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The Impact of Neoliberalism and Globalization on Knowledge Workers
Knowledge workers, individuals whose jobs involve handling information rather than producing goods, were once seen as the primary beneficiaries of neoliberalism and globalization. However, the rise of generative AI and an increasingly competitive employment market has led to a decline in their economic stability. This shift has sparked discussions among corporate leaders and government officials about the long-term effects of these economic policies.
At a recent event hosted by venture capital firm Andreessen Horowitz, Vice President J. D. Vance offered a candid analysis of the last fifty years of U.S. economic policy. He highlighted that the original expectation was for wealthy countries to move up the value chain while poorer nations handled simpler tasks. This vision suggested that American workers would adapt by transitioning from manufacturing roles to higher-value jobs, such as coding or other technical fields. However, what actually happened was that as developing countries improved their skills at the lower end of the production spectrum, they began to catch up at the higher end as well.
Vance’s perspective is more honest than what many American politicians typically present. Since the Cold War, leaders have often promoted globalization using terms like progress, integration, and modernization. This approach promised that wealth would trickle down to uplift underdeveloped nations. While living standards have indeed increased, particularly in East Asia, the results for other regions have been mixed, with some experiencing stagnation and the collapse of state institutions.
Vance’s narrative, which focuses on a zero-sum competition between nations, overlooks the role of class in determining who benefits from globalization. He tends to conflate different groups, including those seeking profit and those suffering from the consequences of this relentless pursuit of accumulation.
By positioning themselves as champions of the American working class, figures like Vance often deflect attention from their billionaire backers, instead focusing on foreign workers and an undefined liberal urban elite. This strategy exploits the divide between blue-collar and white-collar workers.
Fordism and Post-Fordism
The economic system that Vance and others on the populist right admire is known as the Fordist era of capitalism. During its peak, roughly one in six American workers was employed in the auto industry. Fordism was characterized by mass consumption and mass production, driven by Taylorist principles aimed at maximizing efficiency. This period saw significant wage growth and economic expansion, with average wages rising by 2% annually between 1947 and 1979, while real GDP grew by 7.3%.
However, the decline of Fordism began in the 1970s due to intensifying international competition. Countries like West Germany and Japan started producing similar goods, leading to downward pressure on prices and profits. This shift resulted in changes to both production and consumption patterns. Lean factories and globalized supply chains replaced mass domestic manufacturing, while advances in technology enabled more flexible work arrangements.
The erosion of the labor movement in the Global North followed, as factories were offshored and organized workers were laid off. This displacement made it harder for workers to organize, leading to significant defeats for unions and the deindustrialization of regions like the American Rust Belt.
This period created a split between a Northern mind, where intellectual and managerial labor took place, and a Southern body, responsible for physical production. Agreements like NAFTA and China’s entry into the WTO accelerated these trends, with production moving to Asia.
The Rise of the Knowledge Economy
Simultaneously, advancements in computing and communication technologies gave rise to a new class of knowledge workers. These individuals, including data modelers, software developers, and financial analysts, played a crucial role in managing the flows of capital and resources. They enjoyed relative stability through higher wages and equity ownership, contributing to the post-Fordist economy.
Advocates of globalization believed these new jobs would offset losses from deindustrialization. However, the benefits were highly unequal, with income inequality in the U.S. increasing significantly. While some upper-income households reaped most of the gains, the broader workforce saw limited improvements.
In North America, the upper class benefited most from globalization, while in Europe, higher taxation helped mitigate some of the disparities. Nonetheless, both models were disconnected from where most profits were generated—factories in China and Mexico, and mills in Bangladesh and Vietnam.
Generative AI and the Inward Turn of Capital
The small subset of workers who initially benefited from the globalized economy now faces challenges due to the rise of generative AI. This technology threatens various forms of labor, including graphic design, copywriting, and programming. While not perfect, its capabilities are improving rapidly, posing a threat to knowledge workers.
Generative AI can efficiently search and process large volumes of text, making it a tool for imposing wage discipline on a broad range of workers. It also automates aspects of software development, reducing the leverage of programmers. For instance, AI can produce code scaffolding for a website or mobile app within hours, a task that typically takes a developer several days.
In marketing and content creation, AI models can replace a significant portion of an employee’s tasks. Market forces may soon accept subpar AI-generated content as the new standard.
Decline of the Aristocracy
The ideas of philosophers like Michael Hardt and Antonio Negri, particularly their book “Empire,” inspired renewed interest in labor analysis. These thinkers argued that networked labor, such as informational and cultural work, could be more resilient to measurement and less susceptible to commodification. However, the reality has shown that generative AI expands the logic of the factory to these seemingly autonomous labor patterns, routinizing them and making them more amenable to discipline.
Today, the position of low-end and high-end workers relative to capital is vastly different, yet they share a downward trajectory. The aristocracy of the knowledge economy, once able to negotiate its terms, is slowly being dethroned.
As Northern capitalism’s inward turn accelerates, it becomes essential to look outward and cultivate alliances with various workers across global supply chains. Building solidarity and organizing across every node in the web of global capitalism is crucial for a successful labor movement.
