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Martin Hart-Landsberg: Globalisation, capitalism and China

Workers at the Foxconn (the Taiwanese multinational corporation owned) factory located in China in which many Apple products are assembled.

[For more discussion on China's economic and political development, click HERE.]

By Martin Hart-Landsberg

January 24, 2012 -- Reports from the Economic Front, posted at Links International Journal of Socialist Renewal with the author's permission -- A January 22, 2012 New York Times story, "The iEconomy: How US Lost Out on iPhone Work", has been getting a lot of coverage. The article makes clear that Apple and other major multinational corporations have moved production to China not only to take advantage of low wages but also to exploit a labour environment that gives maximum flexibility.

The following quote gives a flavour for what attracts Apple to China:

One former executive described how the company relied upon a Chinese factory to revamp iPhone manufacturing just weeks before the device was due on shelves. Apple had redesigned the iPhone’s screen at the last minute, forcing an assembly line overhaul. New screens began arriving at the plant near midnight.

A foreman immediately roused 8,000 workers inside the company’s dormitories, according to the executive. Each employee was given a biscuit and a cup of tea, guided to a workstation and within half an hour started a 12-hour shift fitting glass screens into beveled frames. Within 96 hours, the plant was producing over 10,000 iPhones a day.

“The speed and flexibility is breathtaking,” the executive said. “There’s no American plant that can match that.”

The article highlights these conditions to make the point that manufacturing is not coming back to the United States because these conditions cannot be replicated in the United States. 

One aspect not stressed in the article is that many of the labour policies described are actually against the law in China and contrary to Apple’s own claims about its labour standards. See William K. Black’s analysis here.

If you are interested in a more detailed picture of just what goes into making Apple products so profitable you should listen to or read the transcript of a This American Life radio segment that aired in January. The segment is based on a Mike Daisey performance in front of a small audience. Mike is a self-proclaimed technology geek who just adores Apple products. At least that was before he visited the Foxconn (the Taiwanese multinational corporation owned) factory located in China in which many Apple products are assembled. The program discusses the labour conditions at Foxconn and other similar multinational corporations operating in China.

These multinational corporations have helped make China the world’s top exporter of manufactures, both overall and of high-technology goods more specifically. China’s share of world exports of information and communication technology products (such as computers and office machines; and telecom, audio and video equipment) has grown from 3 per cent in 1992 to 24 per cent 2006, and its share of electrical goods (such as semiconductors) from 4 per cent to 21 per cent over the same period. Of course, while these exports are officially recorded as Chinese exports, approximately 60 per cent of all Chinese exports and 85 per cent of all Chinese high-technology exports are produced by foreign companies operating in China.

The issue here isn’t one of China stealing manufacturing jobs from the United States or other developed countries. According to the US Bureau of Labor Statistics, total manufacturing employment in China actually fell by more than 9 million over the period 1994-2006, from 120.8 million to 111.61 million. Total urban manufacturing employment, which would include most foreign operations, declined sharply from 54.92 million to 33.52 million.

In fact, China’s growth has generated few decent employment opportunities for urban workers, regardless of their employment sector. The International Labor Organization did an extensive study of urban employment over the period 1990 to 2002.

Although total urban employment increased slightly, almost all the growth was in irregular employment, meaning casual-wage or self-employment—typically in construction, cleaning and maintenance of premises, retail trade, street vending, repair services or domestic services. More specifically, while total urban employment over this 13-year period grew by 81.7 million, 80 million of that growth was in irregular employment. As a result, irregular workers in China now comprise the largest single urban employment category. 

The issue here isn’t even one of China versus the United States. It also isn’t one of dictatorship versus democracy. Rather it is one of capitalism’s logic. Said simply, large multinational corporations and their allies in both the United States and China have successfully created a global system of production and consumption that gives maximum freedom of operation.

It is this logic that keeps pushing more free-trade agreements, attempts to create more flexible labour markets and more attractive conditions for business investment, both here and in China. And it is this logic that needs to be challenged on both sides of the Pacific.

[Martin Hart-Landsberg is professor of economics and director of the Political Economy Program at Lewis and Clark College, Portland, Oregon; and adjunct researcher at the Institute for Social Sciences, Gyeongsang National University, South Korea. His areas of teaching and research include political economy, economic development, international economics and the political economy of East Asia. He is also a member of the Workers’ Rights Board (Portland, Oregon).]

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