NAFTA and Labor in North America

1. Labor and Global Capitalism in North America, 1850-1970

1 Labor and Global Capitalism in North America, 1850–1970 When the 1848 revolutions of Western Europe removed the remaining feudal roadblocks to economic expansion, Britain, through the use of its military and naval might, not only knocked down barriers to its expansion, but in so doing provided the basis for the expansion of capitalism in other nations . As the world’s preeminent capitalist power, Britain advocated free trade and the freeing up of labor everywhere. In North America, British investment in railroads and other capital ventures provided important traction for the growth of capitalism on the continent and with it the expansion of national and regional labor markets based on the principle of free-wage labor.1 In the United States, the Civil War had a profound impact on these developments , and following the North’s victory, the nation experienced an unprecedented economic expansion. With slavery and the political challenges of the southern aristocracy swept away, northern industrial and financial elites used their control of the state machinery to carry out measures to promote industrial expansion by subsidizing the construction of railroads and other internal improvements. At the same time, they enacted protective tariffs and established a national banking system.2 In 1873 when this rapid economic expansion halted and turned downward, a series of financial crises erupted that affected the entire capitalist world. In response to enormous downward pressure on profits, capitalists the world over looked for ways to restore profitability by developing new production methods through innovation, longer working hours, and the acquisition of new labor markets. In the United States especially, while all of these factors 10 . nafta and labor in north america came into play, it was the development of new forms of industrial organization and technologies resulting in innovative production methods that proved most important. These changes boosted labor productivity to unprecedented heights. The 1913 opening of Henry Ford’s Highland Park, Michigan, assembly-line car plant represented the culmination of this process.3 Among the European countries, the downward pressure on profits precipitated a renewed scramble for colonies among the great powers, a process reflected by the carving up of Africa and China in a twenty-year period. This weakened the relative position of Britain internationally and marked the beginning of the decline of British global hegemony. Although the success of the American economy took place within tariff walls, the United States entered the competitive world stage in this period under the banner of the “open door.” In contrast to European efforts to obtain colonies, open-door policy reflected the emerging industrial and economic superiority of the United States over its rivals, just as Britain’s free-trade agenda in the nineteenth century expressed the domination of British industry.4 Another major factor driving this economic dynamism was that regions of the world were pulled into the capitalist orbit of production, made possible by new forms of transport and communications. Minerals and raw materials, such as rubber, copper, lead, iron ore, and zinc were all transported in bulk to be processed in factories. In North America, the construction of extensive railroad networks allowed for the opening up of the mineral-rich Canadian west and northern Mexico. By 1895, the ability to secure quantities of these commodities at lower costs had helped generate another round of global capitalist expansion that lasted until the outbreak of World War I. Output per capita for the advanced industrial countries doubled between 1895 and 1913 from what it had been during the previous fourteen years. At the same time, the United States emerged as the world’s leading manufacturer, surpassing its leading rivals, England, Germany, and France.5 Rising rates of profit resulting from this economic output led to significant growth of foreign investment abroad by U.S. industrialists and bankers. Much of that investment found its way to Canada. The country possessed material power in the form of industry-serving minerals and power-generating rivers, a factor that helped Canada become the recipient of around 33 percent of U.S. direct investment.6 Also attracting investment was the national policy implemented during Canada’s transition to Dominion status within the emerging British Commonwealth system. Its key components were the launching of an import substitution-industrialization strategy with railway construction to connect eastern and central Canada with the western prov- labor and global capitalism · 11 inces, immigration aimed to attract labor to work in industries, and...