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Import Substitution: A Guide to Boycotting Neoliberal Globalization

 

By
Richard D. Vogel

Copyright © 2010 by Richard D. Vogel

Permission to copy granted

 

Boycotting is an act of Civic Revolution.  To engage in a concerted refusal to have any dealings with a person, company, or organization in order to effect change is a form of direct political action available to every citizen regardless of her/his social status.

Historically, boycotting has played a significant role in the struggles of common citizens against economic and political oppression.  American colonists boycotted British goods as part of their independence movement as did Indian nationalists under Gandhi a century and a half later.  Examples of successful boycotts in the 20th century include the Montgomery bus boycott in support of the US civil rights movement, the nationwide grape and lettuce boycotts to back the United Farm Workers Union in its struggle to represent the most oppressed workers in the nation, and the international boycotts against corporations and institutions that had investments in South Africa in the campaign to defeat apartheid in that country. 

Successful boycotting in the 21st century will require that citizens be more sophisticated than in the past -- activists will have to think globally and act locally.  The primary target of today's boycotts must be the juggernaut of neoliberal globalization that maintains a stranglehold on so many of the world's labor, raw material, capital, and commodity markets.  The goal of boycotting in the 21st century will be to stop the massive importation of cheap goods and services into domestic markets, a practice that is producing huge profits for big box merchants and finance capitalists but is undermining working people and their communities at home and abroad and is contributing to environmental damage all along global supply and production chains.  Boycotting neoliberal globalization is the essential first step in combating the global megatrends of increasing inequality and escalating climate change.

The history of the production of jeans for the North American market presents a microcosmic study of the ongoing assault of neoliberal globalization against the working people of the world and the environment.

The History of Jeans

Of Jobs and Jeans: The Case for Boycotting Neoliberal Globalization

Manufacturing jeans has always been a labor-intensive industry where employees (mostly women) work very hard under poor conditions for low wages.  As the map, "Of Jobs and Jeans", indicates, the original factories of the jeans industry in the US were located in San Francisco, Salina, Kansas, and Greensboro, North Carolina.  To avoid unions and access cheaper labor markets, the industry followed the runaway shop movement of the late 1950s and early 1960s establishing plants in the American South and Southwest.

The Border Industrialization Program of 1964, a bilateral agreement with Mexico gave US firms access to the vast pool of Mexican workers who had been deported from the US at the end of the Bracero Program, drew the jeans factories along with many other light manufacturing industries across the border into the maquiladoras.  NAFTA extended the penetration of the Mexican labor market in the late 1990s, and the area around Puebla, south of Mexico City, became the new center of the garment industry in North America.

The further migration of the industry into to the Global South under the Central American Free Trade Agreement-Dominican Republic came after a series of successful labor organizing campaigns in Puebla.  Under the free trade provisions of CAFTA-DR, American denim is shipped to Central America and the Caribbean for sewing by the cheapest labor in the hemisphere. The exploitation of CAFTA-DR is compounded by the fact that the finished jeans are re-exported tax-free to the lucrative markets in the USA and Canada, depriving the countries of the South much-needed revenue.

But even the most impoverished workers of the global South in the western hemisphere cannot compete with the even poorer workers of China and South Asia, and the industry is continuing its global migration.  Today it is not uncommon for jeans to be shipped 10,000 miles from Far Eastern sweatshops to North American retail outlets with the cost of transportation far exceeding the cost of production.  The high environmental costs of global supply chains are not even considered.

Each stage of the migration of the jeans industry has left behind ranks of discharged workers, scores of abandoned factories, and countless forsaken communities -- a clear instance of the practice that we have defined as slash-and-burn capitalism.

The history of the manufacturing of jeans is not a unique narrative -- the production of most other garments, shoes and boots, furniture and accessories, small and large appliances, electronics, toys, sporting goods, tools and hardware, building materials, safety equipment, automobiles and auto parts, aircraft components, steel and other metal products, pharmaceuticals and medical supplies, and even food have followed similar migrations in search of cheaper labor.  Facilitated by advances in information technology, the offshoring of service, managerial, and professional industries is following apace.

Neoliberal globalization, the current stage of capitalism, is nothing less than a war of attrition against the working people of the world and an open assault on the global environment.  If there ever was a political/economic system that needed to be boycotted, this is it.

Although global boycotting may seem far-fetched, conventional economic theory and practice offers a viable strategy for effectively combating neoliberal globalization.

 

Import Substitution

Import substitution is a trade and economic policy based on the principle that in order for a nation to develop (or restore) its economy, it needs to substitute products which it imports with domestically produced goods and services.  Through import substitution, profits and money earned as wages are invested and spent locally, resulting in sustainable domestic economic development.  Historically, governments that represent the interests of their common citizens have promoted import substitution through high tariff barriers against imported goods coupled with tax incentives and subsidies for domestic producers.

The full potential of the economic policy of import substitution vis-à-vis free trade is illustrated by comparing the success of the Japanese automobile industry to the decline of US auto manufacturers.

  • Japanese automakers currently produce 96% of the vehicles sold in Japan compared to less than a 45% market share for US automakers in their home market.
  • After World War II, Japan adopted a National Industrial Policy that helped create a world class automobile industry that exports over 40% of its car and truck production with the majority of its vehicles going to North America and Europe.  By contrast, US automakers, who dominated world auto production in the immediate aftermath of World War II, have steadily lost market share under free trade policies.
  • Although Japan was forced to open its markets to world competition in the 1970s, it did not allow the US or other foreign automakers to build manufacturing plants in Japan.  By way of contrast, the US, in exchange for access to foreign capital markets, has accommodated and even subsidized foreign owned and operated auto plants in the US.

 
The post-war National Industrial Policy of Japan shows how effective government import substitution policies can be in fostering and protecting domestic industry.  However, under the reign of neoliberal globalization, multinational corporations have co-opted most modern states.  Not only have governments removed barriers to free trade, but they have supplied transnational corporations with substantial development and operating capital through huge tax incentives and subsidies, giving them an unfair advantage over domestic corporations.

 

Import Substitution -- with a Twist

The iron grip of neoliberal globalization on the economy of the USA or any other country can be broken by import substitution -- with a twist.  The twist is that the initiative to protect the domestic economy and, consequently, the social infrastructure of the nation will have to come from the bottom rather than from the top.  In other words, it must take the form of a consumer boycott of goods and services produced under the terms and conditions of super-exploitation imposed by transnational corporations and sponsoring governments. 

 

Can It Work?

It’s a great idea, but can it work?  At first glance, the prospect of successfully boycotting neoliberal globalization seems remote.  The size and reach of the big box retailers like Walmart, Target, Home Depot, and Lowe's, the greatest purveyors of cheap imports in the USA, are intimidating -- they have penetrated every major market in North America and in some areas maintain virtual monopolies.  Likewise, the transnational corporations that produce the imports enjoy effective oligopolies.  In many retail markets there are few, if any, domestically produced products from which to choose.

There is also the problem of the extensive US branding of offshore products.  GM, Ford, Chrysler, GE, and a host of other mainstream American companies offer products that are manufactured overseas by cheap labor or contain a significant proportion of cut-rate imported components.  For a successful boycott of neoliberal globalization, US-branded offshore products must also be included.  The historical advice, "let the buyer beware", which traditionally addressed the issues of price and quality, must now include considerations of the origins of products and components, the conditions under which they were produced, and the environmental costs of production and transportation.

Neoliberal globalization -- fueled by the undeniable power of the transnational corporations and wholesale corruption of governments at all levels -- can be effectively challenged through well-organized consumer boycotts.  What must be kept constantly in mind is that the entire process of production -- no matter how large the factory or how long the supply chain might be, or how much money is invested in the enterprise -- is dependent on the consumer purchasing the goods or services offered.  If it doesn't sell, it won't be produced.  This central fact of capitalist production invests the purchaser with the ultimate power.

Import substitution from the bottom -- choosing to purchase domestically produced products over the goods and services offered by the rapacious transnational corporations -- is not just an economic decision but an act of Civic Revolution.  And while individual consumer decisions might have little impact, as an organized campaign boycotting neoliberal globalization through import substitution can become a social movement with profound implications.

The viability of boycotting neoliberal globalization was nearly tested in the 1990s when a coalition of college and high school students began organizing a nationwide boycott against athletic shoes produced in sweatshops overseas.  The campaign was ultimately derailed when a cabal of merchandising corporations backed by transnational manufacturers conducted a successful national campaign to outlaw informational picketing at shopping malls.

In retrospect, the athletic shoe campaign of the 1990s offers valuable lessons for combating neoliberal globalization today.  Most importantly, it reaffirmed the powers of the boycott and import substitution, when, in anticipation of the student campaign, several major athletic shoe manufacturers began reactivating plants in the US.  A clear advantage for activists today is that boycotting neoliberal globalization is not a single-product issue like the athletic shoe campaign.  The catalog of offshore products and services enumerated above offers a lengthy list of targets for boycott organizers.

Secondly, even though the anti-picketing laws remain in force, those very laws steer activists of today towards organizing through the internet, a medium with infinitely greater potential than on-site informational picketing.  The internet also facilitates import substitution.  For example, although all of the major brand jeans offered by the big box merchandisers are now imported, there are still over 30 manufacturers operating in the USA that offer a wide variety of alternative products from basic work dungarees to up-scale dress jeans.   Most of these jeans and a wide range of other products made in the USA are available online, making it convenient to bypass the megastores.


Can it work?  Ultimately the question for activists in the US is not if boycotting through import substitution will be the decisive strategy in combating neoliberal globalization.   Instead, we must consider the ultimate outcome for working people if the present global megatrends of increasing inequality and climate change are not challenged by all available means.

With so many national governments and international organizations in overt and covert collusion with the transnational corporations, the act of boycotting neoliberal globalization through import substitution is a fundamental act of Civic Revolution.  This direct political action by ordinary citizens is a viable means of resisting the global megatrends that are threatening the future of the working people of the world, their communities, and the environment.

Join the CIVIC REVOLUTION today!

Boycott the products of neoliberal globalization!

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