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A final and much-discussed aspect of the new economy concerns globalization. Has the emergence of a global economy fundamentally changed the economy and the situation of workers worldwide? In some respects, the global economy is not really new. The histories of virtually all modern societies, from the sixteenth century onward, can be traced to international economic ties (Wallerstein 1979, 1983). For example, colonial America participated in international trade of slave labor, sugar, rum, tobacco, cod, and textiles (Kurlansky 1998). Had it not been for these exchanges, the present-day demographic makeup of the United States would be profoundly different, as would its culture. Likewise, the export of slaves to the United States had an enduring impact on the development of African societies. Trade with Asia is not new, and the European “discovery” of America was the result of attempts to find better trade routes. Indeed, international trade has long been in existence and has gone through numerous cycles of growth and decline (Chase-Dunn, Kawano, and Brewer 2000).

Nevertheless, one must still acknowledge that the extent of global economic activity is unprecedented and that the penetration of global capitalism to all corners of the world is both more complete and more complex than ever before. The new global economy can be described as a vast international network capable of rapidly developing and diffusing resources, technology, and information across the world. Among the key characteristics of the new global economy are the following:

 The immense volume of trade and consumption between societies

 The rapid transmission of information between societies

 Powerful and transportable technologies implemented throughout the world

 Intense “dis-integrated” production, spread over national boundaries

 Flexible arrangements that enable employers to shift production and consumption from one society to another.

It should be added that the new global economy is also characterized by new types of legal and political arrangements designed to promote globalization. In the past, global economic activity was supported politically in various ways. Nineteenth-century colonial occupation created economic opportunities for employers in the dominant country (e.g., British enterprises benefitted greatly from British colonial activity in places such as India). Even after the colonial empires dissolved, enterprises in the developed world often continued to derive considerable benefit from activities in the former colonies, aided by political, military, and diplomatic support from their home governments. On the other hand, international economic activity, especially among industrialized countries, was often limited in various ways by tariffs and other legal arrangements designed to protect domestic economies. It is this last situation that has begun to show signs of change in the new economy. Accompanied by economic theories that trumpet the benefits of free trade and the free movement of goods, services, and investment, many countries have joined in a variety of free trade agreements and even currency unions that remove many of the barriers to international economic activity. Notable examples include NAFTA, designed to enhance free trade among the United States, Canada, and Mexico, and the European Union, which has created a large free trade zone among many of the countries of Europe and includes a common currency shared by at least some of its members. These political efforts to promote globalization have met with some high-level resistance—in the United States, President Trump has made his opposition to NAFTA and other multi-lateral trade deals a hallmark of his presidency, and the British in 2016 voted to leave the European Union (Brexit). However, the fact that the effort to replace NAFTA with a better deal resulted in only relatively minor modifications, the predictions that Brexit will have disastrous consequences for the British economy, and the continued emergence of new global trade deals (such as the Trans-Pacific Partnership, which moved forward without American participation), suggest that globalization and the international emphasis on free trade are not a passing fad.

These arrangements make it much easier for goods and services to move across borders and for companies based in one country to establish facilities (or move them) to a range of others. One result has been that cultural and technological changes in developed and developing countries are accelerating at unprecedented rates. The speed of change, the extent of diffusion, and the flexibility of webs of connection set the current organization of work apart from the systems that preceded it (Castells 2000, Mattsson 2003, Milberg 2004). As one observer has remarked, the world is now, probably for the first time, approaching “universal capitalism” (Wood 2003).

Companies are integrating themselves into the global economy for a variety of reasons. An obvious reason is that companies try to move closer to emerging markets for their products; as countries such as China, India, and Brazil grow and industrialize, their residents emerge as new markets for products made by foreign companies, who often set up facilities nearby to be able to manufacture products for local consumption. Labor cost savings also are a major motivator; some companies locate in low-wage countries not to sell their products there, but to reduce the cost of manufacturing goods to be sold in the United States and other developed economies. This is why some companies who had invested in production facilities in China, where labor costs have begun to rise, are now considering moving manufacturing operations to countries such as Vietnam and Indonesia.

Some critics argue that manufacturers, particularly those in highly polluting industries, are drawn to developing countries with lax environmental rules and enforcement. For this reason, many economists argue for stricter environmental standards as a means to control job flows. However, not everyone agrees, as counterevidence suggests that companies seek stable regulations, not necessarily loose ones, in making decisions about where to invest (Jones 2005, Rivera and Oh 2013). The tax structures of nation-state systems also encourage the movement of jobs. Companies that operate in multiple countries have the opportunity to concentrate their tax obligations in the country with the lowest tax rates. In some cases, they may even deliberately “move” outside the United States, while continuing to have operations in the United States, in search of tax havens. Major U.S. companies now have headquarters in places such as Bermuda, the Cayman Islands, and Luxembourg for this reason. In recent years, public attention has been drawn to the increasingly common practice of “inversion,” in which U.S.-based companies merge with foreign companies and move their base abroad. The result is that large companies, such as medical equipment maker Medtronic and even Burger King, move at least a portion of their corporate operations overseas, in the process making huge tax savings by “locating” in a lower-tax country (Davis 2014). Companies also internationalize operations to secure government contracts and extend the global reach of their product lines.

The emergence of a global economy has had significant effects on workers in the United States and other industrialized countries, partly because the “national” character of companies has weakened and become ambiguous. American companies such as Ford have long had overseas operations in Europe. However, the scale of those overseas operations is something quite new. General Motors (like nearly all the major employers in the new economy) is a multinational corporation that operates both within and beyond the political realms of nation-states. Today, General Motors employs almost as many workers outside the United States as it does within (in some years, its overseas labor force has been larger than its U.S. labor force),⁵ and it manufactures and sells cars around the world, with most of its sales outside the United States. Companies such as General Motors are reconfiguring to expedite shifts in production from place to place, as workers in Michigan have discovered. When companies move or open new facilities abroad, they bring more than jobs—they also sometimes spread culture and methods of organizing work. A good example of this can be seen in the case of Japanese companies, which have built facilities in both the industrialized and developing worlds. These plants became vectors through which Japanese production methods diffused to places such as Marysville, Ohio; northern Mexico; or Spain (Elger and Smith 1994). However, in other cases, foreign companies adopt local practices. A Los Angeles Times editorial argued that European companies, when they establish facilities in the United States, actually adopt American-style practices (such as “union-free” workplaces) that differ radically from the same companies’ practices in their home countries (Meyerson 2011).

The emergence of a global economy has undoubtedly brought with it much that is new. Workers in the United States are much more likely to encounter technologies and managerial practices that originated elsewhere, and workers in developing countries have been drawn into more direct relationships with global webs of production. Still, arguing that all this is entirely new seems an exaggeration. Employers have relocated in the past, and even the earliest industrial firms in America “borrowed” practices from the pioneering British. It seems more accurate to say that globalization has accelerated and intensified existing dynamics at work. At the same time, the socioeconomic differences between the developed and developing world have not been erased by these changes (an observation that we document in the next chapter). Nor have national differences in workplace practices been eliminated by globalization (Smith and Meiksins 1995). As with the various other changes we have reviewed, there is much of the old within the new global workplace.