Petty Capitalists and Globalization: Flexibility, Entrepreneurship, and Economic Development

1. Introduction

1 Introduction Alan Smart and Josephine Smart 1 This volume contends that while the enterprises operated by petty capitalists may be small, there is nothing petty about their significance for the operation of economies and for our understanding of contemporary societies, families, and localities. Petty capitalists regularly operate in the ambiguous boundaries between capital and labor, cooperation and exploitation, family and economy , tradition and modernity, friends and competitors. By examining how these relationships vary over time, space, and culture, the study of petty capitalists offers insights into an era where assembly lines are deconstructed and scattered across the globe, and where rapid and flexible response to desires can make the difference between economic success and failure. An ever-increasing proportion of interactions cross national boundaries. At the same time, changing technologies and regulatory contexts have made it more compelling for even the smallest firms to either compete on a transnational terrain, or at least to be wary of competitive threats from beyond their nation’s border. Globalization has usually been seen in terms of the activities of large private corporations and the governments of the World Trade Organization (WTO), Group of 7 (G-7) or Organization of Economic Cooperation & Development (OECD-23) who are changing conditions to facilitate freer flow of trade and investment. Hypermobile capital is widely thought to have improved its negotiating position 1 vis-à-vis workers and localities, potentially producing a race to the bottom in terms of working conditions and welfare provisions. Conversely, small business is usually assumed to be local business , while business activities that operate regionally, nationally, or transnationally are seen to be the province of increasingly larger enterprises. Yet, the greater ease with which goods, money, and ideas move around the world also makes it possible for very small firms and individuals to operate in global markets. Small entrepreneurs can operate in a global economy in ways that would not have been feasible a few decades ago. For example, a study of Canadian companies doing business in Japan found that companies established before 1970 waited an average of over 20 years before exporting to Japan. By the 1980s, the average lag between starting business and exporting to Japan had dropped to 1.9 years and to 1.1 years in the 1990s. The report concluded that relaxed trade barriers, as well as cheaper travel costs and ease of e-mail and fax machines, have helped smaller business globalize more quickly than in the past (Walton 1999:B10). As Hill Gates (1996; this volume) reminds us, however, small enterprises have operated across borders for at least a millennium, sometimes in the forms of what Weber called pariah capitalism. Brokerage across borders provides risky opportunities that appeal particularly to those with little capital but higher risk tolerance (A. Smart 1999). At the same time, international migration and study abroad creates kin and friendship ties that can facilitate taking advantage of opportunities created by local difference (Smart and Smart 1998; M. P. Smith 2001). In this volume, a variety of scholars explore the impact of contemporary circumstances on petty capitalists. They consider how operating in transnational markets influences the dynamics of these enterprises. An analysis of petty capitalists, we suggest, provides a different perspective on the contemporary era, and on how people respond to its challenges and opportunities. Our argument is not that petty capitalists, or even the larger category of small and medium enterprises, are the most important driving forces of the contemporary global economy, although many studies suggest their increasing significance in a variety of settings (Blim 1990; Buechler and Buechler 1992a). Rather, we are suggesting that when conditions make production across national borders more feasible and attractive, petty capitalists may be among the pioneers in taking advantage of this situation . Doing so may involve mobilizing ethnic links (a major focus of 2 Alan Smart and Josephine Smart a recent flurry of work on transnationalism, see Glick Schiller, Basch, and Szanton Blane 1992; Faist 2000), particularly when the “rules of the game” are poorly elaborated or are rigged against members of particular ethnic groups. The “rules of the game,” in the form of international standards or trading regulations may also work against the viability of smaller enterprises, as with the Rugmark process to certify the absence of child labor on exported rugs discussed in Tom O’Neill’s chapter. Conversely, social movements that have been promoting “fair trade” instead of free trade...