[In this concise article, Harvard Economist Richard Freeman shows us that a spectre is haunting the industrialized societies, and above all the workers of these countries. Though little recognized in Japan and elsewhere, there has been an effective doubling of the global labour force (that is workers producing for international markets) over the past decade and a half, through the entry of Chinese, Indian, Russian and other workers into the global economy. The effective supply of capital, on the other hand, has virtually remained unchanged. With such a massive increase in the supply of labour, its relative share of the returns from production inevitably decline. One important dimension of this decline is the ability of increasingly footloose capital to find cheaper labour to employ. Morgan Stanley's Chief Economist Stephen Roach has long referred to a “global labour arbitrage” wherein high-wage jobs in the developed world are eliminated in favor of low-wage jobs in the developing world. He has argued that this is not limited to manufacturing, but also extends to such service industries as banking. But capital does not have to move to keep pressure on wages and salaries. Even work that is not at present outsourced may experience this pressure if the cost of labour becomes excessive relative to global benchmarks (including premiums for developed world levels of political stability and infrastructure).