Theedgemarkets 12/01/2023 reported that the average wages per employee in the manufacturing sector is a mere RM$37,000 compared to the average salary in Malaysia of RM$70,000 annually.
That each dollar of industrial labour exerted effort has contributed to nearly 19 ringgit to capital accumulated extraction that is only one-fifth of a finished product that is valued locally.
Global Commodity Chain
The term global commodity chain is referred to the material and logistical aspects of organizing production involving numerous components brought together over spatially dispersed global production platforms or assembly sites.
For example, with a global footprint, Apple contracts with FedEx and UPS is able to ship its iPhones around the world. One Boeing 747 flight can carry such 150,000 iPhones.
For phones bound for the U.S., flights depart from Zhengzhou, China, and head to Anchorage, Alaska, where the jets are refuelled. Then, these flights are mostly routed to Louisville, Kentucky, where logistics personnel sort and reroute the iPhones to their final destinations.
Through this spatial dynamics, economic researchers at the Institut de Recherches Économiques et Sociales in France indicate that global commodity chains have three different elements: (1) a production element linking parts and commodities in complex production chains; (2) a value element, which focuses on their role as “value chains,” transferring value between and within firms globally; and (3) a monopoly element, reflecting the fact that such commodity chains are controlled by the centralized financial headquarters of monopolistic multinational corporations and garner massive monopoly rents, as theorized by Stephen Hymer in the 1970s, (Stephen Hymer, The Multinational Corporation, Cambridge: Cambridge University Press, 1979).
According to one recent pioneering study of global financial flows by the Centre for Applied Economics of the Norwegian School of Economics and the United States-based Global Financial Integrity, net resource transfers from developing and emerging economies to rich countries were estimated at $2 trillion in 2012 alone, (Centre for Applied Research, Financial Flows and Tax Havens, Norwegian School of Economics and Global Financial Integrity, Bergen, Norway 2015).
Global Labour Arbitrage
In the context of the Marxian labour theory of value, the global labour arbitrage is quest for valorization. It is a strategy for both reducing socially necessary labour costs and maximizing the appropriation of surplus value. It extracts more out of workers through various means, including repressive work environments in periphery-economy factories, state-enforced bans on unionization or union-busting by the transnational companies (TNCs) themselves, and by means of unfair piece-rate work payments, (see Mhinder Bhopal, US Union Busting in Contemporary Malaysia: 1970-2000, University of North London; and STORM, Zero Hour Underemployment – Surplus Value Exploitation).
Surplus Value Expropriations
In Marxian economics, the rate of exploitation is the ratio of the total amount of unpaid labor done (surplus-value) to the total amount of wages paid (the value of labour power). The rate of exploitation is known as the rate of surplus-value.
It is not the ordinary workers in the Global South, but the Gobal North executives and corporate capital who are benefiting from the structural power of the global commodity supply chains. While Apple’s iPod is made entirely overseas, but ‘52 percent of the final sale price is counted as value added in the United States and is added to U.S. GDP’ (Intan Suwandi, Value Chains: The New Economic Imperialism, p.158). The surplus value, the source of profit, entirely comes from in the production process, and therefore originates completely outside the USA. However, the finance and administrative procedures take place in the core centre of Global North. In a capitalist society, under a capitalistic accounting method, the ‘surplus-value’ is regarded as ‘value added’, while in Marxist terms, these activities add no value at all (Suwandi, ibid.,p.160). With all this value accruing in the imperial centre, it is the middle-class professionals ‘including the outsized “compensation” and bonuses, commissions of corporate executives – [who capture] more than two-thirds of the total wage bill associated with iPod production’ (Suwandi, op.cit.,p.158):
As another example, in the international garment industry, in which production takes place almost exclusively in the Global South, direct labour cost per garment is typically around 1–3 percent of the final retail price, according to senior World Bank economist Zahid Hussain. Wage costs for an embroidered logo sweatshirt produced in the Dominican Republic come around 1.3 percent of the final retail price in the United States, while the labour cost (including the wages of floor supervisors) of a knit-shirt produced in the Philippines is 1.6 percent. The surplus value captured from such workers is thus enormous, while being disguised by the fact that the lion’s share of so-called “value added” is attributed to activities (marketing, distribution, corporate salaries) in the wealthy importing country, removed from direct production costs.
In 2010, the Swedish retailer Hennes & Mauritz was purchasing T-shirts from subcontractors in Bangladesh, paying the workers on the order of 2–5 cents (euro) per shirt produced; (see also comparative Spice Girl’s T-shirt production cost).
Nike, a pioneer in Non-Equity Modes of International Production, outsources all of its production to subcontractors in countries such as South Korea, China, Indonesia, Thailand, and Vietnam. In 1996, a single Nike shoe consisting of fifty-two components was manufactured by subcontractors in five different countries. The entire direct labor cost for the production of a pair of Nike basketball shoes retailing for $149.50 in the United States in the late 1990s was 1 percent, or $1.50.
Over 50 years since the country geared towards an industrialisation initiative to attract foreign direct investments, but a recent World Bank Report indicates that Singapore, Indonesia and even Vietnam are surpassing Malaysia economic growth rate.
Worst, Malaysia’s economy is set to go through a “slow and normalisation” growth of only 4.1% this year, down from an estimated 8.5% last year, reflecting largely a weakening external environment, and internal economic performance, according to the Socio-Economic Research Centre (SERC).
Even Bank Negara Malaysia is rather pessimistic on the economic environment stating while moving into 2023, headline and core inflation are expected to remain elevated amid both demand and cost pressures.
The state of a nation is that the corporate capitals’ - both from local clientel ethnocapital and Global North monopy-capital - compensation of employee contributes only 34.8% to the nominal GDP’ in 2021 (whereas our GLCs’ CEOs make 300 times the employee minimum wage, see rakyatpost 18/06/22) compared to Singapore (40%), the Philippines (76%) and Indonesia (84%).
The surplus value extracted from Malaysian workers is a fact - and a reality - even duly acknowledged in a Bank Negara Malaysia Report, (theedgemarkets 28/03/2019).