A rather intriguing and canny seminar at Manchester Business School…
Ever stand in the aisle, lost in the supermarket, and wonder what went into getting the products on the shelves? The tin mined for the cans, the oil drilled for the plastic packaging, the lives lost and the futures mortgaged for our present convenience? I do, when I’m not taking my pills.
Supermarkets use tuna as a “loss leader”. It’s a known price item (KPI), so shoppers base their decisions on that. Supermarkets then offload the pressure down the supply chain, to the canners, the boat owners and so on. That leads the charge for more boats, more nets, different species .
That was the gist of a detailed and fascinating seminar delivered today by Liam Campling, a senior lecturer at Queen Mary College.
The seminar was very much in two halves –
The first rattled through a bunch of political economy types who I’d never heard of but will be looking up for my post-doc (cough cough).
- Steven Hymer on Foreign Direct investment as control
- Oliver Williamson on ‘natural transaction costs’ – see his Nobel* Prize Lecture
- Peter Nolan of Cambridge University , who “has looked at the intensification of capital in the roaring 90s” on the notion of the external firm (blurred lines) and the ability of particular firms to use the “cascade effect” to control up and down a supply chain without the hassle/risk of ownership. i.e. de facto but not de jure integration.
- [See article “The global business revolution, the cascade effect, and the challenge for firms from developing countries” from the Cambridge Journal of Economics, 2008]
- Gereffi on ‘buyer-driven commodity chains’
The second half looked specifically at tuna as a “worked example”. It was dead fascinating. I will never look at a tin of tuna in the same way again (I know, #sadmanshouldgetalife.)
- Tuna production is done on wafer thin margins. Some of the production plants are in places where the factory is the only large employer, giving the owners the opportunity to demand subsidies from governments. (Campling told the story of Lehmann Brothers extorting, sorry, “negotiating” a huge subsidy for a 1,400 employee factory in the Seychelles, which they’d told the government was unprofitable in order to get a tax-payer bailout. Guess what. They lied!?! )
- Meanwhile, private equity companies want rents, so they aren’t going to invest in the non-branded processing areas. There is, unsurprisingly, a “Global Ocean Strategy.” This is not about sustainability…
- Profitability is about access to markets, and tariff-walls matter; e.g. there wouldn’t be an African production sector but for preferential access to Europe. That said, the Thai companies STILL manage to compete in the EU, despite a 24% tariff.
- States(US, France, Spain etc) are, of course, directly subsidising fleets to fish in foreign waters
Concepts (some familiar, some spanking new)
- Sales velocity (how quickly something flies of t’shelf – tuna behind only granulated sugar and coffee)
- Global Value Chain Management (and the question of control rather than ownership)
- Second contradiction of capitalism (James O’Connor)
And from Wikipedia –
O’Connor argues that capitalism necessarily undermines the “conditions of production” necessary to sustain the endless accumulation of capital. These conditions of production include soil, water, energy, and so forth. But they also include an adequate public education system, transportation infrastructures, and other services that are not produced directly by capital, but which capital needs in order accumulate effectively. As the conditions of production are exhausted, the costs of production for capital increase. For this reason, the second contradiction generates an underproduction crisis tendency, with the rising cost of inputs and labor, to complement the overproduction tendency of too many commodities for too few customers. Like Marx’s contradiction of capital and labor, the second contradiction therefore threatens the system’s existence.
In addition, O’Connor believes that, in order to remedy environmental contradictions, the capitalist system innovates new technologies that overcome existing problems but introduce new ones.
Campling’s conclusion: that efforts at regulation need to go beyond the point of extraction
- I wonder if there is mileage in looking at what Timothy Mitchell did with the idea of the Carbon Democracy and strategic “choke points”
- This is another great example of what I call “bio-Taylorism” – after Frederick Taylor and his model of logically intensifying production. Taylor only managed bodies. We are managing genes, oceans. We are as gods. Sadly, some of the stupider and more venal ones.
- Death by speed-up indeed.
- Meanwhile of course, it’s always logical to chop down the next tree (you have to tools, and the know-how, your shareholders expect it and your competitors will do it if you don’t.)
- here’s a brilliant cartoon by Marc Roberts
- There is no Nobel Prize in Economics – http://www.alternet.org/economy/there-no-nobel-prize-economics It’s awarded by Sweden’s central bank, foisted among the five real prizewinners, often to economists for the 1% — and the surviving Nobel family is strongly against it.
Crossing the threshold of ecosystem resilience: the commercial extinction of northern cod
A. Christopher Finalyson and Bonnie J. McCay
The situation began to change after World War II. With much of the infrastructure of European agriculture in ruins, fish became a vital source of food. Under this impetus, and incorporating technologies developed during the war – inexpensive steel ship construction, powerful diesel engines, shipboard refrigeration and freezing, and electronics for precise navigation, long-distance communications, bottom imaging and fish-finding – the hungry nations of Europe, led by the Soviet Union and its Warsaw Pact member states, developed distant-water fishing capacity and combined these technologies into a new and devastatingly effective configuration: the factory freeze-trawler. With the size and strength to fish in ice-ridden waters and all but the worst storms, these ships could be directed by their corporate or state owners to wherever catch rates were highest. Supplied via motherships with food, fuel and fresh crews from their home ports, these vessels could fish the year round and stay at sea indefinitely. By the mid-1960s, their numbers were so great that the Newfoundland fishing banks at night were described as a ‘city of lights’ (see Warner, 1983)
Warner, 1983 Distant Water: The Fate of the North Atlantic Fisherman Boston: Little, Brown and Company