Globalization - NEOLIBERALISM AS EXCEPTION

Aiwha Ong makes an important contribution to our thinking about neoliberalism by

distinguishing

between neoliberalism as exception and exceptions to neoliberalism

(Ong 2006b).

One example of neoliberalism as exception involves the creation in various parts of the

world of special economic zones which are largely separated from the rest of society, free

from government control, and within which the market is given more-or-less free reign.

These are “exceptions” because the market is not nearly as free elsewhere in society. For

example, early in its move away from a communist economic system, China set up “Special

Economic Zones” and “Special Administrative Regions” (as well as “Urban Development

Zones”) characterized by “special spaces of labor markets, investment opportunities, and

relative administrative freedom” (Ong 2006b: 19). While the state retained formal control

over these zones, de facto power rested with MNCs that set up shop within them. It was

those corporations that controlled migration into the zones as well as the ways in which

people in the zones lived and worked.

Naomi Klein described the Cavite Export Processing Zone (EPZ) in Rosario, a town

about 90 miles south of Manila, Philippines, in critical terms (Ong is also a critic) (Klein

2009: 202–29). Cavite is a tax-free zone sealed off from the local town and province. Such

zones are independent entities free to police themselves and to prevent those outside them

from seeing what is going on inside. They are, in effect, denationalized zones. Inside Cavite’s

gates are factories devoted to producing goods for some of the leading brands in the world

– Nike, Gap, IBM, Old Navy, and so on. However, the brand names are largely invisible, and

certainly do not bedeck the buildings in the zone. Furthermore, the buildings are not

devoted to the production of any one brand. Rather, various brands are produced side-byside

in the same factory, by the same workers, using the same machinery. The emphasis is

on low-cost production and squeezing as much production as possible out of the factories

and those who work there.

Klein argues that wherever EPZs exist in the world, they function in much the same way –
employees are mostly female, they work for contractors or subcontractors, wages are low

(often below subsistence), the jobs are tedious and require little skill. The factories are run

in military fashion, often by abusive managers. This is all very attractive to MNCs, as is the

fact that the zones are tax-free, at least for the early years that the work is done in them

(companies often shut down, or simply change their name, at the end of an initial tax holiday

in order to avoid paying taxes). That means that raw materials are shipped in tax-free

and finished products leave tax-free. As Klein (2009: 207) puts it, this amounts to “zero-risk

globalization.”

Conditions in Rosario are atrocious with much pollution, rivers of sewage, scarce running

water, crime, exploding population, and so on. The factories are run in an iron-fisted

manner with tight restrictions on bathroom breaks (employees are sometimes forced to

urinate in plastic bags hidden under their machines), talking, even smiling. Workers not

only earn low wages, they may work overtime for a few donuts, but no extra pay. The MNCs

that benefit from all this often claim that it is not their business since the work is not being

done for them but for sub-contractors.

Neoliberalism by exception can take a variety of forms, many of them less formal and less

audacious than those created in China and the Philippines. For example, in Asia several

countries have set up special zones for labor, tourism, the growing and harvesting of timber,

science parks, and knowledge centers. In a negative sense, these zones are not controlled by

national laws on such issues as “taxation, labor rights, or ethnic representation,” while in a

positive sense these zones are free to “promote opportunities to upgrade skilled workers, to

improve social and infrastructural facilities, to experiment with greater political rights, and

so on” (Ong 2006b: 78).

Ong calls the political result of constructing these zones graduated sovereignty. That is,

instead of governing the entire geographic area of the nation-state, the national government

retains full control in some areas, but surrenders various degrees of control in others to

corporations and other entities. While the creation of these zones may bring a series of

economic advantages, it also can create problems for the nation-state that is no longer in

full control of its own borders. (This is yet another indication of the decline of the nationstate.)
Another example of neoliberalism as exception involves the creation of growth

triangles,

or largely autonomous areas that link contiguous areas of neighboring countries.

One example is the Singapore/Jahore-Riau Triangle (Sijori) spanning Indonesia, Malaysia,

and Singapore. Such areas allow the exploitation of complementary resources that exist in

the border areas between countries.

Ong is primarily concerned with neoliberalism as exception, but she also deals with

exceptions to neoliberalism. These can be double-edged. On the one hand, such exceptions

can be used by the state to protect its citizens from the ravages of neoliberalism. For example,

subsidized housing can be maintained even if a city’s budgetary practices come to be

dominated by neoliberal entities and processes. On the other hand, they can be used to

worsen the effects of neoliberalism. For example, corporations can exclude certain groups

(e.g. migrant workers) from improvements in the standard of living.