Smith (2014): Rana Plaza and the crack in economic theory

More articles addressing the imperialist, neoliberal, capitalist agenda of the West that depends on the exploitation of workers to thrive like this pls. Didn’t understand some of it but what I did banged. Click here.

Notes I done made (these were made when researching my dissertation topic so not everything in the paper will be included here, just bits that were relevant for me and points I found interesting):

  • Rana Plaza revealed how capital/labour relation is a relation between Northern capital and Southern labour -> Production shifted to low-wage workers in oppressed nations while control and profit remains in the hands of imperialist countries
  • Cracks in Rana Plaza symbolic of crack in bourgeois economic theory which denies capitalism is a system of exploitation << BARS


  • BD has the lowest factory wages of any major exporter in the world
  • Relations between factory owners, politicians and police mean employers are not convicted of violating health and safety
  • Garment industry in BD a result of export-oriented industrialisation strategy pursued by capitalist governments in the Global South -> industry depended on external global buyers, who can determine what is produced, where etc
  • Frances O’Grady, General Secretary of British TUC-> in the global race to the bottom on working conditions, the finishing line is BD
  • Despite BD owners organising the extraction of profit from their industry, it is Northern companies who receive most of the benefits
  • A large percentage of revenue from the selling price of garms goes to the state in which they’re sold in the richer countries, the state takes more than clothing companies
    • E.g. Norfield: oppression of workers in the poorer countries is a direct economic benefit for the mass of people in richer countries. Revenue going towards states used for, e.g. welfare system, wars, education etc.
  • Price attractiveness of BD is the low costs of labour- the most important factor affecting costs of production
  • Sports t-shirts prices are 700% more than the manufacture cost- some are up to 1800%
  • British Parliament:  profit margins of suppliers are very thin (receive little profit), encourages health and safety violations to be able to sustain production e.g. subcontracting, increased working hours, unauthorised factory expansions

The Accord

  • Driving force of race to the bottom is ‘price gouging’ by brands (reducing production costs)
  • Response of the Accord: participating brands will negotiate with their suppliers to ensure that it is financially feasible for factories to maintain safe workplaces-> no one is tasked with monitoring the implementation of this, and no penalties if there is no compliance, no reference to this clause in reports and news articles
  • Not all health and safety conditions are covered by the Accord- e.g. excessive and forced overtime, suppliers not required to allow TUs to organise despite shop-floor organising being the mst important line of defence against dangerous working conditions
  • Some nonBD officials involved have supported policies that protect their own workers at the expense of BD workers, policies opposed by BD trade unions and activists

Global Labour Arbitrage

  • Labour arbitrage: substitution of high wage labourers in the North with like-quality, low wage workers abroad. Allows them to reduce the cost of labour, as labour makes up the bulk of production costs
  • Neoliberal capitalism expanded vast pool of super-exploitable labour across the world
  • Companies benefit from imperfections in the market that lead to differing costs of production between the Global South and Global North. The bigger the imperfection, the bigger the price difference and bigger the potential profits

Globalisation of industrial production and working class

  • Capitalists in imperial nations cutting costs and boosting profits by replacing high wage labour with low wage labour has been driving and shaping globalisation of industrial production. Capitalists either:
    • migrate production to low wage economies/outsourcing (this is faster)
    • employ workers who have migrated to imperialist nations
  • Wage-driven production outsourcing increasing prevalent in neoliberal era, source of surplus value, increasing profits in imperial countries
  • Neoliberalism removed protections for workers and destroyed jobs in protected domestic markets in countries
  • Souths workforce integrated into global value chains lead by HQs in Europe
  • structural adjustment programmes and other neoliberal policies by imperialist governments by the World Bank and  International Monetary Fund resulted in the rise of export-oriented industrialisation in the Global South- living labour in these countries offered to MNCs and global buyers, increasing race to the bottom

Wages, productivity and GDP illusion

  • Profits, prosperity and social peace in Europe, North America and Japan dependent on super-exploitation of low wage labour in the Global South
  • Neoliberalism marks capitalisms imperialist motives


  • Brands’ profits and government tax revenues in imperialist countries dependent on super-exploitation of workers- attacks rights and increases exploitation in North, as workers are made to compete against low-wage labour for employment
  • Worker unity/solidarity only alternative to mutually destructive race to the bottom, and abolish racial hierarchy of nations and disparities

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