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What COVID-19 tells us about global supply chains

“These stupid supply chains that are all over the world, we have a supply chain where they’re made in all different parts of the world,” a frustrated Donald Trump exclaimed in May. “And one little piece of the world goes bad, and the whole thing is messed up.”

President Trump is not the only one bewildered by global supply chains today. Over the past 40 years, it has become normal for the production of many goods to be disaggregated and outsourced around the world. Transnational supply chains now represent 80% of global trade; they’re inextricable from our daily lives. Most people aren’t exactly surprised when their t-shirt comes from the other side of the globe or when their phone contains components from 43 countries, even if we can’t ever quite shake the feeling that there’s something uncanny about the contrast between these extraordinary distances and the ordinary purposes these goods serve.

Supply chains are supposed to be efficient; so-called “lean manufacturing” and “just-in-time production” means that goods are assembled as soon as consumer demand is anticipated, leaving little to no inventory sitting unused in warehouses. We can see the pervasiveness of these supply chains as part of the hegemony of neoliberalism, a political theory that sees efficient markets as the key to human freedom and wellbeing and accordingly makes creating and sustaining such markets the aim of politics. On this view, supply chains are an obvious boon to the common good because they exemplify the virtues of efficiency.

This rosy picture is incomplete, of course. Supply chains that pursue efficiency at the expense of all other values also predictably result in serious injustices. For workers, poverty wagesunsafe working conditions, and forced overtime are the norm. The 2013 collapse of the Rana Plaza complex in Dhaka, Bangladesh is emblematic: 1,132 garment workers who made clothes for global corporations like Walmart and Primark were killed when the building that housed their garment factories collapsed; at the time, many were earning the minimum wage, which was roughly $38 a month, while Walmart’s CEO took home $1.7 million a month. This outsourcing also predictably reduces wages for workers in the US, contributing to the ongoing growth of economic inequality. A global economy structured so that it’s profitable for Walmart to manufacture a t-shirt in Jordan and ship it to the US to sell for a retail price of $2 also isn’t environmentally sustainable; the UN Environmental Program estimates the global apparel industry is responsible for 10% of all carbon emissions.

Enter COVID-19. 94% of Fortune 1000 companies had a top tier supplier in the Wuhan region where the virus originated. Chains that were deliberately organized to have as little slack in them as possible came to a halt. Global trade flows dropped by 12% in April, in the wake of widespread shutdowns. In Bangladesh, more than 1 million garment workers were laid off; brands cut their orders without offering any severance pay or other support to workers suddenly left to starve. Meanwhile, in addition to massive unemployment, the US faced shortages of personal protective equipment like the N95 masks that protect wearers from airborne viruses, shortages that persist, in part, because the masks are not profitable to produce in the US and so are manufactured elsewhere.

Trump’s frustration at “stupid supply chains” that circle the globe thus reflects a neoliberal global economy that may be at a crossroads. Global supply chains that maximize efficiency at the expense of all else don’t seem sustainable as they are. But there are competing visions of what should come next.

Trump unabashedly pursues a nationalist economic vision, though it’s a mistake to see him as seeking to make the US independent of the global economy. The US cannot wave a magic wand and discover domestic deposits of the gallium needed to manufacture semiconductors, for example; it will continue to need resources from elsewhere. Consequently, Trump has formally declared this dependence a “national emergency” and, as a matter of national security, asserted that the US must dominate the countries where these resources are located. That is far from a vision of the US isolated from the world.

For their part, multinational corporations have unsurprisingly suggested that the solution is even fewer restrictions on capital mobility in the name of ever greater “flexibility” that would allow them to shift production from one country to another more easily in the event of a pandemic or a workers’ strike. This would lead to supply chains with “greater geographic diversity,” moving some production away from China and bringing more countries into supply chains without altering their fundamentally exploitative nature.

What’s needed today is neither resource imperialism nor a deepening of neoliberal precarity in the name of “supply chain resilience” but transnational solidarity founded on a shared interest in resisting and replacing a global economy that justifies worker exploitation and environmental damage in the name of efficiency. What makes supply chains today “stupid” is not that they circle the globe, but that they do so to the disproportionate benefit of the few. The global pandemic has brought into sharp relief not only the fragility of just-in-time manufacturing but also the fact that our dependence on and vulnerability to each other, economically, environmentally, epidemiologically, means most of us share common interests, while others benefit enormously from our current unequal arrangements. With the value and operations of global supply chains thrown into question by COVID-19, we may yet see transnational solidarity replace the neoliberal common sense that has prevailed for decades.

 

Feature image by NASA

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