Geographies of production II: Thinking through the state

I Introduction

From the simmering US-China trade war, to widespread popular protests against continued austerity in South America and the Middle East, to the violent advance of racial and religious supremacist nationalisms, struggles over the state are roiling. As right-wing populism moves to the mainstream, dogged champions of neoliberal globalization warn of the social, economic and political costs of what The Economist has called ‘slowbalisation’. Yet such admonitions burst under the weight of their own contradictions since neoliberalism consolidated the very corporate power that undermined market competition and now strains liberal hegemony. This is not to suggest competitive markets to be the institutional kin of democratic social forms (Jessop, 2015). Nonetheless, we do find corporate power consolidated in and through governments that legitimize a hostility to democratic norms and liberal principles. As Josh Barkan recently noted, ‘[n]eoliberal ideology has accommodated growth and centralization of corporate economic power…fostering monopolies and oligopolies that are increasingly difficult to control through the weakened regulatory structures of the state’ (2018: 138).

Scholars in economic geography and development sociology have tracked the consolidation of corporate economic power in oligopolistic form by tracing the precise governance mechanisms whereby corporations determine the terms of participation within, and capture above average profits through, global production networks (e.g. Milberg, 2008). The winners of this process include multinational corporations based in the Global North, as well as significant corporate players from emerging economies. But if scholars have elucidated the nuts and bolts of corporate power concentration through production network governance, far less attention has been paid to how politics and the state determine these dynamics and, in turn, are reshaped by them.

My agenda for this report, then, is to discuss recent work that seeks to center the state in studies of global production networks. It builds on my first progress report, which discusses the geographies of uneven development that have formed in and through the global restructuring of production via networks (Werner, 2019). As I detailed there, firm-centric literatures have begun to correct their bias towards studying successful network inclusion by focusing on the ‘dark sides’ of uneven development (devaluation, disinvestment and exclusion). Here, I analyze a related pivot underway with respect to the state. Until recently, the general thrust of this literature, and globalization studies well beyond it, was to attribute to the state the role of facilitator of global capital’s priorities, such as expanding the ambit and strength of private property rights, guaranteeing low wages, and ensuring lax or selective enforcement of environmental and labor regulations. In Geography, informed by regulation-type analysis and Polanyian influences, few scholars understood this change to signify the shrinking or receding of the state (e.g. Brenner et al., 2010). Instead, state action was clearly necessary to create the conditions for capital accumulation via its facilitative role, including, as geographers were at pains to point out, transforming the scalar remit of the state itself from households to supranational trade agreements (Marston, 2000; Smith, 2015a). Despite the inclusion of horizontal development institutions in the Global Production Network (GPN) framework (Coe and Hess, 2011; Glassman, 2011), the state-as-facilitator assumption largely held: the state was – and largely continues to be – understood as ‘an inter-scalar mediator’ between domestic and foreign capital (Coe and Yeung, 2019). Although important differences exist between GPN studies and the sociological literature on Global Value Chains (GVC), ¹ the state across both frameworks is primarily seen as reactive or secondary relative to global capital and/or domestic fractions (Mayer and Phillips, 2017). This state-as-facilitator assumption is now facing increased scrutiny as a consensus appears to be in the making that firm-centered scholarship has marginalized the state analytically for too long. At a minimum, the view that the state-facilitator role is insufficient to understand changes in state-capital relations is gaining ground.

II The state-global production network nexus: Expanding state roles

In a recent intervention, Horner draws on developmental state, GVC and economic geography literatures to offer a four-fold typology of state roles (2017; see also Horner and Alford, 2019). The first and most familiar one, the state-as-facilitator, casts the state as creating the conditions to attract and retain foreign investment in, or to promote supplier linkages to, production networks. Most commonly, the goal of state action is for domestic capital to obtain or improve its position (i.e. upgrade) within these networks. Mayer and Phillips (2017) offer a useful overview of these now-familiar forms of state facilitation, including international trade, investment and IPR agreements and policies, the substitution of industrial policy for policies that promote global network inclusion, and the decline of competition policy. The state as a global production network facilitator moved decisively from the academic margins to the policy center in the wake of the global financial crisis (Gereffi, 2014; Neilson, 2014; Werner et al., 2014). As trade slowed, WTO negotiations remained stagnant, and mega-regional trade agreements faced disruption from the US, the World Bank continued to trumpet the benefits of outsourcing and exports for workers, domestic suppliers, and multinational corporations alike. The Bank’s latest World Development Report, Trading for Development in the Age of Global Value Chains (2020), offers the familiar array of state-facilitation policies. The authors warn of catastrophic declines in global income (as much as $1.2 trillion) if ‘policy predictability’ – that is, states conforming to the post-Washington Consensus narrow set of policy options to correct for ‘market failure’ – is not restored. In other words, the state-as-facilitator assumption continues to be central both to development nostrums and government policy. The shift in emphasis to other state roles thus does not signify that the facilitator assumption is inaccurate, but rather that it is incomplete.

The second role outlined by Horner, the state as a regulator, intentionally adopts a narrow definition of the term, referring specifically to restrictions on economic activity in response to different societal interests seeking to contain rampant market-led regulation. Despite this definition, much discussion on this role remains focused primarily on the continued outsourcing of regulation and the concomitant rise of private governance (Mayer and Phillips, 2017; Alford and Phillips, 2018). Geographers and development scholars are well-versed in the proliferation of these ‘multi-stakeholder frameworks’ on labor rights and environmental standards, which typically bring together firms, non-governmental organizations, state agencies and international development organizations to agree on (often voluntary) standards and enforcement (e.g. Bair, 2017).

While the state’s restrictive or directive regulatory role remains limited (not to mention highly uneven across jurisdictions) as compared to the immediate post-Second World War period, a number of scholars suggest a modest ‘regulatory renaissance’ (e.g. Phillips, 2017). There is some evidence for this trend in investment, industrial and trade policy. UNCTAD (2019), for example, reports that one-third of national investment policies adopted in 2018 introduced restrictive measures on FDI, the highest proportion in 20 years. Indeed, ‘asset-light’ integration via global value chains, plus licensing and royalties, appears to be the saving grace for the globalization project in the context of anemic FDI since the 2008 financial crisis (although flagging international trade suggests the limits to the value chain path) (UNCTAD, 2019). Scholars have explored how a handful of emerging economies have placed conditions on investment in order to access technology, capital and training: from the ‘obligated embeddedness’ of FDI in the Chinese automobile sector (Liu and Dicken, 2006) to local content incentives linked to obligations to reinvest revenue in local R&D in the Brazilian electronics sector (Gereffi and Sturgeon, 2013). Such policies fit within a revised understanding of industrial policy more generally, where regulatory measures combine restrictions and incentives for domestic firms to upgrade within networks (Yeung, 2014; Chang and Andreoni, 2020). In China, for example, the national government as well as regional administrations have implemented a series of measures to induce domestic firms not only to ‘move up’ the value chain, but also to move labor-intensive production to ‘lagging’ regions (‘go West’) and to other countries (‘go out’) (Zhu and Pickles, 2014).

Traditional trade policy is another clear area of regulatory resurgence, motivating the doomsday scenarios peddled by the World Bank and The Economist. Production network studies generally focus on novel so-called behind-the-border trade disciplines, but Curran et al. (2018) remind readers that traditional disciplines such as MFN tariffs, rules of origin (RoOs) and trade preference schemes remain relevant to the geography of many production networks, even prior to the current trade wars (see also Smith, 2015b; Campling, 2016). We could well add tariff escalation, that is, the increase in tariffs along the processing chain, which has long hindered efforts to relocate downstream processing of tropical commodities (e.g. Clapp, 2012). Antidumping measures and quid-pro-quo tariff measures add an extra dimension of regulatory trade action and uncertainty shaping global production networks, even as the latter demonstrate remarkable malleability (Curran, 2015).

Inattention to the third state role, the state as producer, is attributable to two factors. First, studies have tended to focus on consumer goods as opposed to strategic sectors such as energy, infrastructure and defense, where state-owned enterprises (SOEs) are far more common (but see e.g. Bridge and Bradshaw, 2017). Second, a tendency to study multinational corporations based in the Global North has meant less attention paid to state-owned MNCs, which are playing a larger role in the Global South (Horner and Nadvi, 2018). Of the 1500 state-owned MNCs worldwide, one-third are European and 45 percent are from ‘developing Asia’, including 18 percent from China (UNCTAD, 2019: 6). State capitalism beyond state-owned MNCS – a notion itself in need of conceptual definition – surely offers additional areas for production network research but remains beyond my scope here (Alami and Dixon, 2020). Today, the growth of state-owned MNCs is garnering renewed attention to the state’s role, especially the activities of Chinese state-owned MNCs, and debates over debt and dependency related to these activities on the African continent (e.g. Brautigam, 2020; Carmody, 2020). Ching Kwan Lee’s (2017) comparative ethnography of state-owned versus private MNCs in the Zambian copperbelt offers a fascinating look at what these differences between state versus private capital mean for network governance and labor regimes. The state-owned MNC Non-Ferrous Metal China, for example, is far more restrained in its outsourcing relative to the private firms Vedanta and Glencore because the state priority to secure copper supplies supersedes quarterly profit performance. In a recent contribution on this topic, Lim (2018) offers a stylized case study of a Chinese state-owned oil and gas company’s (CNOOC) takeover of a Canadian energy conglomerate (Nexen). He argues for reconceptualizing the question of regional-MNC linkages (i.e. ‘strategic coupling’ in GPN parlance) given the actions, capacities and limits of SOEs. In addition to investments in mining, energy, and infrastructure, Chinese state-owned MNCs have become key players in the consolidated seed and agrichemical sector: the takeover of Syngenta by ChemChina was the largest merger in Chinese history, part of a wave of corporate mergers that now sees only four firms dominate the agricultural input sector (Clapp, 2018). Downstream, the state-owned MNC, COFCO, is now the fourth largest grain trader globally, behind Archer Daniels Midland, Cargill and Louis Dreyfus. The contribution of state capitalism to the consolidation of a ‘corporate food regime’ suggests the need for a revision of global production network studies to account for these changes (see also Belesky and Lawrence, 2019; McMichael, 2020).

The fourth and final role outlined by Horner is the state as buyer. Public procurement has long allowed for governments to guarantee demand stability in order to support new or strategic industries, including the US aircraft and computer industries, Finnish electronics and, more recently, green energy technologies in a number of countries (Chang and Andreoni, 2020). If public procurement increasingly intersects with global production networks today, the state-buyer role has never been solely a national affair. Hyundai’s origins, for example, are irredeemably linked to US military procurement and construction contracts during the Vietnam War era (Glassman, 2011). Public procurement was long-targeted for global governance through restrictive national treatment provisions at the WTO and in regional trade agreements, with moderate success. Procurement remains a crucial if underappreciated modality of state action that shapes global production networks in largely unexplored ways. Hughes, Morrison and Ruwanpura (2019) study the introduction of ethical codes for supply chains into government procurement policies in a variety of sectors in the UK, efforts that are hampered by the legal context and absence of consumer pressure (see also Martin-Ortega, 2018). The state-as-buyer role is more often used to shore up domestic producers, for example, in food procurement for hospitals, schools, and food aid programs. In the wake of the 2008–9 and 2011–12 global food price spikes, many governments introduced food-based social protection programs, often tied to public procurement from domestic producers (Pritchard et al., 2016). In the Indian case, in particular, Right to Food legislation became the target of WTO proceedings instigated by the US government acting on behalf of large grain interests that saw the Indian policy as undermining their market access (Wilkinson, 2015). A focus on public procurement puts these sorts of regulatory struggles squarely within the ambit of production network studies: not only does ‘national’ agriculture consume transnationally produced inputs, but public food programs, which are growing, also may well shape global production networks. A case in point is the role of public procurement in so-called global destruction networks (Herod et al., 2014) of food waste. The US Department of Agriculture subsidizes large agro-food concerns by purchasing surplus commodities for distribution through a complex network of private food banks (Lohnes and Wilson, 2018). Massive corporate retailers like Walmart then leverage this public-private infrastructure to dispose of their food waste and benefit from fiscal incentives in the US tax code for doing so. In short, the scope for studying the state-global production network nexus remains largely underexplored, especially from the perspective of the state as a producer and a buyer. As these research agendas develop, we are sure to gain a better appreciation for the ways that state action shapes organizational, functional, and geographical arrangements of these networks.

III Where and why state roles combine: Theorizing the state-production network nexus

Both GVC/GPN frameworks, albeit with key differences, originate from a critique of the state-centrism of the developmental state literature on East Asia. If the developmental state disciplines domestic capital to conform to the priorities of national industrialization, the facilitator state of firm-network studies creates conditions for domestic capital to compete for positions in corporate-governed production networks. But both firm-network (GVC/GPN) and developmental state schools rely upon the Weberian conceit of a state/market divide to make their arguments (Glassman, 2011); a typology of state roles, although offering a useful heuristic device (as Horner intended), does not remediate this problem. In this section, I focus on scholarship that aims to interrogate the state-market relationship drawing primarily on critical/Marxist political economy, often influenced by neo-Gramscian theory, in order to determine the form that the state-production network nexus takes and why. As David Levy has argued, production networks are inseparable from the ‘amalgam of rules, norms, and taken for granted ideas and practices’ that lend hegemonic stability to the asymmetric arrangements of authority and distribution of surplus of global production networks (2008: 951). A refusal of the analytical separation of states and markets motivates Levy’s and a number of other critical approaches, which train attention on the possibilities for and limits to state action as part of the analysis of the form that these actions take. For these scholars, the institutional scope and form of state action vis-à-vis production networks is determined neither by enlightened planners in state bureaucracies nor shareholder-maximizing managers in executive suites.

Instead, much scholarship in this vein advances an understanding of the state as the outcome of struggles within the state and between the state and civil society at different scales (Jessop, 2008). In addition to troubling the state-market dualism, this synthesis also refuses orthodox economistic explanations that are glossed by the concept of relative autonomy between the state and markets. The relationship between the two is at the heart of analysis, Jessop reminds readers, but relative autonomy is ‘the name of the problem, not the answer’ (2019: 127). As Glassman writes, ‘states can be seen not as existing external to markets or production networks but rather as being produced and reproduced in the same processes that produce markets and production networks’ (2011: 157). As scholars engage with a wider range of state roles then, the key question becomes not what states do, but rather why states act in the ways that they do, and how do social forces and class dynamics shape these institutional arrangements (Smith, 2015a; see also G. Smith, 2011).

We can consider, for example, the fundamental tension between the state as facilitator and regulator at the heart of much recent work on global production networks and labor, which has expanded considerably in the past few years. As Coe and Hess explain, ‘[l]abor is clearly produced, reproduced and regulated in different local and national contexts, meaning that labor agency needs to be framed within state formations and the global structure of capital’ (2013: 7). Earlier work on global production and labor largely took the state-facilitator role for granted, and thus focused on whether the structural power of workers in global production networks could be transformed into associational power, bolstered by transnational unions and NGOs, in order to redistribute returns from capital to labor (Cumbers et al., 2008; Selwyn, 2012). But work on labor and production networks has not only grown in volume, it has also significantly expanded in scope. In particular, a number of recent studies grapple with how changing labor regimes are shaping and being shaped by production networks. Labor regimes describe the multiscalar articulation of state, capital and labor relations that determine how labor is managed and surplus is distributed (Smith et al., 2018; Campling et al., 2019). South and Southeast Asian states entering export-led production networks for garments, for example, navigate the tensions between acceding to the demands of global capital for a compliant workforce while maintaining hegemony in line with promises of liberal freedoms. In Myanmar, the recent legalization of trade unions has coincided with rapid labor mobilization in industrial zones and unionization. The state must navigate these developments while seeking to fit into a regional division of labor that satisfies global capital’s demands for an acquiescent and low-cost workforce (Arnold and Campbell, 2017). In Sri Lanka, the expansion of export garment production to post-conflict regions is part and parcel of a state-military-capital nexus that promises jobs and economic stability under a unitary nationalist ethos that minimizes the civil war and its legacies (Ruwanpura, 2018).

Indeed, states are navigating analogous challenges to hegemony from below in numerous other contexts and industries. Since 2010, the Chinese state has faced increasing labor unrest as migrant workers have contested the prevailing labor regime through wildcat strikes and other forms of collective action (e.g. Pun et al., 2016). Regional governments in the Pearl River Delta have responded by raising wages while restricting associational rights bolstered by vertical unionism (Chan, 2014). Scholars trace the significance of postcolonial and post-socialist legacies in these provisional arrangements of coercion and consent that come together in states’ efforts to maintain a hegemonic position at the crossroads of labor and capital demands. Much of this literature is skeptical of the rescaling of the state to improve distributional outcomes for labor via corporate social responsibility programs, voluntary, non-binding labor provisions in trade agreements, and internationally-led capacity building programs (e.g. Tran et al., 2017; Smith et al., 2018; see also Berliner et al., 2015). Arnold and Hess (2017) offer a useful assessment of one such initiative, an ILO-led labor compliance program for export zones in Cambodia. They argue that the program secures legitimacy for a state that relies upon both coercive power to quell protest and consent-building through civil society dialogue. The trans- and international dimensions of labor regimes are likely to be revisited shortly by scholars focused on North America in light of the revised US-Mexico-Canada Agreement (USMCA), which mandates minimum wages in the auto sector and commercial sanction for certain labor violations, but remains, nonetheless, the project of a US administration that is strongly anti-labor and violently anti-immigrant.

Critical engagement with the state is central to a number of contributions that challenge depoliticized studies of ‘economic upgrading’ to interrogate the political economy of production network restructuring. In the mainstream literature, economic upgrading describes the possibility for suppliers to obtain better returns by changing what they do or how they do it, while network or chain governance (i.e. principally, the power of lead firms) determines whether and how upgrading may occur. A political economy approach unpacks how politics and the state mediate this process and is well developed in the literature on smallholders. In the context of global agrifood supply chains, Neilson and Pritchard (2011) have long argued that local and national political struggles and state interventions are central to the outcomes of upgrading projects. In a recent study, Behuria (2019) explores the changing roles played by the Rwandan state in its efforts to boost the country’s participation in value-added coffee networks. The analysis demonstrates that the state plays much more than a ‘facilitator role’ by investing directly in domestic coffee roasting as a producer. The ruling party’s coffee strategy is part and parcel of forging hegemony amongst skeptical business classes and oppositional rural smallholders. The role of state violence is also notable: farmers are coerced to sell coffee to washing stations (and thus onward to higher value markets) and military reservists oversee the planting of 3.7 million coffee trees. A recent comparative study on ‘relationship coffee’ (i.e. coffee branded as a direct roaster-producer product) in Indonesia underscores the centrality of local politics: the benefits of roaster, state and development investments in improved production methods or processing facilities are modest and ultimately captured by local elites (Vicol et al., 2018). In this example and elsewhere in smallholder upgrading schemes, power is reinforced by gender norms and status hierarchies (Baglioni, 2017).

Rural political structures fundamentally shape outcomes of agri-food upgrading projects within macro-structural constraints. Studies of ‘Pink Tide’ social democratic governments in Latin America that aimed to transform the extractivist tendencies of soy and sugar production towards more distributive ends offer an example, extending beyond smallholders to plantations and related struggles over land tenure. In a comparative study of the Southern cone, Córdoba et al. (2018) find that competing producer interests and broader state-society relations lead to distinct outcomes of national biofuel policies articulated with global production networks: wildly unequal land and capital concentration in Argentina, and more equitable control over land, along with a balance of uses for food and fuel, in Uruguay. In Argentina the state combined its facilitative role with a strongly regulatory one during this political period. The government reinstated retenciones (or export taxes) on soy exports, among other agricultural commodities, but tied tax rates to processing, charging lower taxes on derivative products in order to incentivize functional upgrading. The rural reaction to retenciones unified a cross-class agrarian opposition to the progressive government, cascading in events that led to its downfall and the return of a revanchist neoliberal administration (Lapegna, 2017; Berndt et al., 2020).

The current global conjuncture clearly informs the turn in scholarly attention towards the state. As this agenda develops, we would do well to take heed of geographical work that has long problematized the divide in geostrategic discourses between geopolitics and geoeconomics. Geopolitical logics are equated with territorial management and control, while geoeconomic logics are associated with securing a ‘flat world’ for capital accumulation; global production networks have long been understood, if implicitly, as the sin qua non of the latter. Beginning with David Harvey, however, scholars have argued for an understanding of these dynamics in dialectical, non-sequential and non-dichotomous terms. Scholars point to the ‘entanglement of geopolitical institutions and interests…within and alongside [the] geoeconomic imperatives and imaginations related to securing globalizing capitalism’ (Sparke, 2018: 486; Sheppard and Leitner, 2018, Glassman 2018). The current conjuncture certainly calls for increased attention to geopolitical dimensions, but as Lee et al. (2018) argue in their analysis of mega-regional trade agreements and China’s One Belt One Road initiative, the logics of state territorialization are inseparable from the imperative to reproduce capitalist social relations. Other work in political geography offers opportunities for an as yet underexplored but potentially very fruitful dialogue, particularly in the field of critical logistics studies (e.g. Chua et al., 2018). Centering the geopolitical/geoeconomic dialectic disrupts false state-market dualisms, which not only limit our analytical perspective but also bolster current discourses from the epistemic rearguard of the neoliberal project that position a Big State as a threat to the ‘stark utopia’ of globalization.

IV Conclusion: Centering politics in the study of global production networks

Decades of research on global production networks has elucidated the active role of states in stabilizing transnational relations that concentrate corporate wealth and power, and push cutthroat competition to lower-tier firms and workers. The stability of such arrangements is not a given. The burgeoning work on state roles beyond facilitation demonstrates that the strategies, terms and possibilities for a global economy held together by protean, dynamic and power-laden production networks cannot be taken for granted. The analytical challenge to understand changes in state-production network relations reminds me of what Jamie Peck playfully terms the silent ‘c’ of ‘combination’, referring to Trotsky’s concept of uneven and combined development. Peck argues that ‘the axiom of combination problematizes questions of interdependence, interconnectivity, situatedness, positionality and the immanent potential for finding and shaping new configurations and pathways’ (2019: 51). The interrogation of how state roles combine as contingent outcomes of political interests and struggles at different scales is no recipe for elegant formulations and stylized typologies. Nonetheless, scholars undertaking such analyses are offering fascinating findings on changing dynamics of global governance and how these are transformed in particular locales. The challenge of ‘combination’ is to interrogate sedimented histories as structuring forces of the present, while also exploring how new connections create novel political conjunctures and contested relations. Much can be learned across different contexts as workers and social movements contest existing unequal relations of power with, through or against state institutions (or in some combination, depending on the context). The possibility for redistributive outcomes, for those adversely included as well as those excluded from global production networks, will be determined by political struggles and settlements materialized in and through the state. And as I will discuss in my final progress report next year, the ecological conditions and limits of the current organization of global production in the Anthropocene will only increase the significance of challenges to predominant state-capital relations and their effects on existing network arrangements.