Deindustrialization

Deindustrialization refers to the large-scale loss of manufacturing jobs and subsequent labor market restructuring that has left many former manufacturing centers in ruins. Deindustrialization is most prevalent in the older industrial regions of Europe and the United States. Job loss is concentrated in heavy industrial sectors, particularly in steel and automobile manufacturing. The social and economic impacts of deindustrialization are dire. The unemployment caused by deindustrialization leads to increased poverty and a variety of other social ills such as crime, alcohol and drug abuse, suicide, and divorce.

The first and most influential work on deindustrialization was Bluestone and Harrison's The Deindustrialization of America, published in 1982. Bluestone and Harrison argued that deindustrialization is a deliberate corporate strategy to move capital out of manufacturing and reinvest it in more profitable (and speculative) activities such as financial services. The disinvestment in heavy manufacturing erodes national economic competitiveness in basic industry.

Deindustrialization is the flight of capital. Ignoring any sort of responsibility to the workers and locations that had been key elements during earlier rounds of accumulation, managers of industrial concerns let their factories become technologically obsolete. Corporations milked their older factories for as much profit as possible and then reinvested the funds elsewhere.

The mobility of capital and the willingness of corporate managers to use capital mobility as a way in which to gain concessions from workers and communities helped to disempower labor unions. Faced with massive job loss and eroding memberships, many unions gave in to corporate demands for wage and benefit rollbacks. Communities desperate to prevent[Page 90] plant closings readily negotiated tax breaks and other incentives to keep companies from leaving town. Corporations skillfully play workers and communities against each other, “whipsawing” them and gaining the greatest possible concessions. In many instances, companies that obtain worker concessions and community tax breaks remain only a few years and still leave town. Many corporate critics wonder whether any sense of corporate responsibility still exists.

Deindustrialization was part of a broader effort to reduce the power of organized labor. In Britain, Margaret Thatcher's government explicitly sought (successfully) to break the power of unions, particularly in the mining industry. In the United States, President Ronald Reagan actively signaled the federal government's support for union-busting efforts. The success at breaking the labor–management accord that had underlain the Fordist system signaled the ascent of neoliberal forms of economic governance and control.

The labor market effects of deindustrialization include the loss of well-paying manufacturing jobs. Many workers experience a permanent decline in income as they are forced to find employment in lowerpaying service-sector jobs. Job losses as a result of deindustrialization are particularly pronounced among women and minority workers, but white male workers suffer the largest declines in income.

In manufacturing towns, the impact of deindustrialization is felt for many years. High levels of unemployment and accompanying social distress are common outcomes of large-scale deindustrialization. In many cases, people find it very difficult to adjust to the job loss associated with plant closures. Workers not only lose a way in which to make a living but also experience the loss of an entire set of social relationships that are based on the shared experience of work.

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