Huge social, economic and political transformations characterize the so called globalization process. After the 2008 global financial crisis, much of the academic debate in economics focused on its causes and the governance issues related to risk management, monetary policy and weak regulation. Nevertheless, changes in the capital accumulation and production trends on behalf of the reality of automation and of technological innovation have received little attention.
Throughout the last decades, a variety of growth models have overwhelmed the global scenario: while some countries have presented a consumption-driven growth model fuelled by credit, generally followed by current account deficits, other countries have developed an export-driven growth model, mainly characterized by modest consumption growth and large current account surpluses. In spite of the specific growth pattern, the finance-led accumulation regime has presented some distinctive features in labour markets.
Indeed, there has been a redefinition of labour and working conditions that affected livelihoods. The evolution of the capitalist relations of production has revealed changing labour organizing principles to cope with the dictates of increasing capital mobility: redefinition of tasks in the context of transformations in management practices towards new kinds of control in the workplace, job rotation, outsourcing, crowdsourcing and labour saving strategies. Attacks on labour unions and the diminishing organizational strength of collective demands need to be underlined. In this scenario, the deterioration of income distribution puts a downward pressure on consumption. However, on behalf of financial liberalization, households could expand the levels of consumption because they have access to credit, not only to mortgages but also to consumer loans, such as credit cards and overdraft bank accounts.
In historical perspective, the very real facts of capital accumulation, as well as of production and employment trends, have turned out to show their economic, social and political limits and contradictions. Nation states have created opportunities to capital mobility and increasing global profits. As a result, there has been a trend to the corporatization of national policies in a context where the implementation of industrial policies has turned out to reinforce corporate power. Thus, the impacts of globalization need to be thought within the boundaries of a global accumulation dynamics where the interactions between the nation states’ policy targets and the workers’ needs are overwhelmed by tensions.
For instance, global competition and investment trends are currently driven by technological innovations that are labor-saving. Germany has recently launched the project Industrie 4.0 which is considered of significant importance to the continued competitiveness of German industry. Besides, the recent President Obama’s program A Strategy for American Innovation addresses that “… the United States cannot afford to be complacent. Our economic competitors are dramatically increasing their research and development (R&D) investments”.
Accordingly the ITIF’s 2015 report, the list of “innovation mercantilist” policies includes:
- Canada: Continued to misuse international intellectual property law to undermine pharmaceutical patents.
- China: Introduced expanded requirements for forced local data storage. China also used its semiconductor industrial policy to support domestic firms.
- India: Introduced local content requirements as part of its National Telecom Machine-to-Machine Roadmap and introduced local content requirements in solar power projects.
- Indonesia: Introduced local content requirements for smart phones and forced local data storage.
- Nigeria: Implemented local content requirements for information, communications, and technology products and forced local data storage.
- Russia: Implemented forced local data storage requirements and forced the local production of pharmaceuticals and medical devices.
- Turkey: Adopted safeguard protection measures in order to protect a nascent smart phone manufacturer.
Taking into account this scenario, we can notice a relationship between investment, innovations and the “competition among countries for business” that has been called “innovation mercantilism” (ITIF update, 2016). Indeed, in the race for global advantage in innovation, many countries embrace protectionist policies to expand domestic production and exports of high-tech goods and services. Therefore, households’ consumption will continue increasingly dependent on central banks’ and banks’ strategies since policies focus the stabilization of profits instead of employment and income goals.
As a matter of fact, as Hyman Minsky warned, the decisive question related to the policy making of this “innovation mercantilism” is “Who will benefit?”.