The struggle over Global Europe: neo-liberal restructuring contested

Similar to the EU's internal neo-liberal restructuring since the mid-1980sFootnote ⁹ the Global Europe strategy of 2006 is equally driven by a rationale of extending neo-liberal restructuring.Footnote ¹⁰ In line with the EU's general direction, its main focus is on competitiveness of the European economy:

The Commission does not accept that Global Europe would undermine development. Rather, in neo-liberal fashion perceiving globalisation as a win-win situation, it is argued that free trade is the best way towards development. In this sense, the Commission argues, Global Europe should also be understood as a development strategy.Footnote ¹² Moreover, the Commission makes clear that Global Europe is mainly directed at emerging economies such as China and that there are a whole range of other programmes for developing countries. For example, the EU points to its special relationship with countries from Africa, the Caribbean and Pacific (ACP). The envisaged Economic Partnership Agreements (EPAs) would include the possibility for these countries to retain 20 per cent of their tariffs and phase in the opening up of the other 80 per cent over a period of up to 15 years, while the EU commits itself to 100 per cent liberalisation of EU trade in exchange.Footnote ¹³ EPAs are justified as necessary to comply with WTO regulations. However, comparing these agreements with past practice, then a clear change in EU policy is noticeable. Previous agreements between the EU and ACP countries, the so-called Lomé Conventions, were based on non-reciprocal trade preferences. The EU granted these countries access to its own markets in certain areas, without expecting that they open up their markets vis-à-vis the EU. This has now changed.Footnote ¹⁴ Hence, the EPAs are, similar to Global Europe, about the opening up of new markets for EU exports and investments. As Oxfam International argues, the proposed EPA agreements ‘were classic free trade agreements (FTAs), very similar to the EU-Chile and EU-Mexico bilateral deals’.Footnote ¹⁵ In sum, the EU's bilateral free trade strategy, whether under the Global Europe heading, or whether through EPAs, has the main purpose of boosting the international competitiveness of European business through the opening up of new markets abroad.Footnote ¹⁶ This is combined with a perceived need for further restructuring at home to support this external drive for competitiveness. The EU is, thus, clearly part of what Cammack describes as the ‘convergence club’, pushing an agenda of global competitiveness.Footnote ¹⁷

A whole range of NGOs in the EU are opposed to Global Europe and EPAs. This includes War on Want, which argues that ‘if the EU gets its way, vital policy tools to foster future development by supporting local industries will be removed and the pattern of job losses and deindustrialisation will be locked in for decades to come’.Footnote ¹⁸ The World Development Movement is equally critical of the EU's trade agenda and argues that ‘the opening-up of markets by poor countries to rich countries like the EU leads to job losses, falling wage rates and decreased government spending, including on basic services such as health, education and water’.Footnote ¹⁹ The Seattle to Brussels Network, in turn, demands a re-regulation of global trade, which ‘will pave the way towards incorporating some alternative guiding principles into trade policy, producing: a) an internal market orientation instead of an export orientation, b) sufficient policy space instead of relegating more and more competencies to the WTO and c) policies serving the general public instead of a narrow “business first” corporate agenda’.Footnote ²⁰ Oxfam International considers it possible that trade can lead to development. ‘In a fair deal that truly reflects partnership, Europe would fully open its markets to all exports without asking ACP countries to reciprocate, thus ensuring ACP countries have the policy freedom to govern their markets in the public interest and pursue regional integration on their own terms and at a pace congruent with regional processes.’Footnote ²¹ As the EPAs are, however, constructed, inequality and marginalisation, not development would be the outcome.Footnote ²²

This generally negative position on Global Europe and EPAs by Northern NGOs and social movements is also characteristic of the positions of trade unions in the Global South. In a statement of 14 May 2009, Central American trade union leaders strongly criticised the ongoing negotiations of a Central America – EU Association Agreement. ‘We come to the conclusion’, they said, ‘that this is nothing else than a pure free market agreement, similar to the Central America Free Trade Agreement [with the US].’Footnote ²³ Human rights at work and the environment would be completely subordinated to the free market and, most significantly, the EU would not recognise access to clean water as a fundamental human right. The latter gives rise to concerns that the privatisation of water may be part of the eventual agreement. Similarly, the South African trade union COSATU calls for the rejection of the Partnership Agreement between the EU and the Southern African Development Community (SADC). COSATU ‘believes that the agreement would bring about an unnecessary entrenchment of neo-liberal macro-economic policy framework that undermines the rights of workers and the poor will definitely be first to feel the pinch’.Footnote ²⁴ The EU strategy is described as a neo-liberal recolonisation tactic. Moreover, Korean trade unions including the Korean Confederation of Trade Unions participated in signing a joint text together with European and Korean social movements against FTAs of the EU with South Korea and other countries in Asia and Latin America. ‘The goal of these bilateral or bi-regional free trade agreements is to open and deregulate markets to the benefit of European companies, to increase their access to natural resources, in particular to energy reserves, and to secure their profits by enforcing intellectual property rights and other trade defence mechanisms.’Footnote ²⁵ Noticeably, however, except for the rather small French Union Syndicale Solidaires, there are no big European trade unions amongst the signatories. Similarly, a statement by social movements against the EU – Central America FTA does not include any European trade union.Footnote ²⁶ What opens up here is a clear difference between the position of European trade unions and trade unions of the Global South over the EU's free trade agenda.

The European Trade Union Confederation (ETUC) is the main trade union representation within the EU. In its evaluation of Global Europe, it is not uncritical of the Commission's strategy.Footnote ²⁷ It makes clear its preference for multilateral trade agreements via the WTO and raises concerns about the inclusion of investment, competition, and public procurement in bilateral agreements. Moreover, the ETUC is concerned about the implications for developing countries. ‘The ETUC would like to express its disagreement with the proposed general reorientation of European trade policy in favour of an extremely aggressive liberalisation agenda in the developing countries, without consideration for possible social and ecological implications, both positive and negative.’Footnote ²⁸ It is also worried about the internal dimension of Global Europe and the consequences of the related restructuring. ‘For the ETUC, European regulations and standards must not be governed solely by the imperative of competitiveness if this concept is limited to maximizing the share of the global market held by multinationals operating in Europe.’Footnote ²⁹ Nevertheless, the ETUC is supportive of expanding the markets for European exports of goods and evaluates the contributions of such a strategy as potentially positive for European workers.

The ETUC's condition for its support is that a social dimension is part of trade agreements including the promotion of dignified and fair work, the promotion of social protection and the guaranteed application of social rights (for example, the eight fundamental ILO conventions, right to employment, maternity, health and safety at work) plus a social dialogue committee. The latter is to be put in charge of monitoring the implementation of the social dimension.

This support of intensifying international free trade through the reduction of tariffs and non-tariff barriers is even more visible in the ETUC's support for the WTO Doha negotiations round. Here, it is clear in its rejection of including public services into the trade agenda and demands that there should be especially no liberalisation of the water sector. It urges the EU to drop its agricultural export subsidies and grant developing countries better access to its markets. Nevertheless, in relation to issues of Non-agricultural market access (NAMA), it is very determined that the EU secures new markets abroad. ‘The European Union, which has very low or zero customs duties on industrial products of interest to the emerging countries, must ask the latter to open up their markets to some degree to high value added, top of the range products, and to dismantle the illegal non-tariff barriers that affect these products.’Footnote ³¹ It is this position, the support for further free trade in manufactured goods, which leads to the biggest differences with trade unions from the Global South as well as social movements from North and South. When there were discussions about reviving the WTO Doha negotiations in the summer of 2008, trade union leaders from the Global South made their opposition clear. ‘“If we sign this agreement, Argentina could lose 200,000 jobs,” warned Ruben Cortina from CGT, Argentina. The representative of the trade union institute Observatorio Social in Brazil, Felipe Saboya stated that, “the last time Brazil made significant tariff cuts, we lost 1.3 million jobs”.’Footnote ³² Thus, there is a clear understanding that further free trade through the reduction in tariff barriers will lead to the loss of jobs and potential deindustrialisation in countries of the Global South. In a statement by trade union representatives from the Global South including signatories from Brazil, Argentina, Costa Rica, India, Mexico, the Philippines, South Africa, and UNI-Americas, it is argued that

Similarly, the Trade Union Confederation of the Americas (TUCA-CSA) argues that the current NAMA proposal ‘not only continues to violate the industrial potential and generation of decent work, but further restricts the flexibility with which they could exclude certain sensitive sectors from industrial tariff liberalization through the adoption of the so-called “anti-concentration clause” that is under negotiation’.Footnote ³⁴

The ETUC is not unaware of these problems and attempts to counter-balance disagreements through its emphasis on the necessary social dimension of trade agreements (see above).Footnote ³⁵ This should include the building of global citizenship, incorporating the ILO as a party to trade negotiations; establishing a trade union inspectorate to monitor applicability of standards and labels as well as integrating social and environmental standards into world trade.Footnote ³⁶ ‘Governments both within the European Union and beyond should pledge themselves, as a matter or priority, to integrate the decent work agenda into all macroeconomic policies and development assistance frameworks at national as well as European and international levels’, declared ETUC General Secretary John Monks.Footnote ³⁷ Cooperation between the ETUC and trade unions of the Global South in support of a social dimension of FTAs is possible. For example, the ETUC signed together with the Trade Union Coordinating Committee of Central America and the Caribbean (CSACC) as well as the Central American Confederation of Workers (CCT) an open letter to the negotiators of the Central America-EU Association Agreement including demands for the protection of human and labour rights, a social-labour chapter, regular trade union involvement in monitoring the agreement, and ‘approval of a social cohesion fund designed to eliminate inequalities in the Central American region’.Footnote ³⁸ What the ETUC does not sign up to, however, is a fundamental rejection of the FTA as voiced by social movements in Europe and Central AmericaFootnote ³⁹ or Central American trade unions.Footnote ⁴⁰

Tensions between European trade unions and unions from the Global South over international free trade developed into an open confrontation during the talks over the revival of the WTO Doha round in 2008. The European Metalworkers' Federation (EMF) cooperated with the European Automobile Manufacturers' Association (ACEA) in the publication of two joint press releases. First, on 22 May 2008 they heavily criticised new NAMA proposals, which would allow emerging markets to restrict European exports by sheltering some of their sectors through so-called ‘flexibilities’ and non-tariff barriers. ‘We are in favour of lowering EU import tariffs’, the joint press release states, ‘but insist that our industry gets equitable market access in return.’Footnote ⁴¹ This position was reaffirmed in a second press release on 29 July 2008. ‘Auto industry and metal workers demand a thorough review of the pending Doha compromise in order to achieve reciprocal market access in developed, emerging and developing countries, and a long-term solution to eliminating the so-called “flexibilities” and “non-tariff barriers”.’Footnote ⁴² These joint statements led to an angry response by Rudi Dicks from the South African union COSATU. He accused the EMF of undermining workers' solidarity, since their cooperation with European employers in demanding equal market access would imply job losses in the Global South and undermine the internal unity of the International Trade Union Confederation.Footnote ⁴³ Hence, the question of how transnational solidarity between unions in the North and the South can be established on free trade remains open, especially as far as the relations between European trade unions and unions in the Global South are concerned. The next sections will analyse the underlying dynamics of the global economy and the place of Global Europe within it in order to understand better why there is this difference in positions between trade unions in Europe and labour movements in the Global South.

Development and the capitalist social relations of production

In a liberal understanding of capitalist development, free trade is regarded as a win-win situation, a positive-sum game. As David Ricardo famously argued, if every country concentrates on producing and exporting at what it is best, that is, its comparative advantage, and engages in trade for all the other necessities, an optimum outcome with everybody benefitting will be the result. Neo-liberal economic thinking about the extension of free trade in times of globalisation builds on this understanding. States should refrain from intervening into the economy and deregulate and liberalise markets including the labour market in order to facilitate free trade. This is ultimately the rationale underlying not only European integration including its Global Europe project, but also general global trade policy within the WTO. If developing countries open up to free trade and foreign direct investment, development would follow and allow them to catch up with developed countries.Footnote ⁴⁴ Thus, the Commission makes clear that ‘a guiding principle of EU trade policy is indeed that it should be at the service of development in its broadest sense’.Footnote ⁴⁵ Trade unions, interested in the development of their particular country, should logically support free trade as a result. Nevertheless, as the previous section has shown, this assumption is not born out in reality. Moreover, although neo-liberal economics has been the dominant policy of the global economy since the 1990s, the results are far from impressive. In a recent study by the NGO War on Want, it is illustrated that global economic growth in the 1980s and 1990s – the time of neo-liberal globalisation – is slower than in the 1960s and 1970s. Moreover, ‘the number of people unemployed and the number in unstable, insecure jobs has actually increased – from 141 million to 190 million (1993 to 2007) and from 1,338 million to 1,485 million (1997 to 2007) respectively’.Footnote ⁴⁶ Especially developing countries lost out during this period. ‘Trade liberalization contributed to the deindustrialization of many third world countries, thereby increasing their import dependence.’Footnote ⁴⁷ An analysis of the consequences of trade liberalisation in Africa and Latin America during the 1980s and 1990s reveals widespread job losses, increasing unemployment and declining wages in both continents.Footnote ⁴⁸ While trade liberalisation as part of the North American Free Trade Agreement led to the creation of jobs in the labour-intensive maquila sector in Mexico, ‘they were offset by vast job losses for agricultural workers. Employment in agriculture fell from 8.1 million in the early 1990s to around 6 million in the first quarter of 2006.’Footnote ⁴⁹ Inequality between countries has also increased. The Gini coefficient (0 signifies perfect equality, 100 signifies complete inequality) rose from 43 in 1980 to 54 in 1999 to 67 in 2005. This rising inequality between countries is also reflected in increasing inequality within countries (for example, Eastern Europe, India, and China).Footnote ⁵⁰ The crisis of the global financial markets since 2008 is only the latest sign that the neo-liberal focus on a deregulated economy is misguided. Ultimately, this is far from surprising. In a detailed analysis of the assumptions underlying free trade theory, Martin Hart-Landsberg illustrates the highly artificial conceptual understandings and simulations, which are at the heart of Ricardo's theory of comparative advantage and its contemporary further developments.Footnote ⁵¹ Rather than a scientific understanding of capitalist development, neo-liberal economics is unmasked as an ideology, a project of transnational capital to serve its particular interests.Footnote ⁵² Clearly, the dynamics of global development and capitalist accumulation need to be analysed from a different perspective.

An alternative perspective is offered by historical materialism and its focus on the capitalist social relations of production. ‘Uneven and combined development’ can be identified as the first key dynamic. It was Leon Trotsky, who introduced the notion of uneven and combined development in his book Results and Prospects in 1906,Footnote ⁵³ when analysing the particular location of Russia within the world economy. While Russia was economically backward based on a large sector of inefficient agriculture indicating the unevenness of development in relation to advanced Western countries, a number of small pockets of highly developed industries especially in military related production were established as a result of foreign pressure by more developed neighbours in the West. ‘The Russian State, erected on the basis of Russian economic conditions, was being pushed forward by the friendly, and even more by the hostile, pressure of the neighbouring State organizations, which had grown up on a higher economic basis.’Footnote ⁵⁴ Hence, capitalist expansion is ‘combined’ as a result of ‘the sociological outcome of international capitalist pressures on the internal development of non-capitalist societies’.Footnote ⁵⁵ It was especially foreign capital, which drove industrialisation in Russia leading to a situation in which a highly centralised and advanced working class in certain sectors and specific geographical locations, especially St. Petersburg and Moscow, confronted a rather weak national bourgeoisie.Footnote ⁵⁶ And it is on the basis of that particular situation of uneven and combined development that Trotsky then developed his notion of ‘permanent revolution’, that is, the possibility of the Russian working class to move directly from the bourgeois to the socialist revolution, thereby providing the spark for revolutions to follow elsewhere in the advanced industrialised countries.Footnote ⁵⁷

The exact relationship between uneven and combined development and the capitalist mode of production is contested. On the one hand, Rosenberg understands uneven and combined development as a transhistorical phenomenon and, thus, as intrinsic to the historical process itself.Footnote ⁵⁸ In line with research by Lacher and Teschke,Footnote ⁵⁹ he agrees that capitalism emerged in an already existing international states system. Because this inter-societal plurality precedes capitalism, he argues, such a transhistorical notion is necessary to understand geo-politics. ‘The issue of the geopolitical cannot be fully grasped from within a theory of capital.’Footnote ⁶⁰ On the other hand, Callinicos, while accepting that uneven and combined development is relevant beyond the capitalist historical period, argues that the concrete dynamic of uneven and combined development within a specific historical period cannot be understood without reference to the dominant mode of production of that period. Uneven and combined development is a transhistorical phenomenon, but yet specific depending on the particular mode of production.Footnote ⁶¹ While the feudalist expansive dynamic within uneven and combined development was driven by political accumulation, that is, the conquering of new territories and people,Footnote ⁶² the specific economic pressures through a focus on competitiveness within the capitalist mode of production required a constant process of technological innovation. Hence, while accepting the transhistorical importance of uneven and combined development, its specific nature in relation to current capitalist development in general and Global Europe in particular can only be grasped through an understanding of the capitalist social relations of production.

The exact definition of the capitalist social relations of production is, however, also contested. World-systems theoryFootnote ⁶³ as well as dependency theoristsFootnote ⁶⁴ understand capitalism as a market-based system and focus on production for profit in a market.Footnote ⁶⁵ For example, Wallerstein dates the emergence of capitalism back to the ‘long sixteenth century’ starting around 1450.

Giovanni Arrighi, in turn, dates the start of capitalism back to the thirteenth and fourteenth centuries and medieval Italian city states. He argues that ‘an agency of capital accumulation is capitalist precisely because it reaps large and regular profits by investing its stock of money in trade and production or in speculation and the credit system’.Footnote ⁶⁷

These definitions of capitalism, however, overlook the importance of the social property relations/the social relations of production for the creation of wealth in capitalism. The world market alone cannot explain the transition from feudalism to capitalism. ‘As the feudal monarchies of Spain and Portugal were to discover, the wealth plundered during the mercantile period did not fuel an industrial revolution on the Iberian Peninsula precisely because social relations were not transformed.’Footnote ⁶⁸ By contrast, Brenner argues that it was in medieval England that a specific set of social property relations based on landlord/capitalist tenant/wage-labourer structure emerged, in which both landlord and tenant relied on the market for their reproduction.Footnote ⁶⁹ ‘This system was unique in its dependence on intensive as distinct from extensive expansion, on the extraction of surplus value created in production as distinct from profit in the sphere of circulation, on economic growth based on increasing productivity and competition within a single market – in other words, on capitalism.’Footnote ⁷⁰ Thus, capitalism is defined as a system, which is based on wage-labour on the one hand, with workers being ‘free’ to sell their labour power on the market, and the private ownership of the means of production, on the other.

It is this particular set-up of the social relations of production, in which workers oppose capital, but both depend on the market for their reproduction, which leads to the second key dynamic of capitalist accumulation, the relentless search for higher profits. Because capitalists too have to reproduce themselves through the market, they constantly need to ensure that they remain competitive vis-à-vis their fellow capitalists. As Ernest Mandel writes, ‘there is only one basic driving force which compels capital in general to step up capital accumulation, extraction of surplus value and exploitation of labour, and feverishly to look for profits, over and above average profits: this is competition’.Footnote ⁷¹ This is clearly visible in today's EU and its overarching emphasis on competitiveness. As the then Commissioner for Trade Peter Mandelson stated at the launch of Global Europe, ‘the purpose of the policy review that the Commission has adopted today is to set out the external aspects of that competitiveness’.Footnote ⁷² Increases in productivity and the role of technology in achieving this play a crucial role in this dynamic.

The inner logic of capitalism in this relentless search for higher rates of profits, however, also implies that there is an inner tendency towards crisis, the third key dynamic of capitalist accumulation. While the constant search for higher profits through the introduction of new machinery and technology into the production process may be a logical thing to do for the individual capitalist, for capitalism as a whole it is disastrous. ‘At a certain point in this development, however, the increased organic composition of capital and the limit to the number of commodities that can be sold to the “final consumer” must lower the rate of profit and also induce a relative contraction of the market.’Footnote ⁷⁴ This results in a falling rate of profit and general economic recession. In addition, if all capitalists attempt to produce more goods at cheaper prices and with fewer workers, then eventually there will be a lack of demand for their products resulting in crisis. ‘We see here the necessary contradiction that arises when each capitalist strives to reduce the share of variable capital in value added within the enterprise while speculating on selling his output to workers employed by other capitalists.’Footnote ⁷⁵ In times of crisis, capital has several possible options. As Marx and Engels wrote in 1848, ‘how does the bourgeoisie surmount these crises? On the one hand through the enforced destruction of a mass of productive forces; on the other through the capture of new markets and a more thoroughgoing exploitation of old ones.’Footnote ⁷⁶ First, devaluation in the form of the partial destruction of production capacities will bring development back down to a level from where it can start afresh. This devaluation can take different forms. ‘Capital held in money form can be devalued by inflation; labour power can be devalued through unemployment and falling real wages to the labourer; commodities held in finished or partially finished form may have to be sold off at a loss; the value embodied in fixed capital may be lost as it lies idle.’Footnote ⁷⁷ Second, capital can intensify the exploitation of the existing workforce.Footnote ⁷⁸ Measures here include longer working days without additional pay, lower wages, and cut-backs in labour related costs. Third, capital attempts to secure new markets and locations for cheaper production costs abroad in competition with other capitalists. As Trotsky noted in 1929, ‘in the process of its development, and consequently in the struggle with its internal contradictions, every national capitalism turns in an ever-increasing degree to the reserves of the “external market”, that is, the reserves of world economy.’Footnote ⁷⁹ Hence, there is a general expansive outward dynamic of capitalism.Footnote ⁸⁰ Capitalist crises are contained within a particular geographical area by a further expansion of capitalist production. Global Europe, the EU's attempt to open up new markets for its exports, operates exactly according to this logic. ‘The frontiers of the region can be rolled back or relief gained by exports of money capital, commodities or productive capacities or imports of fresh labour powers from other regions. The tendency towards overaccumulation within the region remains unchecked, but devaluation is avoided by successive and ever grander “outer transformation”.’Footnote ⁸¹ And it is here that we come full circle as it is this third strategy of how to overcome crisis, which leads then to a further spread of capitalism along uneven and combined lines, the first key dynamic identified above. In the next section, it will be discussed in more detail what the implications of processes of uneven and combined development as exemplified in Global Europe are for the development possibilities of developing countries.

Uneven and combined development and the question of developmental catch-up

While the implications of permanent revolution were at the forefront of Trotsky's thinking in Results and Prospects (1906), in his later book The History of the Russian Revolution (1932), he returned to processes of uneven and combined development in more detail. He argued that backwardness in a general situation of unevenness can actually be an advantage:

Trotsky does indicate the possibility that countries can catch up with the development of others in this process and identifies Germany and the United States, which had overtaken the frontrunner England in industrial production by the end of the nineteenth century. Neil Davidson adds the examples of Italy and Japan,Footnote ⁸³ as well as Scotland, the latter having been able to draw on England's earlier accomplishments. At the same time, he warns against generalising, for example, from the Scottish experience. ‘No other country would ever complete the transition from feudal agriculture to capitalist industrialisation so quickly or completely. The moment was too brief, the result so uniquely decisive, for any theoretical generalisation from this experience to be possible.’Footnote ⁸⁴ In short, there are only a few examples of countries, which have succeeded in developmental catch-up. These were generally located in the core of the world economy with the possibility of participating in imperialist expansion to sustain this process of catch-up. Amongst the advanced capitalist countries, according to Mandel, ‘the law of uneven development continues to operate inexorably, causing the relative decline of previously supreme powers and the emergence of newly strengthened imperialist forces’.Footnote ⁸⁵ Inter-imperialist rivalry in the core is, however, combined with increasing inequality in the world economy as a whole. John Weeks distinguishes between primary and secondary uneven development in this respect.

Thus, while convergence dominates the core of the global economy, the vast majority of countries have been unable to catch up development wise. As Trotsky highlighted, the extent to which a country is able to adopt capitalist features depends on its ‘economic and cultural capacities’. ‘The backward nation, moreover, not infrequently debases the achievements borrowed from outside in the process of adapting them to its own more primitive culture’,Footnote ⁸⁷ slowing down overall development. ‘Not infrequently the result is only a form of modified backwardness.’Footnote ⁸⁸ Instead of a full-blown adoption of capitalist social relations of production, a mixture of traditional and advanced forms is the likely outcome. Elements of old social formations continue to coexist with capitalist social relations.Footnote ⁸⁹ This is the moment when uneven development becomes linked to combined development. ‘From the universal law of unevenness thus derives another law, which for the lack of a better name, we may call the law of combined development – by which we mean a drawing together of the different stages of the journey, a combining of separate steps, an amalgam of archaic with more contemporary forms.’Footnote ⁹⁰ It is these forms of combined development, first observed by Trotsky in Russia at the beginning of the twentieth century, which ultimately prevent countries from catching up with advanced industrialised countries.

Throughout the 1990s and early 2000s, Greece, Portugal, Spain, and especially Ireland were held up as the paradigmatic examples of a successful developmental catch-up strategy through a liberal strategy focusing on free trade within the Internal Market of the EU. This illusion has now vanished with all four countries facing a sovereign debt crisis. Development in the EU too has been characterised by uneven and combined development without catching-up effects. The emerging markets and here in particular China are often referred to as examples of countries, which have greatly benefitted from globalisation and free trade. And indeed, Chinese economic growth with double digit levels of GDP increases year on year is very impressive indeed. What this picture, however, overlooks is first that uneven and combined development as a key dynamic of the capitalist social relations of production is not only taking place between countries and regions but also within countries. Especially processes of combined development are being played out at the national level.Footnote ⁹¹ ‘They may have adopted the most modern forms of technology, industrial organisation and scientific thought in certain areas, but most of society remains at a much lower level.’Footnote ⁹² Hyper-modern coastal regions are counterpoised to backward inland areas in China. Second, the highly impressive GDP figures hide the miserable working conditions of millions of Chinese workers, work long hours for low wages in often hazardous work places and without access to basic labour rights.Footnote ⁹³ Especially the plight of around 200 million migrant workers is noticeable. In short, ‘although China develops more dramatically than any of the countries, like India, with which it is usually bracketed, it is unlikely on any remotely foreseeable scenario, to “catch up” with the West in any overall sense’.Footnote ⁹⁴ As for Gross National Income per head, for example, the gap between China and the US is enormous. In 2010, ‘China's $4,260 was only 9 percent of the US's $47,240. In order, to close the per capita gap in 30 years, Chinese GDP per head would have to grow about 10 percent per year for three decades, or expand to nearly 18 times its current size in that period.’Footnote ⁹⁵ In short, developmental catch-up is the exception, while a continuation and extension of unevenness is the norm. ‘The theory of uneven and combined development explained what occurs when the same “overleaping” process takes place in the colonial or neo-colonial world, where it is impossible to fully “catch up” with, let alone “overtake” the developed West, but to do so instead in a fragmentary or partial way.’Footnote ⁹⁶ The next section will discuss in detail how Global Europe is part of these dynamics as well as the related consequences for the various national labour movements.

Global Europe, the mechanisms of uneven development, and trade unions

For Neil Smith, it is ‘the contradictions inherent in the very constitution and structure of capital’,Footnote ⁹⁷ which underlies uneven and combined development. On the one hand, there is the tendency towards equalisation. As already noted above, if one capitalist makes a new invention in a particular area, competitors have to follow to match the same level of productivity.Footnote ⁹⁸ On the other hand, capitalist expansion is characterised by a tendency towards differentiation. First, ‘at the scale of individual capitals, the differentiation process is quite direct; capital is concentrated and centralized in some places at the expense of others’.Footnote ⁹⁹ Second, differentiation results from the division of the economy into specific sectors. Here, ‘it occurs in a cyclical manner according to the equalization of the profit rate within a given sector, and the resulting movement of capital between sectors, from those with a low rate of profit toward those with a higher rate of profit’.Footnote ¹⁰⁰

The 1970s were characterised by world-wide economic recession and a falling rate of profit. The Fordist accumulation regime in developed countries, based on mass production and mass consumption and supported by national class compromises between trade unions and employers' associations, had been exhausted.Footnote ¹⁰¹ As Beverly Silver outlines, in response to declining profitability capital drew on four different, yet combined strategies.Footnote ¹⁰² First, in a financial fix more and more financial market instruments were developed as accumulation points in their own right and finance capital became delinked from industrial capital. An integrated, global financial market emerged as a result.Footnote ¹⁰³ Second, there was a product fix with increasing activities being concentrated in the services sector as the new growth point. As the Commission reports, in Europe, for example, services represent now 77 per cent of GDP.Footnote ¹⁰⁴ Third, there was a spatial fix with the labour intensive parts of production being shifted towards developing countries. This was combined with a technological shift in developed countries through an increasing introduction of new technologies in the workplace. In other words, while labour intensive and, thus, low productivity production was shifted abroad, new technology with related higher rates of labour productivity was introduced in industrialised countries. These developments have brought industrial capacities to developing countries and are a reflection of the tendency towards equalisation within capitalist expansion. At the same time, this is mainly based on outdated technology indicating the tendency towards differentiation. ‘While spatial fixes tended to erode the North-South divide, technological fixes, product fixes, and protectionism [for example, in the form of non-tariff barriers such as technical standards] tended to reconstitute the divide continually.’Footnote ¹⁰⁵ Some development in the Global South resulted, but in an uneven way.

Capitalist expansion along these uneven and combined lines has, thereby, led to a situation of unequal exchange between countries, integrated into the global economy. Unequal exchange is generally a term used by world-systems analysis. It is considered to be the result of the appropriation of surplus value by countries in the core from countries in the periphery on the basis of monopoly production.

However, this understanding is problematic in that world-systems analysis and dependency theorists, as already discussed above, define capitalism as a market-based system and overlook the underlying social relations of production.Footnote ¹⁰⁷ Instead, when linking the notion of unequal exchange to the discussions of uneven and combined development, I draw on Smith, who argues that unequal exchange has to be understood as the consequence of uneven and combined development,Footnote ¹⁰⁸ and Mandel, who makes clear that it is not the difference in the nature of goods, which is the cause of unequal exchange. Rather, it is the difference in the productivity of labour, which is decisive.Footnote ¹⁰⁹ Of course, a monopoly position of a product also implies that labour productivity of workers producing this particular product is very high. Nevertheless, ‘monopoly is one source of surplus profits, but much more important is technological innovation that, by increasing productivity, reduces the innovator's costs of production below the sectoral average’.Footnote ¹¹⁰ A monopoly ensures the longer feasibility of higher productivity rates, but it is not in itself the cause of unequal exchange. Rather, ‘on the world market, the labour of a country with a higher productivity of labour is valued as more intensive, so that the product of one day's work in such a nation is exchanged for the product of more than a day's work in an underdeveloped country’.Footnote ¹¹¹ In other words, ‘capitalist expansion is a dynamic but also an uneven process, and in contrast to the neo-liberal (and pro-globalization) positions, this unevenness is not seen as a result of market imperfections, but is in fact a product of the way competitive markets work in the real world’.Footnote ¹¹² Market leaders, often in areas of new technology, have a competitive advantage and are, therefore, interested in free trade and open competition. Developing countries, on the other hand generally operate in ‘old industries’. Free trade intensifies these imbalances in trade and production. In sum, uneven and combined development ensures the continuity and intensification of different productivity rates between developed and developing countries and, thereby, unequal exchange. ‘International movements of capital constantly reproduce and extend the international productivity differential which is characteristic of the history of modern capitalism, and are themselves in turn further determined by this differential.’Footnote ¹¹³

Global Europe as a free trade strategy is clearly part of European and global restructuring. By enforcing the opening up of other countries to European exports based on high productivity, it also intensifies uneven development in that those competing production sectors in these countries, which are based on lower productivity levels, are driven out of business. A certain level of deindustrialisation is the result. ‘On the EU's own figures, the EU-Mediterranean FTA will cause the loss of almost 3.4 million manufacturing jobs in the partner countries.’Footnote ¹¹⁴ Only the low productivity level, labour intensive production sectors are often the sectors, which survive the lowering of tariff barriers, and then, in turn, become the areas which are most likely to attract foreign direct investment. In China, for example, foreign direct investment is mainly concentrated in the area of assembling manufactured components for exports to locations outside East Asia and, thus relies on cheap labour.Footnote ¹¹⁵ ‘China's growth in manufacturing exports must in part be explained through its (subordinate) role in East Asian production networks, and it essentially concentrates on exporting the lower value end of such goods.’Footnote ¹¹⁶ Global Europe is, therefore, a mechanism of locking developing countries and emerging markets into a relationship of unequal exchange in that these countries are forced to trade low productivity goods in exchange for high productivity goods. Unequal exchange in a way functions as the key mechanism of exploitation here.Footnote ¹¹⁷ Moreover, since the mid-1990s the international trade agenda has been significantly expanded. It now also includes the trade related intellectual property rights (TRIPs) accord as well as negotiations for a general agreement on trade in services (GATS).Footnote ¹¹⁸ In other words, the trade agenda has been expanded in order to incorporate the product fix towards services, based on high productivity levels in developed countries. This move to commodify traditional parts of the public sector is equally part of the EU's Global Europe strategy. The Commission highlights in its strategy the elimination of non-tariff barriers, access to resources, intellectual property protection, services, investment, public procurement, and competition. Public services are especially singled out as an area, where the EU intends to open up new markets.Footnote ¹¹⁹ Similarly, it argues that ‘in terms of content new competitiveness-driven FTAs would need to be comprehensive and ambitious in coverage, aiming at the highest possible degree of trade liberalisation including far-reaching liberalisation of services and investment’.Footnote ¹²⁰ Services are the new growth area characterised by high levels of productivity increases in Europe. Opening up other countries to exports in these areas will inevitably integrate them into new relations of unequal exchange. Investment by European corporations into service delivery in developing countries will lead to some development, but in a very uneven way and a combination of modern technology with traditional social forms.

When relating these developments to the situation of workers in the global economy, it is clear that as a result of uneven and combined development, workers across the globe, in the twentieth century as today, are not automatically in the same economic position. As indicated above, the nature of combined development prevents countries from catching up. In turn, however, combined development then maintains and potentially even increases unevenness at the global level.Footnote ¹²¹ Hence, different national labour movements are situated in rather diverse locations within the global economy and workers in advanced industrial countries with higher rates of productivity have to some extent benefited from the privileged position of their country in the overall situation of unequal exchange. As Mandel already wrote in 1970, ‘it is hard to deny that American workers participated to a certain degree in the benefits of US imperialism's monopoly of advanced industrial productivity (technology)’.Footnote ¹²² This is the same situation European workers find themselves in today. Harvey highlights the potential geographical dimensions of class formation. The coping with economic crises at the regional level, organised together by capital and labour, may lead to strategies at the expense of others outside this region. ‘In so far’, he argues, ‘as class struggle, yields a terrain of compromise between capital and labour within a region, organized labour may rally in support of such alliances in order to protect jobs and privileges already won.’Footnote ¹²³ The ETUC's and EMF's support for further trade liberalisation can be understood as part of such a regional class compromise, benefitting European workers and be it at the expense of workers elsewhere in the world. Indeed, external strategies such as Global Europe may not only lead to cross-class compromises at the regional level, they may also facilitate intra-class compromises. The EU too is characterised by uneven and combined development and transnational solidarity within the EU between different national labour movements is not automatic in the current crisis of the Eurozone and the pressure on Greek, Irish, Portuguese, and Spanish workers as a result of budget cuts by their governments. Policies such as Global Europe, which focus towards the rest of the world, allow trade unions to paper over their EU-internal conflicts.

Conclusion: agency within the structures of uneven development

Capitalist expansion is inevitably characterised by uneven and combined development as a result of the contradictory tendencies towards equalisation and differentiation and the resulting difference in productivity rates. Because capitalist expansion has taken place within a pre-existing system of nation states, different levels of development based on different rates of productivity in various industrial sectors have become consolidated within particular countries. Countries with different average rates of productivity as a result of different developmental levels are subject to a situation of unequal exchange within international free trade. Global Europe is clearly driven by a rationale of increasing international competitiveness of European exports. By focusing on the opening up of other countries, it locks them into a relationship of unequal exchange, in which high-productivity goods and services are traded in exchange for low productivity goods. Development NGOs and farmers' movements strongly oppose Global Europe. Especially the rather poor record of neo-liberal restructuring, of which free trade agreements and the qualitative extension of the trade agenda into new areas are a core aspect at the international level, explains the latter's opposition. Interestingly, however, while trade unions from the Global South agree with NGOs and social movements and their negative position on Global Europe, European trade unions give qualified support. The opening up of markets in emerging economies is considered an important task of the EU and free trade is supported, as long as services are excluded and a social dimension becomes a part of agreements. In a second step, it was argued that these divisions between the labour movements of the North and South have to be understood against the background of the transnational dynamics of capitalist expansion around processes of uneven and combined development. While the nature of combined development, itself a consequence of unevenness, makes it impossible for developing countries to catch up with developed countries, the resulting continuation of, and potential increase in, international unevenness puts various national labour movements in rather different positions within the global economy. This, in turn, may lead to different labour strategies vis-à-vis free trade. In other words, as a result of the uneven and combined expansion of capitalism within a pre-existing international states system, workers in advanced industrial countries, under certain circumstances, may be in favour of an expansive strategy, from which they benefit in the form of secure employment and more jobs.

It is important to remember, however, that the objective condition of the working class and trade unions as their institutional expression does not determine their strategic outlook. The general dynamics of capitalist accumulation and here in particular uneven and combined development provide the structural setting for agency. Consequently, in the first instance the strategies of labour are influenced by its particular location in the capitalist social relations of production. Nevertheless, structure is not sufficiently determinate, as concrete strategies are established in processes of class struggle and interaction with other labour movements as well as capital. How social forces operate in a particular situation in the final instance, therefore, depends on the outcome of class struggle and has to be established in an empirical investigation. ‘The class-based relations of production under capitalism create the possibility of particular kinds of agency, but this potential can only be realised through the political practices of concretely situated social actors.’Footnote ¹²⁴ In short, structure does not determine strategy. Rather, within a particular structural setting, there are always different possible strategies available to actors.Footnote ¹²⁵ The fact that there is currently no solidarity between European workers on the one hand, and trade unions in the Global South on the other, does not imply that this is always going to be like that. Considering that Global Europe also entails EU internal restructuring, European trade unions may change their positions on Global Europe during these struggles.

The experience of trade unions in the Americas is illustrative in this respect. When the North American Free Trade Agreement (NAFTA) came into force on 1 January 1994, there was no common trade union position. While the Canadian Labour Congress had been opposed, the main Mexican trade union confederation supported the agreement. The US trade unions presented a mixed picture.Footnote ¹²⁶ As a result of experiences with NAFTA, however, a common position emerged over time. This new position does not only include a rejection of neo-liberal free trade agreements such as the defeated Free Trade Area of the Americas (FTAA) initiative, but as Bruno Ciccaglione makes clear, it also ‘seeks to design a model of integration that is an alternative to free trade, not only because it proposes alternative trade rules, but because it aims at moving away from neoliberalism by giving a new centrality to the State, and to a new democratic and participatory process’.Footnote ¹²⁷ The related strategies include both cross-border cooperation with trade unions as well as alliances with other social movements and, thus, provide the basis for a common consciousness at the transnational level. Hence, as a result of concrete struggles against free trade initiatives in the Americas, labour has moved beyond the structural conditions of uneven development towards transnational solidarity. As Mohanty makes clear, ‘solidarity is always an achievement, the result of active struggle to construct the universal on the basis of particulars/differences’.Footnote ¹²⁸ Such a development could become equally possible between European trade unions and their counterparts in the Global South.

Due to an increasing frustration about the ineffectiveness of social clauses in FTAs, the ETUC has recently called for the suspension of the EU's free trade negotiations with Peru and Colombia in response to the continuing assassination of trade unionists in the latter country.Footnote ¹²⁹ Similarly, in May 2010 the ETUC issued a joint statement together with the ITUC and the Trade Union Confederation of the Americas, calling – in vain – for the EU's free trade agreements with Central America, Peru, and Colombia not to be signed.Footnote ¹³⁰ Are these the first steps towards transnational labour solidarity between European trade unions and labour movements from the Global South? As Trotsky emphasised, the combined element of development in backward countries implies a particular politically volatile situation, more likely to provide the terrain for revolutionary movements.Footnote ¹³¹ It is perhaps unlikely to see European trade unions at the forefront of resistance and the view has to go to the labour movements of the Global South, which may perform a similar role to the Latin American trade unions in the successful struggle against the FTAA.