The Political Economy of Social Upgrading : A class-relational analysis of social and economic trajectories of the garment industries of Cambodia and Vietnam

Abstract

Based on a Marxist reworking of the global value chains (GVC) framework, supplemented by insights from structuralist development economics and dependency theory, the thesis investigates what role evolving class relations play in processes of social and economic upgrading in global garment value chains. Situating workers’ agency at the intersection of a horizontal axis (local capital-labour-state relations) and a vertical axis (governance and distributional dynamics of the GVC), the thesis starts out by examining the key features of the 21st century garment GVC and their implications for producer countries. It is shown how a series of interrelated processes, including the transition to neoliberalism in the North, and the phase-out of quotas in the South, combined to produce a “supplier squeeze” in the garment GVC, with a simultaneous depression of export prices and an es-calation of non-price requirements. Drawing on the work of the dependentista Marini, it is argued that these distributional dynamics amount to a form of unequal exchange that incentivizes manufacturers to super-exploit workers, pushing their wages below repro-duction costs and/or working them beyond exhaustion. Against this backdrop, the thesis interrogates the social and economic trajectories of the garment industries of Cambodia and Vietnam. Based on fieldwork and secondary sources, the analysis shows that workers’ collective resistance to super-exploitation was a key driving force of social upgrading. In Cambodia, the thesis’ primary case, a lengthy phase of social downgrading, with infrequent minimum wage adjustments and deteriorat-ing living standards, was broken by a major strike wave in 2012-2014 – an event that re-sulted in a sequence of minimum wage hikes and a new wage-fixing mechanism. This “critical juncture” was leveraged by tectonic shifts in workers’ structural bargaining pow-er, including the temporary dry-up of surplus labour and a regime-shattering national election. The victory proved Pyrrhic, however, as employers and the government – eager to restore profitability and political control, respectively – pursued counterstrategies that severely weakened organized labour. In Vietnam, a parallel process took place a few years earlier: A historic strike wave (2006-2011), bolstered by upswings in workers’ structural power, forced the party-state to increase the minimum wage and introduce annual wage adjustments. These labour-led turning points, in turn, had economic implications, as wage-driven profit squeezes forced garment manufacturers to attempt moving up the value chain. In Cambodia, upgrading efforts were largely impotent, as the disconnect between export prices and living costs placed unrealistic demands on productivity growth; and a great part of the burden was shifted onto workers in the form of an intensification of labour processes. In Vietnam, in contrast, the garment industry was more successful in offsetting social upgrading through economic upgrading, a finding which is attributed to its mixed ownership and ambitious industrial policies. In sum, the thesis suggests that while gar-ment workers’ resistance is a key determinant of social upgrading, sustained improve-ments require a break with the “supplier squeeze” and its inflation-defying pricing dy-namics.