Global Supply Chain Disruption – RESULT OF ANARCHY OF CAPITALIST PRODUCTIONOctober 28, 2021
|International | Political Economy|
Suddenly, we started seeing reports of interruption in the production of electricity and various other goods due to shortage of coal from all around. But neither has the quantity of coal suddenly reduced so much in nature, nor has any mine suddenly closed, nor has there been any major natural calamity in the recent past that has obstructed or stopped coal mining. Neither the numbers of coal miners have fallen short, nor have they carried out any sudden strike. Neither the ships or trains and trucks transporting coal have been destroyed, nor have the workers running them ceased work to increase wages.
Then why this sudden ‘supply chain disruption’? That too, not in one or two places, but all over the world. Is there any rational explanation?
Again, this situation of production and supply constraints is not only in the case of coal. Similarly, there are reports of shortage of various goods like petrol-diesel, computer chips, shoes, medicines, etc. from America, Europe, Asia, i.e., all over the world. According to the New York Times, many shelves are lying empty in big American stores. Automobiles, computers, mobile phones and other electronics manufacturers in India have been saying that the lack of availability of chips has hampered production.
In Britain, it was said earlier that there is shortage of trucks to transport goods. Then they figured that the shortage is not of trucks but of drivers to drive these trucks. The US media has alleged that China suddenly closed its major ports twice, so there is a problem in the circulation of ships and containers as it is taking unduly more time. Then it was said that Vietnam donated the shoes to Haiti instead of sending them to America, so there is a shortage of shoes. Indian media is also saying that ships bringing coal from Australia are stuck in Chinese ports, hence there is a shortage of coal.
On the other hand, China’s Xi Jinping has been complaining for a year that the US-European imperialist bloc is sabotaging global supply chains, hindering China’s industrial production. Hence, China will have to become ‘self-reliant’. Xi Jinping has been talking about the principle of Dual Circulation for China’s ‘new stage of development’, according to which, instead of fully integrating its domestic production and global trade, China will try to keep both relatively independent so that if the American camp isolates them or if there is a situation of war, their economy does not come to a standstill. But the anti-China camp from US to Modi is also talking about increasing self-reliance, blaming China for the disruptions.
Then, like the hue and cry over lack of lorry drivers in Britain, many capitalists and business media from different countries are also complaining of the lack of workers to operate production lines. On the other hand, we all know that unemployment is at its peak, workers are not getting sufficient employment. But it was only a few months ago that the British bourgeoisie were adamant on Brexit arguing that cheap migrant workers in large numbers from Eastern Europe were taking away the jobs of British workers. They declared immigration as the biggest problem of the country. That is, the cheap immigrant drivers who were being called the most dangerous people required to be prevented from entering and driven away from UK, their shortage is now being given as the reason for the problem of shortages. In India also, the bourgeoisie has been complaining since long that the biggest problem is the restrictive practices in the labour relations and have been asking for the right to hire and fire workers. But now when unemployment in India is at historical peak and workers are desperate for work, why are the capitalists talking of a shortage of workers?
We can present many such examples of what the world’s capitalists, their experts and their media are telling is not only completely absurd, but only a few months ago they themselves were saying the exact opposite. So, where is the real problem? For that, we need to focus our investigation on the current state of the capitalist production system, and in particular its global supply chain. In this very brief note, we will briefly mention only four aspects of it.
First, the basic objective of capitalist production is to maximize profits for each capitalist owner, not to satisfy social needs. Therefore, every individual capitalist plans and regulates his own production to a very detailed micro level so that he can put himself ahead of the other capitalists in the market competition by producing more and more by procuring the cheapest raw materials and producing at least labor cost possible. But it is not possible for the capitalist society as a whole to have planned production because every individual capitalist constantly changes his own plans according to his strategy to earn maximum profit. It is the fundamental cause of anarchy in the capitalist mode of production.
Second, this competition for production by procuring cheapest raw materials and cheapest labor (workers at low wages) has given rise to global supply chains where the production of every commodity has become part of an integrated global production system. The capitalists and workers of many countries are involved in the production of every commodity before at finally arrives in the market to be sold for individual consumption. For example, it is estimated that the production systems of about seventy countries contribute to the final output of a mobile phone from mining, refining, conversion into usable input materials, spare parts production, design, software, assembly, packing material, etc. The rapid growth and cheapening of transport costs, especially the increase in the speed and capacity of large container ships, has made this possible. Therefore, now every country is dependent on the whole world to run its production systems smoothly.
Third, technical management with ‘just in time’ or ‘on the spot’ production systems. The cost of inventory that is storing the goods for the industry producing it, whether it is the end product or the intermediate part, is a component of the amount of working or circulating capital required by a firm. Higher this amount, higher the interest to be paid on this. Moreover, technology is constantly changing, so the outdated products and models are quickly phased out of the market. There is also the uncertainty owing to intense competition. Therefore, no capitalist wants to produce goods without certainty of sale. They are not confident that the goods produced without confirmed orders will be sold. Hence, just in time production – also due to fast and cheap transport. It is a different story that capitalist over-production still happens despite this ‘just in time’ production. But we will not go into that here.
Fourth, capitalist competition has given rise to monopoly. Now most of the industries are dominated by small number of monopoly capitalists who dominate from production to distribution of a commodity. Then the capitalists in these supply chains collaborate with their suppliers and buyers and buy shares in each other’s companies to make exclusive deals with each other excluding other rivals. For example, Ambani is giving Saudi Aramco a place on the board of Reliance Industries for a special deal in petrochemical raw materials and GAIL has bought a stake in a US natural gas company or Adani is investing in an Australian coal mine or Amazon has entered into an exclusive agreement with Cloudtail to sell on its platform. Amazon owns 25% while Narayana Murthy’s company holds 75% in this. Through these mutual agreements and investments, these supply chains from the production of raw materials to the sale of final products are being dominated by groups of monopoly capitalists, who collaborate as well as compete among themselves. On the one hand there are agreements for cheap goods, on the other hand there are also conflicts and tussles for a greater share in the profits.
Thus, the whole system of production is becoming integrated and socialized not only in a region or a country but at the global level. This has opened opportunity for immense increase in production by increasing productivity and created possibility of meeting the needs of humanity. But the planning and level of cooperation required to run this integrated socialized production smoothly is not possible in a privately owned and for-profit capitalist production system because the competition for profit, speculation and manipulations, conflicts and tussles, and gambles for super profits is the inalienable feature of this system.
As long as there was no monopoly in capitalist production, an individual capitalist could not influence and affect the entire production system, but in the present era of monopoly capitalism, there is competition as well as conflict between the global monopoly capitalist groups for the dominance of the entire production and circulation chain. Therefore, due to interruption in production at one place or the bankruptcy of a single capitalist, the entire global chain is disrupted. Now these conflicts are manifesting in the form of clashes between different camps of imperialist capital which is even creating war frenzy. For example, just recently, the US-UK pulled Australia into AUKUS, and Australia canceled an earlier order to buy submarines from France and gave it to the US-UK combine instead. France called it a stab in the back. This would force the entire chains involved in submarine production to change their production plans.
What could be the result of this conflict of global capitalism-imperialism and the fight for profits except this type of supply chain disruptions? Another aspect is that the monopoly capitalists, taking advantage of these disruptions, are blackmailing the whole world and extracting high prices, plundering to make super profits. Due to the problem of coal shortage in India, where many public generating units have been shut down, the price of electricity generated by private units in the open market has reached Rs 14-20 per unit from the usual level of Rs 4-5 per unit. In the shipping sector, container freights have tripled in just a few months. The bottom line is that today the bankrupt capitalist production relations based on private ownership are simply incapable of managing the developed productive forces and technology in the interest of society. The anarchy of the capitalist production system obstructs the efficient and smooth operation of the developed productive forces for the benefit of the humanity and meet the needs of the society. To fulfill that purpose a planned production system in social ownership of all means of productions i.e., socialist system is needed. However, while the capitalism is bringing the whole world to the brink of all kinds of disasters, many scatter-brained experts keep on saying nonchalantly that main problem is that the workers do not work enough, and if all is handed over to the private capitalists, everything will be fine.