Options for Jamaica-based manufacturers

Trevor A. Campbell, Reginald K. Nugent and David C. Wong, Contributors

Based upon most of what we have read and heard from the Caribbean academic community, political and business leaders and journalists on the subject of economic globalisation, we have come to the conclusion that the collective understanding of how modern industry is organised, as well as what is required to develop or participate in globally-competitive industries, in the context of globalised capitalist production, remains at a very shallow level within the region.

A case in point is Claude Clarke's article, 'Following the flying dragon', which appeared in last week's Sunday Gleaner (October 10) in response to Professor Winston Davidson's reply to Clarke's earlier critique of the People's National Party's recently published conference document, 'The Progressive Agenda'. It should be noted that our comments here are not to be perceived as providing arguments for or against the merits of 'The Progressive Agenda'.

According to Clarke, "Our political leaders need to wake up to the urgency of the country's economic challenges. They seem incapable of conceiving the types of strategic changes needed to move the country towards development. Some seem to have lost faith (if they ever had it) in our ability to be a competitive economy engaged in industrial production. Instead, they promote any number of ad hoc ideas in the unrealistic expectation that they can succeed in our dysfunctional and uncompetitive macroeconomic environment. They are prepared to leave high-value industrial production to other countries like China and India, against which they believe we have no hope of ever competing."

Wishful thinking

However, a close reading of Clarke's article will reveal that it represents little more than an exercise in wishful thinking on the part of a small group of nationalistic-minded, would-be manufacturers, who are clearly not aware of all of the complex requirements, demands and challenges that are integral to the process of producing commodities for a globally integrated market.

To assist in bringing some clarity to the discussion, we would like to bring to the readers' attention some remarks regarding the challenges facing would-be Jamaica-based manufacturers and the options that are available to them in the context of the contemporary global economy by two of the authors of this piece (Campbell and Nugent) made in 2003.

This will be followed by a comment from the third author, David C. Wong, which specifically addresses Claude Clarke's misconceived proposals regarding currency rate management, showing how he proceeds from a lack of understanding of the real processes that are unfolding in the world of capitalist competition.

The two poles of contemporary manufacturing

(Excerpts from 'Globalisation and the Crisis of the Caribbean Intelligentsia' by Trevor A. Campbell and Reginald K. Nugent, 2003)

"The accelerated process of globalisation is revealing in very clear terms the conditions under which commodities can be produced and exchanged on a competitive basis throughout the world. The possibilities for the development of modern capitalist industry are dictated by capitalist competition on a global scale. Any serious thought of developing a modern manufacturing sector must take into account the prevailing standards in the global economy. Modern global manufacturing today is organised around two poles: (1) production systems based on cheap labour and (2) production systems based on advanced technology.

"Where does Jamaica stand in relationship to these two poles? This question must be addressed as an element of any competitive strategy that is under assessment. For, unless this matter is settled one way or another, all efforts directed towards attracting investments are a monumental waste of energy and resources.

"It is clear that Jamaica (and most countries) is not able to compete with a country such as China that possesses an enormous reserve army of labour (as W.A. Lewis puts it, 'unlimited supplies of labour'). The huge labour pool drags wages down to a level that is far below what is required for the reproduction of the Jamaican worker. In other words, Jamaica's workforce is clearly too advanced in its cultural development to be exploited at 'slave-labour' wages. The Jamaica-based workers measure their standard of living against that of their relatives in the United States (US) and Canada, reflecting the high level of social and cultural integration between Jamaica and the North American region. To further bring home this point, we note the observation of one manager of an American apparel factory that once operated in Jamaica. In his letter to the editor (The Gleaner, Sunday, September 14, 2003), he makes the following observation: 'The issue of the minimum wage is another sore point. Unfortunately, the cost of living on the island is astronomical. Walk into Sovereign Supermarket with US$50, and you walk out with two little black scandal bags that can be balanced on your pinkies. Walk into a Winn-Dixie in Miami with US$50, and you need a shopping cart to carry out the groceries. Increasing the minimum wage only results in putting the population behind the eight ball as bus fares, groceries and all other items experience increased prices as business owners try to catch up with higher payrolls. It amounts to rearranging the deck chairs of the Titanic.'

worker expectations

"Modern communications, the daily circulation of people between North America and the Caribbean, and the tourist industry (Jamaica's most globalised industry) have raised the Jamaican worker's expectations for his or her living standards to those of the US worker. This is making it unviable to lower wages below their current levels. In fact, for this reason, the further development of the tourist industry will foreclose the possibility of low-wage manufacturing.

With respect to a production system based on advanced technology, the Jamaican business class does not have the material wherewithal to organise manufacturing around such a system. Specifically, building a manufacturing industry around advanced technology is simply not viable because the society does not Visitors check out a car displayed at the Geely booth during the Auto Parts Expo in Beijing, China, in 2009.


possess the scientific intelligentsia that is required to build an infrastructure to harness advanced technology. Furthermore, the introduction of advanced technology would throw large numbers of workers into the ranks of the unemployed and deepen the crisis for the political leadership. The political leadership sees employment as the goal of the economy, not developing the productive forces. Businesses are compelled to abide by the fundamental law of the capitalist economy (the law of maximum profit), not to meet the electoral goals of the politician.

"Fundamentally, we are dealing with a major crisis involving a relatively advanced Jamaican working class and an underdeve-loped capitalist class lacking the wherewithal to organise production around advanced tools. This class is underdeveloped because it was never able to prepare a scientific intelligentsia to lead it into the era of globalisation. Much of the current discourse on global competition and its impact on large sectors of the industry in Jamaica has invoked notions of unfair competition. This ranges from opposition to tariffs imposed on imported means of production (raw materials and machines) from abroad and subsidies on US-produced commodities. Let us examine more closely the thesis of unfair competition.

The issue of unfair trade

"What this argument presupposes is that there is some natural order that allows for fair trade under capitalism. The fact of the matter is that under capitalism, a capitalist enterprise can survive only to the extent that it expands its market at the expense of other capitalist enterprises. Capitalist competition is economic warfare and in matters of war (and some people would even say love), there is no such thing as fair play. This illusion that capitalism can be organised around a set of abstract moral principles or natural laws is now evaporating before our very eyes, as the expansion of global capital comes into collision with the legacy of protectionism that was handed down from the colonial past.

"Globalisation is making transparent the very essence of what capitalist exchange is all about. The existence of unequal trade reflects the relative strength of the different sectors of capital that are tied to particular nation-states. In the case of the global competitors, what they have at their disposal is the full might of their respective states to protect their interests in the global market. We are talking about the military apparatuses (guns, ships, submarines and fighter jets) that these states command and use to impose the will of their capitalist class.

The Challenge of leadership

"To be effective, political leadership must be able to respond to the objective demands of a given society. This requires an understanding of class relations and the contradictions that are inherent in the process of development and change in that society. The social classes within Jamaican society are being overwhelmed by the forces beyond what they are currently prepared to manage.

"In a world that is undergoing major economic upheavals resulting from the global restructuring of entire industries, all social classes and individuals are compelled to address the issue of their own survival. This is the issue that the intelligentsia is being called upon to clarify.

"Either this process results in the continuing marginalisation of the entire society, or it leads to a higher level of integration of the society into the global economy. The challenge for leadership is in bringing together the relationships necessary to develop the physical and social infrastructure of the society that will facilitate the latter process. Can a new leadership be put together that is able to assemble the cadre of intellectuals to make this possible? And who might these intellectuals be?"