Translated from GegenStandpunkt 1-22
Supply bottlenecks due to pandemics and other disasters
The global market economy proves its reason
In the last year and a half to two years, there have been a few drastic disruptions to the usual course of globalized market economy affairs: First and foremost, the government imposed lockdowns of varying severity due to the pandemic, together with the blockage caused by a large freighter in one of the main arteries of global shipping traffic, and finally damaged semiconductor plants result in a comprehensive “stress test for global supply chains.” In the opinion of those whose judgment matters in such questions, these do not generally pass the test well.
All assessments, analyses, and forecasts linked to these situations are based on the partisan concern that the current “disruptions” and “shortages” should give way as quickly as possible to a return to global economic normality. Halfway useful explanations about the nature of this normality and the economic nature of the exception are therefore unfortunately scarce. Although there is plenty of information available.
I. The economic nature of global supply chains and their current strains
First, the astonished public is informed about how unbelievably many suppliers are involved in the production of a single good on average or can be nvolved at a maximum – around 140 for a “simple white men’s shirt” and several thousand for a technically more sophisticated industrial commodity – and what unimaginably large distances an ordinary commodity travels in the course of its production process in the form of its individual parts or its semi-finished stages – a pair of jeans 50,000 km and an iPhone even to the moon and back, one thinks! The entertainment value of such information, which is available in light of interrupted supply chains, is definitely high, since the normal person, who after all does not bear the nickname “end consumer” for nothing, has precisely so much to do with the planning and practice of this impressive complexity that he is sought after at the very end with his wallet in order to buy and ‘consume’ the stuff off the shelves and online stores.
There are often a few more detailed explanations, however: Somehow these immensely complex and quite confusing ‘supply flows’ have a lot to do with making production cheaper. As for the real victim of the difficult special situation, it is – according to the daily health bulletins – a thing called growth; and finally, the extensively followed economic imperative of “just in time” also plays an essential, and in this case inglorious, role. That’s some interesting information to start with.
1. From the decisive criterion and dominant purpose of the strained international division of labor
With respect to the reason for the cheapening trend which“now takes revenge,” the specific difficulties currently being caused for the globalized circulation of commodities – this is what the term“supply chain” alludes to – arises from an imperative of production: the calculation with the lowest possible production costs for the producers. Even if no one likes to see it this way: the peculiar circumstance that the decisive datum for the question of where production takes place lies in how expensive it is at which place on the globe for a company to have its preliminary products manufactured by an offshoot of itself specially created for this purpose or by an external and independent supplier, or to have the final assembly completed, is always good for a judgment about the general purpose of production worldwide.
First of all, this only ‘makes sense,’ but does so compellingly because the difference between production cost and selling price is the decisive quality feature of all commodities and their production processes. This points to the fact that achieving monetary surpluses by means of the production and selling of useful things of all kinds is precisely the general, dominant purpose which is at stake – which invalidates any idea that material supply could or should be, somehow and ultimately, the reason and standard of this large-scale international cooperation. And it doesn’t matter whether this idea of a useful service is brushed off as a transparent lie often launched for advertising purposes, that providing customers with inexpensive products is the intention and aspiration of the companies themselves, or whether this service is seen more as a general effect of the workings of a somehow anonymous logic of the market.
Second, the distinctions made by those in charge and their subsequent decisions regarding low cost production locations show how the all-important difference between costs and surpluses comes about and how some locations distinguish themselves from the others: what qualifies countries, for example in the “Far East,” to have the production of textiles, electrical appliances and other industrial mass commodities done on their territory is the labor power located there. Like labor power everywhere else and everything else in general, it has its price, hence it can be purchased as a commodity. Capitalist cosmopolitans survey all of humanity as this purchasable commodity labor power, examining it with regard to the all-important question: Where do they have access to this commodity and its use value, under what conditions and at what price? This distinguishes it from the rest of the colorful, inanimate world of commodities: Because the purchased labor power, if one builds the appropriate factories, equips it with the appropriate machinery and supplies it with all the necessary raw materials and preliminary products, makes the cost of all material means of production profitable; its use creates the difference that constitutes capitalist wealth. As a purchased property of capital, the labor it performs accomplishes the feat of transforming itself into a money product greater than the cost of acquiring it. In Asian regions, it obviously does this particularly advantageously: Over there, “labor doesn’t cost much,” as everyone knows. The cheapness of labor there includes the absolute wage levels, the freedom to shape the conditions of use and exploitation of the work crews, and also the freedom that manufacturing companies have there to consume and spoil the natural conditions of human existence, such as the air they breathe, the water, etc., more or less at zero cost: capitalistically, all this is relevant as a cost to be minimized – or not one at all.
What is so drastically evident in the ruinous use of labor power in the many low-wage regions of this world is nothing more and nothing less than the principle of the internationalized capitalist mode of production. This is not only at work where Chinese workers solder phones for the American company Apple, which are delivered all over the world; but also where German multinationals and medium-sized companies have their ‘high-wage’ personnel assemble cars and machines in Germany in order to sell them at a profit all over the world: The economically decisive result of all production is the gain of the subjects who use their capital to initiate and determine production; it exists in the form of a monetary surplus that is realized by selling the produced commodities above the costs of all the conditions and means of production; it is generated by the labor power which, through its work, productively relates said conditions and means to each other and transforms them into a product that can be sold at a profit – and thus ensures that the expenses for the user of the labor power are profitable. The wage paid to them is the means to encourage them to maximally surplus-generating labor; and therefore it is always an opportune method to lower this cost however and wherever possible. And if the reduction of this cost is drastic enough, it also then justifies all the expenses for transport which increase with the distances, including its “ecological footprint,” which for its part only counts capitalistically according to its money side.
For the entrepreneurial practitioners, this not very complex principle of production, which is made to vanish so thoroughly by the media’s gawking at the impossibly complex “supply chains” around the globe, is obviously the sufficiently precise compass for searching, requisitioning and preparing the globe for their production facilities.
2. Relevant and not so relevant concerns
In the discussion of the present special difficulties in making the supply of humankind with necessities the means of profits that can be counted in money, the proximal measure of success for this entrepreneurial activity also comes up when talking about the main and actual victim of bottlenecks and everything else that has to do with them.
In any case, it is clear that the much-vaunted “end consumer” with his needs does not count as the injured party for the time being – which also deserves to be taken seriously as an indication of the logic of global economic activity. After all, he is not active in matters of money augmentation, but pursues the task of being the last link in the chain of payments which helps the money augmentation efforts of the entrepreneurial subjects to finally succeed. If this figure has to dig deeper into his pockets for this purpose, there is nothing inherently out of order. It only becomes problematic when he fails in the face of the task of paying higher and higher prices because he reaches the limit of what money he actually has. It is only then that the “consumers” who orient their “consumer behavior” to the always limited, often extremely narrow size of their wallets become a disturbance, but then quite decisively, to the honorable efforts of capitalist producers and retail groups, gastro and tourism companies, et al., to pursue their profession lege artis. This affects not only sellers of cheap travel and draught beer who do their business with such proletarian luxuries. According to WHO reports from last year, the populations in certain territories are surprisingly quick to refrain from buying even basic foodstuffs because of the rapid rise in prices for agricultural products due to, among other things, the rise in the price of natural gas-based fertilizers. As a result, they are no longer paying customers of the food suppliers and are instead, in some places, already a burden on their governments and international organizations which, one learns, have to step up their efforts to provide more food aid, i.e. food that apparently still exists as such.
Conversely, from the outset it is not at all okay if – with or without the intervention of the irresponsibly money-strapped end consumer – the calculations of the actually active economic subjects are damaged or even destroyed by exceptional stoppages and the associated price movements. From these diligently applied calculations, one learns – not for the first time, but on the occasion of their disruption quite clearly – that it is not enough to make profits at all and that the big imbalance does not begin when nothing is pushing them at all. According to the nightly statements of the economic experts, the catastrophe induced by material bottlenecks is that the permanent increase in profit-making suffers a setback: the vital growth. And how would it not be: If all production, delivery, and distribution exists for the purpose of making money for those who organize all this by investing their capital, then a final and in this respect limited success is not built into this purpose, and vice versa: every limitation is then a deduction from what is at stake.
Incidentally, and this is no secret to anyone, this is where the other spur to the surveying and using of the global profit economy comes from: for its organizers and beneficiaries, because they are concerned with the growth of the relevant corporate figures, supplying a nationally limited market is a barrier that they have long since happily overcome. They have also turned the whole world into a sales outlet for their junk. Near and far away regions of the world interest them from the point of view of the number of people living there, therefore ‘consuming,’ multiplied by their monetary income, which they extrapolate as a matter of course into a “purchasing power” located there, to be used in that sense. This includes, also as a matter of course, not leaving needs at any present status, but creating new ones however and wherever possible, in order to thoroughly exploit their service. On the occasion of the pandemic and the extra circumstances caused by the respective state pandemic policies, the newspaper reader is made familiar in detail with the fact that the living habits of the populations of capitalist nations aggregate for the masters of the economy into business opportunities which now suddenly either – as with tourism – “collapse” or – as with home office, home schooling, home entertainment – “flourish.” And if something gets stuck at some point, then it takes longer than planned, which is detrimental to growth, before American companies can sell European customers their electrical goods assembled in China because chips from Taiwan are not being delivered on time.
So this is the economic world which is currently being modified by the state measures to fight the virus: a globe completely prepared for the growth efforts of capitalist entrepreneurialism, whose regions are economically completely characterized by and subordinated to what they are suitable for as locations for the profitable use of labor and as target markets for profitable sales on an ever increasing scale. The counter test for this is provided by all the serious or not-so-serious alternative calculations regarding what “one” could produce “back here at home” instead of “in the Far East” or elsewhere in the short, medium, or long term so as to make oneself less dependent on vulnerable supply chains; as well as possibly reality-based objections against such calculations. Nobody fools themselves into thinking that it is or would be exclusively a question of the profitability of production measured in money and not an objective impossibility or inconvenience to bring back production that has been successfully relocated abroad, which does not take place here because it is ‘cheaper’ somewhere else. And it is even more clear to everyone that the sale of commodities produced here, there, or wherever must not be limited to national or regional markets, if only because of the greater reliability of delivery. The fact that growth is not possible without all the things that constitute globalization in these respects is already a convincing reason for the “Keep it going!” that no one seriously questions.
The final confirmation of the validity of this rationality with no alternative and its ultimate measure of success is communicated to us every weekday night: Friendly ladies or gentlemen report against the background of a jagged line and with the aid of other tables and statistics about how “the stock exchange” or “the financial markets” are dealing with the emergency of a pandemic or the effects of shipwrecks and other accidents: Their verdict, reduced to compact numerical form, about whether the slightly – or slightly more – disrupted flow of commodities has had an impact on their way of increasing money is taken in all seriousness as a final economic judgment about how bad things really are for the poor supply chains or, conversely, how optimistic one may be about a “recovery.” This, too, can’t be overestimated as a message about the valid and not-so-valid purposes of economic activity in this country and around the globe in general: After all, this is how it is publicly insisted, every trading day, that all the efforts for the production, transport, and sale of ever larger mountains of commodities, which is carried out around the clock and around the world and which are a little out of step due to a few external circumstances, are there to justify the growing balance sheets of the companies involved in the transactions of the financial markets, which get by without any material involvement of their own in production, transportation, and sales. They are “involved” in a much more systematic way: It depends on their judgment – that’s why it has a prominent place on all news channels – whether they provide the producing and trading companies with the capital, i.e. grant the credit and create the stock market value which they need for their ever new efforts to make the world their production location and sales market. That’s why it’s only fair that the financial markets make their approval or rejection dependent on how they assess the prospects for their growth when they “supply” entrepreneurialism “with capital.” And that’s why it’s all the more fair that this assessment, which is renewed every trading day, is the ultimate information on whether and what is actually disrupted by any disruption in global supply chains.
* In this context, one also learns that this financial capitalist assessment is by no means a clear-cut matter. One example of this is the fact that, in the course of the pandemic and its accompanying stagnation, stock market investors are giving many a company the thumbs down, while at the same time other companies are giving them a great deal of pleasure, which is expressed in the corresponding “price jumps.” This juxtaposition points to another facet of global market economy rationality.
3. The role of prices in capitalist cooperation and its disturbances
As befits an economy that makes all material production a means of profit making on a growing scale, the division of labor, which is therefore also highly fragile, takes place in the form of purchase and sale relations between suppliers and buyers which revolve around prices that are worthwhile and serve the respective profit and growth calculations. This means, as the “corona crisis” teaches us, two things: First, before even a single product is actually no longer available, i.e. before a shortage occurs in this naive, use-value sense, the movement of the prices charged or paid is not simply an indicator of a material bottleneck of a completely different kind, but what is economically decisive for the companies involved. And in this price question there is, second, a conflict between the cooperation partners that is quite a challenge.
This, too, is very clearly demonstrated to the interested layman when supply relations are disrupted: The price spikes associated with interruptions in production and supply do not ‘just happen,’ almost like a major external disruption of the entire movement of commodities that breaks out over global production. After all, prices do not simply exist and they do not move by themselves, but are made. How is well known. What is currently being addressed in the form of mutual finger pointing in regard to “exorbitant prices” and “crisis profiting” is otherwise regarded as one of the greatest advantages of capitalism, which is why it is also called a “market economy”: Prices and everything they mediate in terms of exchange are the result of market haggling between capitalist buyers for whom the price they have to pay should be as low as possible and sellers for whom the price they demand can’t be high enough. In capitalistic terms, the materially interrelated and interdependent suppliers are competitors who exploit each other and strive to make money off each other, both of whom have price as the decisive lever and criterion. For their struggle, the relation between supply and demand therefore represents nothing but an economic relation of force or power. Availability or non-availability, a ‘glut’ or 'shortage’ of goods – this exists only as a result and only in the form that prices are demanded and paid or refused, which for the seller should allow the surplus calculation to work out successfully and for the buyer, for his part, represent a worthwhile entry into his cost-surplus operation. What results in “supplier relations” and “partnerships” has to do with the exchange of the objects which they need from each other or have to offer to each other for their profit production, at the prices and in the quantities and in the time rhythms which are required as starting or ending points of their respective profit calculations. This governs the ‘division of labor’ between the participants and determines what is produced and sold or not. In principle, nothing else is taking place at present, now that the movement of commodities is being rationed and stalled in many places because of a particularly drastic divergence between the growth-driven demand and the supply, which is not as abundant and liquid as the growth efforts that the demanders require and assume. In accordance with the general principle, this is tantamount to price increases which, due to changes in market power, can obviously be enforced and generate many an extra profit in one place, many a procurement shortage and correspondingly worsened profit balance in another.
It is precisely in this wonderful anarchy that the mode of the ‘division of labor’ suits its purpose perfectly and provides for another beautiful thing which is so clearly evident in the current supply and shortage crisis and which is unique to the market economy: It consists in the fact that, measured by the economically valid standards of success, there is no damage that does not also entail a benefit, measured by these same standards. Price increases, which for some people mean inappropriate cost increases which they then “unfortunately have to pass on” to their customers, i.e. impose on them as best they can, are ultimately convenient increases in revenue for those who charge these prices because they can. Only capitalism manages, for example, to give good economic meaning to a shortage of some medical goods caused by epidemics. [1]
In principle, however, this conflict between buyers and sellers on the basis of price does not amount to a zero-sum game, and certainly not at the moment. Whether the higher prices that capitalist buyers have to pay will have a lasting impact on their balance sheets or whether they will be able to pass them on to their customers is an open question that is explosive for their business. To answer this question, it is crucial to know that society’s overall solvency can be exploited for this purpose.
This is where the previously mentioned end consumer comes into play in two ways. On the one hand, the majority of the figures referred to in this way are wage and salary earners, i.e. a cost factor for the entrepreneurs who employ them. In the last two years, the latter have freed themselves from this cost factor to a large extent by making use of every existing and newly created freedom, and this has been good for corporate balance sheets hit by the pandemic depression. On the other hand, the former’s ability to pay which can be profitably exploited has dwindled to the same extent as their wages and salaries. In view of ‘supply,’ i.e. payment relations between companies, being interrupted primarily due to the pandemic, the state has stepped in as an external provider of ample additional solvency because it does not want to allow the capitalism it oversees to suffer from the political-epidemic disruption. In addition to this, finance capital is there to take the state’s readiness for a financially strong bailout as a good reason to speculate on an upswing driven by the state credit, i.e. it in turn creates credit with it. Altogether, this results in a huge reservoir of extra-solvency for capitals seeking to sell their products profitably: After only a short pandemic gloom, they celebrate an upswing that translates all the frictions in supply and demand for some commonly needed goods – natural gas, chips, metals.... – into a general price increase: inflation “takes hold.” According to the logic of the system, those who do not buy in order to sell, but in order to live, are involved in this only in such a way that they pay the increased prices for their necessities as much as they can. It has just never been true that the competition of those who compete with and for prices builds a guarantees of inexpensive foodstuffs into the system – not even in well-oiled supply chains: The ‘cheapness’ which matters to those who use their capital actually ensures the permanently precarious relation between needs and the solvency of those who pay them poorly as workers and use them as end consumers. In this respect, too, the exceptional situation is proof of the functioning of normality.
* In connection with the question about how production or transportation interruptions modify power relations in the market for the competitors, another achievement of ‘globalization’ comes into view. A window of vulnerability within the competition is obviously the widely used practice known as “just in time.”
4. The modern forms of warehousing and their contribution to the nature and extent of the current jams
This English term, which in normal times guarantees solely by its Anglo-Saxon origin that the thing designated in this way is correct, refers to the practice of capitalist companies of minimizing their storage costs as much as possible. In any case, the experts take it for granted – and this is how it is passed on to the lay public – that the planned reduction of warehousing goes hand in hand with a production committed to growth, expanded and branched out worldwide. And to an extent that is – as is now being reported – responsible for certain delays in one place having such an extensive and, above all, rapid impact in hundreds of other places. In view of the current ‘distortions,’ there is even talk from some quarters about the replacement of warehousing and stock-keeping with the “just in time” strategy having been “overdone.” As if it were a fashion. However, this is not a collective aberration or exaggeration at all, but the entrepreneurial handling of a contradiction in capitalist production.
On the one hand, the purpose of permanent growth, for which every profit earned is only the starting point for its investment in the next round of profit production with the help of offers from the credit system, imperatively requires continuity and the greatest possible speed of production; any interruption or slowdown in the material production process which might be caused by a lack of material damages the endless cycle of investment, return, and re-investment, i.e. the turnover process of the invested capital; that is why, among other things – as is generally known – the 24/7 operation of all production plants and transport vehicles represents an unquestionable commandment of reason.
On the other hand, this very same reduction of production to a part of the turnover of capital, which is to be constantly passed through on an ever larger scale, is not at all compatible with the burden on the money flows of the company by keeping in stock the stuff needed for material production, its continuation, its growth, i.e. by putting the capital invested in it on ice. After all, this proves itself as such only to the extent that it transforms permanently and as quickly as possible from an advance made in money into a surplus flowing back in money form. From the point of view of the calculation that every money advance has to be transformed into a surplus as quickly and as easily as possible, storage and inventory is pure waste, a dead weight that needs to be reduced.
Hence capitalist companies have always been busy dealing creatively with this insoluble contradiction, namely to secure permanent access to all material, adapted to every fluctuation of their needs, and at the same time to get the associated financial burden off their backs as much as possible. For the tireless strategists of capital, therefore, nothing is more obvious than shifting the burden of warehousing in various ways to the globalized production and supply relations, the worldwide transport routes and times. This ensures that the traffic to and between the locations of capitalist production and the sales markets is as beautiful as it is according to all reports: with all the rolling, floating and flying warehouses, for the expedient operation of which breaks and rest times, bans on night flights or restrictions on ship passages are notoriously unbearable; with all the “traffic infarctions” and “fine dust problems” that are normal for successful capitalist locations, and with the constant repair and expansion work on the transportation infrastructures.... But because and as long as everything that matters is buzzing, i.e. this ‘strategy’ proves its capitalistic usefulness, none of this is ever up for discussion.
But even if a pandemic or other disaster should occur, the globalized “just in time” capitalism that dominates worldwide production and transport is not at an end – on the contrary. German car manufacturers, for example, have been given the freedom to react “instantly” to the corona-induced short-term slump in demand for their products by canceling orders for electrical components that are no longer needed, instead of being helplessly exposed to the terrible fate of having to buy ordered goods and keep them in stock until their own sales actually take off again. Germany, a “high-wage country,” offers a rich repertoire of flexible working hours, short-time work, etc. for the aligned discontinuance of expensed labor power. According to the logic of the market economy, it is none of their business that the companies impose exactly the complementary burden on their dear suppliers from overseas – after all, that is the beautiful, market-economically just effect of the flexibilized and diversified supply relations. For the honorable German carmakers, it was just stupid that these suppliers did not see themselves obliged to keep stocks for better times for German automotive capital, but instead looked for their part how they could keep themselves free from harm – and the demand boom for IT and other electronic products, which was also caused by pandemic policies, came just in time for them because of home office and the like. This now stands in the way of a rapid recovery of production capacity in the German premium industry because their flagship companies are short of components, but this is none of the chip manufacturers' business... [2]
However, these German pioneers of globalized supply and the constant minimization of their own warehousing in favor of a perfected “just in time” supply chain do not have their hands tied in view of unordered bottlenecks and price spikes. First, they ultimately have every freedom to calculate with scarce material in such a way that profit suffers as little as possible. For the car companies, for example, this means that they install the available chips in the high-price segment of their fleet with the traditionally better margins; on the other hand, they push through small price jumps in relation to the small cars that can still be produced. Secondly, companies go beyond the balance sheet-friendly handling of scarce goods to ways of dealing with and alternatives to the currently somewhat problematic ‘relationships’ in order to get their profit apparatuses “back on track for growth.” As a result of the having up to now successfully pursued the competition, they have the decisive means in their own hands: their capital, thus competitive power. It’s not very surprising what they come up with when it comes to overcoming bottlenecks.
5. Handling bottlenecks in s system-compatible way and its mixed effects
For them and in other industries, this starts in a very small way, but in the overall effect it is not a small thing, with what experts nowadays call “sandbagging” and simply means “hoarding.” Where capitalist corporate leaders see a hindrance to the ease with which they normally purchase all the commodities or book transport capacities exactly when they need them for the profitable production and sales that they organize, they make double use of their contractual freedom within the framework of their financial power: on the one hand, like the aforementioned purchasing managers of German car manufacturers, to discontinue commodties without further ado; on the other, where it is possible and seems appropriate, also to order a stockpile or even only on a hunch. As can be seen, one of the consequences of this is that in the middle of a phase of excess demand for transport capacity, especially on ships, many a container slot remains empty. This is because resourceful and cautious managers prefer to book double and triple in view of the short supply of containers and slots on ships, provided that the cancellation costs are cheaper than the calculated damage in the event that they do not get their junk shipped at all. This is also the way in which the reciprocally cultivated handling of actual or expected shortages works with regard to the commodities required. Suppliers of intermediate products for industry, for example, report a boom in demand for their products, while the industry they supply is producing less: Everyone orders more than they need because there is less than they demand. Anything else would be a planned economy, and that really does not fit in with the mutual planning of competition for profits, so there is competition in turn for secure access to the commodities that have become uncertain in the meantime, which generalizes, prolongs and reinforces the “imbalance” between supply and demand. This is called the “bullwhip effect” in expert parlance and ensures that within a very short time it is actually indistinguishable whether hoarding is taking place because there is a shortage or whether there is a shortage because hoarding is taking place.
* However, the power of those who participate in this is clearly distinguishable. Because it is clear that in this traffic circle of dealing with and generating supply bottlenecks and price spikes, those who have the most financial power do the best: As the largest buyers, the largest capitals are the key customers for the suppliers they are courting, so they have to put up the least with being at the back of the queue of customers; and they are the most likely to be able to afford the higher prices and the other increased costs – associated, for example, with stocking up.
6. Systemic conclusions from the current difficulties
The size of their capital also obligates and enables them to prepare for the future in a completely different way. To stick with the example of the automotive industry, Tesla, the pioneer of the electrification of the global car market, is demonstrating what matters here. Tesla is said to be defying the “chip crisis” quite well and even selling more, while German car manufacturers “can’t handle their full order books,” i.e., can’t convert them into growing sales because they lack the components. It is quickly reported how this, from a German point of view, deeply regrettable difference comes into being: On the one hand, Tesla has achieved its growth on a large scale by buying up existing manufacturers of various components, which, in addition to developing the production capacities for its special new product – the fully electric passenger car – has led to a now universally admired “vertical integration” of the group with enormous “productive depth.” This not only replaces many a supply relationship with third party companies that, if worst comes to worst, might calculate and act against their own needs, but also ensures persuasive power in relation to the suppliers with whom Tesla is in business on the basis of it own production capacities, which is always important for price reasons, and even more so in a special situation, as is currently the case. [3]
The “future strategies” of German industrial capital, which in view of its difficulties has to listen to accusations like “homemade,” “sleeping through development” or “resting on its laurels,” seem to follow – just as undogmatically as with Tesla – completely opposite guidelines which, on closer inspection, however, all amount to the same thing. In this context, brilliant ideas such as “more in-house production” and “more independence from external suppliers” are just as popular as “greater vertical participation.” This is alongside plans such as “diversifying supply chains” and the like. All of which adds up to a ‘strategy’ that fits in perfectly with what the economy has always been about anyway, and which therefore also represents the unified perspective for a successful way out of the current difficulties. Free market producers are not aware of any crisis, any shortage, and any disturbance other than in the form of obstacles to their own growth. And if they perceive such things, then only in such a way that their competitors – suppliers, customers, ‘trade partners’ – cause them these inconveniences. And for them this in turn translates completely into them lacking or insufficiently using their own power to pass on such disruptions to the others. The lessons from the special situation are finished: It is necessary to secure the most unassailable access as possible to all the necessary components of one’s own growth under all global economic circumstances.
One way to do this is to appropriate additional elements of the supply chain that are still at the disposal of other companies – with the not at all insignificant effect that, quite apart from protection against any external catastrophes, this directly promotes the company’s own business growth, simply because a “supply chain” is first and foremost a “value chain.” How exactly this “value creation” works is not important for the actors of the trade – after all, it is not their job to develop value theory, they already have enough to do with the accumulation of suplus value. And from this practical standpoint, so much is certain about this chain that the number of links in it corresponds exactly to the number of opportunities to appropriate value – displacing the other links in the chain that are trying to do the same for themselves. On the other hand, looking at the exemplary Tesla, the largest possible presence within the manifold dependency relationships creates more power compared to the numerous other participants in the overall work of art that is the supply or value chain. And this power is needed to exploit these others for one’s own benefit without becoming dependent, which could take the form of dictated prices.
All the clever ideas and calculations that were already being tossed around in normal times and are increasingly being tossed around at the moment, all the strategic alternatives with regard to “vertical integration” or “outsourcing” of production and other business areas, with regard to the “streamlining” or “diversification” of business cooperation, revolve around the question of how to turn the others into reliable, inexpensive and fexible moments of one’s own profit making; contributors to one’s own growth who are undoubtedly available for every demand situation and every change in demand situation, but whose calculations and viability do not need to be taken into consideration. More of everything that has always been called ‘globalization’ and been brought forth in terms of business strategies and techniques – that is the whole system-appropriate wisdom with which entrepreneurs, party experts, and state supervisors give each other hope in the face of chip, phosphate, and toilet paper shortages. No one believes that this will prevent any bottlenecks in the future, but that is not what is important. The only thing that matters is that – under all conditions – one’s own growth is secured and the negative effects are only felt by others.
II. The role of free market transportation systems in globalization and the current jams
By its very nature, one sector in particular is the focus of the current assessment of the interwoven global economy: the transportation system, which in fact has its very own part in the ‘problems’ that are being complained about all over the place. Many interesting facts about the customs in this department of the economy are reported on the occasion of certain interruptions imposed by pandemic policies and other ‘imbalances,’ which in turn throw a few spotlights on the rationality of the globalized market economy.
It is completely self-evident what ‘sector’ also means in this case: the transport of a thing from one place to another is not simply an objective necessity of production based on the division of labor, but, as an indispensable means of globalized production and marketing by capitalist companies, at the same time represents a reliable and, with each new stage of globalization, reliably growing opportunity to make money. The service of this sector to the others consists in providing the necessary transport and warehousing services to an increasing extent and at prices that are profitable for the customers of these services. Because the prices have to be worthwhile from the point of view of the shipping companies and truck fleet operators, they structure their business accordingly, which in times like these is sometimes the subject of public criticism because not everything works as usual.
1. Also in the transportation industry: on the multiple benefits of having free disposal over the (sometimes not) paid labor power in ordinary and extraordinary times
The operators of the global transportation system also make good use of the sheer cheapness and disposability of their personnel as a means of creating a profitable relation between the costs and the prices they can charge their customers. They recruit them across all borders wherever they can get them most cheaply; and here, too, “cheap” means that the entrepreneurs make the labor and productivity of the transport workers available to themselves with little money, use them, and appropriate the surplus thus created as profit for their companies. What this implies in terms of the capitalists’ ways of dealing with their labor force is abruptly revealed not least by pandemic policy restrictions on freedom of movement across European borders: for example, the extent to which the “free movement of commodities” – one of the fundamental freedoms of the European Union and a high good, as we know – is now also dependent on the fact that tens of thousands of cheap Poles, other Eastern Europeans, and now also Filipinos spend a good part of their lives outside paid working hours in their driver’s cabs on the highways and truck parks all over Europe.
The Christian maritime industry is even happier. What the consequences of the global “corona shock” mean for their employees is worthy of a report by UNCTAD, [4] for example, which, however, proves more how the normal course of this business works than announcing any revolutionary innovations that the epidemic would be responsible for. The fact that an intermittent standstill in ship transport makes hundreds of thousands of seafarers and dockers and their families penniless, plunges them into immediate existential hardship, and even tears holes in the budgets of their home countries, only proves that the absolute poverty of the populations of entire countries gives the big shipowners of this world a nice reservoir of readily available, fantastically cheap maritime labor. And when it says elsewhere in this report that, due to ports being closed by the epidemic authorities, between 50,000 and 100,000 seamen are stranded on the world’s oceans without being paid, sometimes months after their contracts have expired, instead of a concerted effort being made to relieve them – as called for with references to the corresponding, quite existing capacities and international humanization conventions that have been in place for a long time – then this shows one thing above all: how much freedom capitalist shipowners have obviously always had in this respect. The fact that they extensively strain these freedoms in normal times and even more so in the special times of “Corona” may sometimes happen in legal gray areas or even be offensively illegal. [5] Economically, however, this is only the consistently perceived responsibility of companies for their profits. They are based on the fact that capital, by paying wages, entitles itself to the profitable use of labor, i.e. it pays only for work that has this profitable effect. And that means, vice versa: capital has bought its freedom in all forms from concern for the fact that the labor power – maybe even including his family – has to live on the money for the work. Therefore, it is also none of the shipowners’ business that their people, with the wages paid to them, are not only responsible for producing the profits of the shipowners, but are at the same time obliged to contribute to the budgets of their home states for this patriotic service. Of course, the circumstance that makes certain compatriots the preferred pool for the international shipowners’ hiring policy is also responsible for a few extra difficulties in the return to pre-pandemic normality in shipping: according to UNCTAD, the absolute poverty of the crews and the general economic misery of their nations of origin correlate strikingly with the fact that the vaccination rate among seafarers leaves much to be desired. This leads not only to many covid outbreaks on board merchant ships – this would be tolerable as such – but also to the fact that China, in particular, an eminently important merchandise trading nation, repeatedly insists that these people do not come ashore or that the corresponding ships do not even enter the ports. From the point of view of the shipowners, China’s “zero covid strategy,” which follows such a rigid approach, is one thing above all: a permanent disruption of the role that the country plays for the circulation of global commodity traffic, i.e., the justified growth ambitions of the international business community.
2. Old and new transportation techniques for ensuring growth in all circumstances
Of course, the strategies of profit making on the part of the large, globally operating transport capitals are not limited to the carte blanche handling of the wonderfully extortable labor power material in line with all the downturns and economic upswings decreed by epidemic policies – this is also evidenced by the shortage of available transport and loading capacities that has existed since 2020.
It is almost not worth mentioning that the masters of global transport also take to heart the maxim that a growing demand on the part of the suppliers can be exploited for the sharpest possible price increases, which, according to all the standards of decency and success of capitalist competition, is not considered to be an ‘unearned income’ but a clever and quasi-lawful exploitation of the “market situation.” The freight customers’ profit margins are thus worsened and some are completely spoiled, which naturally leads the latter to stop production and delivery. In this way, transportation, which is treated as its own source of profit, acts as a further and independent source of one or the other shortcoming, as can be seen, among other things, from the harrowing testimonies from the ranks of German mid-sized companies. Regrettable, but unchangeable! Above all, however, it is also true in capitalism that there is no shadow without light – in this case, it shines brightly from the balance sheets of the industry leaders in the transport sector in particular, who, in some cases without transporting more, have been able to write the largest profits in their corporate history in recent months.
In addition, a few other trends are discussed that contribute to and modify the “supply chain chaos” in international transport markets. This concerns above all the way in which profits from the global transport business are used. According to the relevant statistics and annual reports, these are invested to a considerable extent in new container ships. And even larger ones than before. This urge is not new – the cargo capacity of the largest ships has roughly tripled in the last 20 years. This cannot be explained by a mere increase in transport volume, but rather, of course, by the fact that it is more profitable for the business to cram more and more containers onto fewer and ever larger ships, because this reduces the cost per container. So much so, in fact, that the few tricky side-effects of operating ever larger ships are all justified. [6] Finally, the insurance companies are there to manage the capitalist law of nature “bigger ships, bigger risks” (Süddeutsche Zeitung) in a businesslike manner. After the “Evergiven” accident, they announced that they would no longer insure ad infinitum enlarged ships, but they have to make good on their promises, because this capitalist progress has been profitable for them so far. And the big global transport ‘service providers’ accept the effect that even individual traffic jams and congestions develop ever greater general effects more and more quickly, if every transport has an ever more gigantic volume.
This is because the degree of monopolization achieved in their industry is now large enough to make their decision to build and purchase ever larger classes of ships a “trend” that even the upstream and downstream links in the transport chain can’t manage: the shipowners can rely on canal and port operators around the world to always complete their deepening and widening work on time and to replace dockside loading technologies that are unusable for new ship sizes with new ones even before they are actually worn out. Otherwise, they risk being left behind in the global supply business because, as is well known, ports also compete with each other in the global market economy.
The market power of the few globally active shipping multinationals is now so great vis-à-vis their actual customers – and this has also been proven and exacerbated by the recent interruptions – that the producers of the cargo are increasingly being persuaded to adjust their production cycles in the loading and unloading cycle as well as the transport rotation of the floating container mountains, even if that doesn’t fit in easily with their “just in time” policy. On the basis of this, however, a new form of special offer is made to them which is intended to help the shipowners exploit the happy excess demand for their services to increase their profits even further: For those who do not want to wait for the arrival or departure of the next twenty-, twenty-two- or twenty-four-thousand-container freighter, the well-funded shipowners can – for a correspondingly steep surcharge – also offer short-term and individually tailored alternative solutions by air or road transport or a mixture of all three modes of transport. They are in a position to service a demand they have created themselves because they are increasingly pursuing their growth outside their traditional sector, have acquired and are buying more and more airplanes, are buying into existing air transport companies or buying them outright, are doing the same with truck forwarders, port companies, etc., and are also making use of the services offered by the state or private railroads.
In this currently particularly fierce competition over which side actually has to be there for the other side, whose capital-intensive needs at what price set the pace for production and rolling, floating or flying transport within the framework of the heavily stressed supply chains, all kinds of startups are finally interfering with their very own offers. They present an irresistible idea to the companies involved in the global competition for transportation, on the one hand, and to the courted financial capitalist investors on the other: By means of GPS trackers on every tomato can and IP addresses for every screw, including additional satellite traffic, they want to provide the players in the global capitalist movement of commodities with a new, profit-generating “real time” overview of the madness they are causing.
So everything can continue as before. At least if the capitalist players involved in the global maritime trade in commodities have their way.
* What they exploit is the freedom to use the seas which separate their production sites and sales markets as connecting routes. Even this freedom does not ‘exist’ just like that: The states, under which the mainland masses of the globe and the adjacent sea areas are divided, grant this freedom, subdivided for their territorial waters and specifically also for those parts of the global water bodies that they have not assigned to themselves as territories, bindingly regulated in the “Law of the High Seas” with its core: “the freedom of navigation.” After all, the action of these subjects has already been needed and will continue to be needed so that the comparative view of capital on all continents and countries, together with their inhabitants, does not remain a theoretical matter, but leads to their actual use. The few members of this state elite themselves leave no doubt that this freedom is a matter of securing them by force on the part of a few particularly powerful states: The “right to sail ships” that has been granted exists only as an object and result of their rule over the oceans and straits, and its universality depends on the indivisibility of this rule. Therefore, a rivalry between them revolves around this, which is of a completely different kind than the private competition for growing profits and the state competition for their national economic benefit – and which therefore remains and is worth explaining separately.
[1] This is also generally seen in such a way that the moral question as to whether in individual places there is deplorable usury, as for example with masks or natural gas from abroad, or rather an unobjectionable market-economic luck of the fittest, as with BioNTech, is regularly decided on the basis of whether in each case a contribution to the national overcoming of the historic slump in growth is to be stated or a contribution to its prolongation.... And the factual information about the utility or adverseness of the price fluctuations to be observed is given, as already mentioned, by the price tables in which the financial capitalistic status of the companies can be read.
[2] “At the beginning of 2020, the world still looked rosy. The semiconductor industry had just overcome a prolonged downturn and was on the verge of a strong economic upswing. But then Covid-19 emerged and the automotive sector in particular feared weaker demand. In fact, vehicle sales collapsed briefly in the spring of 2020. Almost in a panic, the chief buyers of the automotive companies canceled their orders to large chip manufacturers such as TSMC in Taiwan. ‘However, this proved to be a serious miscalculation. Suddenly, demand for cars rose sharply again,’ says Kota Yuzawa, an automotive analyst at Goldman Sachs.
But the canceled production capacities in the chip industry were no longer available to the carmakers. They had long since been passed on to consumer electronics manufacturers. ‘During this time, we worked from home, played sports from home, went to school from home and entertained ourselves at home,’ says industry expert Julia Hess of the Berlin-based Stiftung Neue Verantwortung. She says this has led to increased demand for smartphones, tablets, laptops and game consoles. As a result, global chip supplies were quickly depleted.” (zeit.de, Wie der Chipmangel entstanden ist, 13.12.21)
[3] “Tesla has greater vertical integration than Daimler and other automakers. When the company was still in its infancy, it was sometimes impossible to find suppliers willing to deliver parts for the first Roadster and Model S models. Tesla was therefore forced to take matters into its own hands. To this day, this approach is still an integral part of the corporate culture at the American company.
In times of chip shortages, the advantages of this strategy become apparent in the form of increased responsiveness - and also a better negotiating position. In negotiations, the Californians are not afraid to threaten to take the manufacture of a scarce part into their own hands. To avoid losing the deal, suppliers are happy to accommodate Tesla a bit.” (fool.de, Warum der Chipmangel die Quartalszahlen der Daimler-Aktie drückt und Tesla weiter wächst, 7.10.21)
[4] “The Covid-19 Seafarer Crisis” in “Review of Maritime Transport 2021” UNCTAD;
[5] In international maritime trade law, there is the category of force majeure, which, when declared, releases shipowners and cargo owners from all possible contractual obligations. In the case of the freighter that ran aground in the Suez Canal, this was good for many lawsuits by German traders who were threatened with having to write off the money they had already paid for their orders without compensation. Much less interesting, but also legally flawless due to the proclamation of force majeure, is the relief of shipowners from any disruptive obligations toward their crews. So well, in fact, that the ILO felt compelled to politely “advise against” the frivolous and unjustified use of this silver bullet during the pandemic.
[6] One of them was recently witnessed in the Suez Canal, when the container ship “Evergiven” immediately became completely uncontrollable in a situation that could be completely controllable elsewhere or for smaller ships – a bit more of a storm than forecast – because of its sufficiently large volume in relation to the canal being navigated and the accompanying change in the flow conditions in the comparatively narrow tube. It can also be read that the number of fires per year increases proportionally to the growth of ships, because the control, safety and extinguishing technology and – this above all! – the relevant regulations, which always have to be agreed upon internationally, have not ‘kept up.’ It is also mentioned in passing that the number of containers falling into the sea each year never to be seen again is continuously increasing as a side effect of the growth in the size of the maritime means of transport; for the shipowners, however, only to an extent that they can easily cope with by making their business more effective through gigantomania. On the occasion of the Suez disaster, dozens of experts spoke out and, for once, were given a few lines about how they have long warned about the various risks of the large-scale experiment of permanent ship enlargements and have so far simply been and will probably continue to be ruled against by the still successful profit-making.