Robots and the Organic Composition of Capital

This week, London's Financial Times has decided to get back to what it is good at and report on some interesting economic developments: robots. The articles in this series promise to have much more value for those analysing the world than the FT's editorial line on Ukraine, Russia, Syria, Iran and other issues; opinions that simply reflect the discomfiture of the Anglo-American elite about things that are moving outside their control.

Robotisation of manufacturing processes has been under way for many years, but it seems to have accelerated recently. In the case of Foxconn, already reported on this blog, one pressure for robot innovation was the rise in wages among assembly line workers. However, in an effort to cut costs a number of production processes require not only a speed and accuracy that manual labour cannot achieve, but also a physical scale of operations that only robots can manage. Try carrying a 2.5 metre glass panel used for producing LCD displays that is only 0.5mm thick without breaking it. Or try to measure to an accuracy of 0.05mm. There is also a development in lightweight 'collaborative' robots that are used more directly by workers, and that are less likely to crush their human counterparts.

Here are some key points:

• South Korea had the largest number of robots per manufacturing employee in 2012: 396 per 10,000. Japan's figure was 332, Germany's 273 and China's only 23.
• Japan has the most industrial robots in total with more than 310,000 in 2012. The US had 168,000; Germany, 162,000; South Korea, 139,000; China, 96,000; Canada, 18,000; UK 15,000; India, 7,800; Brazil, 7,600.
• China is growing fastest, however, with robot sales increasing at an average annual rate of 36% from 2008 to 2013.
• The automotive industry accounted for some 70,000 of the overall 179,000 robot sales in 2013, followed by the electronics industry (35,000) and food (6,200).
• Lightweight robots cost around $35,000 each; the big guys cost more like $100,000 or above.
• Robotics companies from Japan, Switzerland and Germany dominate the market, with some important companies also based in the US, UK and Denmark.

One implication of these developments is an increase in manufacturing productivity. Another is the increase in what Marx called the 'organic composition of capital': where there is not only a rise in the mass of machinery and raw materials compared to labour power employed, but also a rise in the value of such machinery and raw materials compared to the value of that labour power. The result in recent years has been evident for South Korea, as shown in the following chart, taken from a McKinsey Global Institute report.

From 1995-2010, Korean output grew dramatically, at more than 7% per annum, but productivity grew still faster, at more than 9%, so that employment actually fell. Korean companies, like others, also shifted their operations overseas to take advantage of lower wages elsewhere.

Tony Norfield, 3 June 2014

British Imperialism Today

For most commentators, British imperialism is a matter for the history books. It is neither polite, nor, it would seem, in the least accurate, to label Britain today as an imperialist power. Yes, there were the days of empire and colonies, they will argue. But apart from a few hangovers from the imperial past like Northern Ireland, and a string of tax havens around the world whose anthem is ‘God save the Queen’, like Gibraltar, Bermuda and the Bahamas (and many others), surely the ‘imperialist’ label is just a term of abuse with no real content in present day reality? After all, Britain now presides over a voluntary Commonwealth of 54 countries, not an empire.

However, this is to look at the form, not the content, of imperialism. Even in the colonial era, it was not always necessary to exercise domination through direct political control. The economic content of imperialism, a focus of this blog, is how the major powers derive economic privileges from their position in the global economy. This may be through violence and intimidation: do what we tell you, or else. But it can also be through other forms of exercising power to ensure the economic privileges are realised. As explained in the first article on this blog, The Economics of British Imperialism, 22 May 2011, the economic lifeblood of British imperialism today comes from earnings on direct capital investments overseas and from the UK-based global banking system, in its role as the broker for global capitalism. It is this that makes the UK more than usually prone to go to war, or at least to interfere in other countries’ business.

In this context, it was interesting to read a comment last month from a frank Labour imperialist, Lord West, the former First Sea Lord (2002-2006) under the previous Labour Government and later Prime Minister Gordon Brown’s Security Advisor. In words that rang with pride in Britain’s imperial status, and annoyance at anyone who considered Britain to be second rate, he said:

“This business of a second-tier power - we are probably, depending on what figures you use, the fifth or sixth wealthiest nation in the world.

“We have the largest percentage of our GDP on exports, apart from the tiny countries around the world, we run world shipping from the UK, we are the largest European investor in south Asia, south east Asia (and) the Pacific Rim, so our money and our wealth depends on this global scene.

“We are a permanent member of the (United Nations) Security Council and I think that gives us certain clout and certain ability.

“These mean we are not a second-tier power. We are not bloody Denmark or Belgium, and if we try to become that, I think we would be worse-off as a result.” Daily Telegraph, 22 September 2011

This is basically true, and the insults for ‘bloody Denmark or Belgium’ come naturally from one who thinks British imperialism is not always given its deserved status. Lord West fought for Britain against Argentina in the 1982 war over the Malvinas, and is less inclined to adopt the euphemisms of politicians.

Tony Norfield, 24 October 2011