Foxconn -- A Conundrum of Chinese Socialism


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.

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  • china is a historical civilization and culture, 5000 years old or more, and with an appearance six decades old by that country's first nation- state: the people's republic of china. any evaluation of their party, trade unions, and the abilities of the chinese people to resolve their problems must...and will... proceed from how they, and they primarily, take up the responsibilities and will to do so.

    our concerns of what goes on there, given china's presence in the world's global economy within which capitalism is on the skids, have to also be governed by a faith in the ability of that people to discern their place and role in that world.

    finally, our role in this question is that of solidarity with the chinese people and their chosen leadership, chosen via chinese and modern traditions. solidarity against those, especially our own capitalist class that will leave no stone unturned to reverse china's huge and world-shaking achievements.

    like the poet langston hughes wrote: roar china!

    Posted by gary hicks, 03/24/2012 2:53pm (7 years ago)

  • An excellent article and analysis. However, I would like to know about the question of independent trade unions in China. Is the CPUSA for or against? Until very, (very, very) recently, the official Chinese unions have been more in tune with the needs of the corporations which set up to use the cheap labor and to help the CPC maintain tight control of the workforce and political discussion. Only pressure from the international labor movement, the independent unions and the seemingly spontaneous labor actions have caused the All-China union to more actively support workers rights and reasonable conditions. I am not trying to import American labor standards to China. It is not the same in many ways. However, the rash of suicides at Foxconn and the emergence of the independent unions show that a real labor movement independent of the government, the commercial interests and the Party is necessary, and that the working class is ready for it.

    Posted by pinkjohn, 03/14/2012 11:01pm (7 years ago)

  • The acceleration of the socialist social giant, China, in a context of real world history, whose present, moving away from capitalism in millions of ways, is much more a positive phenomenon than this piece by John Case suggests.
    Notwithstanding the "export driven economy", the "class struggle under socialism" and the weaknesses of the legacy of t Maoism, and his body of theoretical work(largely expurgated by opportunists and renegades of Marxism/Leninism-this term itself controversial for many in our CPUSA) China marches on in and with a positive socialism.
    A number of articles in the windows of PA have documented and fought for the position that China, despite the wiles and maneuvers of the myth of eternal imperialism empire of the Nixons and Kissingers, The American Chamber of Commerce in Shanghai, The U.S. China Business Council or Foxconn-for that matter, is a great protector of the material and spiritual interest of the international working class.
    China promises, as maybe the greatest Marxist intellectual in the history of the U. S., W. E. B. Du Bois, covers in the epic making "Soliloquy"(his third and last) autobiography,in deed, that"In China the people-the laboring people, the people who in most lands are the doormats on which the reigning thieves and murdering rulers walk, leading their painted and jeweled prostitutes-the people walk and boast."
    This statement is truer today for the Chinese, this great people of color, than over fifty years ago, in 1959-two years before the great Du Bois joined the C P U S A.
    Also, it is in tune with the exemplary historical and literary work and theme, honed by Party historian, Gerald Horne.
    Theorists like Arthur Lewis(who was not African American but St. Lucian, from the Caribbean, where he is now buried.
    His 1979 Nobel Prize in Economics, after he was heavily influence Eric Williams with Williams's Capitalism and Slavery,(Lewis's prize and Williams book both possibly impossible or at least dwarfed by Du Bois's monumental Suppression of the African Slave Trade in 1896.
    China and its intellectual activity today, is greatly indebted to Du Bois, as all humanity is, as reflected in the working class and intellectual community there and here mutually recognizes the role of scholars who continue in the path of Du Bois, scholars like Henry Louis Gates Jr. (with his recent book, indebted also, Life Upon These Shores).
    The great Chines people appreciated Du Bois then and Gates now-as we must them, in the best working class and intellectual traditions of our peoples.

    Posted by E.E.W. Clay, 03/14/2012 2:22pm (7 years ago)

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