A Logistical Explanation

This document is breath-taking. But what it's descriptions can be verified practically anywhere: for example, in the greenhouse vegetable production areas of Antalya, Turkey, where Claire Pentecost and I visited seedling providers, growers, a buyer and a very interesting sociologist, who together painted the picture of a JIT industry where such things as use of fertilizer, varieties of plants, ripeness, quality and delivery schedules are all controlled by big European distribution groups such as Carrefour, to the point where the "farmers" are more or less employees on their own fields, with one major exception: if it's a bad year, they bear all the risk... Does it affect the taste of your winter salad?

A simple web-search shows the text is by Brian Ashton and was published in Mute:
http://www.metamute.org/en/Logistics-Factory-Without-Walls

To see how we got from vertically integrated Fordist production to the flow-controlled supply/assembly/distribution chains of global logistics, read the chapter on "Coordinating the supply chain" in the book by Womack et al, "The Machine that Changed the World: The Story of Lean Production" (1990). This was the result of a global research project done by the International Motor Vehicle Program at MIT, comparing Western, Fordist-type car production to the methods developed by the engineer Kaiichi Ohno at Toyota plants (including its transplant operations in the US and Europe). [Tip: to read it right away, find the book on Amazon, click "look inside" and enter the search term "coordinating supply chain" (usually you can also enter page numbers in there); it's best to land three pages further than the one you want, because the program allows you to go two pages back...]

This book caps off a series of such studies throughout the 1980s and can be credited with launching the massive shift to Just In Time production in Euro-American capitalism. What emerges from the chapter on supply chain coordination is a strong, partially idealized distinction between the cooperative Japanese method and the highly cut-throat, predatory relations between major Western auto-assemblers and the parts suppliers whom they try to exploit and manipulate, with the results of immense amounts of waste, defective parts, incompatibilities and chaotic business cycles as everyone struggles to keep their internal operations and pricing policies secret from each other in order to protect perceived strategic advantages. By contrast, the Japanese system was said to be based on long-term relations between supplier and assembler, total transparency of information on both sides, cooperative design procedures, shared trouble-shooting and error-correcting procedures and profit-sharing over the medium term, all of which largely eliminated waste and ensured a smooth flow of parts even under the conditions of flexible specialization where the ideal is small-batch production and instant adaptablliity to the market. This was a system depended on a smooth, open, two-way flow of information at every level. In 1990, at a big slump in the business cycle when Western industries were feeling very strong competition from Asia, the book "The Machine that Changed the World" helped spur a tremendous approriation and adaptation of Toyota's methods, resulting ultimately in the kind of global supply chains we now see.

I think the research question here is, what were the stages whereby the appropriation occured, how did Information Technology fit into it, and at what point did the initial Japanese models become irrelevant? Another study from 1990, Neither Market Nor Hierarchy, by the Stanford organizational theorist Walter J Powell, develops the notion that there are not just two ways of organizing productive activity (via price-signals on the open market or by hierarchical relations within the firm, as Ronald Coase famously maintained) but instead there is also a third way: the network form of mutually beneficial cooperation, exactly the kind of thing that Toyota was doing. It was under the same cultural climate that Peter Drucker wrote his famous book "Post-Capitalist Society" in 1993, which predicted, not socialism, but new forms of cooperation arising from knowledge economies; and I think the same ideas permeate Arrighi's rather idealized version of the inherently cooperative Asiatic mode of production (whose origins he locates in the Japanese system of landholding by extended clans -- that's in his strange but fascinating final book, "Adam Smith in Beijing"). You can clearly see the legacy of the Japanese methods in the description of the contemporary logistics hubs and the way they operate with total transparency of information all the way along the route, as well as the system of gradated priorities that treats the most time-sensitive cargoes first and increases cost-efficiency for all the partners. The ideal of a "pull-driven" industry capable of immediately adapting to market fluctuations is being realized on the scale of world society. But you can also see the extreme difference when you look at the kinds of cut-throat labor relations that are being built up, the brutally fast geographical shifts of production in order to gain tiny increments of cost-efficiency, etc.

One of the reasons for looking at this whole development historically is to try to understand the forms of competition between regions that define the struggle for hegemony, and in so doing, cause the focus of industrial development and its lead technologies to shift around, rendering the analysis of periodization a good deal more difficult. One recent historical study, "The Embedded Corporation" by Sanford Jacoby (2005), gives some insight into the way forms of regulation compete in the world. In his first chapter, Jacoby notes that three three different regional forms of corporate governance can be identified: "shareholder-oriented governance in the United States and the United Kingdom, statutory stakeholder governance in Europe [that means that by law, the different stakeholders including labor have to be included in the decision-making process] and voluntary stakeholder governance in Japan." However, he also notes that due to the extreme profitability of US corporations during the financial boom from the late 1990s onward, the former fascination with the Japanese model has entirely evaporated, and "the focus of research and debate has shifted from analyzing institutional variety to predicting how quickly US patterns of regulation, risk-sharing, and governance will take hold around the world."

The deeply existential question is whether the ongoing crisis -- and the power of workers' self-organization that Ashton talks about at the end -- will bring about some reconsideration of global logistics and lead to some new or strengthened types of regional governance, or whether the acceleration forced by the Anglo-Saxon shareholder-oriented model will continue unchecked as it is doing now, provoking a severe ecological and social disaster. That's the question that motivates this whole study, as far as I'm concerned....