In its classical form, this argument holds that there has (at least since the 1960s) been a tendency for manufacturing production to relocate away from "the North" or the most advanced industrial states towards a succession of newly industrialized economies (NIEs) or "the South". (6) A number of changes have driven this move: 1) a flow of migrants into cities in less developed countries producing a large pool of cheap labor, in a context where either 2) production processes rely on unskilled labor or 3) existing levels of educational attainment are quite high and 4) collapsing transportation and communication costs make production at sites remote from the point of consumption economically viable. Typically starting with textiles and steel manufacture, a number of industries have migrated from developed to developing economies, creating a situation in which the less developed countries no longer simply export raw materials but also increasingly manufactured goods which can now compete on world markets. (7) Changes in the location of production have an impact upon patterns of employment within the developed economies (with the most extensive welfare states). In particular, there is a decline in the demand for unskilled labor and a growing premium for marketable skills. This is seen to feed a tendency for both growing unemployment amongst the unskilled and/or a greater dispersion in wages between the skilled and the unskilled. There is also a suggestion that, without some form of institutional intermediation, this will also tend to generate a greater diversity in the dynamics through which wages are set in the traded and non-traded sectors of the economy. In their turn, these changes in both the international and domestic division of labor alters the patterns of support upon which the traditional social democratic state was constructed. Social democracy both built upon and helped to constitute the commonality of interest of waged worker...