NAFTA and Labor in North America

Conclusion

Conclusion In many ways, NAFTA explains much about the history of world capitalism. As an economic system that constantly seeks to push the productive forces to develop on a global scale, capitalism inevitably creates conflicts among nation-states in which the private property and the regulatory rules for accumulating wealth are legally rooted. In certain historical periods, this contradiction has been regulated and contained through the organization of the world economy under the hegemony of a single great power. Such was the case in the immediate decades following World War II when the United States exercised and managed its economic hegemony around the world through the Bretton Woods institutions. In this period, profits reached record levels and workers in North America made economic gains through bargaining in the workplace and by pressuring their respective national governments to enact reforms that also helped raise living standards. But the oil shocks, stagflation, and the falling rate of profit that began in the 1970s put pressure on this arrangement. Although these developments affected all three countries in North America, their greatest impact was on Mexico and the United States. Forced to abandon its fifty-year-old development policy rooted in the goals of the 1910 revolution and the national market , Mexico began pursuing an economic strategy that promoted the nation as a haven for low-wage manufacturing. More important, Japan and Europe reemerged as major capitalist rivals to the United States. The competitive pressures that built up in the global economy as a result weakened the oncedominant economic position of the United States. When protectionist measures enacted by the United States in the 1980s failed to reverse this turn of 190 . conclusion events and American efforts to rewrite the global rules of trade encountered resistance from rival nation-states, the United States then sought to restore its economic supremacy through the negotiation of trade agreements with individual countries. In 1994 when the United States, Canada, and Mexico entered into NAFTA, the elites of all three countries firmly believed that the agreement would generate renewed economic growth and restore profitability within their respective national economies. Canada and Mexico looked to ride the coattails of the United States, a country that had achieved its economic might through the building of its industrial base by securing access to the resources and the labor of its North American neighbors. While NAFTA positioned the United States to shore up this traditional dominance, at the same time it presented the United States an opportunity to gain significant economic leverage against rival nation-states. As the template for organizing and regulating capitalism on a regional level, it was hoped that NAFTA would aid the United States in its bid to restore economic hegemony worldwide. The NAFTA template, however, placed strong emphasis on the integration of national economies, a factor that departed significantly from the model the United States had organized to manage the postwar economic boom. The “golden years” of postwar capitalism managed and regulated by institutions like the GATT had been based on the steady growth of economies geared toward national markets. Because the profits of corporations resulted mostly from production carried out within the boundaries of nation-states, workers and unions exercised leverage to bargain for wages and benefits from employers while pressuring governments for reforms. By comparison, NAFTA had been established in a new period of world capitalism, one that increasingly emphasizes the international market. Beginning in the 1970s, when stagflation slowed economic growth around the world, manufacturing firms everywhere began developing and introducing methods to cut production costs. In an effort to restore profitability, firms invested in new technologies that included advances in transportation, telecommunications , and computers. This allowed manufacturers to disaggregate formerly unified production processes within national borders and spread them around the globe in search of cheap labor, lower taxes, and other factors that reduced production costs. In North America, this process began in 1965 when United States–based corporations started transferring assembly manufacturing to locations along the Mexican side of the international border. By the 1980s, this development had gained momentum, and by the early 1990s the search for cheap labor and conclusion · 191 lower production costs in North American manufacturing was in full swing. By 1994, the year NAFTA went into effect, the offshoring of manufacturing to Mexican factories called maquiladoras had become an established trend. By 2000, thousands of maquiladoras operated in Mexico, employing nearly one million workers. Helping...