The study of monopsony has been central to the explanation of inequality within countries for almost two decades. However, it has seldom been applied to the global economy, despite the globalization of production and finance and the persistence of intra- and international income inequality over 40 years of trade liberalization.

Monopsony characterizes labor markets where employees and potential employees have little power to select their employer. According to Joan Robinson, a monopsony is “a market with multiple sellers and a single buyer, or, in labour market terms, a single firm and more workers than are needed.” In facing a single employer, workers accept lower wages than they would otherwise.

Monopsony power is a strategic goal of firms as they compete among suppliers. Indeed, this global monopsony has left outsourced firms under the constant threat of being replaced, which in turn puts constant downward pressure on increasingly precarious workers in fear of replacement. Just as employers rely on labor surpluses to wield monopsony power in the labor market to ensure workplace discipline, global brands and retailers rely on a surplus of manufacturers to wield monopsony power in the global value chain to generate large profits. Thus, global value chain monopsony and local labor monopsony work harmoniously to enact a regime of persistent inequality.

In this project we extend the analysis of monopsony beyond large companies and their workers to lead firms, their suppliers, and workforces, and assess the role of monopsony power relations, especially within global supply chains, to help explain the lack of convergence. The goal of the project is to introduce a more systematic treatment of monopsony in global production.