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1 Capital accumulation and the international mobility of labor
An introduction
Introduction
There is a popular saying among Indians that “Dubai is the best-run Indian city.” Notwithstanding the implications behind this statement that Indian cities are poorly managed or that Indian capabilities are second to none, the stark reality is that hundreds of thousands of Indians and others from the Indian subcontinent and Southeast Asia have been making a living in the Gulf region through temporary contract labor. These are mostly unskilled or semi-skilled workers engaged in the provisioning of a variety of services such as construction, retail, building maintenance and security, teaching, healthcare, and domestic help. There are also some highly skilled professionals, technical and non-technical: petroleum engineers, accountants, information technology specialists, and managers of various sorts.
The Gulf region is a geological accident, sitting on one of the largest reserves of oil, which is owned and managed by a coterie of local elites and multinational firms. The region is lacking in the basic ingredients for economic development of a local workforce, professional managers, and entrepreneurs. The sheikhs and their extended relatives have deployed their oil wealth to hire people from across Asia and elsewhere. In fact, Dubai, Abu Dhabi, Doha, Bahrain, and other cities in West Asia could not deploy their oil wealth locally without foreign workers and without oil they would be largely invisible in the world economy.
The international movement of workers to the Gulf represents a new phase of extensive capital accumulation in which unskilled and semi-skilled labor moves to where capital is generated by, and invested through, extractive industries. This in itself is not a novel development since historically labor has been mobilized to serve the interests of capital in general, be it in mining or plantations. Furthermore, the kafala employment system that binds workers to their employers in the Gulf countries is only marginally different from earlier forms of indentured labor under colonial regimes. In that phase of capitalism, slaves from Africa bound for the New World were replaced by contract labor from India and elsewhere in far-flung plantation economies in Southeast Asia, Fiji, and the Caribbean. What is different today is the scale of the movement of such workers across international borders, and, unlike the previous flows of people, those of today are highly regulated by governments through immigration policies and visa regimes.
The purpose of this volume is to offer an alternative understanding of how contemporary global capitalism works by using the lens of international mobility of technical professionals. Technical professionals can be defined as tertiary-educated professionals with a technical background, such as the OECD classification of human resources in science and technology (HRST), or simply those with science, technology, engineering, and mathematics (STEM) degrees. More narrowly, for this study they refer to information technology (IT) professionals, which I refer to interchangeably as technical talent. Since the US experience has been extensively studied, I focus on a less-studied case of the movement of technical professionals from India to Japan. While the limited inflow of foreigners to Japan is also familiar to most scholars of international migration, less is known specifically about foreign technical talent in Japan, and especially Indian professionals. This is all the more curious since Indian engineers and other technical professionals seem to span the global economy, including non-Anglophone countries.
The phenomenon of international migration has been widely studied, especially from policy angles, but there has been little investigation of the contemporary phenomenon of professional mobility to theorize and thus understand the workings of contemporary capitalism. By relying on the process of the mobility of people as a conceptual and analytical component of functioning capitalism, I integrate the reasons for and the ways by which mobility of professionals is institutionally restricted and facilitated by states and capitalist firms. Thus, immigration policies, changing visa regimes, the pursuit of tertiary technical education, and business practices govern the form and function of international mobility. Rather than view global capitalism as unfettered, which would be a crude structuralist interpretation, I argue that the changing structures of capital accumulation, a process by which the very foundations for relentless expansion of capital is transformed, induce the international movement of people and that mobility is circumscribed by national institutions such as governments, business, and labor.1 However, and more importantly, I also argue that, under the imperatives of capital accumulation, the impediments to international mobility posed by local institutions cannot be durable if the prospect for capitalist expansion is severely jeopardized. When exactly the shift occurs is difficult to predict a priori, but prolonged economic crisis compels institutions to change to accommodate the new structures of accumulation.
I thus posit that the international mobility of talent can be viewed as a structural requirement for accumulation. By using the IT industries of Japan and India, I demonstrate that hitherto inhibiting institutions (stickiness) in Japan must adjust to the imperatives of business competitiveness and expansion despite the institutional propensity not to do so.2
In the rest of the chapter I introduce the relationship between the movement of highly skilled professionals and the contemporary capitalist world economy, bringing in the less-studied interaction between India and Japan. In section two, I provide a brief setting in which the international mobility of labor is linked to the contemporary world economy. In section three, I present the main arguments behind the international mobility of professionals. Three broad areas are introduced, which are further developed in Chapter 2: globalization and the process of economic integration, which also entails the movement of people; the services transition in advanced capitalist countries, which demands professionals in addition to unskilled workers; and the phenomenon of international migration itself. In section four, I briefly present the India–Japan relationship, which is investigated in more detail in several subsequent chapters. Section five presents a brief note on methodology and data sources. In section six, I provide a description of the forthcoming chapters.
Setting the stage for global mobility
The world economy relies on both raw labor and those with embodied knowledge obtained through education. The Gulf region’s wealth creation rests on raw labor, which is used to deploy oil rents for non-oil investment and consumption such as infrastructure projects built by foreign workers. While resource-based wealth is not confined to the Gulf region, most other resource-dependent nations have had short-lived prosperity or they have been subject to boom and bust cycles. Oil, however, is still a special commodity whose rents have allowed the Gulf countries to go on a consumption binge abroad and a spending spree in their local economies, building the tallest buildings, signature hotels, museums including annexes of Western museums such as the Louvre and Guggenheim (Bouchenaki 2011), New York University’s offshore campus (Kaminer and O’Driscoll 2014), and, more recently, the construction of football stadiums for the 2022 FIFA World Cup tournament. None of these would have been possible without the labor of South Asian and other workers.3
Raw labor is a source of economic value in an absolute sense and the accumulation by these rentier states rests directly on the backs of foreign workers. They differ from indentured labor of the colonial period in that they are temporary contract workers with no recourse to secure jobs or the possibility of becoming residents of these countries. Indentured laborers of the past were also on contract but they either had no savings to afford a return to distant homelands or worked in colonial plantation economies, where the need for migrant labor was critical, which contributed to their permanent settlement (Crow et al. 1988: 35–36). The obverse of contemporary contract workers in the Gulf is the increasing dependence of South Asia on the billions of dollars in remittance income sent home by these workers (see Nayyar 1994). Most recent estimates suggest India’s remittance income was $70 billion in 2013, a good fraction of which was generated in the Gulf countries (World Bank 2014). International migration, like internal migration, can be interpreted as a structural outcome of wage differentials across space and represents, among other things, an agency-driven response to the structural failure of economies.4
This growing asymmetric interdependence of global capital and labor is also accompanied by the parallel development of international mobility of professionals, especially technical talent (Solimano 2010; D’Costa 2008), which also contributes to capital accumulation in an economically more intensive but less exploitative way.5 While the number of such professionals may not be as large as that of unskilled workers, their global mobility, visibility, circulation, and permanent emigration suggest growing numbers and an incipient global market for professionals (Saxenian 2006). The emergent shortages of certain categories of high-skilled professionals have compelled advanced capitalist countries to launch a “global war for talent” (Michaels et al. 2001).
The fundamental dynamic behind international mobility of technical and non-technical professionals can be presumed to be the mismatch of supply of and demand for such professionals. However, the intrinsic reasons for shortages and surpluses in specific markets are not so straightforward. They demand a contextual understanding of national and sector-specific characteristics. For example, India, China, and, to a lesser extent, the Philippines are major contributors of professionals to the global economy, be they engineers, managers, healthcare workers, or merchant seafarers, suggesting that lower levels of economic development produce excess talent because of the absolutely large pool of tertiary-educated professionals in these countries. The understanding of the nature of political economy of development in these countries that produces tertiary-educated professionals is an important component in capturing the dynamics of mobility and accumulation at the global level. Rich economies, on the other hand, face shortages in specific labor markets due to changing structures of capital accumulation from unskilled, labor-intensive to high-skilled, knowledge-intensive production of goods and services. Other developments, such as declining fertility rates, also contribute to the labor market mismatch. Such a transition in the accumulation structure leaves in its wake a wide gulf between the highly skilled, who are in demand in the rich countries, and the unskilled and semi-skilled workers everywhere, which reinforces international mobility.
The USA, as the largest open economy, has been the primary recipient of Indian professionals. This is not a mechanistic outcome of supply and demand adjustments but rather the product of a conscious strategy to attract the highly skilled. The demand for such professionals has arisen because of the structural shift away from manufacturing to services in general and, with technological change (mainly information and communications technologies, or ICT), to tradable services. In addition, demographic shifts accompanying capitalist maturity and social modernity have resulted in declining fertility rates in advanced capitalist countries, creating imbalances in labor markets for both unskilled and skilled labor. With the wide variety of services now internationally traded rather than consumed at the point of production, the demand for technical professionals globally has increased. Hence, the physical movement of software professionals to the USA, backed by offshore development sites such as those in India, can be argued to add another layer to the capital accumulation process at the global level. Unlike most workers in the Gulf, however, these professionals have college or university degrees, many with technical training beyond the baccalaureate level, and relevant work experience. Curiously, Japan, with the second-largest IT market and a services-dominated economy, has not been an important destination for foreign professionals. Correspondingly, the presence of Indian talent in Japan is miniscule compared to that in the USA.
This study aims to unravel some of the key determinants of why Japan has been “closed” to Indian professionals and why and how the status quo is changing. As the competitive pressure on Japanese businesses mounts, resolving the stalemate is expected to be on the agenda of both business and government. While resolution cannot be assumed to be a foregone conclusion, the changing structure of accumulation, which relies on the service economy and thus on skilled professionals, suggests that doors will likely be pried open for foreign technical professionals. This interpretation is slightly different from that of Solimano (2010: 32–34), who argues that economic crises in both sending and receiving countries impact migration outflows. While this is true, I argue that economic crisis in the advanced capitalist countries may actually draw in foreign professionals as a cost-cutting strategy in a highly integrated world economy as shortages of technical workers in ageing societies take on greater urgency. In this sense, the global capitalist system can be argued to have entered a new phase in which the process of accumulation increasingly relies on foreign professional talent from the global economy. Countries such as Japan can be expected to align with this development over time, while sending countries such as India, because of their particular form of capitalist development, are able to respond favorably to the global demand for talent.
Two interrelated questions arise from these anticipated responses by the two countries: why is Japan slow to accept foreign professionals, given that the shortage of talent is real and the economy could be rejuvenated through enhanced competitiveness; and what allows India to be a global supplier of technical professionals, given its low level of economic and social development? The answers to both necessarily point to the integrated functioning of global capitalism. The answer to the first question is “institutional stickiness.” By this I mean that there are cultural and business practices that were established, some unwittingly, to support Japanese capitalist development by keeping others out but which have become less effective for business success. Thus the elaborate local subcontracting system and business groups under the keiretsu arrangement have been quite effective in insulating the economy from foreign competition and in supporting Japanese manufacturing capability and exports. The stability and durability of such institutions is the reason for their stickiness and why Japan’s adjustment to the new circumstances of global competition and international mobility of professionals has been halting. However, as I have indicated and will further demonstrate in subsequent chapters, the imperatives of capital accumulation are strong enough to warrant institutional changes for a more open and competitive Japanese economy.
The answer to the second question lies in the political economy of capitalist development and the place of tertiary technical education in India. Briefly, late industrialization in India has meant state-led development and thus the compression of multiple phases of capitalism, which also generates uneven development (D’Costa 2003a, 2014a). Thus, a large agrarian society coexists with a large petty commodity producing sector and modern industrial and services sectors. There also has been overdevelopment of the tertiary educational infrastructure, which was initially established to serve late industrialization under the import substitution industrialization strategy. Setting aside the issue of quality of education, India produces a large number of technical graduates, although they are a relatively small share of total college-going students and an even smaller share of the relevant age group. The privileged place of tertiary education, particularly for technical degrees, among India’s middle classes is a long-standing feature in an economy of scarcity and a status-conscious society. This has been further boosted by the global demand for such professionals through direct employment in global IT firms and indirectly through outsourcing activities by international firms in India.
Changing structures of accumulation and international mobility
Accumulation is the process by which the magnitude as well as the quality of capital is expanded through diverse economic production of goods and services. Profits, the underlying motive, are realized in the market, which under capitalist imperatives are generally reinvested for further economic production of goods and services. The economic surplus, which is realized as profits, at the level of production can be increased through two principal methods: lengthening the workday, and increasing efficiency through technology and other organizational means. There are of course political limits to both due to the shifts in the relative power of capital and labor and the institutional environment in which both capital and labor are governed. In the absence of regulatory regimes governing the length of the workday, workers could work long hours with or without overtime. Professionals tend to be salaried workers, hence overtime is generally not compensated. Both types of labor use modern technology to enhance efficiency systematically. However, low-wage, unskilled workers face the brunt of low wages and poor work environments, while high-skilled professionals, because of their education and training, generally enjoy better salaries and perks.6 Structurally, professionals are in a better position than their unskilled counterparts.
Changing economic conditions include rising costs of production, falling demand, increased competition, technological change, and new sources of demand. Consequently, when profits rates vary due to changes in economic circumstances, investments are redirected to the higher profit sectors, which tend to be increasingly technology driven. Firms, as strategic actors, are likely to respond to these new challenges and o...
