Re: [OPE-L] A memorable quote...

From: Paul Cockshott (wpc@DCS.GLA.AC.UK)
Date: Fri Dec 28 2007 - 11:56:14 EST


There is a lot of talk about the "dynamic" economies of India and China, but in reality, demographically, the number of people involved in this is, relatively speaking, rather small. In reality, China with its "vast labour reserves" battles with major labour and skill shortages in many cities, driving up wages in many cases and adding to capital costs there. There was supposed to be a "huge reservoir of surplus workers" in the countryside but this turns out to be much less than anticipated. I would obviously not deny that Chinese workers earn less than US workers, it could take fifty years to catch up, but large chunk of the difference between US and Chinese or Indian wage levels of the urban industrial workers disappears, once they are valued at purchasing parity. Lower wages in China also owe a lot to the severe restrictions on collective bargaining, or wage bargaining of any sort (a lot of them don't even have any formal employment contracts). You cannot explain the inability to bargain over wages, simply in terms of pressure from a "vast reserve army of labour" (most agricultural workers are employed, not unemployed), it also has much to do with the employment policy of the government. In reality, there is an enormous dispersion of wage rates in China, mirroring socio-economic inequality elsewhere in the world. In real terms, the money-wages of skilled workers in China in the cities can be to the order of 30 times that of the lowest paid workers in the countryside, and the money-wages of unskilled workers can be 20 times the lowest paid workers. The higher wages earnt in China often aren't so very different from US industrial rates now, once purchasing parity is taken into account. The "Chinese bogey" or the "Indian bogey" is often invoked as a threat to Western wage levels, but this has to be taken with a grain of salt and the biggest "threat" there is in that area, is from Western governments and Western employers themselves.

I agree here. The chinese labour reserves will last another 15 years or so at most before the 
declining working population caused by one child families overwhelms the effect of rural-urban

At that point the over-accumulation of capital we saw in Europe from the 60s will become
apparent in china with the beneficial effects for labour that that brings about.

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