End of the Road for Runaway Factories?

Ever since there has been a capitalist world-economy, one essential mechanism of its successful functioning has been the runaway factory. After a period of significant accumulation of capital by so-called leading industries (usually about twenty-five years), the level of profit has gone down, both because of the undermining of the quasi-monopoly of the leading industry and because of the rise in labor costs due to syndical action of some sort.

When this happened, the solution was for the factory to “runaway.” What this means is that the site of production was transferred to some other part of the world-system that had “historically lower wage levels.” In effect, the capitalists who controlled the leading industries were trading increased transaction costs for reduced labor costs. This maintained significant income for them, if nonetheless lower than in the previous period when they still had a quasi-monopoly.

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About Giorgio Bertini

Director at Learning Change Project - Research on society, culture, art, neuroscience, cognition, critical thinking, intelligence, creativity, autopoiesis, self-organization, rhizomes, complexity, systems, networks, leadership, sustainability, thinkers, futures ++
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