The Outsourcing of Society
A companion piece to 'Good intentions. Opportunism. Wishful thinking.'
In the mid-1960s, I worked in a shoe factory in the village of Sileby in the county of Leicestershire in the English East Midlands. At a tender age I was put in charge (I use that term extremely loosely!) of the Closing Room where a team of women machined the uppers of the shoes preparatory to their going on to the Lasting Room (where all the men worked) for final assembly. Boy, I learned a lot!
By the mid-1980s I was working in a communications agency in London. A video brief from Marks & Spencer necessitated a visit to an M&S ladies lingerie factory in Biggleswade, Bedfordshire. There, I met another wonderful team of women whose good humour and enthusiasm for their work I remember to this day. Already, at that time, there were dark mutterings that outsourcing could mean more and more manufacturing moving overseas but the women were confident that the quality of their work and the loyalty of their UK customers would assure the continuance of their employment.
The rest you can guess. Both of these workplaces ceased to exist, handing over to factories in India, Bangladesh, Sri Lanka, China and elsewhere. And so it was across much of the West as deindustrialization accelerated. In the sense that the migration of manufacturing jobs was to areas that were in need of economic uplift, that may be a good thing … BUT – you could see that ‘but’ coming from a light-year away! – back in the industrial areas of the West, the outcomes have been far less benign.
It wasn’t just the work that went
We outsourced more than the jobs. Far more. We outsourced some key elements of our western societies. The shoe factory and the lingerie factory were not just workplaces. They were communities in and of themselves, and integral parts of their wider communities. And, of course, they were contributors to their local economies.
Crucially, the factories provided employment for all classes of society including the working class. How else do you think the working class got its name? I mention all of this not for nostalgic reasons but because it bears on current concerns here in the west about business practice, business values and Business Purpose itself, and about the cohesion of our societies.
The Scottish comedian and British national treasure, Billy Connolly, made some poignant observations on this subject in a BBC TV documentary, Billy Connolly: Made in Scotland1. It’s an autobiographical lyric poem with profound insights and great jokes. In the late 1950s Sir Billy Connolly (as he now is) started his working life in the River Clyde shipyards as an apprentice welder. It was, he explains, the almost inevitable route for working class boys growing up in post-Second World War Glasgow. Comparing it with the present, he says:
“The Clyde is very different – almost unrecognizable – now. The quiet is almost overwhelming to my memories of once-relentless noise. ... In these sheds nobody tells jokes anymore: there’s just dead machinery lying about the place and the wind whistling through.”
I love the bleakness of ‘dead machinery’. Then, this question:
“It’s a constant sort of puzzle to me: where did all these thousands of men go? All those men who worked in the docks: all those stevedores and dockers, all the riveters and hole borers from the shipyard, platers and welders? Thousands and thousands of men – where have they all gone?”
Who knows where the men have gone but we do know where their work has gone: in this instance to the shipyards of China, South Korea, Japan. But it’s not just the business that has gone. We lost more besides, as Connolly makes clear:
“Working on the Clyde was hugely intimidating to a boy. When you’re sixteen you might have hairs on your chin, you might get drunk, you might even get somebody pregnant, but you’re still a boy ... As a boy you clamour to be heard above the crowd. When you walk into a man’s world you quickly learn to shut up, listen and watch.”
So, what went was not just the industry but the community and the social and cultural elements that accompanied it. The fact that all of this left the focus on overt enterprise-level money making (i.e. all about profits, C-suite salaries and so on) was an open goal for those who wished to attack capitalism. So perhaps it’s unsurprising that in the UK, in a 2016 YouGov survey, those aged 18 to 24 viewed socialism more favorably than capitalism. And in 2018 a ComRes poll found that 24 per cent of this age group grouped ‘big business’ with ‘right-wingers’ not just as a bit iffy but as “the most dangerous things in the world.” So free-market capitalism, the very thing that had created hitherto unprecedented levels of health and comfort and well-being became, in the minds of a new generation, the devil incarnate.
And, right up to date, the 2023 Edelman Trust Barometer leads with the headline Social fabric weakens amid deepening divisions. Are we really surprised?
Where ideals and realpolitik coincide (or not)
The phenomenal momentum achieved by the outsourcing movement was generated from a combination of inputs:
The idea that, provided output quality can be maintained or improved, it is always good business practice for a supplier to pursue cost reduction in order to increase profitability and/or reduce the product price to the consumer. The outsourcing movement omitted to mention that this dynamic originally related to an integrated ecosystem within a specific political & societal setting. The original, synergistic model went like this:
“In times when industry and the arts flourish, men are kept in perpetual occupation, and enjoy, as their reward, the occupation itself, as well as those pleasures which are the fruit of their labour.”2
The rapidly accelerating availability of digital technologies that enabled global inter-connectivity and large-scale disintermediation. The outsourcing movement omitted to mention that the disintermediation drove a coach and horses through the then-existing virtuous circle where business, polity and society functioned as a synergistic whole.
Outsourcing provided a huge new source of income and profits to western management consultancies and software creators, together with quick financial wins for the executives in companies that agreed to these plans. The outsourcing movement reserved this information for those who would be beneficiaries of the ‘gold rush’.
The fulfillment of a utopian vision of globalized trade that built, particularly, upon the West’s post-WW2 hope for a peaceful world. The outsourcing movement omitted to point out that this involved giving absolute priority to the economic function system at the expense of, inter alia, the politics, law, religion and mass media function systems. (This terminology relates to the work of Niklas Luhmann, about whom more in an upcoming post.)
The reduction of CO2 emissions by Western countries was a supposed additional ‘benefit’ of outsourcing. Western countries have outsourced a large part of their CO2 outputs to China, India and so on. However, if the problem with CO2 is a global one, it stands to reason that outsourcing it makes no difference whatsoever to the overall result!
The outsourcing movement promised that only routine production work would be outsourced and that high value innovation work would be retained by Western countries. However, consider this, from an American Affairs Journal article:
“In terms of long-term competitiveness, the biggest strategic consequence of this profound decline in American manufacturing might be the loss of our ability to innovate—that is, to translate inventions into production. We have lost much of our capacity to physically build what results from our world-leading investments in research and development. A study of 150 production-related hardware startups that emerged from research at MIT found that most of them scaled up production offshore to get access to production capabilities, suppliers and lead customers.”3
The conviction, in the West, that the victory of liberal democracy was assured - provisionally assumed at the end of WW2 and then reinforced after 1991 when the Soviet Union collapsed. The outsourcing movement failed to point out or perhaps even recognize that that this was a triumph of hope over reality.
Now, in 2023, flaws in the thinking have become all too clear:
More than two decades after China was admitted to the World Trade Organisation, the Chinese people have not become so enamored of Western liberal democracy as to have risen up against the Chinese Communist Party (CCP). And many of the CCP’s beliefs and practices are, from the perspective of the liberal democratic mindset, unacceptable.
Russia and some other countries are obviously antagonistic towards the globalization project.
“The flip side of the changing skylines of China and the Middle East was the rising unemployment and the hollowing out of industrial communities in Europe and the US to create crime-ridden, welfare-dependent, post-industrial wastelands.”4
The most obvious supply problems arising from these flaws are the resulting adverse effects on security and energy supply in the West, but it goes much further. We have got ourselves in a mess.
So, how to respond?
A part of the solution has to be to bring back more manufacturing to the West. On 26 January 2023, on BBC Question Time, Konstantin Kisin put the case for so doing, and did so beautifully. Take a look:
But it’s not only about bringing back jobs. We need to think more broadly. The elephants in the room, in my opinion, are the problems arising from the vast power that has been given to the economic function system. I’ve been a marketer for decades and yet I now worry that we have gifted too much power to ‘the market’. I like the way American historian, Christopher Lasch, summed it up:
On the one hand, the market appears to be the ideal embodiment of the principle - the cardinal principle of liberalism - that individuals are the best judges of their own interests and that they must therefore be allowed to speak for themselves in matters that concern their happiness and well-being. But individuals cannot learn to speak for themselves at all, much less come to an intelligent understanding of their happiness and well-being, in a world in which there are no values except those of the market.5
Another American academic, Philip Bobbitt, identified an emergent ‘market-state’ as the successor to the nation-state:
In the market-state, the marketplace becomes the economic arena, replacing the factory. In the marketplace, men and women are consumers, not producers (who are probably offshore anyway).6
Well, that looks about right. And he expands on the idea:
If the nation-state was characterized by the rule of law – and ... the society of nation-states attempted to impose something like the rule of law on international behaviour – the market-state is largely indifferent to the norms of justice, or for that matter to any particular set of moral values so long as law does not act as an impediment to economic competition.7
This leads to the conclusion, it seems to me, that many of the problems we now face are connected with the at first tentative and then more headlong rush to globalization. Can we ease back? We surely must try.
Thanks for reading.
Connolly, Sir Billy. Made in Scotland, BBC Television (2018/2019)
Hume, David (1711-1776). Of Refinement in the Arts - Essays Moral, Political and Literary.
Kota, Sridhar and Mahoney, Tom, Reinventing Competitiveness, American Affairs Journal, Fall 2019. Volume III, Number 3.
Paterson, Stewart. China, Trade and Power (2018)
Lasch, Christopher. The Revolt of the Elites and the Betrayal of Democracy (1995)
Bobbitt, Philip. The Shield of Achilles: War, Peace and the Course of History (2002)
Bobbitt, Philip. Ibid
I started writing this comment by copy-pasting the most salient quotes from your essay and adding "Yes!" , "This!!" and "Spot on!!!" I soon understood that I was, in essence, reproducing the essay quote for quote in the comments :-)
Another tack: We're holding local elections here in Norway next weekend, and it might be interesting. The result is fairly predictable: the 'conservative party' (Høyre = the Right) will most likely win comfortably, and the ruling Arbeiderpartiet (= Worker's Party) will perhaps have their worst election since their founding a hundred years ago. This is of no consequence -- they are just two sides of the same coin. The interesting bit is the small, new start-up parties, I think there are three or four of them, catering to the disgruntled voters, they being the 'properly conservative', the 'properly Christian' and the most promising one (on the polls): INP = Industri & NæringsPartiet (Industry & Business-party). Their policies seem realistic and centrist, the sort of stuff that would be considered sound commonsense ten years ago, and that nowadays is 'far right'. They are able to field candidates in all constituencies and polls suggest they could get representatives in some 'Kommuner' / Councils. Not that it will make any difference, in the short term, but who knows where the rabbit jumps? God knows we need alternatives to the stultifying regime we have today!
*rant off*
My paternal grandfather was a riveter on the Clyde all his working life ... but once shipbuilding - and the skills it required - was moved offshore he never worked again because there were few jobs that he was qualified or able, at 59, to do. The solution is to consider the TOTAL cost of outsourcing ; not only the cost of labour but to support the great gap it leaves in a community. As Harari, in his book Sapiens, says "What do we want to become?"