Search results for Political economy

Summary

To investigate the hypothesis that CSR is an intermediary institution arising from processes of functional differentiation, these processes must be identified. This chapter focuses on the functional differentiation of the Indian economic system. It describes how monetization and the development of markets and incorporated firms under British colonial rule created the conditions for a modern capitalist economy to develop. As the chapter shows, this process of functional differentiation remained partial. A significant part of the economy remained ‘embedded’ in functionally undifferentiated social structures, in particular with regard to the rural agrarian economy. And economic transactions and non-economic spheres of society remained enmeshed within the core of India's modern capitalism.

In particular, large Indian industrial companies were not driven by the sole axiom of profit maximization, but by a blend of economic and non-economic logics. After independence, the adoption of state-based economic development policies triggered significant structural reconfigurations in India's political economy. However, while the functional differentiation of the economy progressed under this new setting, extensive regulation and political interventions restricted the role of profit-driven calculations in the economy.

In the following pages, the institutions and processes underlying this partial functional differentiation of India's corporate capitalism are analysed in four domains of business–society interplays: corporate governance, labour relations, relations between companies and politics, and companies’ non-business activities that are formally directed towards the common good, in particular corporate philanthropy.

Economic relations in pre-modern India

The formation of a functionally differentiated economic system in India is tightly connected with European colonialism, which asserted its power on the subcontinent from the mid-eighteenth century onwards. At that time, following the death of Emperor Aurangzeb in 1707, the Mughal Empire had already disintegrated into several hundreds of kingdoms and local chieftains. These feudal political units were more or less bounded into an unstable and war-prone system of allegiances and alliances, which was dominated by a few groups such as the Marathas, the Rajputs, the Bundelas, the Jats, and the Sikhs.

Summary

Corporate Social Responsibility (CSR) is an intriguing modern phenomenon. Since the development of corporate capitalism, owners and managers have been called upon to adopt ‘responsible’ business practices, that is, practices which can help society overcome its problems (for example, poverty, inequalities, harsh labour conditions, corruption, environmental degradation) while also benefitting companies thanks to enhanced public trust and legitimacy. With more or less willingness, companies have answered this call by dedicating resources to show their ‘responsible’ commitment to social welfare and progress, beyond the normal course of business and abidance to law. Under the catchwords of ‘trusteeship’, ‘corporate citizenship’, ‘stakeholder management’, ‘triple bottom line’, ‘doing well by doing good’, or ‘shared value’, the CSR discourse tends to repeat itself – plus ça change, plus c'est la même chose. However, CSR has also changed substantially in terms of both form and outreach. Since the 1990s in particular, as large companies have been dragged into growing controversy regarding their harmful social and environmental impacts, CSR has expanded worldwide in business organizations and governance structures with the promise to harmonize business–society interplays.

In the face of recurring discrepancies between the objectives put forward by CSR and the actual behaviour of firms, it is clear that CSR is not as virtuous and transformational as its promoters like to claim. Nonetheless, given the institutional and cultural extent of the phenomenon, CSR is bound to have effects that formulas such as ‘managerial fancy’, ‘window dressing’, and ‘green washing’ fail to grasp. How has the development of CSR in companies’ organizations changed the way these companies perceive and respond to problems in their social surrounding? How has CSR changed the way society perceives companies and conceives of their role within and beyond the economic sphere? Overall, is CSR about tuning capitalism to the expectations of other spheres of society, such as morality, law, or politics? Or is CSR rather intended to make morality, law, and politics more compatible with the profit-oriented processes of a globalized capitalist economy?

In India, where economic reforms starting in the 1980s have initiated a development strategy based in large part on private industrial growth, with extensive political support to large companies and a significant relaxation of regulatory constraints, the questions raised by CSR have become particularly salient.

Summary

Introduction

The rise of global retail value chains has been closely associated with changing gender patterns of work and growing labour force participation of women across many countries. As discussed in the previous chapter, global retailers facilitate the commercial provision of many affordable goods previously produced unpaid by women within the home. These include processed food, ready-prepared meals, ready-made garments, personal care and household goods. At the retail end of value chains, companies monitor customers (including their gender profile) to deliver a wide range of products. At the producer end, retailers coordinate suppliers to deliver on a JIT basis at low cost while ensuring quality. This commercial model, and coordination of end-to-end JIT delivery, has important implications for the types of paid work undertaken by women and men at every tier of retail value chains, from retail sales to global sourcing. Examining this is central to addressing the core questions of this book: How are global retail value chains shaping gender patterns of work, and what are the gendered outcomes for workers?

In this chapter, I explore this further by examining how engagement in global retail value chains is driving gendered fragmentation of work. It examines how women are concentrated in work that is more flexible, less well-remunerated and more insecure compared to men in every value chain tier. Drawing on information from various sources, it provides an illustrative gender mapping of work across the global agri-food value chain supplying supermarkets. This shows how gender discrimination is systemic at every tier from retail through distribution to production. The chapter then examines the trajectories of economic and social downgrading and upgrading. This provides a framework for assessing challenges and opportunities for attaining more gender equitable outcomes, which will be examined in more depth in later chapters.

As we saw in Chapter 2, three key issues constituting the mantra of global retail value chains are cost, quality and speed of delivery. I argue in this chapter that fragmented workers provide the ‘oil’ that lubricates the integrated functioning of global retail value chains on a JIT basis across national borders. In most countries in which retailers sell and/or source, labour markets are deeply embedded in social norms that configure the gender division of labour. Traditionally this has assigned certain unpaid functions to women within households—including food preparation and sewing.

Summary

As the previous chapter has shown, until the early 1980s, the role of corporate profit-making in the functioning of the Indian economy was limited by various institutional settings. After peculiar conditions during the emergency rule under Indira Gandhi (1975–1977), followed by two years of ineffective policy-making under a government based on a heterogeneous coalition, the return to power of Indira Gandhi in 1980 marked the beginning of a new period for India's political economy. This period, which is still ongoing, is characterized by four interrelated trends:

Summary

CSR as an intermediary institution for economic responsiveness

Companies are core institutions of modern society, and their role as both problem-making and problem-solving entities has become a major cause for concerns. While such concerns are not new, it has become hard to find any societal problem that does not involve companies in one way or another. Unemployment, child labour, occupational hazards and suffering at the workplace, growing financial instability, socio-economic inequalities, poverty and related hardships, public health issues such as cancer and obesity, militarized conflicts, energy (in)security, and the multiple manifestations of a global ecological crisis exemplify this vast entanglement in society between corporate conduct, problem genesis, and problem solution.

The phenomenon of CSR has grown out of this entanglement. At first, CSR emerged as an idea developed by American business ethicists and corporate executives who argued that companies can and should not focus single-mindedly on profit maximization. Companies were rather supposed to follow business practices that combine profit-making with moral standards and what was referred to as ‘service to the nation’. Building on this synergistic view, CSR has expanded globally and concretized into specialized knowledge, discursive frames, organizational structures and management practices, inter-organizational partnerships, collaborative governance structures, and a vast corpus of public and private regulatory norms. These multiple facets of the global CSR phenomenon are held together and stabilized by the same core idea that was at the origin of the CSR doxa : companies can and should go beyond legal compliance and business as usual, and invest resources in finding ways to minimize societal problem-making while maximizing their contributions to societal problem-solving.

Notwithstanding this stable core, CSR has been caught in ongoing academic and popular contention regarding its scope and meaning. For some, CSR is a managerial fancy that should not be taken too seriously. Others conceive of CSR as a phenomenon of major significance, as it could potentially redeem capitalism by channelling ethical, social, and environmental concerns into the functioning of firms. Yet another standpoint also views CSR as a significant phenomenon, but in a negative way. For critical commentators, CSR is primarily a vehicle of corporate hegemony which ends up subordinating non-economic spheres of society to the capitalist logic of monetary accumulation. In view of these debates, whether and how CSR actually changes the way social systems observe and address social problems remains an open question.

Summary

Introduction

Women have long played a key role in apparel production, both as contributors of family labour in traditional home-based work and as waged workers in larger-scale manufacture. Apparel is a relatively ‘footloose’ labour-intensive industry, and production can easily be relocated across countries in pursuit of lower costs. The outsourcing of apparel production from Europe and North America to developing countries in the 1980s led to the rapid rise of female employment, particularly in Asia. This generated jobs for tens of millions of women workers, many of whom previously had limited labour market access. Indeed, women are a preferred ‘low cost’ labour force in many countries because of their perceived ‘docility’ and their socially acquired skills in making garments (Elson and Pearson 1981; Hale and Wills 2005).

Developing countries often compete based on low labour costs to attract apparel FDI and buyers, driving a ‘race to the bottom’ (Applebaum et al. 2005; ILO 2016d). Civil society campaigns have long targeted global retailers and brands for driving a ‘low road’ sourcing model based on a cheap female labour force with poor working conditions and few rights (Oxfam 2004; ITUC 2016).

However, as Chapter 2 discussed, the expansion of global value chains since the 1980s has also led some buyers to move away from traditional arms-length sourcing based on low-cost assembly of ‘cut–make–trim’ (CMT) to more integrated ‘full package’ sourcing strategies. These have been labelled original equipment manufacturing (OEM) and original design manufacturing (ODM). This move requires economic upgrading and innovation by suppliers in order to be able to take on higher-value functions, including design, input sourcing, finishing and distribution (Gereffi and Memedovic 2003; WTO 2013b). Economic upgrading often requires workforce innovation and more skilled workers, to enable the achievement of higher quality and productivity levels, with implications for social upgrading and improved labour standards (Barrientos et al. 2011; Fernandez-Stark et al. 2011b).

Two types of supplier strategy can therefore be identified: the ‘low road’ of economic and social downgrading, based on low labour costs, and the ‘high road’ of economic and social upgrading, based on skill and productivity. In this chapter I focus on the ‘low road’; Chapter 8 examines a contrasting upgrading case study from an Indonesian apparel manufacturer.

Summary

To grasp how CSR, conceived of as an intermediary institution, has emerged from and retroacted on the way society responds to tensions and conflicts between profit-driven economic processes and other spheres of society, studying companies seems to be an obvious area of investigation. Indeed, companies operate at the crossroads between the economy and other function systems, and the introduction of CSR in their organizational structures and processes can be expected to change economic responsiveness vis-à-vis problems located in other spheres of society.

Business organizations and the interplays between the economy and other spheres of society

In the framework of SST, companies as organizations constitute a specific kind of social system that operates on the basis of decisions. Of course, organizations involve human participants in the communicative production of decisions. But decisions are not intentional acts of individual human decision-makers. Decisions consist in the combination of two selections: the selection of a set of alternatives and the selection of one of these alternatives as the ‘decision’. As such, decisions constitute the building blocks of organizations, and organizations reproduce themselves by maintaining the self-referential and autopoietic process of decision-making. More concretely, once an initial decision has been taken to create an organization, this decision creates the conditions for further decisions to be taken – about the legal status of the organization, its name, its internal structure of positions and the related division of tasks, the recruitment of members, and so on. Each of these decisions keeps the organization going and creates the conditions for further decision-making.

In this framework, unlike function systems, organizations do not operate along a binary code such as paying/not paying (the economy), powerful/powerless (politics), legal/illegal (law), true/false (science), and so on. Their decisions are guided by ‘decision premises’ that reduce uncertainty by structuring and stabilizing the organization's decision-making processes. For instance, a company's strategy, its internal policies, or its annual budget are premises that structure and orient – without determining – a multitude of other decisions. Similarly, personnel decisions about recruitment and assignment of tasks structure a multitude of further decisions regarding the internal division of labour. And decisions on communication channels, such as hierarchical chains of command, define which decisions are expected to be considered as premises for which decision-making situation.

Summary

Introduction

This book draws on research undertaken over 20 years, a journey I outlined in the preface. It aims to unpack some of the complexities of changing gender patterns of work associated with global value chains. My experience, talking with workers in many sectors and countries over the years, is that both benefits and challenges come from working in global production. It is often preferable to alternative livelihood options. However, it can also involve significant problems, especially for the most precarious workers. For women, paid work can provide a route to greater economic independence, despite being low paid and despite combining it with multiple household and care responsibilities. As a Chilean temporary fruit worker told me in 1998, ‘We have always worked hard, now we are being paid for it.’

In my research, I have always tried to analyse both the commercial and the social dimensions of global value chains. I soon realized it is not possible to understand how one sphere operates without understanding how it interacts with the other. Analysing this interaction underpinned the development of the global (re)production framework examined in Chapter 4. An important dimension has been the commercial retail of many goods previously produced by women unpaid within households is now based on paid work in production largely in middle- and low-income countries. Global value chains, coordinated by buyers, now reach beyond a narrow market focus, into the households of consumers, operations of suppliers and lives of workers and smallholder farmers.

The G(r)PN framework has also helped unpack tensions within global value chains between the financial drivers of cost and efficiency and the societal drivers of quality and caring. This enables differentiation between a low road, based on downgrading trajectories of low wages, poor conditions and few rights, and a high road, based on upgrading trajectories of higher productivity with better rights, terms and conditions. Analysing the commercial dimension helps us understand how financial drivers and buyer purchasing practices can exert constant pressure on suppliers to reduce unit labour costs (via low wages or rising productivity) while delivering on quality. Analyzing the social dimension helps understand how fragmented work sustains the commercial dynamic of global value chains.

Summary

Introduction

Global sourcing has been driven in part by a search for low-cost and fast delivery, associated with a ‘low road’ outcome for workers. However, the drive for quality and innovation, especially in niche value chains, has also supported a ‘high road’ outcome for some in terms of improved conditions and rights. Yet economic and social upgrading in global retail value chains is far from automatic, as the previous chapter examined. It involves a journey of contestation, intervention and collaboration (Gereffi and Lee 2016). Governance matters if this journey is to promote more sustained gender-equitable benefits for workers. However, the dynamics are changing in a global value chain context, where private, social and public governance all play a role.

Global governance relates to the way international relations are managed, involving nation states and regional and international organizations. With greater global integration, global governance has evolved from a focus on inter-state activities to encompass the many ways that public and private actors and institutions manage their common affairs (Held et al. 1999; O'Brien et al. 2000). In the context of global value chains, the initial focus was mainly on private governance. It is now recognized that value chain governance involves a diverse range of company, civil society and state actors who are able to influence the norms and rules framing the operation of value chains across global, national and local scales (Ponte and Sturgeon 2014).

Three dimensions of private, social and public governance are identified as playing roles in global value chains (Mayer and Posthuma 2012). Private governance has received the greatest attention in the GVC literature. This involves the power of lead firms to coordinate and distribute resources along their value chains. This mainly relates to product, environmental and labour standards applied by lead firms and private sector bodies (Gereffi et al. 2005; Gibbon and Ponte 2005; Nadvi 2008). Social governance relates to the ability of CSOs, including NGOs, trade unions, charities and community groups, to influence social norms, policies, institutions and markets at national or international levels through advocacy and campaigns (Mayer and Posthuma 2012).

Summary

Introduction

Global retail sourcing, with its search for cost-effective and cost-efficient production, involves both ‘low road’ and ‘high road’ trajectories. Previous chapters mainly examined the ‘low road’ trajectory of economic and social downgrading, drawing on examples from the cocoa, fresh fruit and apparel sectors in Africa and Asia. An important argument of this book is that retailers and brands seek not only competitive prices and fast delivery but also quality products. A continuum prevails between the low- and high-road ends, with retailers and suppliers positioned in relation to different consumer end-markets. For niche retailers and brands, a focus on quality requires their suppliers to pursue a ‘high road’ trajectory. Investment in innovation and enhanced capabilities facilitates economic and social upgrading. Raising productivity and enhancing skills makes it possible to produce higher-quality products while being efficient and competitive. To achieve this, retailers need to attract and retain more highly skilled workers (often female) by offering better pay, conditions and rights. This has implications for gender patterns of work and the relationship between productive wage work and reproductive unpaid work undertaken largely by women.

This chapter examines a high-road trajectory drawing on two examples, one from Nike's equitable manufacturing (EM) initiative and the other from the Kenyan flower sector. These cases show that a pathway to economic and social upgrading with gender-equitable benefits for workers entails many challenges. Global production is embedded in social norms and institutions that underpin gender discrimination in supplier workplaces and sourcing countries. Women have been drawn into production as a ‘docile’, low-cost labour force, whose socially acquired skills help deliver on speed and quality at competitive prices. Yet global value chains have opened up channels for new forms of contestation, often led by CSOs with women workers also playing an important role.

In both the Nike apparel and Kenyan flower value chains, contestation by CSOs played an important role in pushing back on poor labour conditions during the early stages of global sourcing. However, in both cases, once innovation set in, and the benefits of raising productivity and skills became apparent, economic upgrading became linked to social upgrading. This has led to improved conditions and rights for a largely female workforce. It has also had wider implications for promoting gender-equitable outcomes and addressing issues ‘beyond the workplace’ that affect women's combined productive and reproductive roles.

Summary

In the previous chapters, we have enumerated the factors that have influenced the bargaining between labour and capital in West Bengal (WB). It has been underlined that economic conditions along with the role of trade unions and the state through their interactions determine the nature and outcome of bargaining. While Chapter 3 provided our observations from the field with regard to collective bargaining in WB, Chapters 4 and 5 enumerated the economic conditions and the role of trade unions and working class politics, respectively. In this chapter, we look at the role of the state in collective bargaining.

The state has an intrinsic role in capital–labour bargaining because of its historic claim to legitimacy enabling it to play the mediating role in the relationship between social groups to facilitate common development and welfare. In the production system this intervention between capital and labour is institutionalised through the Industrial Relations (IR) system. The tension and fluidity in capital–labour relation in a capitalist system arises primarily from three distinct but interrelated factors: indeterminacy of labour contract (since the performance of labour cannot be perfectly observed and therefore monitored); inequality between labour and capital; and the dynamic nature of workplace with coexistence of conflict and cooperation (Colling and Terry 2010). Since such contestations and inequality of power and wealth between labour and capital exist, the need for an institution that is relatively autonomous to the dynamics between labour and capital arises in order to provide a stable IR framework. Industrial Relations as the institutional framework of capital–labour affiliation manage such relations according to political–economic dynamics.

The role of the state has varied across countries and time depending on the dynamics of the state–market relationship. Many states, such as Germany, Sweden and India, have had significant involvement in collective bargaining, while countries such as the UK and the US have been marked by minor and non-decisive role in IR. In all countries, however, the state has a role in IR through legal enactments and institutions that establish the context and standard of IR (Streeck and Thelen 2005).

Political economy

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14235 results in Political economy

3 - Economic Differentiation and the Rise of India's ‘Embedded’ Corporate Capitalism

Summary

Frontmatter

Preface

Summary

List of Figures

Index

3 - Gender Patterns of Work in Global Retail Value Chains

Summary

4 - Increasing Functional Differentiation and the Rise of CSR

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References

7 - Conclusion

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7 - Contested Terrain: The Limits of Social Compliance in Asian Apparel

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Frontmatter

5 - CSR at Work: Economic Responsiveness through Risk Management

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10 - Concluding Reflections: Future of Work

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9 - Governance Challenges: Promoting Gender-Equitable Value Chains

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Contents

8 - Upgrading Strategies: Innovation, Skills and Rights

Summary

List of Abbreviations

Index

Frontmatter

6 - The State and Collective Bargaining

Summary

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