Hard work and determination: crucial ingredients for the American Dream to become the American reality.
Or so I’ve heard.
In an ideal world, all things generate a profit and all are empowered to find success. Nothing is ever ideal, so it seems we need exploitation and greed in order to achieve this profoundly paradoxical dream.
The textbook definition of capitalism (the “textbook” in this case would be the dictionary, I suppose) is as follows: an economic system where an initial investment of capital is made with the expectation of making a profit.
It may shock you, however, to learn that capitalism emerged as a direct successor to feudalism. You know, the social system built on the relationship of obligation and servitude between vassals (those that maintained land) and lords (those that owned land).
After the development of agriculture, societies like that of England became stratified, dividing wealthy landowners – who required field workers – and peasants – who provided a source of cheap labor. Social classes became further divided during the advent of land enclosure and division, which allowed landowners to use their land, as well as their laborers, for profit.
Over time, market relationships eventually replaced feudal relationships and people were allowed to begin working for wages instead of obligatory contracts. As capitalism took root in European society, it shifted the focus of human labor from the fields of agriculture to the factories of industry.
But capitalism didn’t stay confined to Europe.
Global capitalism, which can be understood as the worldwide movement of labor and capital, produced several corollaries – some good, some not so good.
One of the most noticeable consequences of global capitalism is outsourcing – the transfer of skilled labor jobs from an internal source to an outside supplier. So if capitalism is all about profits, and if outsourcing can allow corporations to increase profits and minimize risk and expenses then hey, why not?
None of it would be possible without assistance from the state or, more specifically, through the deregulation of international trade.
In 1994, the North American Free Trade Agreement (NAFTA) created incentives for U.S. corporations to outsource jobs to Mexico. Perhaps the most influential regulation that NAFTA created was the 807A rule, which gave U.S. companies permission to export raw materials to Mexico and re-import it to America without duties or quotas, thus opening the door to foreign labor exploitation.
In addition to NAFTA regulations, the U.S. Congress passed the Trade Development Act in 2000 which allowed American corporations to outsource jobs to nations in sub-Saharan Africa and the Caribbean. By removing the barriers on imports and lowering the costs of importing, the U.S. government directly allowed multinational corporations to move jobs to other countries where labor regulations were more lenient.
In other words, the greed of multinational corporations led to the exploitation of impoverished foreign communities, which typically produces unfair wages, excessive work hours, unhealthy working conditions, poverty, and poor standards of living.
It’s not exploitation! American corporations are giving poor people jobs!
But let’s be real. The money earned in developing countries is rarely kept in their domestic economies – it goes straight inside the pockets of multinational firms.
Corporate greed has been gaining critics, primarily because its effects are being felt more strongly in the so-called “first world” via unemployment.
However, it must be pointed out that outsourcing and labor exploitation are common features of a capitalist society. As long as monetary profit comes first and healthy, sustainable communities come second, the working class will continue to be exploited.
Nike shoes, iPads, cell phones and designer jeans will always be affordable to the average American consumer just as long as manufacturing jobs remain permanently fixed in developing nations. In a world where wealthy, multinational corporations seek to gain the largest profits, they will continue to have a vested interest in exploiting laborers in poorer countries.
It’s feudalism 2.0.