Geographical ‘post-Fordism’ saw a larger emphasis on the role

Geographical Power
and Shifts in the Recent Past

Throughout the period between
the late 1800s to 1930, commercial geography existed, which concerned commodities
according to their places of origin and their paths of transportation (MacKinnon
and Cumbers, 2007, pp23). Post World War 1, a decline in colonial empires powers
could be seen (MacKinnon and Cumbers, 2007, pp24). Realisation of the need for
major growth was globally apparent.

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1930s saw a rise of Fordism,
a system based on mass production and consumption, bringing high rates of
productivity in the workplace and expanding wages (Mackinnon and Cumbers, 2007,
pp31). This was possible through fixed expenses being shared over a larger
number of outputs thereby reducing unit costs and exploiting the division of
labour (Thompson, 2007). Years of sustained high economic growth and economic
advancements was present throughout most major world economies due to Fordism (Thompson,
2007).

 

Keynes emphasised just how
important government control over the level of demand in the economy to reach
full employment. States took on interventionist approaches (Mackinnon and
Cumbers, 2007, pp 31).  The Keynesian
economic theory, that consisted of two components: raising government
expenditure and lowering tax rates, aimed to stimulate demand and get economies
out of an economic downturn (Investopedia, n.d.).  

 

Fordism experienced many
problems leading up to the 1970s. A new form of ‘post-Fordism’ saw a larger
emphasis on the role of small firms, ICT and individualised forms of
consumption (Mackinnon and Cumbers, 2007, pp32).

 

Neoliberal approaches became
very apparent in the 1970s as we shifted away from Keynesianism, towards the
reduction intervention by the state and the increase in popularity of free
markets, promoting competition (MacKinnon and Cumbers, 2007, pp32). 

 

A rise in Marxism came about
towards the end of the 1960s (Mackinnon and Cumbers, 2007, pp30).  In its early stages, focus was based on how
capitalism can create certain geographical landscapes; there is both need for
capital to be fixed in one place and for it to be able to move around
(MacKinnon and Cumbers, 2007, pp31). Productive environments need to be built up
over a period of time, which is done through keeping capital immobile however,
if capital doesn’t eventually move, it will be unresponsive to changing
economic conditions and miss out more profitable locations (MacKinnon and
Cumbers, 2007, pp31). Spatial fix, which is “the establishment of relatively
stable geographical arrangements that facilitate the expansion of the
capitalist economy for a certain period of time” (MacKinnon and Cumbers, 2007,
pp302), saw North America and Western Europe deindustrialise in the late 1970s and
expansions in certain industries in newly industrialising countries (MacKinnon
and Cumbers, 2007, pp.31).

 

In the 1980s, Marxism became criticised
for being too out of touch with modern times and thought (MacKinnon and
Cumbers, 2007, pp32). Three important critiques included the view of human
beings as their class instead of their individual person, too much stress on
economic forces and relations and too much attention to class, with little to
gender or race (MacKinnon and Cumbers, 2007, pp33).

 

The post war welfare state
agreed with Keynesianism theories to surge economic growth. Keynes rejected the
thought of a classical market economy and was for state fiscal policy to reach
maximum employment (MacKinnon and Cumbers, 2007, pp93). Spatial Keynesianism
was enforced to close the widening gap between richer and poorer regions. Factories
and office spaces were positioned in locations that saw need for growth and
development of financial core hubs was halted to even out the development
(MacKinnon and Cumbers, 2007, pp95). These was prominent until the stagflation
crisis of the 1970s, when attention shifted towards neoliberalism (MacKinnon
and Cumbers, 2007, pp96).

 

Neoliberalism concerns the
underlining free market competition and is non-interventionist (Smith, n.d.).
It reinvented regulatory techniques since the early 1980s, introducing new
experiments and reforms, based on private enterprise and liberty for the people
(MacKinnon and Cumbers, 2007, pp103). Three main policies due to neoliberalism
are privatisation, liberalisation and deregulation in order to open up new
markets (MacKinnon and Cumbers, 2007, pp103). When Prime Minister Thatcher was
elected in 1979 and President Reegan in 1981, the reduction of state
intervention was put into practice, the International Monetary Fund also spread
neoliberalism across the world through grants and loans and by the early 1990s
neoliberalism was considered normal and the correct way to go about controlling
the economy (MacKinnon and Cumbers, 2007, pp104). 

 

During the mid 1990s, a new
balance between state socialism and free market capitalism was sort due to the
uneven implementation of neoliberal policies, as states had produced some parts
of policies whilst completely discarding other parts (MacKinnon and Cumbers,
2007, pp104). Neoliberalism has created problems which ultimately resulted in the
2007 – 2008 financial crisis. Due to the implementation of neoliberalist
policies such as deregulation and liberalisation 20 to 30 years prior, world
trade dropped and developing countries whose economies were built on exporting
raw materials saw a great downturn (MacKinnon and Cumbers, 2007, pp106 &
218). Countries that saw economic growth during the 2000s suffered dramatically,
a real chnange for Ireland the ‘Celtic Tiger’, whose growth rate suddenly plummeted
(MacKinnon and Cumbers, 2007, pp218). However, one country in particular did
not see such problems, China, due to its vast amount of infrastructure
spending, was still able to keep production and growth rates high during this
period (MacKinnon and Cumbers, 2007, pp218).

 

The expansion of Multinational
Corporations (MNCs) was mainly to do with state policy changes brought about since
Keynesianism was discarded (MacKinnon and Cumbers, 2007, pp106). The opening up
of national economies led to governments turning their focus to low tax and
inflation rates and more malleable labour (MacKinnon and cumbers, 2007, pp107).
In order for developing countries to receive loans and grants from the IMF and
World Bank, strict rules and conditions were imposed, including partaking in
Structural Adjustment Programmes, which are designed to advance a countries
foreign investment climate in three ways: ridding of trade and investment
regulations, cutting spending by the state and promoting exports (Chebucto,
n.d.).

 

China: Its Emergence as the “Workshop
of the World”

 

Due to the 1979 opening up of
Chinas markets to trade and investment, an unprecedented rate of growth was
seen by the country “1980 to 2003: 9.5% growth/year, 2003 to 2008: 10%
growth/year” (MacKinnon and Cumbers, 2007, pp105). This growth has decelerated
slightly since the recession but is still a strong 6-7% ahead of the global
average (Spark, 2013). At the time when many economies saw their growth
decline, during 2007 and 2012, Chinas GDP grew by a notable 60% (Spark, 2013).
During the mid-20th century China was categorised as one of the
“poorest countries in the world” which was mainly at fault due to its very weak
health and educational systems, in addition to this, wars completely destroyed parts
of the country (Spark, 2007). The Maoist period of stagnation from 1949 to 1978
was crucial in providing China with a strong economic base as during this time
GDP had already started to increase by ~5% per year alongside life expectancy
(Spark, 2007). 

 

In order for China to become attractive
to other countries, four Special Economic Zones (SEZs) were created in 1979
(MacKinnon and Cumbers, 2007, pp105) with the aim of attracting capitalists
(Spark, 1013). Success of these SEZs was incredible, with Hong Kong bringing in
two thirds of the total (MacKinnon and Cumbers, 2007, pp105) and the Chinese government
decided to create “open coastal cities” in 1984 which meant that Western
companies could now set up along the East coast of China, soon after this the
Yangtze valley opened up for foreign investment (Spark, 2013).

 

A number of factors
facilitated the growth of China into becoming a flourishing production economy.
China has a large labour supply, meaning supply outstrips demand for work. The
Chinese workforce will work for low wages as they are mainly lower middle or
working class (Investopedia, n.d.). There are also no workers’ rights relating
to child labour or low wages, meaning companies can get away with paying the
lowest possible wage. Chinas evolution of supply chains has helped to support
its growth as many areas now connect together to form a system of manufacturing
through low cost labour, large workforces with great technical skills,
component manufacturers, suppliers and customers (Investopedia, n.d.). For
example, in the late 1980s China supported the fastest growing automobile
industry, which was composed of six main clusters around China that all linked
together (Mackinnon and Cumbers, 2007, pp233). By 2003 every single major
player in this industry had invested in China, proving the singularity of
Chinese bargaining power in gaining access to any world market (MacKinnon and
Cumbers, 2007, pp234). 1985 saw the abolition of “double taxation” on exported
goods from China, which increased its competition and lower tax rates and meant
that production costs could be kept down (Investopedia, n.d.).

 

Chinas dominance over other economies is not likely to remain forever. Already
we are seeing newer emerging economies (such as India) with growth rates
increasing rapidly and they may pass China in the near future. As China shifts
to a more knowledge based economy, away from production, this will cause wage
rates to rise meaning the one key advantage that China historically had, i.e.
cheap labour, will no longer be maintained, reducing Chinas competitiveness
(Investopedia, n.d.). 

 

Chinas growth has not all
been positive. The country has suffered both socially and environmentally since
the start of its growth period. The poorest nations in the world have a similar
divide between the incomes of the rich and the poor to China and due to the
mass rural to coastal migration, regional inequalities have severely worsened
(MacKinnon and Cumbers, 2007, pp105). Environmental degradation and pollution
is incomparable to any other country, seen as a major factor of Chinas growth
is dependent on using up masses of raw materials and energy (MacKinnon and
Cumbers, 2007, pp106).