Stylios, G. (2010), "Manufacturing as a scaffold to economic recovery", International Journal of Clothing Science and Technology, Vol. 22 No. 5. https://doi.org/10.1108/ijcst.2010.05822eaa.001Download as .RIS
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Manufacturing as a scaffold to economic recovery
Article Type: Editorial From: International Journal of Clothing Science and Technology, Volume 22, Issue 5
In a recent editorial, I was arguing the case for manufacturing as a solution to the economic crisis. I was also concerned that by lending capital to the same institutions that created this crisis, we potentially allow them to repeat the same mistakes and that the second time round the consequences will be catastrophic. I have been a believer that money is made by manufacturing goods and not by services alone. Services have the propensity to inflate prices and create bubbles in short-term cycles, whilst manufacturing is long term and creates employment and real wealth.
Is not it an elusion that the economy will recover, if the economic centres of the world are continuing to become larger and not being governed under strict and effective political regulation? We hear about “market regulation” but the world system demands solutions from those that are responsible for this crisis. Banking is so strong that it undermines elected governments, so why are we surprised when declarations by Obama, Sarkozi and Merkel about regulation prove “just nice words”? Many eminent thinkers believe that today’s democracy depends upon the 500 largest world companies which are governed by their shareholders, who in turn govern the world. The belief that “capital accumulation is God” made “selfishness” a new religion and “consuming” an ideal living, believing that each one of us is alone in this world and that there are no ethics. In this social jungle that we created, we now live an economic war, a war that unfortunately many are hostages and cannot fight. I particularly think of the young, those that have dreams and hopes, and of the old and vulnerable. Why do we see so many millions of young unemployed, working people with low wages, older people with cuts in their benefits, pensions disappearing, whilst banks continue to administer unrealistic fees for customers and huge bonuses for those taking risks as they did in the past?
Recent news of the FDIC in the USA states that there are 775 banks that may default coupled with 9.9 per cent jobless and another sliding of the value of real estate; leave us to wander if recovery is underway! The deficit of Ireland, Greece, Spain, Portugal, Italy, Hungary and others in Europe is frightening. The strategy for reducing their deficit by cuts and without real economic scaffolds; in particular regenerating their manufacturing sectors, commit their economy to decline further. In Europe for instance the European Central Bank and the International Monetary Fund agreed to provide a $1 trillion loan to these vulnerable European economies. The fundamental mistake is that this “loan aid” is based on reduction of spending from countries that are already in deficit, so these reductions will render their economies in deeper decline, for some it may even be a “free fall” destabilising the Euro quicker! An example is Ireland who last year reacted quickly with austerity measures and increased taxes. The result was that the Irish economy shrank 7 per cent and the deficit increased reaching 14 per cent of GDP. Greece, Spain, Portugal, Italy, Germany and the UK follow the same plan, without any strategy to regenerate lost manufacturing sectors. The case of textiles and clothing should be highlighted because being labour intensive, can score in a number of areas such as employment by the chain production of goods.
The brightest brains of the dogma of the free economy are trying to persuade those that govern us that the only solution is cuts and more lending, and that this is the only way to recovery! Why should we trust all those that were unable to predict this economic crisis? Even Krugman (2009) admits that “econometrics failed because the economists believed their economic theories based in elegant mathematical models but with low stability values and believing in capitalism as a perfect system”. And they have failed because the banking and market sectors attack without regulation whoever they find along their passage legalising the model of the “survival of the fittest” in the jungle of the free market that they created.
Textiles and clothing became the pillars that held the industrial revolution and made people’s lives better. Let us see it back with other manufacturing sectors, the expertise, the will, the infrastructure and the opportunities are all here and calling for this.
George K. StyliosEditor in Chief
Krugman, P. (2009), “How did economists get it so wrong?”, New York Times Magazine, 2 September