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Will coronavirus herald the end of capitalism?
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Global supply chains are built on inequality are being destroyed by coronavirus

Supply chains are global because companies choose to host each constituent part where it is cheapest. This practice deepens the inequality upon which capitalism depends.

The Argument

American corporations frequently outsource their manufacturing to countries in the global south, meaning underdeveloped regions that are largely subjugated by capitalism, such as Asia, South America, and Africa. For example, many products purchased by American consumers say "Made in China" because the cost of labor in China is less expensive. Chinese factory workers are exploited by their employers in ways that American workers legally can not be, and when this is coupled with widespread poverty and an oversaturated labor market due to China's high population, it results in Chinese citizens competing for jobs with relatively dismal wages because those wages are better than nothing at all- and therefore, employers can afford to keep those wages low. The COVID-19 pandemic has revealed that this system of using global supply chains to capitalize on the exploitation of foreign workers is not a sustainable practice. Countries that large corporations frequently outsource their labor to, such as China or India or Bangladesh, have been hit particularly hard by the COVID-19 pandemic for several reasons. Low-income regions are often overcrowded, making social distancing nigh on impossible. Many developing countries also lack the healthcare infrastructure necessary to provide accessible medical care, including COVID-19 tests. The COVID-19 pandemic forced China to shut down many of its manufacturing plants. As a result, there has been a shortage of many products that American corporations often choose to manufacture in foreign countries. In addition, there is a medical mask shortage because China, the world's leading manufacturer of medical masks, isn't exporting them to the rest of the world because global supply chains have been disrupted. China also needs these masks to stop the rapid spread of the virus in the country's crowded cities. "In many parts of China, face masks are required by local governments to protect against infection in public spaces. A recent report by a leading Chinese financial services firm, Huachuang Securities, says China has 38 million people working in healthcare, transportation, and manufacturing industries. If one person uses one mask per day, China would need 238 million masks every day." [1] In its current form, capitalism cannot exist without social and economic inequality abroad because the goal of capitalism is to cut all unnecessary costs, and this can be done by outsourcing manufacturing and capitalizing off of inequality. This inequality is self-perpetuating because corporations actively facilitate the exploitation of foreign workers. Therefore, the people exploiting these workers have an incentive to continue doing so. However, the COVID-19 pandemic is forcing companies to turn towards domestic manufacturing instead to prevent additional shortages, but doing so is far more expensive and would result in higher prices for goods. Capitalism would have difficulty sustaining itself and cutting costs if corporations were forced to stop outsourcing their labor, which would lead to a discontinuation of the cycle of exploitation.

Counter arguments

Capitalism will be able to survive without the exploitation of foreign workers. The deterioration of supply chains led to "a newfound urgency for local sourcing, particularly when it comes to vital medical equipment such as ventilators and supplies of masks and gloves. No one cares any more which country holds comparative advantage in producing medical equipment. You can rest assured that once the pandemic is over, Canada, along with every other country that can afford to do so, will want to become self-reliant in masks and ventilators no matter how much more it costs to produce them at home instead of importing them from some cheap labour market abroad." The shortcomings of capitalism and of our reliance on supply chains have made self-reliance more attractive to businesses than ever before. In addition, companies are less likely to continue exploiting foreign workers given our current political and social climate. For example, popular clothing retailer H&M has recently been criticized for refusing to pay its workers in Bangladesh: "The Bangladesh RMG [ready made garment] industry is the backbone of its economy, accounting for over 80% of the country’s exports. It competes successfully on price, operating at large volumes with small margins per unit. It also has some of the world’s cheapest labour, with the legal minimum monthly salary for garment workers being TK8,000 (around $96). This has left factories, garment workers and the country devastatingly exposed, with no indication of when they will receive future orders or payments." [2] Companies are growing more aware of the fact that their consumers are always scrutinizing them, and are less likely to tolerate unethical business practices. The refusal to pay workers in Bangladesh resulted in calls for boycotts of H&M, as well as several other fast-fashion brands such as Primark or Shein. Appeasing consumers and maintaining an ethical reputation is now more important to many businesses in the long run because failing to remain ethical could result in a loss of income. As a result, companies are now more likely to become self-reliant and engage in sustainable, domestic manufacturing because it will help them earn more money as more consumers make the educated decision to support their brand. Although this is different from how businesses usually operate and may result in prices going up, it will not result in the end of capitalism. It can be argued that an increase in domestic manufacturing will actually create jobs and further strengthen capitalism and its institutions.



[P1] Corporations establish their business networks in countries that are less developed because doing so is less expensive, rather than creating jobs in their own regions. [P2] Taking advantage of lesser developed countries is an unsustainable practice because these regions are more likely to be negatively impacted by COVID-19. [P3] This leads to the further deterioration of global supply chains and forces companies to invest in domestic manufacturing instead, which is more expensive. Businesses will be forced to close as a result.

Rejecting the premises


This page was last edited on Wednesday, 7 Oct 2020 at 07:33 UTC

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