Wheat from the Chaff

Chinese Labour Costs are Going Up

A number of recent newspaper articles (for example, here and here) have been published regarding the climbing costs of labour in China. For some, this is a worrisome trend that foreshadows lower profits and higher consumer prices, and a shift in manufacturing to even lower cost (!) countries. Others note that this is a typical trend for any industrializing country, particularly one that wants to make the shift from an economy that is export dependent to an economy that relies on domestic consumption. [In Canada, consumer spending accounts for about 57% of GDP; it's 67% in the USA.] What better country than China to rely on domestic consumption!

Of course, these articles generally avoid the painful truth for capitalists: greater relative equality (created largely by a stronger union movement) will be necessary before a mature consumer society can develop. Too bad the neo-liberals in the West have forgotten this historical verity.

China's evolution is similar to what the West faced 100 to 200 years ago, and provides us with some perspective on the de-industrialization that North America has faced: perhaps we are not alone!

I'm also reminded of Karl Marx's intriguing (and mistaken?) endorsement of free trade, and by extension the global spread of capitalism: [T]he protective system of our day is conservative, while the free trade system is destructive. It breaks up old nationalities and pushes the antagonism of the proletariat and the bourgeoisie to the extreme point. In a word, the free trade system hastens the social revolution. It is in this revolutionary sense alone, gentlemen, that I vote in favor of free trade.