#69 -Outsourcing, offshoring - Behind the "global market", the profit drive of British companies

October 2004


If the predictions of today's economic "experts" are anything to go by, hundreds of thousands - if not millions - of jobs and entire industries are under threat of being transferred - or "offshored", as they say - from Britain to low-wage countries within the next two decades or so.

The predictions of union leaders are just as pessimistic. A recent TUC report estimates that, while 750,000 manufacturing jobs have disappeared since Labour came into office in 1997, hundreds of thousands more are likely to go in the future. Another report, this time by the technical, engineering and financial union Amicus, states that the 50,000 white-collar jobs which have been "offshored" to developing countries during the course of last year are only a beginning - and that as many as 200,000 may follow in the next 4 years. Both reports point to "offshoring" as the main threat confronting British workers' jobs.

If disappearing jobs were constantly replaced with equivalent ones in terms of pay and conditions, such a prospect would not appear as a threat to the working class. But we are very far from the kind of full employment that Blair and his ministers keep boasting about.

This context raises a number of questions: what is the real extent of the present threat for the working class? Where does it come from? How can it be confronted? This is the subject of the present pamphlet.

The subcontracting explosion

Capitalist mouthpieces such as the Financial Times and the Economist describe the development of offshoring as a "managerial revolution", which is taking place across the industrialised world. But is this phenomenon really as new as they claim?

In fact, this so-called "revolution" is wrapped in jargon that workers have already been hearing for years. Words like "subcontracting", "outsourcing", "offshoring" have been used repeatedly in conjunction with "global market", "competition", "cost-savings", "efficiencies" and "lean production". The purpose of this exercise invariably being to justify slashing workers' jobs or blackmailing them into agreeing to worse conditions.

Of course, what has caught the media headlines - and caused enthusiasm in the columns of the Financial Times - is the "offshoring" of skilled white-collar jobs to India or Eastern European countries. But manual workers have been affected by a similar phenomenon for a very, very long time already.

In virtually every industry, the process began with large companies subcontracting various productive and non-productive activities to other, usually smaller companies. The aim of this outsourcing exercise was always the same - to cut workers' pay and conditions, while avoiding a head-on confrontation with the existing workforce. And, of course, the subcontracting firms had every interest in turning the screw on their workers' jobs, pay and conditions - in order to cut their own costs, since their big customers were in a position to call the shots by playing their competitors against them.

The generalisation of this division of labour and specialisation based on subcontracting started as early as the 1960s in the large-scale industries, such as the car and aircraft industries, or shipbuilding, for instance. Subsequently, from the late 1970s, the same process began to invade every sector of the economy, including public and government services. Both manual and white-collar jobs were affected. The privatisation of state companies and public services only accelerated the process. And today, it would be hard to find one sizeable organisation in the country, whether public or private, which does not subcontract at least some of its activities.

It is impossible to measure precisely the number of jobs and the worsening of workers' conditions which is attributable to the subcontracting explosion itself. But it has been unquestionably one of the main devices used by the capitalists to increase the exploitation of the working class over the past decades, particularly in manufacturing.

Subcontracting across borders

The fact that this subcontracting process ended up crossing national borders, was just the logical continuation of the large companies' drive to increase their profits by reducing production costs. In some cases this was made worthwhile by the fact that transport costs were more than covered by the savings made, thanks to cheaper labour in poorer countries. In others, it was cheaper to produce locally for the local market, rather than to pay the cost of transport and import taxes. In either case, the companies' choices were exclusively based on maximising profits.

However, this process of internationalisation continued a trend established much earlier, which saw capital flow from the rich to the poor countries, as a result of the capitalists' constant search for higher returns. One should bear in mind, for instance, that by the eve of World War I, nearly 40% of Britain's national wealth was invested abroad - that is, in fact, a far higher proportion than today.

As part of this process, the largest companies began to operate an international division of labour between their subsidiaries across the world. At the beginning of the 20th century, the former British tyre giant Dunlop was already pre-processing the sap of rubber-trees in local mills in Malaysia before shipping it in the form of compact bricks to its factories in Britain. When this division of labour was not aimed at speeding up the manufacturing cycle, it was aimed at making it easier to take over foreign markets. As early as 1873, the American sewing-machine manufacturer Singer built a factory in Scotland, followed by another one in Austria ten years later. Already by 1914, it was estimated that foreign subsidiaries of international firms were responsible for between 3 and 6% of world manufacturing production.

Today, of course, the concentration of production within or around international companies is considerably higher. For instance, according to the World Bank, more than a third of world trade takes place between subsidiaries of multinationals. But this is only the tip of the iceberg, due to the subcontracting factor, whereby factories buy their components from dozens of foreign contractors. In the case of the British car industry, for instance, a report from the Department of Trade and Industry states that "the components of a car produced as a final product in the UK may have been constructed in up to 40 different countries before final assembly in the UK." And although these foreign subcontractors are not technically subsidiaries of the international companies for which they work, they are often so totally integrated in their production processes that it makes little or no difference.

Subcontracting on a world scale has become such a major phenomenon that it has produced in turn, new manufacturing multinationals, which specialise in... subcontracting. The two largest among them are Flextronics, the world leader, and its main rival, Solectron. Although Flextronics is formally based in Singapore and Solectron in California, both are controlled by American interests and both have annual revenues above the £5bn mark. Their sole activity is to assemble products for big American and European manufacturers, mostly in electronics, but also in the car industry in the case of Solectron. Flextronics boasts of having production facilities in 32 countries and Solectron in 23. And this is one of their main attractions for western companies like Apple, Hewlett Packard, Microsoft or Philips, because these subcontracting giants can assemble final consumer goods almost anywhere where they can be sold.

Despite the large job cuts which followed the 2000 "dotcom" crash, these two companies are said still to employ between 60-70,000 workers each. These figures, however, are only estimates, because, as a matter of policy, they never disclose the number of their employees. Instead, they only publish the number of millions of square feet available in their production facilities. For them, workers are like the machinery, they are merely part of the equipment of their assembly lines. Significantly, the majority of their workforce is on temporary contracts. Significantly too, their factories are not located only in the poor countries. In fact, the majority of Solectron's production is located in Europe and North America. But this should not come as a surprise, as these two continents are the main markets of their corporate customers.

In some industries, the subcontracting phenomenon has taken an extreme form. In July 2001, for instance, the chairman of the French electronics and telecommunications giant Alcatel launched his plan to turn it into a "manufacturing company without factories." This involved getting rid of 108 of the group's 120 factories by closing them down or selling them to subcontractors. The remaining 12 factories will be kept only for research purposes. In the process, more than 20% of the group's workers have lost their jobs. Shortly afterwards, another telecommunications giant, the Swedish company Ericsonn, decided to go down the same road at the same time as it was merging part of its operations with Sony.

The "offshoring" of white-collar jobs

As mentioned before, it is not the fate of British blue-collar workers which has grabbed the headlines lately - presumably because most journalists consider that manual workers are expendable - but the fact that large financial companies plan to transfer part of their so-called "back office" activities to regions like India or Eastern Europe. And obviously, this must be causing some concern in the world of the media as, after all, if companies are able to transfer part of their accounting and legal services to India, there is no reason why media companies would not be able to transfer some of their editorial work in the same way! And indeed, the British news agency Reuters has already done just that: in addition to its archives which have already been transferred to Bangalore in India, where they employ 300 workers, 20 Indian economic journalists are now covering 2,000 companies listed on the New York stock exchange for Reuters.

However, for the time being, the jobs which are being transferred to India by insurance companies like Aviva (the former Norwich Union group), Royal Sun Alliance and Axa, or by banking giant HSBC, are mostly low-paid call centre jobs. There is of course a nasty irony in this. These call centre jobs made up a large part of the so-called "new" jobs created under Blair, particularly in Scotland and the North East. They were supposed to be the ultimate proof that the best way to get companies to create jobs was for workers to agree to reduced wages and conditions. So the wealthy financial giants got the cheap labour they wanted for as long as they wanted it, and regional subsidies together with tax rebates as a cherry on top. But now that technological advances in telecommunications make it possible, their next move will be to switch to an even lower cost-base for their operations, wherever they may be, in India or elsewhere, provided this allows them to show an even more inflated profit figure to their shareholders at the end of the year. Why should they care if jobs disappear as a result?

The "offshoring" of skilled jobs in computing, legal services, accounting, human resources, etc... is a far more sensitive issue, of course, because it affects a relatively better-off electorate, which the Labour party needs to keep on its side if it is to remain in power. And its past demagogy is not going to be very helpful in this respect.

Everyone remembers the days, a few years back, when government ministers were hailing the new era of "teleworking", as they called it. Armed with a modem and a computer, skilled white-collar workers would be able to do their work from home. There would be no more time sheets or travelling into work in crowded trains, thus increasing productivity. Everyone would be able to fit in work and leisure at will during the day. This would have been a real working paradise! But technological advances arrived faster than changes in working practices. What was technically possible from leafy suburbia with an ordinary modem a few years ago, is now a doddle from any place in the world with a broadband internet connection. So yesterday's promoters of "teleworking" can be justifiably considered as the inventors of today's offshoring to distant countries.

The government is all the more in trouble over this issue because it is itself directly responsible for the offshoring of white-collar jobs. So for instance, the civil servants' union PCS has denounced the fact that in the National Savings Agency, the government is allowing its subcontractor Siemens to offshore 250 jobs to India. Likewise, the health and local government union Unison reported that in 8 London hospitals, the typing of letters and reports for medical staff has been subcontracted to the India-based company, Omnimedical, thereby taking the work away from medical secretaries.

A "foreign" threat?

We are told that jobs are being cut in Britain because competition on the "global market" makes their offshoring to low-wage countries "inevitable". This gives a particular psychological dimension to these job cuts. They appear to be the result of a sort of unstoppable economic "iron law" which also means that many more jobs will go in the coming period. Moreover, this process appears to be pitting the working classes of the rich countries against those of the poor countries in a struggle for survival over jobs. As if the world was not rich enough to cater for the needs of its entire population!

Such fears can be summed up as follows: "The only protection that remains for us is distance, that is the cost of transportation. But it is all too often forgotten that... the speed of circulation of goods has been increased tremendously, that the timing of their delivery is almost mathematically guaranteed, thereby reducing transportation costs in such proportions that they no longer affect production costs, especially when it comes to manufactured products... The yellow threat which hangs over Europe can therefore be defined as follows: a violent breakdown of the international equilibrium on which the social organisation of the great industrialised countries rests, a breakdown caused by sudden competition, both abnormal and unlimited, from a gigantic country."

These words were not published in the columns of a British tabloid. Nor are they borrowed from a speech made on a UKIP platform. In fact, they were part of a parliamentary report made by a famous French economist, called Edmond Théry, in 1901! And yet, the only "breakdowns of the international equilibrium" which have taken place since then were not caused by China or the "yellow threat", but by the rivalries between the old imperialist powers, which resulted in two world wars and millions of casualties!

This is why the "threat" that the working class here is allegedly facing from the poor countries, in the form of the offshoring of jobs, needs to be put into perspective. The offshoring of jobs, as we see it today in services and as we have seen for much longer in manufacturing, is indeed just part of the normal operation of the capitalist system.

If the British working class is under threat, it is not from the poor countries, let alone from the working classes of these countries, but only from British bosses and their on-going profit drive. And against them it has plenty of weapons at hand here, as well as in the poor countries themselves, where local working classes may prove to be precious allies in tomorrow's struggles.

But we will come back to this point later. Before this, we shall devote some time to examining this "normal operation" of the capitalist system, in the light of history, and its consequences from the point of view of the working class.

The massacre of India's industry by British capital

Today, India is blamed for taking jobs from Britain. But a long time ago, things happened the other round. In the 19th century, hundreds of thousands of Indian cotton workers lost their jobs so that British cloth manufacturing could really take off. And not only did these workers lose their jobs, but the whole Indian economy was forced backwards by many decades.

In the early part of the 19th century, the new English cloth capitalists began flooding the Indian market with the cheaper (and probably much poorer quality) woven fabrics from the Lancashire textile mills. Marx noted that "in 1824 the export of British muslin to India hardly amounted to 6m yards, while in 1837 it surpassed 64m yards."

In Britain, the result was that by 1850, hundreds of thousands of jobs had been created, with one eighth of the working population employed by the English textile industry. In Manchester and its surrounds, this new generation of workers provided the basis for the revolutionary section of the Chartist movement, which began to challenge the exploitation of the working class and its lack of political rights.

In India, however, the consequences were devastating. Within 10-15 years following the flooding of the Indian market by Britain's cloth, the ancient, centuries-old, vast Indian cloth industry, and the whole social fabric which rested upon it, had been deliberately wrecked.

A century earlier, a British colonial official had described Murshidabad, then capital of Bengal, "as extensive, populous and rich as the city of London, with this difference, that there were individuals [there] possessing greater property." In the mid-19th century, Murshidabad, which today does not even figure on the map, as well as Dacca and Surat became desolate, as their populations were driven by starvation to the rural villages. As Marx noted, "the population of Dacca decreased from 150,000 inhabitants to 20,000." And he quoted the Governor-General who reported that "the misery hardly finds its parallel in the history of commerce. The bones of the cotton-weavers are bleaching the plains of India."

But this catastrophe was not limited to those who had lost their jobs. As Marx pointed out: "This decline of Indian towns celebrated for their fabrics was by no means the worst consequence. British steam and science uprooted, over the whole surface of Hindustan, the union between agricultural and manufacturing industry." In addition to urban workers, hundreds of thousands more village cotton weavers and spinners lost their bread-winning activity and were forced into rural hard labour.

Taking advantage of the social upheaval thus caused, British entrepreneurs took over vast tracts of lands for plantations and India was converted into an agricultural backyard for the production of cotton, jute, hemp and indigo, becoming part of the new international division of labour, whereby one part of the world (the colonies) supplied cheap produce and raw materials to the other, industrialised, part where these materials were processed by machines into finished goods - which were then brought back to the colonies and sold to the captive populations.

Then, in the latter half of the 19th century, British capitalism reached another stage in its development. Large amounts of capital which had been accumulated on the ruin of countries like India, were now being exported in search of higher profits. India attracted an increasing flow of investment from London (second only to Canada - around 18% of the total placed in the Empire). So, when there was a downturn in international trade in the 1870s, import substitution industries, with modern machinery, including cotton mills, began to be built in India, especially in Bombay - both by British and by Indian capitalists, mainly acting as their subcontractors. This new period marked the beginning of the downfall of the Lancashire cotton industry

Between 1890 and WW1, Indian factories developed apace - cotton power looms quadrupled, power spindles doubled, jute looms increased four and a half times. Employment in Bombay's cotton industry increased from 74,000 workers in 95 mills in 1896 to 195,000 workers in 197 mills in 1905. The jute industry employed, by 1913, as many as 216,000 workers. But conditions were barely human - for instance, British jute mills in Calcutta enforced a 15-16-hour day for weavers! Nevertheless, after the catastrophic destruction of the country's manufacturing industry more than half a century before, the pendulum had swung back. A new industry and a new working class were born in India. However, this was not due to any plans made by British capital. It was only due to the blind logic of capitalist profit.

Russia - the capitalists' greed digs their own graves

There are those who complain that jobs and technology are being exported to "benefit" foreign countries against the interests of the British working class. But the British working class is an integral part of the international working class, whose primary interest is to get rid of capitalist exploitation on a world scale. And repeatedly, the working class of one country or another has asserted this common interest, by standing up in the name of the international working class and giving a bloody nose to capitalism. This was the case in Russia in 1917. But without the huge development of the Russian economy thanks to the greed of foreign investors, there would have been no working class in Russia strong and conscious enough to overthrow the Czarist regime, push aside the ambitions of the weak Russian capitalists and establish the power of the Soviets.

By the turn of the twentieth century, Russia was clearly the largest "emerging market" of its time. Industrial production doubled during the 1890s, and then doubled again during the first decade of the 1900s. Productivity growth was especially impressive compared with the standards of the time. With increasing use of all the latest technology, Russia achieved a 75% increase in production with only a 27% increase in the workforce during the 1897-1908 period.

Labour costs were significantly below those of the industrialised nations. Russia's huge population (at 113m it was 50% greater than that of the US) provided an endless reservoir of cheap labour. And presiding over this population was the most repressive dictatorship of the times. Surely a good guarantee for the capitalists' investments?

So foreign money poured in, in a frenzy of blind greed, much of it coming from European and American bankers. Out of the total 5.2 billion rubles of Russian stocks and bonds issued during the 1908-1913 period, roughly a third were sold to foreign investors. British and French investors especially loved Russian railway bonds, which were secured by the Russian state's gold. The eager financiers included many of the most prominent banks in the world, such as Barings and Rothschilds of England, Crédit Lyonnais and Société Générale of France, and CitiBank (then National City Bank) of the United States, which all aimed their sights on huge speculative returns. They helped finance the construction of a vast railway network, including the famous Trans-Siberian Railway. By 1917, no less than two-thirds of the assets of Russian commercial banks were foreign-owned.

The Russian government also sought foreign joint venture partners for some of its state-owned enterprises. Competition among foreign companies to join these ventures was no less intense than it is in China or East Asia today. For instance, in 1907, when the Russian armament giant, Putilov, sought outside capital and technology, the French company, Schneider, and the German company, Krupp, fought an extremely nasty 7-year battle to participate. The French company eventually won by enlisting the diplomatic support of its government and by a massive infusion of new capital from French banks.

Few investors had any idea of any potential danger for their capital. For them, the maths was simple. Russian 5-year gold bonds yielded 6.75% compared with a yield of approximately 6% on similar British bonds. An extra 3/4% was not to be missed. Besides, who could imagine that a large country like Russia, with its vast natural resources and huge gold reserves, and its iron-heeled state, could ever default on its debt? History was about to teach these investors an expensive lesson.

The young Russian working class was located in just a few centres, in particular, St Petersburg. Between 1890 and 1917, the number of factory workers in this town grew to comprise almost 1/3 of Russia's entire working class. Moreover, due to the country's rapid industrialisation, driven by the state and foreign capital, industry was highly concentrated. 70% of St Petersburg workers were in large factories, both state and privately-owned, most of which employed more than 2,000 workers - the largest being the foreign-funded Putilov works, with 30,000 workers, which was to be a decisive Bolshevik stronghold during the revolution.

The Russian proletariat, however, had an unparalleled asset - its own revolutionary party. With such an instrument at its head and the benefit of a situation in which large numbers of workers were armed as a result of the war, the working class was able to overthrow the Czarist regime - the guardian of the West's gold rush into Russia - which was relegated to the dustbin of history. Within eight months, the soviets were able take power in an almost bloodless revolution. Peace, bread and land, won the day. The capitalist class took flight, and their entire system came crashing down.

The new workers' government shook the world when it withdrew from the imperialist war, went on to repudiate all international debt obligations and then nationalised foreign companies without compensation. Foreign governments and investors were owed 13.8 billion rubles (US$7.1 billion) at the time. Had investors put their money in a 6% account in Britain, these investments would now be worth US$700 billion. Too bad for them!

What is more, the soviets proceeded to invite the world working class to follow their example. For the following two decades, revolutionary waves, whose origins could all be traced back to the October revolution, shook various parts of the world. Western capitalists had lost a fortune in Russia and they had inadvertently allowed the international working class to gain a wholly new political tradition and sense of confidence.

China - not a tame but a revolutionary working class

As we saw before, China's image as a huge potential competitor of western economies, due to its virtually unlimited pool of "cheap" labour, is hardly new. Nor, in fact, is the use of China as a workshop by western companies and as a target for speculative investment.

The transformation of China into a western industrial backyard began as far back as the 1840s, after the first Opium war, when London forced the opium it was producing in India onto the Chinese market. Soon the profits of the drug-dealing West were recycled by British and US companies into building repair wharves, foundries and cannon factories in Chinese harbours.

For Shanghai's provincial authorities, tying their fates to western capital seemed more profitable than upholding the rule of the weak Chinese empire. They wanted to turn Shanghai into what would have looked like an early version of Singapore. By 1905, the Shanghai bay area was already a continuous alignment of 36 shipyards. 11 were small Chinese-owned yards, while the other larger 25 yards were foreign-owned, including 18 by British companies. Only one company, the British company Farnham & Boyd, was allowed to build ships - for which the others acted as subcontractors. With 6 docks and a large engineering workshop, the Farnham and Boyd shipyard was one of the world's largest. In the meantime a whole industrial fabric producing the goods and tools required by Shanghai's shipyards had developed in the international concessions allocated by the Chinese authorities to the western powers.

By 1911, the description of Shanghai given by a western journalist, was remarkably similar to what can be read today about the same town: "A huge harbour, one of the world's largest, a kind of Liverpool with gigantic docks, engineering workshops, international banks, factories, luxury hotels, buildings incredibly high - just like an Anglo-American megalopolis."

However, it was World War I which gave the real impetus to China's manufacturing industry, thanks to the paralysis of Europe's industry and the fact that China remained technically neutral. So, between the beginning of the war and 1920, the production of silk cloth doubled, cotton cloth tripled, iron and coal increased by 80% and cigarette manufacture went up 50-fold! And as the Chinese economy grew, so did the working class. From less than 500,000 at the beginning of the 20th century, the working class reached 11m in 1924, of which 1.5m worked in large industrial factories and 1.7m in other large non-manufacturing organisations (mines, railways, docks, etc..). And the majority of this working class was concentrated in the five main coastal zones which had been the springboard of western capital in China since the mid-19th century.

Once the first trade-unions emerged, in 1918, the Chinese working class began to intervene increasingly in the country's political life. In 1919, while the Chinese communist party was being formed, large strikes paralysed the international concessions in support of the nationalist students' movement and its struggle against the pro-western Chinese regime. Three years later, 40,000 workers were organised in trade-unions in Shanghai alone and during that year 150,000 workers took part in strikes, which invariably involved battles with the concessions' private police and gangsters hired by the bosses. On May Day 1924, 100,000 workers marched in Shanghai and twice as many in Canton, despite the martial law declared in both towns. One of the leaflets distributed on that day stated: "8 hours' work, 8 hours for education and leisure, 8 hours' sleep, what a reasonable programme!" - this when, in many factories such as textile mills, a working day of 14 or 16 hours was not unusual.

The working class movement went from strength to strength. In 1925, the first Chinese Trade Union conference held in Canton brought together unions organising half-a-million workers. On 29 May, a strike broke out in Shanghai's international concessions after a Japanese foreman shot a worker. The next day, a protest march in support of the strike was met by gun fire by a British police squad. Twelve students were killed. On June 1st, Shanghai's working class replied with an indefinite general strike, which immediately spread further afield. On the first day, foreign embassies estimated that over 400,000 workers were on strike along the coast. The Chinese revolution had begun.

It was to take almost three years of bloodshed and intense fighting, not to mention the deliberate betrayal of the revolution by the Stalinist mentors of the Chinese communist party, before the uprising of the Chinese working class was finally crushed.

With the exception of Hong Kong, where British troops were brought in to protect western assets, everywhere else western concessions were virtually destroyed when the factories where workers had taken refuge were bombed. Predictably, this caused a lot of bad feeling in boardroom meetings across the rich countries. Western companies, for whom the Chinese masses had never been more than industrial cannon-fodder to boost their profits, had been taken completely by surprise. After all, this "anonymous mass of hands", as one company manager was quoted as calling it, had proved that it had a class consciousness, something that had never entered into the calculations of western investors.

China today - the myth of an economic giant

It took over half-a-century for imperialism to recover from its fright of the 1920s. In the meantime, China was occupied by Japan and devastated by a protracted civil war, before becoming victim of a western-imposed economic blockade to strangle the nationalist regime set up by Mao Tse-Tung, in 1949. Eventually, in 1972, US president Nixon's visit to Beijing signalled the west's intention to resume "normal" relations with China - i.e. to reintegrate China into the world capitalist market.

Even long after 1972, however, western capitalists remained wary of risking their funds in China. It was the convulsions of the world market which finally convinced western capitalists to try their luck. By the early 1990s, the huge amounts of capital floating aimlessly across the world in search of fat profits had found a new target, the so-called "Asian tigers". Western capital flooded into south-east Asia, including China. But when the resulting frenzy of speculation came to a head, in the form of a financial crash in 1997, and the tigers lost their stripes, only China proved large enough to absorb its shockwave. So China was promoted to the rank of top favourite in the City and Wall Street, where it has remained ever since.

Does this mean that China is on its way to becoming a new economic giant, in the way Japan did from the 1930s onwards, to the point of overtaking Britain, let alone the USA, as an economic power? In passing, it should be said that if China did indeed manage to catch up with Britain in terms of national wealth, this would still mean, given the size of the two countries' populations, that the Chinese would be 20 times poorer than the British. This would hardly place China in the club of the rich countries!

Leaving this aside, there are all sorts of reasons which make such predictions meaningless and to begin with, the statistics on which they are based. If one uses the only method of calculating GDP which measures a country's production in terms of its value on the world market, China's GDP is equivalent to only 3.6% of world GDP, compared to 28% for the European Union, 26% for the USA and 16% for Japan. This leaves China very far behind!

But what about China's thriving industry? Apart from the usually small and antiquated rural enterprises, there are three main sectors in China's industry. One sector is made up of the remaining huge state-owned enterprises, although many have already been closed or privatised. Most still use the technology of the 1940s, left behind by the Japanese. And many, if not most, are run-down. In any case, they are in no position to face up to the competition of western companies. Then there is a large sector made up of companies which specialise in copying western-made products, usually for the domestic market, owned by the central state, municipalities or by private capitalists. But if patents are finally enforced in China - and they will be - this sector is doomed. It will have to face bankruptcy or else come under the control of western capital.

Finally, there is the new industrial sector, which is overwhelmingly foreign-owned. Even the state-owned giants which have made successful inroads into the high-tech industries are totally dependent on their foreign partners. So, for instance, China's telecommunication giant TCL owes its technology and its status as the world's largest TV manufacturer and China's second largest mobile phone manufacturer to its joint-ventures with the French electronic giants, Thomson Electronique and Alcatel, in which the French multinationals have a controlling position. Likewise, the state-owned Dongfang Motor Corporation, China's largest domestic car manufacturer, owes its technology to, and shares profits with, Citroën, Peugeot and Nissan. This dependence of the new industries on foreign capital is compounded by the fact that they are mostly export-orientated. Despite the size of China, the smallest reduction of international trade will spell disaster for these industries.

More importantly for the population, these new industries cannot form the basis for an economy able to cater even for the most basic of its needs. Significantly, while the latest technologies are available for making TV sets or mobile phones, there is no sizeable production of modern agricultural machinery, nor even building materials - this, in a country where the majority of the population lives in the countryside or in urban slums!

A proletarian powder keg in the making

The Financial Times' Foreign Direct Investment report this year explained that China had two principle attractions: "low cost labour ...and an enormous domestic market of 1.2bn consumers." But it added, "although the latter has showed only nascent signs of life, rising incomes, up 6.4% in 2002, hold massive purchasing potential."

How "massive" is this though? The Economist, another champion of the emerging Chinese "economic giant", has to admit that the average annual family income in China is just £550. Of course, there is the country's new layer of capitalists, many of whom are former, or current Party, Army or state officials. But altogether, the number of those who may ever be able to enjoy a standard of living remotely comparable to the average in western countries is probably no more than 50 million - if that.

Car sales provide a good example of these limitations. According to an article published in the Financial Times in October, they "soared" to 2.1m in 2003 up from 750,000 in 2001. But throughout 2004, sales have been falling, due to the shortage of credit. As a result, said this paper, "multinational manufacturers had to reassess their ambitions" and both Volkswagen and General Motors, the two largest car brands in China, had to warn shareholders that profits would be lower than expected.

In and of itself, of course, a potential 50-million strong market may be enough to whet the appetite of any western company. But what it implies is hardly a "massive" market compared to the nearly one billion Chinese adults, or even the 256 million urban population.

The reality is that China remains a poor-peasant-dominated, under-developed country - although only around 100m actually engage in agricultural work, while 300-400m in rural areas are either unemployed or under-employed. But farmers must dig, sow, pick, weed, harvest and carry everything without mechanised help. In slack periods they must work in so-called rural enterprises, producing fireworks or car seat covers, for instance. These rural labourers, in their language, says the Chinese Labour Bulletin, do not call this "working" but "suffering". To quote from a news report on 6 October this year "in the afternoon of 4 October, a blast broke out in the Changling Firework factory located in Guangxi province.... The factory employed 120 workers on a seasonal basis and by the midnight of 5 October, the calamity killed 24 workers, injured 28, and razed the factory buildings to the ground." Explosions in these factories are frequent - minor and major - a normal, rather than an extraordinary event.

So what about China's great urban economic growth areas? Inside the oldest Special Economic zone or SEZ, in the Pearl Delta's Guangdong province, the road between its two main cities, Shenzhen, and Guangzou, is a virtually uninterrupted 200km of grey cement and corrugated iron factories sitting in a haze of pollution. The larger factories employ 20,000 and even up to 70,000 workers. 130-150m migrant workers - who are allowed to leave the rural areas temporarily in order to work in the towns under the control of strict pass-laws - form the country's main industrial workforce. A standard wage for migrant workers is somewhere between £35 and £65 a month. Out of this, they must pay an annual fee, plus bribes, for their temporary residence permits. Is this is the great consumer market that the west has its eyes on?

Migrant workers can only apply for permanent residence after seven years. So they struggle to remain in the SEZs and escape controls. As long as they have a job, they live in sex-segregated dormitories reminiscent of the workers' hostels in South Africa under apartheid. Or they crowd 15-20 to a private rented room in order to save money. But once they lose their jobs and therefore become illegal, their only option is to seek shelter in the precarious shanties which have sprung up on the border of the SEZs to house unregistered workers.

In fact, most production line workers are migrant women and most of these are under 25 years of age. In Guangdong they make up over 67% of the workforce. Only this age group could withstand the harsh, unsafe, conditions, in the context of an average working day of 11 hours, although sometimes work is extended to last all night as well, in busy periods. But 40% of these workers are temps, so they can be sacked at will and forced to joint the ranks of the vagrant, "illegal", unregistered workers roaming the streets looking for employment. Shenzhen has 1.4m registered residents, but the real population is closer to 8m, according to the China Morning Post.

For the majority of the working class - urban and rural, China is a living hell. But it is just as much a potential hell for capital - because, in concentrating the urban working-class on a scale which has no precedent in history, they are stoking up a powder keg that will, sooner or later, blow up in their faces. In the new industries, there are daily reports of strikes and protests in small and large factories over safety, over wages, over pensions, even over bad quality food. The same is true of the "old" state-owned industries. 43m jobs have been cut already in these industries. But those who remain at work are responsible for a wave of militancy throughout the country, fighting and protesting over the on-going "restructuring" for privatisation of their enterprises, which results in the loss of benefits pensions, etc. And they carry on despite facing beatings by riot police, rubber bullets, sometimes real bullets and long, if not indefinite prison sentences.

Because of the repressive nature of the regime - which the West condemns hypocritically while taking advantage of it - we know very little about working class organisations in China. Although, in the past, isolated activists did speak out after having spent long periods in jail, to describe their attempts at setting up independent illegal trade-unions. Whether such independent working class organisations do exist today or not, they will emerge at some point. As more and more young migrant workers are exposed to the crude exploitation of the new industries, they find themselves with no option but to fight for survival. Joined by the millions of redundant ex-state enterprise workers, they could be an unstoppable force. China could then have its second working class revolution, less than 100 years after its first, but this time, in today's context, it would set the whole of East Asia and beyond on fire.

India's rebellious working class

Regardless of the irrational myths of today's economic pundits, India, like China, is an undeveloped country. 70% of its 1bn population is poor, living at or below subsistence level in rural villages, 35% of the population is illiterate and 47% of children are chronically malnourished. As for the 405m workforce, most of it is stuck in the rural backwaters. Only 27.8m workers are employed in the formal sector, that is, recognised as such by the labour legislation. The rest have to resort to casual work, mostly in the black economy. They live in sprawling slums, in the main cities. Sometimes they do not even have a roof, just a piece of pavement on which to sleep, which they rent from the local "slum landlord".

Although India's economy, as measured by the World Bank's indicators has, been growing at a relatively high rate annually, hitting 6%, in 2002, compared to the 1-2% annual growth of the British economy, foreign direct investment into India was only $4.7bn in 2003 compared to over ten times that amount into China.

Indeed, unlike their unbridled foray into China, western capitalists' manufacturing investments in India are far more modest today. This was not always the case. Up to the 1990s, many western companies built large factories in India, particularly in the chemical industry. The catastrophe in Union Carbide's Bhopal factory was a consequence of this. But once China became an option, it was immediately seen as much more attractive. First because it had been isolated from the world market for a long time and lacked most current technologies, which was not the case for India. Second, because, unlike the financially poor Indian federal state, China's highly centralised state had enormous financial resources which it could use to develop large infrastructure projects. Finally, and possibly above all, the Indian government was relatively weak and unstable and had proved unable to keep its working class under tight control, unlike the dictatorial Chinese regime, which ruled with an iron hand.

For western companies, the Indian working class' militancy is indeed a major shortcoming, even if the average hourly semi-skilled wage is only around 60p/hour! It is even more of a minus when one takes into account the fact that this militancy manifests itself in huge strikes, involving not just a few thousand, but hundreds of thousands or even millions! What is more, India has an uninterrupted tradition of working class organisation and militancy going back to World War I.

To give just two examples of this tradition: in the 1970s, 1.7m railway workers went on strike over wages, against the opposition of their union leaders. They held out for 3 weeks and only returned to work after 30,000 strikers had been jailed with unknown numbers murdered. Then in Bombay in 1982, 200,000 textile workers struck for 17 months over wages and casualisation, staging "fill the jails days" - i.e. demonstrating, despite a police ban, until the jails were so blocked up they caused a system break-down!

In fact workers are seldom held back by police bans or repressive legislation passed by the states. For instance in February this year, 10m employees of various publicly owned companies and state institutions, went on a one-day strike to protest against a Supreme Court ruling that public sector workers had no right to strike. This ruling followed an indefinite strike staged by 1m Tamil Nadu state employees from July 2003, to demand restoration of pensions and benefits which had been slashed. 170,000 workers were sacked at the time. Eventually after massive demonstrations across the country, the state government back-peddled and reinstated all but 6,000 of the workers.

So, given the living militant tradition of the Indian working class, those local and overseas bosses who employ the new sector of offshored "professional" workers in financial services and IT work - and latterly in call centres - may well find that these workers are not as inclined as previously thought, to put up with being the cheap and exploited alternative to British or US workers.

This BPO sector, or "business process outsourcing", today includes such British names as Lloyds TSB, HSBC, Standard Chartered, Prudential, Sun Alliance, BT, Aviva, and even National Rail Enquiries. To date this sector only employs 770,000 call centre and IT workers, although it is predicted that this will soon increase to millions... But this is still a drop in the ocean of the 405m strong workforce. Already these IT workers who are submitted to frisking and other security measures whenever they enter or leave their offices, are getting organised, demanding wage rises, and last month a new Professional Association was launched in Hyderabad aiming to recruit BPO workers. Of course, it refuses to call itself a union, claiming its activists work as counsellors, informing workers of their "interests", but it may well be the beginning of something more.

The wealthy BPO islands in India's sea of poverty do stand out. Like the so-called campus of Reliance Infocomm, India's largest private sector firm, just outside Mumbai. The Economist tells us that "the approach road is lined with lamp posts adorned with little posters bearing the slogan 'a new way of life'. Public taxis are not allowed beyond the security gates. Thereafter transport is by zero-emission golf buggy, through grass-verged orderliness to concrete-and-glass monuments to modernity." Likewise, Bangalore, which has been compared to California's Silicon Valley, is host to 425 BPO companies and boasts of huge modern campuses where tens of thousands of aspirant students learn how to write software and tall, gleaming office blocks, housing firms like Wipro, Infosys, and Tata Consultancy Services, the main software subcontractors. There are cappucino bars, "British" pubs and yuppies, but of course for many of them a "high" salary is around £275 a month...

So now the Indian working class has a brand new section of white collar "professionals", mostly under-25-year-olds joining it. Some of them, who have struggled to gain university degrees have high aspirations. However, this situation is not dissimilar to the situation back at the beginning of the 20th century. It was the old Indian civil service, whose educated workers provided the backbone to the nationalist movement against the British. Today's educated young office workers cannot fail to resent their exploitation. And it is likely that they will discover the virtues of collective action and links with the traditional working class - just as did their grandfathers and great grandfathers and mothers. In any case, that is what can be hoped for.

The real issue - the capitalists' profit drive

So where does all this leave us today in terms of the attacks faced by the working class in Britain?

First, it must said that offshoring in the strict sense of the word, that is, the transfer of jobs from Britain to another country in order to produce the same goods or services for the same people, is only a marginal phenomenon. Most industries cannot be offshored, because they need to be close to the market which they service, or close to a complex network of other industries which is not easy to find elsewhere. This is why California's Silicon Valley remains the world's centre of computer and advanced electronics manufacturing, why the areas surrounding Birmingham or Manchester are still engineering strongholds and why the City of London is and will remain a worldwide financial centre.

Even the use of poor countries as cheap subcontracting platforms remains very limited. So, for instance, in a survey on how the world's largest car manufacturers were using China as a subcontractor, the Financial Times only managed to produce two examples: the 40% savings made by General Motors on the radio sets used for its cars and the £275m worth of components outsourced to China by Ford last year. But what is the cost of a radio set compared to the cost of a car? And what is £275m compared to Ford's £71bn production costs?

Statistics on offshoring are difficult to obtain, but there are some. For instance, one study of 4.4m workers employed by German companies' foreign affiliates shows that only 18% are based in Eastern Europe and just 3% in China. But the overwhelming majority of the remaining 79% are located in industrialised countries and cannot, therefore, be described as offshored. Rather they are employed by the parent German companies to tap local markets.

Another survey carried out across the European Union before its enlargement is even more striking. It shows that less than 5% of all job cuts made over the past few years can be blamed on offshoring. Prospective studies carried out for the US and the EU predict that the rate of job offshoring should remain at this level relative to other so-called "normal" job cuts over the coming years.

So, when the bosses talk about the "uncontrollable market forces" which force them to offshore their activities and, therefore, cut jobs in Europe, they are lying in 95% of cases! And this, without even taking into account the ending of short-term contracts and other casual jobs which do not enter in these calculations. Offshoring turns out to be what it really is in the hands of the bosses - a means of diverting the attention of the working class from the 95% of jobs which are cut without being offshored. By the same token, this trick provides the bosses with an instrument of blackmail against workers.

But the only tangible reality for the working class is that behind every move made by the capitalists lies their constant profit drive, not abstract market forces. This is the bottom line. And it is what should always be held up against companies which use the threat of offshoring as a means to coerce their workforces into agreeing to cuts in their jobs and conditions.

Blackmail and bogeymen

This blackmailing process has been taking place more or less everywhere in Europe over the past period, particularly in the car industry. So, for instance, in July this year 60,000 DaimlerChrysler workers across Germany took action against their bosses' blackmail: accept the turn of the screw on working conditions, in order to save £334m in costs, or else production will be moved elsewhere - to South Africa or a factory in north Germany's Bremen. In the end, the union leaders conceded that workers would increase their hours from 35 to 39/week without extra pay to prevent this happening. But whether the bosses would have carried out their threat is another question. The union did not try to call their bluff. They agreed this unpaid labour for "job guarantees" until 2012 and a 10% cut in "boardroom pay", which is obviously going to make a huge difference to company bosses!

Just the month before, Siemens succeeded in pulling off the same trick, threatening to shift work to Hungary unless its workers accepted to work 5 hours extra for no extra pay, thus increasing their working week to 40 hours. Bosch in Stuttgart also threatened it would move its new filter for diesel vehicles overseas, in order to get workers to give up their 35-hour week for nothing. And in France, at their engine plant in Venisseux, Bosch told French workers that it would move to the Czech Republic unless they agreed longer hours, working these for free, of course. One cannot help being reminded of the 19th century capitalists who were mocked by Marx when they seriously argued against cutting the working day by one hour because, according to them, their profit was all made in that final hour...

This latest strip poker game, which is merely a cover for an increased profit drive, has been taking place in Britain too, except that it takes different forms. So, for instance Ford told Dagenham Engine Plant workers that they would not get a new replacement diesel engine in 5 years time unless they agreed to changes in working practices (a turn of the screw on conditions by cutting breaks, cutting one hour off the production of each engine etc., etc.) and the outsourcing of everything but the canteen sink, which, along with all catering had already been outsourced years ago. Otherwise the new engine would be produced in the Czech Republic or somewhere else, where wages are far lower.

That the union officials there agreed to most of this probably goes without saying. However the case of Ford illustrates how this blackmail has another objective as well. That is, to get state governments to step in and offer something to the car giants, if only they won't close their plant, cut those jobs etc., which they are happy to do in order to gain political points from the bosses. So Ford only had to announce its closure of the Brown's Lane Jaguar plant at the time of the Labour Party conference, and all of a sudden both Blair and Brown were arranging meetings with top Ford bosses. And soon after that, large government subsidies were being announced. As they say, "no politician wants to stand in front of a closed car factory".

Peugeot, Ford and Vauxhall in Britain have regularly used the blackmail of guaranteeing a new model for a plant - to get workers to agree to greater flexibility, the bringing in of temporary workers, weekend shifts, "lean production", etc., which has allowed them squeeze costs by increasing the rate of exploitation of workers, thus increasing their profits substantially. And of course these guarantees are never binding on the company concerned. They just have to raise the global market bogeyman from his coffin and tell the workforce that, sadly, there is nothing they can do against market forces, which apparently are an act of the gods, other than close the plant. This is what happened when Ford halted Fiesta car production and slashed 3,500 jobs in Dagenham in 2000. After having got the unions to agree to a "Modern Operating Agreement" which cut workers' conditions radically and also cut many jobs in exchange for a new model, it was then awarded to the Ford Cologne factory in Germany. The "market" was apparently to blame.

Today, GM/Opel/Vauxhall again blames the market bogeyman for cutting 12,000 jobs in Europe, 10,000 of them in Germany. Sure, market forces, by definition, are not something that the capitalists can control, let alone workers. But the capitalists unleash these forces themselves, produce as many cars as possible and rely only on winning the competition game against their rivals in order to sell them. And while things are still going smoothly, they cautiously line their pockets with fat salaries and fat dividends for their shareholders, until comes the time of another slump in sales, for which they expect their workforces to pay with their livelihoods.

It is worth mentioning that the luxury car-maker, BMW has gone further than all others in transforming its workforce into one which can flex large or small, according to the market, by using a huge contingent of temps in its plants - in the Cowley plant in Oxford, the number of temps varies from 1/3 to ½ of the workforce. Moreover BMW has also achieved similar flexibility in working hours, which can be extended or reduced according to production "needs".

The union leaders' begging bowl

Amicus and UNIFI, the banking union with which it has just merged, have been spearheading British unions' campaign against the relocation of jobs overseas, on the grounds that "we are on the brink of a massive jobs exodus overseas", which must be opposed.

So Amicus has produced stickers asking "Why have you sent my job overseas?" And leaflets pleading "don't offshore Europe's heart". No doubt the union campaigners are congratulating themselves on at least one success - Natwest Bank's latest TV advertising ploy to get an edge on rivals by, among other things, boasting that it uses "UK call centres only". Not that one should necessarily believe it.

Amicus does not actually choose to challenge the financial bosses' attempt to make workers foot the bill of their cost-cutting. Instead, its campaign revolves around the idea that it is vital for Britain to retain its insurance sector intact, because, as the union boast proudly, it is the largest in Europe. So, for instance, when Scottish Widows decided to transfer 50 jobs to Bangalore in March this year, this logic led Amicus officials to come up with a real humdinger: "It doesn't make sense for our members, our customers nor ultimately our shareholders, nor the country as whole. It should therefore not make sense to management". Whatever next? As if workers had any stake in making sure that British insurance companies remain Europe's top dogs, let alone in defending the interests of their shareholders!

Nevertheless, Amicus proposes a solution, if one can call it that, to all this. That "the government, business and the unions get together to devise a strategy for mitigating the effects of offshoring". All working harmoniously together, of course. It calls for government investment in training so that "we can capitalise on our competitive edge", because, to quote the Amicus finance sector leader, David Fleming, "unless we take action now, the UK could be left as a nation of fat cats and hairdressers with nothing in between".

The communication workers union, CWU, also has its own anti-offshoring campaign - the so-called "Pink Elephant campaign". This was set up some time ago, against the offshoring of several thousand jobs by BT. But while the CWU self-righteously proclaims that it has "no issue with India or Indian workers, only with BT and other UK jobs exporters, the slogans of its campaign are "stop the UK job stampede" and "keep UK jobs in the UK" - which is just another version of the same nationalistic stance. However, the CWU's anti-offshoring noises are all the more ironical, because at the same time it has proved willing to act as a carpet for BT and Royal Mail to walk on when they made tens of thousands of workers redundant in the "normal" way!

Ultimately, the only thing union leaders propose against all forms of job cuts, is to throw the ball into the government's court.

Against the massive job cuts in manufacturing, for instance, the main unions launched a campaign which argued for investment in British manufacturing and endorsed government subsidies to industry (in the name of "saving jobs"), but let the bosses right off the hook. In addition, they pointed to the fact (and still do) that there was nothing to be done unless this government brought in a law which made it as hard to sack workers in Britain as it is in Europe. Which French German, Belgian, etc., workers will be puzzled at, since they have been sacked left, right and centre, in the same period, although their unions were "consulted" about it first. As if under capitalism, legal protection for workers could be effective, unless the bosses are made to fear a militant backlash! But this is precisely what union leaders have always proved determined to avoid, preferring instead to retain their cosy partnerships with employers.

Likewise, the union leaders' call for the government to entice capitalists into investing (or keeping their production) in Britain through subsidies and a "buy British" policy in state procurement, amounts to proposing that even more public funds - that is mostly workers' taxes - should be used to subsidise the profits of capital, but also that, by the same token, the British working class should take part in the worldwide "beauty contest" for capitalist investment - necessarily at the expense of its wages and conditions.

Ultimately, of course, the main preoccupation behind the trade union leaders' policies is to deprive the working class of any fighting perspective so that it does not risk rocking the boat. And this is precisely why these policies always lead to dead ends.

Reactionary undertones

The long and short of the union leaders' campaign against offshoring is that they want British jobs for British workers and they go 100% along with the bosses' blackmail that these jobs can only be the result of winning in the game of capitalist competition. But what follows logically from this nationalistic stance is not just that British workers should improve their skills, it is also that they should be prepared to make themselves "better value for money" by agreeing to cuts in jobs, wages and conditions!

Of course union leaders would protest that they are not being nationalistic nor protectionist. Amicus goes even so far as to point out that "we are working with our sister trade unions in the UK and at the same time strengthening our contact with Indian trade unions." But what do they offer or moreover, have to offer the Indian unions? A manual on partnership and harmonious working with the bosses? Mr Tata would be very grateful!

And what have the British unions got to say about the risk of depriving those Indian IT and call centre workers of their jobs? After all, why should these workers lose out when, for once, they are able to get jobs which did not exist before and take home a wage which, by Indian standards, is better than most. As to the British unions' claim that they intend to help these Indian workers to win wages equivalent to those in Britain, this is nothing short of farcical, given these same unions' appalling record in helping British call centre workers to fight against their dire wages and conditions.

In fact this anti-offshoring often verges on nationalist chauvinism, if not outright racism. For, beyond all the politically correct soundbites, it comes down to claiming that the interests of British workers are opposed to those of the working classes of foreign, but mostly poor countries.

Indeed, the real evil of offshoring is usually exposed as the use of cheap labour in poorer countries. But who protested when the American domestic appliances company Hoover closed down a factory in eastern France, in 1993, and moved its production to the company's Cambusland factory, near Glasgow, on the grounds that labour costs were lower in Britain? Instead of challenging the use of British workers as "cheap labour" against their French sisters and brothers, and warning Cambusland workers that Hoover was out for a free ride on their backs, British union leaders congratulated the company for the jobs it was "creating" in Scotland! Hoover, however, did not prove grateful for this. Ten years later, in October 2003, it announced the closure of the Cambusland plant and the transfer of its production to China. Predictably, the same union leaders made far more militant noises, this time. But they still did not challenge Hoover's on-going profit drive, only the fact that it was resorting to Chinese "cheap labour"!

Just as it makes no sense to focus on offshoring as the working class' main enemy, it would be nonsense to target the export of British capital on the grounds that this capital would be better used in Britain.

Foreign investment is primarily a reciprocal game played by industrialised countries in order to compete on each other's markets, so it translates into jobs in every industrialised country. A very small proportion of foreign investment goes to the poor countries. China may today be the world's largest recipient of foreign investment - although this is due to the 2000 stock market crash and will probably not last forever - but it only accounts for 5% of the foreign investment of the OECD club of industrialised countries - despite having 20% of the world's total population!

Besides, what sense would it make for workers at Ford's British factories, or BMW or Vauxhall, to wage a fight against foreign investment? After all these workers owe their jobs to US or German foreign investment, don't they? Should British workers form two camps: on the one hand the employees of British-owned companies against foreign investment and, on the other, the employees of British subsidiaries of foreign companies, for it? What a recipe for working class unity!

Counterposing our class interests

Outsourcing, subcontracting, offshoring, are all manifestations of the capitalists' drive for profits. But they are only manifestations of this drive, which takes many other forms, such as the intensification of exploitation or the development of casualisation. All these mechanisms used by the capitalists to increase profits operate in parallel. The bosses' profit drive cannot be challenged effectively without challenging all its forms.

It is an illusion to think that capital can be legislated or regulated into behaving itself and respecting workers' lives and communities, as union leaders claim. It is a dead-end to hope that by making themselves "cheaper", by agreeing to cuts in wages, conditions and jobs, workers can induce companies into keeping factories open, or production going in Britain. It is a dead-end because the more profits the capitalists make the more profit- hungry they get. This is why the union leaders' attempts at sweet-talking employers into giving up their redundancy plans have always been resounding failures.

Workers who decide to fight threats against their jobs, whatever the pretext for these threats, are right to do so. But they should not set themselves the aim of forcing their employers to organise their companies' production in one way rather than in another, in the hope of saving their jobs. Otherwise, the next thing they will be requested to do will be to make their jobs "pay for themselves" - that is agree to cuts in wages or conditions.

There is no such thing as a "good" capitalist system for the working class and there is no point in trying to make one. Within the capitalist system, however, everything is ruled by conflicts and relationships of forces. Workers cannot dictate how the system operates until they run it, but they can build a relationship of forces which leaves the bosses no option but to satisfy workers' needs.

How can workers tilt the balance of forces in their favour? It is made all the more difficult by the fact that the main obstacles to this are the very organisations which are meant to defend the day-to-day interests of workers - the trade unions. In any case, fighting with one's back to the wall, when closure or offshoring is already on the cards is not the way forward. Or rather, it is not enough. Those under threat need allies and the best allies they can find are the sections of workers whose jobs are safe and who are still in a position to hurt the capitalists' profits. To build up such a fight, the objective of hanging on to jobs which may already have gone, is of little use. What is needed are fighting objectives, which challenge the myth of the "iron law" of market forces while providing a basis which has the potential to unite all sections of workers.

If bosses want to move production elsewhere because it fits their business plans or cut jobs for restructuring purposes it is their problem. But there is no reason for the workers concerned to foot the bill. The profits they have produced over the years for shareholders should pay them wages until they have found a comparable job. And if there are too few jobs around, work should be shared between all workers, by cutting hours substantially without cutting pay.

This is no utopia. Society is awash with wealth. And this wealth is the product of the labour of the working class, whether it is the record high profits of the big banks, the huge pay packets that directors award themselves or the sky-high level reached by real estate prices, not to mention the vast flows of capital roaming financial markets unproductively.

Likewise, if bosses want to employ fixed-term contract workers, casuals, or agency temps, who cares about the name of the employer, the colour or masthead of the employment contract? The only thing that really matters is that all workers in the same workplace have the same rights, conditions and wages regardless of status. Building up a fight along these lines would go a long way towards challenging the rise of casualisation and ending the divisions that undermine the fighting capacity of the working class. And if companies claim they cannot afford to grant all workers the same conditions, they just have to turn to their shareholders for help. The working class has no reason to be choosey over who foots the bill!

Contrary to the claim that nothing can be done against the law of the market, because it is a "global" mechanism, except bow to it, the working class has the capacity to fight back, provided that instead of fighting against some "global" windmills, it sets itself the aim of taking on the owners of capital who are within its reach, here in Britain.