77 times greater than the median income in the
poorest (bottom 10 percent).21 By 1999, the gap had grown to 122 times. They
claim that the numbers of the world’s poor have grown from 1987 to 1998 and the
world’s poorest people lived on 72 cents a day in 1980 and 78 cents in 1999. They
conclude that “The empirical evidence suggests that reductions in poverty and
income inequality remain elusive in most part of the world, and, moreover, that
greater integration of deregulated trade and capital flows over the last two decades
has likely undermined efforts to raise living standards for the world’s poor.” 22
The International Labor Organization presented data on stagnation and
regression of working class life in Latin American countries.23 Virtually no
employment growth in the higher-wage manufacturing sector occurred there
between 1990 and 1998, while 85 percent of the new jobs were in the informal
sector (informal sector jobs are estimated to constitute 59 percent of non-farm
jobs), involving tiny businesses, personal services, and illegal activities. Work

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 Cormier & Targ: The “Precarious Classes” 71

in the informal sector is low paid, with no labor protections, benefits, or possibilities
of joining unions.
In a New York Times article about conditions in Latin America, Larry Rohter
wrote: “Almost without exception, economic growth in the region has either
slowed or stalled altogether. Unemployment, crime and social violence are growing,
as is popular frustration with a nominally democratic political system that has left
many of the 350 million people in South America feeling that they are trapped in
an endless cycle of stagnation, corruption and incompetent rule.”24
The radical transformation of the U.S. industrial economy to a “post-industrial”
economy has involved several features. First, a large portion of manufacturing
jobs have gone overseas. Second, real average wages for workers in the U.S. have
declined. Third, with cheapened wages, foreign investments in the U.S. have
increased. Fourth, surviving U.S. manufacturing and jobs in the service sec-
tor have been increasingly filled by immigrant laborers who were dispossessed in
their homelands. Fifth, deindustrialization, aggravated by highly mobile capital
and devalued wages, has led to a precipitous decline of labor unions and in the
bargaining power of labor. And with that decline has come a devastation of the
minimal labor standards in the U.S. that had been gained through long years of
workers’ struggle.
This transformation of the U.S. economy is inextricably linked to the trans-
formation of the global economy. With the barriers to global capital mobility
eliminated, globalization fueled by neoliberalism has transformed the international
political economy by driving down wages and living conditions for a growing
portion of the world’s workforce. This includes driving small-holding farms out of
existence and replacing them with massive factories in the fields with high labor
productivity and employing fewer farm workers. More workers in factories earn
poverty wages, even in developed economies such as the working poor in the U.S.
Peasants are forced off the land and migrate to the cities seeking work, ending up
in the “informal” sector, i.e., street hustling.
Capital accumulation and the drive for profit has transformed industrial
economies, created massive capital flight, destroyed high paying jobs, generated
growing immiseration in both developed and developing countries, and replaced
the basis for profit-making from the production of goods and services to financial
speculation. Neoliberal globalization has opened doors of the world for mobile
capital and new technology has speeded up production, distribution, and com-
munications. Under this new mode of capitalism, remunerative labor is becoming
redundant in many areas of the globe.

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 72 Philosophy Against Empire

Analyzing Globalization

Marxist theory, as a scientific study of the capitalist mode of production, was

developed during the industrial revolution. Exploitation was defined as the level
and rate at which capitalists expropriate the surplus value of goods and services
produced by workers. As the expropriation evolved, the largest capitalists accumu-
lated more and more capital as a result of success in brutal competition with other
capitalists. Huge concentrations of capital resulted. In our own day, of course, that
meant the emergence of multinational corporations and giant international finan-
cial institutions. The capital accumulation process, with its cutthroat competition
among the dwindling number of capitalists occurring nationally and globally, each
using the latest technology to produce more products in shorter times with fewer
workers, contributes to a decline in consumer demand followed by declining profit
rates. The emergence of finance capital, with its borrowing and lending, credit and
interest, provided a way to delay the inevitable consequences of this tendency.
Lenin pointed out that imperialism, as the latest stage of capitalism by the
start of the twentieth century, was a system of increasingly concentrated capital
linking production with finance. Banks and investment houses would play a larger
role in generating profits. While his insight was accurate, Lenin could not have
predicted the magnitude of control the small number of multinational corporations
and banks would have by the dawn of the twenty-first century. Likewise he could
not have foreseen the roles that consumer credit and financial speculation would
come to play in the global economy.

Dependency theory

As a result of the global movement for decolonization after World War II and
the growing recognition by peoples in the “Third World” that formal political
independence did not mean economic autonomy, progressives began to debate
about “dependency” and codified a “dependency theory.” Writers such as Andre
Gunder Frank, Walter Rodney, Samir Amin, Theotonio Dos Santos, Fernando
Cardoso, and Paul Baran did not see their intellectual work as falsifying that of
Marx and Lenin, but rather as illuminating the impact of the global economy on
poor countries. They sought to better understand the economic, political, and
cultural dependence that countries of the Global South experienced. Further, they
sought to correct the mistaken notions of some Marxist theorists that as capitalism
spread across the face of the globe, the capitalist mode of production would auto-
matically replace pre-modern economic formations. It was not necessarily the case

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 Cormier & Targ: The “Precarious Classes” 73

that capitalist penetration would lead to these countries replicating the develop-
ment experience that had been characteristic of Europe and North America.
The core idea out of which different strands of dependency theory developed
was the distinction between “core” and “periphery” countries. As core-periphery
relationships were institutionalized, core countries gained disproportionately from
them and the periphery lost. The only beneficiaries in the periphery of the dependent
states were the ruling elites in those countries whose interests and outlook were
more in keeping with ruling classes in the core countries.
Given the brief summary of data reported above, it is clear that Marx, Lenin,
and dependency theory provide a useful “tool kit” for exploring the historic
development of what is referred to as globalization. Marx predicted the concen-
tration and centralization of economic power as characteristic features of capitalist
dynamics over time. Lenin gave the concentration a twentieth-century or modern
meaning by adding insights about the form of concentration and the role of
finance capital (and its export) in the modern world. Dependency theory provided
a way to view the relationship between the developed capitalist nations and the
developing economies of the Third World, especially in the post-colonial era, that
accounts for the continuing exploitation of the latter by the former.
The devastating consequences of capitalist development over the last two
hundred years (as well as the extraordinary unleashing of creative impulses in
science and technology) for workers worldwide have been presciently described
and predicted. However, recent analyses suggest that the global transformation
of capitalism, as described above, may be having consequences that will be of
a magnitude equal to the transformation of the world of feudal agrarianism to
industrial capitalism.

The Emergence of the Precarious Classes

In line with this theory, Samir Amin suggests that the nature and impacts of global
capitalism may be continuing extreme exploitation in the Marxist sense while
going beyond it as well.25 He estimates that there are about three billion workers
in agriculture (primarily rural peasants) around the globe today. He estimates that,
given the high productivity of agriculture today, some tens of millions of these
produce all the food that would be needed to feed the world’s population. The
largest share of these core food producers work in the concentrated agro-industrial
sector and/or represent large private land holders who engage in food production
for export markets. For Amin, this means that about 2.8 billion people living in
the countryside, particularly in a world of neoliberal agricultural production for

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 74 Philosophy Against Empire

export, have become redundant. Almost half the world’s population therefore is
becoming economically destitute, a potentially mobile population of peoples
traversing the globe in desperate pursuit of remunerative activity, in short, a
precarious class.
Amin then discusses the other three billion people who are largely part of
urban working classes. Among these are one and one half billion workers who
experience declining real income and jobs characteristic of the data summarized
above. This sector represents the “precarious” working class, a sector of the work-
ing class made redundant like most of the rural population. While Marx spoke
of a “reserve army” of labor that remained a pool of low-wage workers available
to drive down the price of labor power, this growing redundancy represents
a substantial majority of the world’s population, who are no longer relevant to
modern production due to neoliberal globalization and increasing rationalization
of work processes. These peoples are of limited value as consumers due to their
limited ability to purchase goods and services. They are irrelevant to the world of
just-in-time production of high unit price goods for targeted markets and a world
where a growing share of the profit system is derived from financial speculation. In
other words, neoliberal globalization may be leading in the direction of a capitalist
mode of production that leaves the bulk of humanity bereaved of the capacity for
human survival. These, we suggest from Amin’s analysis, may constitute the new
“global precarious classes.”
Manning Marable, in a recent presentation at the Boston Social Forum, adds a
racial dimension to the conceptualization of “global precarious classes.”26 Marable
reminds us that the great African American scholar, W.E.B. Du Bois declared that
the problem of the twentieth century in the United States was “the color line.”
While the character of the problem changed over the course of the last century,
there exists today a global variant, what Marable refers to as “global apartheid.”
Drawing on data of U.S. and global distributions of income and wealth and
relating the figures to neoliberal globalization, he estimates that most victims of
this new system worldwide are people of color. In other words, victimization from
globalization disproportionately affects people of color, the indigenous, and other
peoples historically subjected to colonialism and imperialism in both core and
periphery countries.
Marable argues that the impacts on U.S. workers of color include dispro-
portionately higher levels of unemployment, lower wages, and less income and
wealth. With pockets of extreme poverty come disparate responses from those
who cannot earn a living. Criminality increases and, with the generalized racist
character of the criminal law system, higher proportions of those in the court/jail

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 Cormier & Targ: The “Precarious Classes” 75

system are black and other “minority” peoples. As an extreme example of how far
this disempowerment process is carried, Marable estimates that some five million
former felons are denied the right to vote in U.S. elections. He concludes that
the system of neoliberal globalization increases joblessness, reduces wages, and
inhibits acceptable living conditions among peoples of color. In response, growing
restiveness and criminality brings down state repression such that incarceration
rates of the poor and marginalized grow drastically. And finally, the victims of
neoliberal globalization and state repression are prohibited from participating in
the political process.
In sum, the globalization of capitalism, its transformation in developed economies
from an industrial political economy to a kind of “post-industrial” society heavily
dependent on finance capital, the rising redundancy of “precarious classes,” and
the increasing racialization of the post-industrial neoliberal global world all
suggest a qualitatively transformed international political economy that may
require new theory and new politics.

The Global Economy and Global Violence

The transformation of the global economy through the centuries has brought
continued demands for change. Sometimes the demands for change have taken
a violent form. The American revolution of 1775 is an example. When violence
has occurred it has been as likely that it has come from ruling classes, violence
from above, who have resisted mass movements for economic and social justice.
Sometimes violence from below has occurred, reflecting anger and frustration;
seemingly random acts of physical and human destructiveness that have minimal
if any positive effects on the movement for progressive social change. Ruling elites
historically refer to the violence from below as terrorist, often intentionally
misrepresenting demands for change as violent acts by crazed people.
As we reflect on the next phase of globalization brought on by neoliberalism we
see the necessity of addressing connections between the qualitative and quanti-
tative economic changes described above and global violence. Our argument is to
avoid using the term “terrorist” or related words in a blanket fashion to describe
individuals or groups of persons who use or promote the use of violence on a
global, regional or local scale to oppose the influence, be it direct or otherwise, of
global capitalism and its major institutional defenders. We adopt this position due
to the indiscriminate use of the term by the Bush Administration, its allies, the
mainstream media, conservative politicians, and all those who promote continued
global capitalist hegemony. The term terrorist has come to mean anyone who

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 76 Philosophy Against Empire

opposes the policies of neoliberalism and the practices of globalization, especially

as dictated by the U.S. government, regardless of their behavior or activities. This
self-serving practice was proclaimed earlier by President Bush when he stated, in
effect, that persons, groups, or nations are either with the terrorists or they are with
the United States. We reject this usage as overly simplistic and as a hegemonic
propaganda device to generate popular support for the Bush Administration’s neo-
liberal policies.
The data on global violence indicate that while the twentieth century was the
most violent in human history from a casualty standpoint, interstate violence has
been on the decline for the last 30 or 40 years. However, intra-state violence is on
the rise. Violence between peoples inside states, be they ethnic conflicts, ostensibly
territorial disputes, or open civil war, have been on the rise. Political scientists
have begun to talk about so-called “failed states” as those in which institutional
order does not exist and thus violence occurs. To illustrate the rise of internal
violence, Kegley and Wittkopf report on data derived from studies by J. David
Singer that show that of the 231 civil wars begun since 1816, almost half of them
(107) began between 1989 and 1998.27
Kegley and Wittkopf consider “economic sources” of conflict as among a
variety of discrete causes. However, they reported “that 57 percent of the armed
conflicts between 1990 and 1995 erupted in the poor countries ranking ‘low’ in
the UN human development index.”28 An additional 34 percent of the armed
conflicts were in “medium-human-development” countries, while only 14 percent
occurred in those countries that scored high. The authors interpret the data as
follows: “Desperation has fomented domestic insurrection throughout all periods
of history, and today, even in the period of democratization and economic growth
through free trade and free markets, misery among those not sharing in the benefits
is breeding revolt.”29
Michael Klare, drawing upon data from 1970 to 1994, identifies the growing
wealth in the world (total global income rose from $10.1 trillion in 1970 to $20
trillion in 1994) and, at the same time, refers to the increasing gaps between rich
and poor nations and peoples, in wealthy and poor countries alike. Preceding
Samir Amin by six years, he wrote,
As the masses of poor see their chances of escaping acute pov-
erty diminish, they are likely to become increasingly resentful
of those whose growing wealth is evident. This resentment is
especially pronounced in the impoverished shanty-towns that
surround many of the seemingly prosperous cities of the third
world. In these inhospitable surroundings, large numbers of

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 Cormier & Targ: The “Precarious Classes” 77

people—especially among the growing legions of unemployed

youth—are being attracted to extremist political movements
like the Shining Path of Peru and the Islamic Salvation Front of
Algeria, or to street gangs and drug-trafficking syndicates. The
result is an increase in urban crime and violence.30

Klare then develops a four-fold “model” to predict intra-state violence. For

him economic suffering, as suggested above, establishes the pre-condition for
violence. Then environmental stresses, such as the lack of sufficient clean water sup-
plies, desertification, increasing population pressures on communities and resources,
and ethnic tensions round out the causal chain. Klare has also written about the
profusion of conventional weapons, e.g., rifles, bombs, hand grenades, rockets, etc.
that have flooded the global “arms bazaar” over the last twenty years. At this stage,
virtually any disenchanted group of people can have easy access to sophisticated
and deadly weapons. Of course, the seething discontent and violence from below
has been more than balanced by violence from above to crush movements of
alienation and/or progressive social change.
We suggest that the seething cauldron of global violence, arising mostly inside
nation-states but spilling over to a global extent, is a direct result of the growing
economic suffering and hopelessness of masses of the world’s peoples. We can only
surmise that the next phase of globalization and neoliberalism will increase the
pressure on the global masses such that this violence will increase. And, not to be
left out of the analysis, the imposition of control by global capital, as imperialism
of every period has been driven to do, will require greater and greater violence to
put down the people.

Neoliberal Globalization and a New Stage of Revolutionary

Ferment

It is necessary as we reflect on the long history of capitalism, imperialism, and

now neoliberal globalization that we think dialectically. Each and every stage in
the modification of capitalism as a mode of production has been met by protest,
resistance, and even revolution. While not successful in overthrowing capitalism
in most places (there have been obvious exceptions in the former socialist world
and in a few places today), resistance and rebellion forced the capitalist classes to
rescind or modify the system they instituted. Over a one hundred year period from
the revolutions of 1848 to the Paris Commune, to the eight-hour day movement
in the 1880s, to the rise of craft and industrial unions, to the massive campaign

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 78 Philosophy Against Empire

for the right to organize in the United States in the 1930s, to the rise of anarchist,
socialist and communist movements around the industrialized world, to the
victories of social democracies and welfare state advocates in post-war Europe and
North America, workers and their class allies were able to limit and divert the
worst consequences of industrial and monopoly capitalism.
These struggles were matched by extraordinary revolutionary ferment and
campaigns for decolonization in countries of the Global South. Lenin estimated
that 75 percent of the land mass of the globe was colonized by European states
in 1900. The whole edifice of formal colonization had come crashing down by
the 1970s as Portugal left the last vestiges of European empire behind. By the
early 1990s the most egregious anachronism of European imperialism and racism,
the white minority regime in South Africa, finally collapsed.
While the spread of neoliberal globalization, paralleling the collapse of the
Socialist Bloc, has left vast misery in its wake, it has also generated a new round
of resistance. This resistance is generically referred to as the “anti-globalization”
movement. While it metaphorically is linked to the “Battle of Seattle,” in fact, it
precedes 1999 by decades. Protest against agents of globalization—G7 countries,
the IMF, World Bank, WTO, the international debt system, trade agreements,
etc.—have grown around the world.
Representatives of popular movements have assembled by the thousands in
the world-wide Social Forum in Brazil, India, and the United States. Cross-
national campaigns drawing together labor unionists, environmentalists, women,
indigenous peoples, small farmers, and others have surged in the past decade. The
world is in the process of creating a new global movement to challenge neoliberalism
and globalization.
In the spirit of the “international proletariat” the next revolutionary changes
may be truly global. We argue that the role of progressives everywhere is to link
up with these movements, theoretically and practically, to articulate an analysis
of how “we are all in this together,” and to connect local struggles to the one big
struggle to change neoliberal globalization.
The philosophical implications of this empirical analysis are varied and
complicated. However, at the risk of over dramatizing, our findings, along with
the work of Amin, Marable, and others, suggest a threat from neoliberal global-
ization to the basic survival of much of the human race.

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 Cormier & Targ: The “Precarious Classes” 79

Notes
1. David Cormier and Harry Targ, “Globalization and the North American Worker,” Labor Studies
Journal, Vol. 26, No. 1 (2001).
2. Ibid.
3. Harry Targ, Strategy of an Empire in Decline: Cold War II (Minneapolis: MEP Publishers, 1986).
4. John W. Wright, The New York Times Almanac, 2000 (New York Times, 1999), p. 513.
5. Joshua S. Goldstein, International Relations: Brief Second Edition (New York: Longman, 2004), p. 63.
6. Wright, The New York Times Almanac, 2000, p. 512.
7. Wayne Ellwood, The No-Nonsense Guide to Globalization (London: Verso Books, 2002).
8. U.S. Department of Commerce, Bureau of Economic Analysis, Gross Domestic Product by Industry
(2005), http:// www.bea.doc.gov/bea/pn/GDPbyInd_VA_SIC.xls.
9. Barry Bluestone and Bennett Harrison, The Deindustrialization of America (New York: Basic
Books, 1982).
10. U.S. Department of Commerce, Bureau of Economic Analysis, Current Account Deficit, News
Release (March 16, 2005).
11. U.S. Department of Labor, Bureau of Labor Statistics, Employment, Hours, & Earnings from the
CES Series, for All Non-Farm Employees (November 19, 2003).
12. U.S. Department of Labor, Bureau of Labor Statistics, Establishment Data, Historical Tables, Table
B-2, from Employment, Hours, and Earnings from the Current Employment Statistics survey
(National), http:// www.bls.gov (July 31,2003).
13. This is shown in detail in Lawrence Mishel, Jared Bernstein, and Sylvia Allegretto, The State of
Working America, 2004-05 (Cornell, New York: ILR Press, 2004), Table 1.21.
14. Business Week, “Working … And Poor” (May 31, 2004).
15. Lawrence Mishel, Jared Bernstein, and John Schmitt, The State of Working America, 2000-01,
Economic Policy Institute (Cornell, N.Y.: ILR/Cornell Paperbacks, 2001), Chapter 1.
16. William Branigin, “Consumer Debt Grows At An Alarming Pace,” Washington Post (January 12,
2004), available at http://www.msnbc.msn.com/Default.aspx?id=3939463&p1=0.
17. Lawrence Mishel, Jared Bernstein, and Sylvia Allegretto, The State of Working America, 2004-05.
18. Josh Bivens, “Shifting Blame for Manufacturing Job Loss,” Economic Policy Institute Briefing
Paper, #149 (April 8, 2004).
19. Charles W. Kegley, Jr. and Eugene R. Wittkopf, World Politics: Trends and Transformation, tenth
edition (Belmont, CA: Thomson and Wadsworth, 2005), p. 225.
20. United Nations Development Program, Human Development Report, 2001 (New York, 2001).
21. Christian E. Weller, Robert E. Scott, and Adam S. Hersch, “The Unreliable Record of Liberalized
Trade,” Briefing Paper, Economic Policy Institute (Washington, D.C., 2001).
22. Ibid.
23. International Labor Organization, ILO Press Release (August 23, 1999).
24. Larry Rohter, “A Vicious Cycle: Failures and Instability,” The New York Times (April 13, 2002).
25. Samir Amin, “World Poverty, Pauperization and Capital Accumulation,” Monthly Review
(October 2003).

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 80 Philosophy Against Empire

26. Manning Marable, “Globalization and Racialization,” Znet (August 13, 2004), www.zmag.org.
27. Charles W. Kegley, Jr., and Eugene R. Wittkopf, World Politics: Trend and Transformation (Boston:
St. Martin’s Press, 2001), p. 436.
28. Ibid., p. 442.
29. Ibid.
30. Michael T. Klare, “Redefining Security: The New Global Schisms,” Current History (Nov. 1996),
http://www.currenthistory.com/archivenov96/klare.html.

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