Outsourcing illustrates the laws of capitalist exploitation

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Relocation (1) is used by all the bourgeoisie’s propagandists, to such an extent that it sometimes not only eclipses all the other attacks that hit the proletariat, but even becomes the explanation for them. Alternative Worldists, leftists, trade unions and parties of the left are at the forefront of this, denouncing the “ultra-liberalism” of the fat-cat bosses and shareholders thirsting for juicy dividends. Against all this we are going to show, in this article, that relocation results from the most fundamental laws that regulate the capitalist system.

Contrary to the Alternative Worldists’ slogan “our world is not for sale”, trade relations, under the aegis of capitalism, have regulated the whole of social and human relations in society for a very long time. In capitalist society, buying and selling a commodity is the only way to avoid being deprived of all means of subsistence. For those who possess no means of production, the proletariat, the only thing left for them to offer on the market is a particular commodity, their labour power.

Capitalist exploitation of labour power

As with any other commodity, the value of labour power finds its expression on the market through a price and in money: wages. Selling labour power is no different from selling other commodities on the market, except that it is inseparable from the seller, the worker, and that it cannot wait too long for a buyer because it would perish with its bearer, through lack of the means to live.

Labour power constitutes for the capitalist buyer, the bourgeois who consumes it, the source of his profit. If the industrial capitalist only pays the worker for the time that he engages him, ie, the time sufficient for the worker to create the wage that he draws, the boss will not realise any benefit. It’s necessary that the worker works longer than this time. The time of work of any worker is composed, without the worker being aware of it, of two parts: one part paid, where the worker only restores the value of his wage, and an unpaid part, where he works for free for the capitalist who appropriates the totality of the production.

The condition of the proletarian sums up the insecurity of his existence: “The proletarian is deprived of everything; he cannot live a single day by himself. The bourgeoisie arrogates the monopoly of all the means of existence in the greatest sense of the term. That which the proletarian has need of can only be obtained from this bourgeois whose monopoly is protected by the power of the state. The proletarian is thus, de facto and de jure, the slave of the bourgeoisie; the latter controls his life and death. It offers him the means to live but only in exchange of an ‘equivalent’, in exchange for his work; he will go as far as to concede to him the illusion that he is acting of his own free will, that he enters into a contract freely and with no constraints in the greater part. Such liberty leaves no other choice to the proletarian than to sign up to the conditions imposed by the bourgeoisie (…)” (2).

In the capitalist system, the thirst for exploitation, for surplus labour, has no limit: the more that capitalism draws unpaid labour from the workers, the better it is. To extort surplus value, extort it without limits, such is the aim and the role of buying the commodity of labour power by the capitalist. “The industrial capitalist remains at root a merchant. His activity as a capitalist (…) is reduced to that which a merchant exercises on the market. His task consists of buying judiciously, at the lowest price possible, the raw materials and accessories, the labour power, etc., which are necessary for him, and to sell as dear as possible the commodities made at his premises. In the domain of production, one sole point must preoccupy him: he must do it in a manner that the worker furnishes for the lowest wage possible, the most work possible, returning the most surplus value possible” (3).

This exploitation only finds its limits in the exhaustion of the exploited and in the capacity of the working class to resist the exploiter. In order to increase the time given to unpaid work, where the proletarian furnishes to capitalism its surplus value, capital uses different means: the lengthening of the working day, the intensification of the rates of work and the lowering of wages, even to the minimum necessary for the simple maintenance of the life of the worker.

As any commodity, labour power is subjected to competition and to the hazards of the capitalist market. “…When there are more workers than the bourgeoisie judges enough to occupy, when consequently in the terms of competition, there still remains a certain number without work, precisely these will have to die of hunger; because the bourgeois cannot give them work, if they cannot sell the product of their work for a profit”. Competition, “the most perfect expression of the war of all against all which rages in modern bourgeois society”, where “the workers are in competition as the bourgeois are in competition”, opposing active and unemployed workers, natives and immigrants or different national fractions of the proletariat, constitutes “the sharpest weapon of the bourgeoisie in its struggle against the proletariat” (4).

Relocation, a product of capitalist competition

Relocation of sites of production from the industrialised countries towards countries where a worker is much cheaper is a clear expression of capitalism’s search for the maximum rate of profit. Under the pressure of competition between the great industrialised countries for more and more limited markets, average hourly wages of €18 in Spain, €4 in Poland and the Czech Republic, €2 in Brazil and Mexico, €1 in Romania, €0.7 in India or China against €23 in Western Europe or the United States, offers a certain windfall for capitalism.

From the 19th century, the bourgeoisie has never hesitated, where the technology of production allowed it, to get rid of workers and search elsewhere, in another region, for a cheaper worker or a worker more docile to exploitation. Even if relocation is not a novelty for the working class, but constitutes an old and international phenomenon, since the 1990s, under the impulsion of the economic crisis, which has lasted more than three decades, this phenomenon has accelerated. In many sectors where the cost of the workers represents an important part of the cost of the global return from production, these transfers from the industrialised countries towards those where the costs of production are much cheaper have “already largely been made”  (5).

In France the manufacturers have had recourse to relocation. Renault has produced the R12 in Romania since 1968. “From the 1970s, Renault has multiplied local partnerships in Brazil, Mexico, Argentina, Colombia and Turkey. (…) After the restructuring of the 80s, Renault bought into Samsung in South Korea and Dacia in Romania in 1999” (5).  One US toy manufacturer has recently relocated from Haiti, the most poverty-stricken country, with the cheapest labour, in the Western Hemisphere, to China where it is even cheaper to produce and send back products to the USA (6). The bourgeoisie moreover did not wait for the collapse of the Stalinist regimes in order to invest and transfer jobs to the countries of the ex-eastern bloc.

If all the sectors of capitalist production are affected by relocation, all production is not destined to be transferred, as bourgeois propaganda would have us believe. “The sectors of industry concerned by relocation are numerous: leather, textiles, clothing, metallurgy, white goods, automobiles, electronics…Equally affected is the tertiary sector: telephone centres, information, accountancy… Really all mass production and repetitive services are susceptible to being relocated to territories where the cost of a worker is clearly less” (7). The drastic reduction of transport costs accomplished in the 1990s (a reduction of 45% of maritime freight and 35% of air freight between 1985 and 1993) has shrunk the distance between the places where many commodities are produced and the market where they are consumed.

There is also a frenetic search to lower the price of intellectual, high-tech labour power, which is very expensive in the western countries. In China, western public bodies and private enterprises are more and more numerous “creating, in situ, research centres such as France Telecom in Canton, June 2004, so as to benefit from fantastic scientific breeding grounds at the low price offered by the Chinese laboratories” (9). In recent years, India has also become highly prized for its ability to offer low cost computer programming.

On the other hand, relocation is largely used to reduce the non-productive costs of large enterprises (information management, exploitation of research and maintenance, management of wages, financial services, customer services, ordering, telephone call centres) by as much as 40 to 60% and to such an extent that “everything which can be done at a distance and transmitted by phone or satellite is there to be relocated”. Thus India “tends to become the shop-window for British and American enterprises” (5).

In the fight to the death that all nations are caught up in, the states of the developed countries have explicitly put a stop to certain activities going abroad. Maintaining inside their borders certain guaranteed industries connected to the military and capable of rivalling nations of a similar order constitutes a strategic necessity and a question of survival for capitalist states in the imperialist arena. More generally, on the economic level, it is also essential to keep on one’s own soil a productive capacity in key sectors that strengthen the state in the face of competition. In the French automobile industry “Under pressure of competition which obliges ever lower production costs, a movement of relocation takes shape leading to the production of smaller vehicles destined for the French market from countries where labour is cheaper. Whereas the production of higher range vehicles is kept in France in highly automated factories (…) “  (7). The same in the textile industry where “today only textiles incorporating technology and know-how are still made in France (7).

The number of countries benefiting from outsourcing is limited: “India, the Maghreb, Turkey, the countries of central and eastern Europe and Asia (notably China) (8). Each of these national capitals is chosen according to the same imperative criteria. They must not only possess a certain domestic stability, which is the case in fewer and fewer countries as entire zones of the planet are given up to the ravages of war, but they must also have a suitable infrastructure and a labour force that has been broken in by capitalist exploitation, and is thus relatively well formed. Most of the countries aimed at have had an industrial past (ex-eastern bloc countries) or a semblance of industrialisation. In contrast, the countries of sub-Saharan Africa that aspire to receive relocations have seen none of it.

The endless crisis of overproduction

The very definition of relocation as “the movement abroad of an existing economic activity from a country whose production is then imported back into that country” (8) reveals to us a part of the secret of the fabulous figures drawn up by the bourgeoisie on the subject of the so-called Chinese or Indian economic miracles. Taking the totality of world production, relocation adds up to zero. If there really is the creation of a pole of production which didn’t exist previously, in no way has there been an overall development or increase of capitalist production, since the creation of a previously non-existing activity in such or such a country has a direct corollary in the deindustrialisation and stagnation of the most advanced economies.

For decades these countries did not generate the investment needed for the massive acquisition of a modern technology, which is an indispensable condition for competing with the most developed countries and achieving an industrialisation worthy of the name. Their very underdevelopment is actually the reason why capitalism is so eager to exploit the working class in these countries.

The absence of any perspective of real improvement of the living conditions of the proletariat in the countries blessed by relocations, as well as the development of unemployment in the western countries, cannot contribute to the expansion of the world market but only to the aggravation of the crisis of overproduction.

Relocation in itself does not constitute the cause of unemployment and the deterioration in the proletariat’s quality of life. It is only one of the forms of the attacks imposed on the class, but all possess the same root: the economic laws of the capitalist system which rule each nation and which plunge the capitalist world into an endless crisis of overproduction.

In order to amass the surplus value produced by the working class that is locked into the commodities produced, it is still necessary for the capitalist to sell these commodities on the market.

The capitalist crisis of overproduction, the scourge of the capitalist system, always finds its origins in the under-consumption of the masses. The working class is constrained by the capitalist system of wage labour, which constantly reduces the part of social production that returns to the proletariat. Capitalism must find a part of its solvent buyers outside of those who have to submit to the labour-capital relationship.

Previously, the existence of an internal market, of large sectors of relatively prosperous pre-capitalist production (artisans, and above all the peasantry), formed the nourishing soil indispensable to capitalist growth. At the world level, the vast extra-capitalist market of the colonised countries swallowed up the overflow of a great many commodities produced in the industrialised countries. Since the beginning of the 20th century capitalism has submitted the whole of the planet to its economic relations. It no longer possesses the historic conditions that permitted it to confront and overcome, to some extent, its contradictions.

From here on capitalism enters into its phase of irreversible decline which condemns humanity to wars, to convulsions, crises and generalised misery, holding out the threat of destruction pure and simple.  Scott


1)             We are defining relocation as: “the movement abroad of an existing economic activity from a country to a country whose labour is much cheaper with the production then imported back to that country”. Relocation has its domestic corollary in “outsourcing”, the transfer of jobs to areas (or the same area) where terms, wages and conditions are less favourable to the workers. As such it is part of the attack on the working class.

2)             Engels, The Condition of the Working Class in England, (1845).

3)             K. Kautsky, The Socialist Programme (1892), chapter on the ‘The Proletariat’.

4)             Engels, Ibid.

5)             Novethics.fr. 10 January 2001.

6)             BBC World Service News, 18.11.05.

7)            L’Expansion, 27 January 2004.

8)            Vie publique.fr. 12 January 2004.

9)            Le Monde.fr. 27 June 2004.