Why is the bible of capitalism cheering on Chinese workers?

Daniel Ben-Ami is not convinced by the outbreak of workers’ solidarity in The Economist, the FT and amongst writers normally so fond of austerity.

Daniel Ben-Ami

Topics Politics

Something weird is happening in the Western media, yet few seem to have noticed. Class struggle, including militant strike action by workers demanding higher wages, seems to have come back into fashion. Judging by some of the rhetoric, the end of the Cold War never happened. The world is still divided between those who support direct action by workers demanding higher pay and ruthless employers intent on keeping workers’ wages down.

Only this time there is a significant twist. The loudest support for workers’ struggle is coming from those who are normally the most ardent advocates of market capitalism, including The Economist and the Financial Times.

Anyone who thinks this is all made up should take a look at the 29 July issue of The Economist, the cover of which featured smiling workers holding wads of cash in their clenched fists. Inside, the lead editorial argued that: ‘Letting wages rise at the expense of profits would allow workers to enjoy more of the fruits of their labour.’ The Economist calling for higher wages despite the impact on profit margins? What’s going on here?

That’s the thing: the workers in question being supported by The Economist are Chinese rather than Western.

The Financial Times is equally emphatic. In a sympathetic editorial on 3 June, headlined ‘Chinese workers are now in revolt’, it argued that ‘the freedom to strike is, in Western eyes, a fundamental right’ and ‘the big challenge is to spread higher incomes across the whole country’. A New York Times editorial was even more militant. It argued: ‘Exploited workers don’t need an extra parent. They need higher wages, better working conditions and a chance to form independent unions.’ ‘Too much of [China’s] prosperity has been absorbed by companies’ profits’, said the NYT, and ‘too little has gone to workers’.

This all begs at least two pressing questions. First, why are prestigious Western publications so keen to support higher wages in China? And second, how do they square this with an editorial line which often supports austerity at home? For example, in an editorial on 23 May, the Financial Times argued in relation to Britain that: ‘The [Liberal-Conservative] coalition has been strong on the rhetoric of austerity. It must now follow through with deeds as well as words.’

Explaining these apparent paradoxes involves looking at two sides of the story. For a start, the West is pursuing its narrow economic interests in trying to encourage China to boost its domestic consumption, which, of course, can be achieved if Chinese workers have higher disposable incomes. And in parallel with this trend is a suffocating moralism which neatly combines patronising Chinese workers with attacks on the living standards of ordinary people here in the West.

The West’s economic interest in persuading China to boost domestic consumption is clear. America, for instance, wants China to increase the size of its domestic market to enable it to import more American goods. This was made clear in The Economist editorial supporting Chinese workers: ‘A 20 per cent rise in Chinese consumption might well lead to an extra $25 billion of American exports. That could create over 200,000 American jobs.’

In reality, what is happening here is that America is keen that China takes up most of the burden of tackling the problems of the global economy. That is also why America is so avidly putting pressure on China to revalue its currency against the dollar, since such a move would make Chinese exports more expensive and American imports into China cheaper.

Rather than the US restructuring its own economy to make it more productive, it would prefer it if China imported more American goods. So increasingly, a narrow and cynical self-interest on the part of American business is being portrayed as humanitarian concern for Chinese workers.

This perspective is completely in line with one of the most influential and self-serving explanations in American official circles for the world’s economic problems. According to this view, proposed by Ben Bernanke, now chairman of the Federal Reserve (America’s central bank), as far back as 2005 the key problem in the global economy was that the Chinese saved too much. If only the Chinese saved less and consumed more, the world economy would be more balanced. So the argument goes. This neatly puts the blame for America’s yawning trade deficit on to the Chinese for not being gracious enough to buy more US goods.

All of this is perfectly consistent with American and British politicians putting the squeeze on their own domestic populations. They want to pressure China to consume more Western goods while at the same time discouraging Western consumers from buying so many Chinese products.

Fortunately for Western politicians and businesspeople, there are commentators who are happy to put the case against China in seemingly radical language. Consumerist campaigners can be relied upon to complain about the ‘high cost of cheap goods’ and to urge Western consumers to curb their purchases of iPhones and flat-screen televisions.

In a recent article, Johann Hari at the Independent presented himself as intent on saving exploited workers from money-grubbing Chinese capitalists. ‘They [Chinese workers] can be treated this way because of a very specific kind of politics that has prevailed in China for two decades now. Very rich people are allowed to form organisations – corporations – to ruthlessly advance their interests, but the rest of the population is forbidden by the secret police from banding together to create organisations to protect theirs. The political practices of Maoism were neatly transferred from communism to corporations: both regard human beings as dispensable instruments only there to serve economic ends.’

So what is Hari’s solution to this dire state of affairs? To encourage his readers to contribute to or volunteer for organisations such as No Sweat or the international arm of the Trades Union Congress – outfits which rhetorically support workers’ rights but which are largely focused on ‘ethical consumerism’. Ultimately he concedes that the success of such campaigns would mean Western consumers ‘will have to pay a little more for some products, in exchange for the freedom and the lives of [Chinese] people’. In other words, Westerners should be prepared to make do without an iPad or a new laptop because doing so will somehow save a Chinese worker’s life.

It is hard to imagine a greater conceit on Hari’s part. He seems genuinely to believe he is campaigning to save Chinese workers from twenty-first-century slavery. But all he has to offer in reality is the prospect of Western consumers paying more for Chinese goods. Given that he is in no position to deliver higher Chinese wages, the main effect of his campaign, if successful, would be that ordinary people in the West would have to make do with less.

Of course none of this means that Chinese workers should not have higher wages or better working conditions. Of course they should. Average incomes in China rose ten-fold between 1980 and 2008, way ahead of anything achieved in the West over the same period (1). But it is true that the rise in wages substantially lagged behind China’s stellar economic growth. And given that China’s growth spurt started from such a miserably low economic base, the average Chinese worker is still poorly paid.

But the impetus for higher wages in China will have to come from the Chinese people themselves. It would be a mistake for them to put their faith in Western observers who are cynically manipulating their cause to promote their own interests, whether they be economic or moralistic. Nor should they take seriously the gullible pundits who believe they can somehow save the Chinese people by promoting ethical shopping in the West.

Actually, both Chinese and Western workers could do with higher wages – but only the naive would allow themselves to be represented by the born-again class warriors of the Western media and political class.

Daniel Ben-Ami is a journalist and author based in London. Visit his website here. His new book, Ferraris For All: In Defence of Economic Progress, is published by Policy Press.

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Topics Politics


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