------------------------------
From: dhenwood@panix.com (Doug Henwood)
Date: Sat, 27 Jan 1996 16:57:52 -0500
To: INTERNATIONAL POLITICAL ECONOMY <ipe@csf.colorado.edu>
Subject: Larry Summers on globalization
In a neglected passage in his famous December 12, 1991, memo, in which he
argued that Africa was "vastly under-polluted," Lawrence Summers also said
this, commenting on a passage from a draft of that year's World Development
Report (the opening quote):
<quote>
"Closer integration has...demonstrated the benefits of exploiting economies
of scale in technological development, production, and trade." Alfred
Chandler has a book (Scale and Scope) on the development of modern
industrial capitalism from (roughly) 1880-1920 in which he argues the most
important factors for firms' success were capturing economies of scale (in
R&D and production) and scope (marketing). What's new? Throughout the
outline I struggle with the evidence showing *what* exactly the proclaimed
revolution has revolutionized. FDI has always existed and many of the
world's largest firms have been transnational from birth. The
"globalization" of production has happened sure, but has the
telecommunications revolution really had a major impact? I would guess the
invention of relatively simple things, like steamship transport, did more
for world trade than digitalized data transmission through fiber optic
cables. How exactly has the nature of manufacturing been "fundamentally
altered"? Aren't people just incrementally better at doing things they've
always done, like locate production in the lowest cost location for
delivery to markets (now "globalization of production"), like manage
inventories in a least cost way (now "just-in-time inventory management"),
like choose the appropriate level of vertical integration depending on the
production process (now "critical buyer-seller links"), like match
production to demand (now "short product cycles"). Is a "revolution really
the appropriate metaphor for these changes? I think the detailed evidence
from the US about the very small impact on productivity from the large
investment in information technology should convince us to hold off on the
breathless tone about technology.
<endquote>
I think Summers may have an important point here; both capital's publicists
and its enemies (such as they are) seem to fall prey to the breathlessness
tone he describes.
Doug
--Doug Henwood Left Business Observer 250 W 85 St New York NY 10024-3217 USA +1-212-874-4020 voice +1-212-874-3137 fax email: <dhenwood@panix.com> web: <http://www.panix.com/~dhenwood/LBO_home.html>