Review of John Urry’s Offshoring

John Urry's Offshoring

John Urry, Offshoring

 

Reviewed by David J. Madden

Abstract: John Urry’s book Offshoring (2014) offers a sociological analysis of the role of offshoring in the contemporary world. Offshoring is no longer a specialist corporate technique or temporary economic trend but a broad principle of global neoliberal capitalism. In chapters exploring the offshoring of work, taxes, leisure, energy production and waste, Urry argues that ‘[a]ll societies in the contemporary world are transformed by powerful offshoring relations’. He analyses the social, political and ecological consequences of the offshoring process and outlines directions for the reshoring of production, wealth and resources.

Keywords: offshoring, secrecy, globalisation, neoliberalism, class, state, financialisation

 

Review of John Urry, Offshoring (Polity, 2014), 212 pages, £14.99

 

Reviewed by David J. Madden

It is widely acknowledged that we live in an era of distended inequality and unprecedented corporate privilege. The signs of these inequities are everywhere and obvious. But according to John Urry’s Offshoring, today’s mammoth inequality—and the brazen curtailment of democracy that often accompanies it—is sustained by a vast system of secrecy. Even as ruling institutions and everyday life alike are restructured by new regimes of visibility, publicity and connectedness, corporations and governments are becoming increasingly expert at constructing and exploiting opacity, concealment and public ignorance. The neoliberal world is not only a world ruled by markets, where any socialized safe havens are colonized by economic logics. It is also a world in which power and wealth move ever farther out of sight and beyond the reach of law.

The book’s thesis is that offshoring is no longer a specialist corporate technique or temporary economic trend but a broad principle of global neoliberal capitalism. It is not only that jobs and corporate headquarters are being moved offshore. Rather, ‘Offshoring has become a generic principle of contemporary societies… Indeed, offshoring worlds have inflected much of contemporary life’ (10). In chapters exploring the offshoring of work, taxes, leisure, energy production and waste, Urry argues, ‘All societies in the contemporary world are transformed by powerful offshoring relations’ (10).

‘Offshore’ need not literally mean out to sea. Rather, offshore is any exceptional realm where tax regimes, legal control and/or social regulation are in short supply or non-existent. The largely unregulated expanse of the oceans is the natural setting for such a libertarian utopia but not the only possible place for it. In addition to island tax havens and special economic zones, the offshore geography includes, inter alia, spaces created by mega-events (the 2012 Olympic zone in London was granted temporary tax exemption), financial districts, casinos, camps, battlefields, oilfields, prisons, garbage patches and a wide variety of seagoing vessels. (This list suggests that Urry’s concept of offshore has some interesting similarities to Foucault’s concept of heterotopia.) Dubai is cast as the capital of the offshore world: ‘taxation, goods, leisure, property, energy, consumption, islands, expertise, crime. You name it and Dubai offshored it to excess’ (171). But the book persuasively argues that the offshoring process—moving or hiding in order to engage in what is, fundamentally, ‘democracy dodging’ (14)—is in evidence in every country and in nearly all areas of contemporary life. Furthermore, the decomposition and recomposition of sovereignty and territoriality that offshoring represents is seeping into so many institutions and spaces that it may now be ‘impossible to draw a clear divide between what is onshore and what is offshore’ (10).

Urry’s account of offshoring differs from garden-variety analyses of globalisation due to its focus on secrecy. He follows Simmel in noting that the money economy allows for otherwise impossible forms of ‘consciously willed concealment’ (16). Successful offshoring, Urry argues, requires a ‘façade’, a social structure that provides ‘safety and secrecy, probity and privacy’ (48). Because façades are only necessary for activities that are at least unseemly if not illegal, they should carry the stamp of respectability; ties to an old financial establishment or, say, a connection to the British honours system can provide effective façades. The façade is used to hide money, actions, people or resources from unwanted attention or legal sanction. But offshoring is not merely the keeping of secrets or the movement of goods and actions abroad. In the era of neoliberalism—a concept which Urry uses thoughtfully though sparingly—secrecy is deployed by a variety of actors in historically specific ways, in the context of weakened social protections, globalising economies, and a fractured, uneven system of state sovereignty.

The book begins with the spectre of class warfare being waged, successfully, by the ‘rich class’ against the rest of us. As a sociological category, the ‘rich class’—Urry borrows the phrase directly from Warren Buffett—may lack nuance, but at this level of generality the term is good enough. The major ways in which offshoring is used for capital accumulation and the pursuit of class power are generally familiar, if, by design, poorly understood. Global corporations, completely unafraid of the national regulatory apparatuses that they are working assiduously to weaken, move production to locales where they can exploit lower labour costs and laxer rules. Offshored products are then circulated across the globe largely via the ‘wild and untamed’ oceans (158). The biggest of the world’s 5,000 cargo ships are currently capable of moving up to 16,000 containers at a time, with greater capacities to come. This swarm of cargo containers taken as a whole constitutes ‘a protective shell around the artefacts consumed mainly in the rich North but produced in the Global South’ (34). And of course it is not only industrial production but ‘ear-to-ear’ services and skilled professional work that are being relocated to lower-cost call centres and business hubs abroad.

Surplus value thus extracted, accumulation-by-offshoring continues. Offshoring has led to major innovations in the field of tax avoidance. In violation of the spirit and often the letter of the law, many companies avoid paying taxes by making use of entire universes of offshore entities. Notorious recent tax controversies have surrounded ‘brands otherwise well regarded… Starbucks, Amazon, Apple, Google, Facebook, Twitter’ (44). Hear-no-evil, see-no-evil tax havens like Switzerland, Cyprus and Jersey, and ‘micro-states’ like the Cayman Islands, Turks and Caicos Islands or the British Virgin Islands (home to only 23,000 residents—but legally home to one million companies) ‘enable taxation, consumption, exclusion and security to be governed away from the gaze of much of the world’s population’ (52). The preposterously wealthy—they apparently prefer to be known as High Net Worth Individuals—park their inflated profits in bank accounts in such ‘secrecy jurisdictions’. Urry reports that these ‘treasure islands’ were harboring US$21 trillion in 2010, meaning that ‘one-quarter to one-third of all global wealth is held ‘offshore’… This is equivalent to the combined GDPs of the US and Japan’ (47). This represents hundreds of billions of dollars of lost taxes per year.

It may be convenient for some political elites in the UK or the US to imagine that offshoring and tax dodging are mainly pursued by nefarious foreigners and the proverbial few bad apples. But offshoring is actually established at the centre, not the margins, of the global financial system. Manhattan and the City of London are inextricably enmeshed with the offshore world. There is a single building in Delaware that, on paper at least, houses 217,000 companies—‘in a way the largest building in the world’ (62). And ‘onshore’ urban spaces are increasingly shaped by the financialised offshore. Secret offshore entities play a major role in many real estate markets.

Just as finance moves offshore to avoid social and political regulation, other socially stigmatized activities are also pursued in these spaces of exception. Urry notes that many of the same offshore locales that have become centres of dodgy finance are also known for ‘“pleasures” that are illegal back home or normatively disapproved of, such as drug taking, gambling, over-drinking or teenage sex’ (80). Leisure destinations like Las Vegas or Macao allow for ‘unregulated modes of consumption and pleasure… These all presuppose “choice”, with high potential for people to become addicted’ (81). Urry observes that islands loom large in the antisocial escape fantasies of the offshoring class. Selected members of the global hyper-rich decamp to St Barts and other exclusive outposts where they ‘can be offshore…and spatially segregated from the merely rich’ (84).

The national security analogue to the tax-free treasure island or libertine pleasure dome is the black site, where security services and their private contractors are free from human rights conventions and injunctions against torture. States have always kept secrets, but Urry sees in contemporary forms of statecraft the offshoring of the means of violence. Evading public scrutiny and seemingly existing in some mysterious elsewhere, both drone warfare and mass surveillance can be seen to follow the logic of offshoring. Urry’s arguments here are intriguing, but he could have gone into more depth about the complexities of state formation in an offshoring world. It is clear that offshoring is directly hostile to and corrosive of state authority. Yet as Urry explains, states also engage in numerous forms of offshoring. And many of the powerful elites who occupy commanding positions within the state also have connections to offshored corporations and live partially offshored lives. These tensions invite a deeper theorization of changing forms of statehood, sovereignty and territoriality.

Whether it is the work of capital or governments, ‘offshoring and democracy are in direct conflict’ (178). Urry wisely refuses to entertain the idea that offshoring’s antipathy to regulation represents the promise of freedom. Offshoring in itself has no redeeming qualities. It entails the triumph of private greed over the commons, the externalization of costs and the production of ignorance. It reveals corporate capital and criminal capital becoming ‘progressively undifferentiated’, such that ‘members of the contemporary bourgeoisie behave more and more like criminals’ (20). Ultimately, offshoring helps the ‘rich class’ to become richer while also allowing them to disentangle themselves from the fates of most of those with whom they share a planet.

Urry hopes that a movement for the broad reshoring of production, wealth and resources will emerge to face these challenges. Already, organisations like the Tax Justice Network engage in a ‘counter-politics of taxation’ (67). This often takes the form of ‘tax shaming’ (68), which attempts to shine the light of public opinion on the worst offenders. Partially in response to the impression that ‘the offshoring of work went too far’ (186) and partially in response to rising transport costs, companies like Apple and General Electric are already reshoring some parts of their production chains, though they do not seem to be rushing to repay dodged taxes.

Urry also foresees the emergence of a digitally-connected ‘low carbon civil society’ to ameliorate the planetary consequences of a carbon-intensive, offshored world. He looks optimistically here to 3D printing, ‘makerspaces’ and ‘new digital worlds, including the App economy’ (190). But considering the labour practices and the politics of tax in the technology sector, there is good reason to be skeptical of a technological fix.

Ultimately, under current conditions it may indeed be the case that the ‘only entities that might begin to bring about anything like an effective reshoring are nation-states’ (178). Therein lies the rub. Under any circumstances the relative autonomy of the state is uncertain; today, for a variety of reasons, it seems to be especially limited. When states do attempt to regulate corporations and hyper-wealthy individuals, they’re often easily outmaneuvered. And for identifiable reasons many state actors simply accept the offshored status quo, when they are not busy enabling it. This is not to suggest that the reign of globalising secret capital is irreversible. But the effective renationalisation of production and finance by states or social movements would require—and constitute—a deeper, systemic transformation.

Just as offshoring is incompatible with democracy, it is inherently challenging for social science. Urry convincingly demonstrates its importance and functionality for the contemporary order. Offshoring may not provide an effective off-the-shelf remedy to democracy dodging. But it does offer an informative accounting of the consequences of an offshoring world and an impassioned critique of the offshored condition.

 

David J. MaddenDavid J. Madden is Assistant Professor in the Department of Sociology at the London School of Economics, where he teaches in the Cities Programme. His research and teaching is focused on urban studies, political sociology and social theory.

Email: [email protected]

Further reading:

Bach, Jonathan. 2011. Modernity and the Urban Imagination in Economic Zones. Theory, Culture & Society 28 (5): 98-122.

Caletrío, Javier. 2012. Global Elites, Privilege and Mobilities in Post-organized Capitalism. Theory, Culture & Society 29 (2): 135-149.

Palen, Ronen. 2003. The Offshore World: Sovereign markets, virtual places and nomad millionaires. Ithaca, NY: Cornell University Press.

Readers may also be interested in some of the recent TCS Special Issues that John Urry has edited: Energy & Society (with David Tyfield, 31.5, Sep 2014) and Changing Climates (with Bronislaw Szerszynski, 27.2-3, March 2010)

TCS has also recently published articles on similar topics, such as:

Nicholas Gane’s ‘The Emergence of Neoliberalism: Thinking Through and Beyond Michel Foucault’s Lectures on Biopolitics’:

Abstract

Video-Abstract

 

Nicholas Gane’s ‘Review Article: Trajectories of Liberalism and Neoliberalism’:

Abstract

 

William Davies’s ‘When is a market not a market?: ‘Exemption’, ‘Externality’ and ‘Exception’ in the case of European State Aid rules’:

Abstract

Video-Abstract

To read more about neoliberalism on the TCS Website, go here

 

You may also be interested in reading more about William Davies’s forthcoming TCS Book ‘The Limits of Neoliberalism: Authority, Sovereignty and the Logic of Competition’

 

 

 

 

 

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