Recent stories coming out of China have exposed a dark underside to its export driven industrialization program. Apple and many other electronic device companies rely upon ultra labor-intensive production provided at a number of manufacturing clusters, the largest of which is Foxconn, a Taiwan based multinational corporation.
Foxconn has 13 factories in nine Chinese cities, more than in any other country. Its largest factory worldwide is in Longhua, Shenzhen, where up to 450,000 workers are employed at the Longhua Science & Technology Park, a walled campus sometimes referred to as "iPod City". It Covers about 1.16 square miles, includes 15 factories, worker dormitories, a swimming pool, a fire brigade, its own television network (Foxconn TV), and a downtown complete with a grocery store, bank, restaurants, bookstore, and hospital. While some workers live in surrounding towns and villages, most live and work inside the complex. A quarter of the employees live in the dormitories, and many of them work 12-hour days for 6 days each week.
The Foxconn manufacturing complex became the focus of worldwide attention when it was reported that between January and November 2010, eighteen Foxconn employees attempted suicide with eighteen deaths. The suicides prompted 20 Chinese universities to compile a report on Foxconn, which they decried as a labor camp. Long working hours, discrimination of mainland Chinese workers by their Taiwanese coworkers, and a lack of working relationships have all been cited as potential causes.
The studies also suggested that the Foxconn deaths may have been a product of economic conditions external to the Foxconn complex itself. In China in 2010 there were several strikes at other high-profile manufacturers in China. The Chinese university studies note that a fundamental decline in the surplus Chinese labor supply that has powered its labor-intensive "factory of the world" development strategy, especially in export products, is the underlying cause of labor market distortions and abuses.
The Lewisian Turning Point
Arthur Lewis was the first African American winner of the Nobel prize in economics for his work in economic development theory. Lewis published a development model in 1954 that came to be called the Dual Sector Model. In this work Lewis combined an analysis of the historical experience of developed countries with the central ideas of the classical economists to produce a broad picture of the development process. In his story a "capitalist" sector develops by taking labor from a non-capitalist backward "subsistence" sector. At an early stage of development, there would be available an "unlimited" supply of labor from the subsistence economy as long as gains in agricultural productivity (or the ability to import food) could feed this supply. As long as this supply remains relatively unlimited, the capitalist sector can expand without the need to raise wages. This results in higher returns to capital which are then reinvested in further capital accumulation. In turn, the increase in the capital stock leads the capitalists to expand employment by drawing further labor from the subsistence sector. Given the assumptions of the model (i.e., that the profits are reinvested and that capital accumulation does not substitute for skilled labor in production), the process becomes self-sustaining and leads to modernization and economic development -- though not immediate improvements in wages or condition for the factory workers.
However, there comes a point at which the excess labor in the subsistence sector is fully absorbed into the modern sector, and where further capital accumulation can not find labor unless it begins to increase wages. This point is called the "Lewisian turning point" and has recently gained wide circulation in the context of economic development in China, including the Foxconn tragedies. Of course the history of capitalism does not witness corporations reacting wisely to labor market changes. Rather, the first corporate impulse is to further intensify the work process with longer hours and speedup management pressures. What results, inevitably, is that the class struggle intensifies with waves of strike actions and political mobilization as workers reject the increasingly inhumane and unendurable conditions.
Class struggle
The class struggle hit Foxconn management like a hammer in the head, and will keep on hitting Chinese manufacturing, which now must confront the need to restructure away from labor intensive strategies to extensive, automation and higher income and skilled occupations to match the emerging demographics. In response to the suicides, Foxconn increased wages for its Shenzhen factory workforce by 25%! However, in typical corporate narcissistic culture, Foxconn also absurdly demanded that employees sign no-suicide pledges. Workers were also forced to sign a legally binding document guaranteeing that they and their descendants would not sue the company as a result of unexpected death, self-injury, or suicide.
At the same time, according to the Lewisian model, one may expect a simultaneous drive to improve, mechanize and induce larger scale farming to free up more workers. This will relatively reduce the agricultural workforce, but raise its productivity and incomes too, and exert more upward pressure on wages of workers who join the manufacturing workforce. As wages, skills, education and culture of the workforce rise so will demand for domestic services and commodities.
Class Struggle Under Socialism?
Many may ask, "How can there be such abuses, and class conflicts, under socialism?" Doesn't socialism promise and end to class conflict, and create a classless society? Among the many misconceptions regarding both Marxist and non-Marxist concepts of socialism is the notion that social and economic classes can be willed into existence or non-existence by just wishing, or voting, or legislating, that it be just so, without regard to objective conditions of technology, natural and labor resources, and many other factors. The Chinese and Russian revolutions both overthrew putrid and corrupt regimes headed by a class coalition of feudal lords and early capitalists. These revolutions were led by parties of the working and peasant classes. They took over the leadership of their societies when the ancient regimes collapsed, and did indeed set forth to bring into being their conceptions (unique to each country) of a classless society. Capitalist and feudal rights were denied any franchise and most industrial and agricultural property was confiscated by the State for redistribution in both revolutions. In both countries these early efforts had some initial successes, but quickly ran headlong into the reality of the great economic, technological and cultural chasms between the backwardness of their countries and the conditions of material and cultural abundance Karl Marx outlined as the requirements of sustaining classless social relations. The Russian socialist experiment ultimately collapsed under the weight of these contradictions, and is now struggling to find its way. The Chinese experiment did not collapse. Instead it retreated, economically, to a position advocated by Vladimir Lenin as early as 1920, where the working class and peasant coalition would retain political power and the "commanding heights" of the economy while re-introducing market, capitalist relations and advanced firm management techniques in the underdeveloped parts of the economy. The consequence for China has been the fastest and most sustained development rate of any large country in the history of the world -- a staggering effort that has single handedly reversed world poverty rates.
But you can't have capitalism, and social progress for working people, without class struggle. That struggle will propel the Chinese working class by the multitudes of millions to the full realization of the promise of their revolution -- as it will for all those who do the work of the world.
