Chinese Capitalism Putting Profits Before Human Lives

By Gabor Steingart

Part 2: Marx's worst nightmare


Unfettered capitalism on this scale has not been seen since the Wild West days of the industrial revolution. Children are deprived of a childhood and workers of their good health. Indeed, one could be forgiven for thinking that Karl Marx learned everything he knew about the viciousness of capitalism in Chinese mines and Indian textile factories. "Capital eschews no profit, or very small profit, just as nature was formerly said to abhor a vacuum," Marx wrote. "With adequate profit, capital is very bold. A certain 10 percent will ensure its employment anywhere; 20 percent will produce eagerness, 50 percent positive audacity; 100 percent will make it ready to trample on all human laws; 300 percent, and there is not a crime which it will not scruple, nor a risk it will not run, even to the chance of its owner being hanged."

Even the 70 million members of the Chinese Communist Party stand at their service when major corporations make demands. As former president and party leader Jiang Zemin said at the beginning of the new millennium, what began as a party of intellectuals under the emperor now feels beholden to three separate groups. The Communist Party wants to serve the workers and farmers, the creative sector and “the developmental needs of the advanced production forces” all at the same time. Corporate envoys, such as the chairman of the Chinese manufacturing company Haier, have moved into the party’s revered inner sanctum, its Central Committee.

Chinese communists have changed, too, and they are no longer the brand of communists we remember from Moscow. Instead they are nationalists who, after decades of going in the wrong direction, now want to guide the country into the elite club of the world’s wealthiest states.

Today large parts of the country make up a special economic zone, which has the sole aim of allowing profit in its purest, almost crystalline, form to develop. The productive centers of China and India are constantly being enriched with new energy from the population on the fringes of society. The state’s role has become that of looking after poor and unemployed agricultural laborers by integrating them into the production process. But what may sound like a contradiction isn’t. The state’s role is actually that of helping no one. The process of integration into production is the natural result of the conditions that have been created.

The contrast with the West couldn’t be greater. Whereas European workers are increasingly landing in early retirement programs, in work-creation schemes, or on the dole, Asia is heading in the opposite direction. New employees are constantly being brought into the production process -- albeit under the brutal work conditions dictated by the system. The non-existing social state thus fulfils a further function. It not only keeps the inner-core of the economy from wasting energy by heating the fringes, it also brings extra manpower into the system. Because of the lack of social welfare, these workers have no choice but to offer their services at any price.

Company’s profits come from the difference between the starvation wages earned by employees and the money made from sales. This is what fuels the steadily increasing temperature at the center of the Chinese, Indian and many other Asian economies. The massive amount of manpower available means that labor costs will remain as cheap as they currently are for the foreseeable future. Each year, millions of people in China alone leave the countryside in order to serve the country’s industry. They live in cramped quarters, share beds with one or two other workers and make do with wages as low as a few cents an hour. And there are an estimated 175 million unemployed people in China and 100 million unemployed people in India who can still be utilized. And that's not even to mention the 375 million people still tilling the land in each of the two countries who are just waiting to get their chance in the city. This manpower reserve alone is larger than the entire working population of the United States and Europe combined.

With both Asian empires still far away from their zenith of population growth, this manpower boom will continue undiminished in the coming years. And as long as it remains possible to employ these people for next to nothing, they will remain a reserve army for Asian industry -- making them India and China’s biggest advantage in the global economic war. This may lead to worker suffering, but it will also strengthen the countries' economies.

It is important to understand the difference between a state on the march and a society on the wane: The unemployed don’t have the same significance in every part of the world. In the West, the unemployed signify the past and are a burden to the state because they cost money. Those out of work in China, on the other hand, are the energy reserve of the future –- and are useful to the economy because their presence helps keep wages down for those who do have jobs. They ensure that the Chinese workers who are already employed stay cheap and cheerful.

They also help keep labor costs down elsewhere. When hourly wages fall in China, they fall across Asia. In Taiwan, one of the most developed countries in the region, the monthly salary of the average worker declined from €1,200 per month in 2000 to €850 per month in 2005.

The strategy of the Asian leaders is both brutal and clever. Brutal, because governments are now excluding millions of their fellow citizens from growing prosperity. Many people in the countryside, in particular in the north of the country, see a China on television that has little to do with their daily lives. But the strategy is also clever because it allows the state to jealously guard its core growth. The result could very well be an export industry of proportions terrifying to the rest of the world.

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