Are workers exploited in the Chinese manufacturing sector?

Many news outlets and scholars have expressed concerns that workers have been unfairly exploited by employers in the Chinese manufacturing sector. Economic theory suggests that this exploitation, if it exists, is the result of employers in the manufacturing sector having considerable monopsony power. While there is a vast economic literature on monopsony power in the United States and other nations, little monopsony research has been conducted on the Chinese manufacturing market. This paper follows the monopsony research tradition and examines the Chinese manufacturing sector along several likely indicators of monopsony power. These include the turnover rate in the manufacturing sector, the relation between marginal factor cost and average factor cost, the relation between average real labor productivity and real wage in the manufacturing sector, and the comparison of labor costs between China and other countries. This study found that worker exploitation/monopsony in the manufacturing sector is not as severe as previously reported.

Here is the paper, by Linan Peng and Joshua Ingber, both of GMU, via the excellent Kevin Lewis.


Exploitation is in the eye of the beholder.
en este episodio ruso trolls explotar el miedo y el sistema educativo americano

Well, it is a worker's paradise, right?

Well, Chinese factory workers often save 50% of wage income while consuming much more than their parents. Few workers have debt, and if they didn't buy real estate with cash, they borrowed no more than half the asset price.

Based on those who think the 50s and 60s were great in the US probably envies China. If you value the culture since circa 1980 of having debt far in excess of assets and no savings, thanks to GOP economics with Trump as the role model - get so deep in debt you control your lenders, then China would strike fear.

I.e., there is no public retirement savings system and not much of a personal credit market available. The joy of constraint and few options.

"This study found that worker exploitation/monopsony in the manufacturing sector is not as severe as previously reported."

So does this mean Marxism is working? Did they fix the exploitation of the proletariat by the owners of capital?

5-year plans and the like amount to speeding up the assembly lines. So whatever exploitation there was (conceivably zero) increased. Hence the characterization of Communism by some as State Capitalism.

Here is David Brooks going all socialist because China: Sure, China was our "partner" as long as China made goods for American firms, i-Phones, household goods for Walmart, etc. But now that China is making goods for China firms to compete with goods made by American firms (my God, even sophisticated telecommunications equipment such as 5G!) , it's unfair trade and a threat to national security and must be stopped. Now, Brooks even believes that to combat China, we should adopt China's economic model. The hypocrisy is deafening. Did Apple and the rest who shifted their manufacturing to China actually believe that China would always be their lapdog, content with making their trinkets? Could they be that stupid? Are we to rescue them, and us, from their stupidity?

It's unrealistic to think that our economic relationship with China wouldn't or shouldn't evolve over time, and it's naive to think that our political relationship wouldn't change along with the underlying economic facts.

Of course, that's the rational approach to China and our relationship. But it's not the approach that is dominating the current conflict. Rising powers have that effect on existing powers. It's not unlike the alpha male among a pack of animals being challenged by a young male.

But isn't China guilty of espionage? Yes, but so is America:

"While American officials refuse to discuss it, the government snooping was a two-way street. As early as 2010, the N.S.A. secretly broke into Huawei’s headquarters, in an operation, code-named “Shotgiant,” a discovery revealed by Edward J. Snowden, the former N.S.A. contractor now living in exile in Moscow.

"Documents show that the N.S.A. was looking to prove suspicions that Huawei was secretly controlled by the People’s Liberation Army — and that Mr. Ren never really left the powerful army unit. It never found the evidence, according to former officials. But the Snowden documents also show that the N.S.A. had another goal: to better understand Huawei’s technology and look for potential back doors. This way, when the company sold equipment to American adversaries, the N.S.A. would be able to target those nations’ computer and telephone networks to conduct surveillance and, if necessary, offensive cyberoperations.

"In other words, the Americans were trying to do to Huawei the exact thing they are now worried Huawei will do to the United States."

I see. Communist slavery is actually good for workers! Hitler sent the Jews to a farm upstate. Marshall Stalin is our friend. Deficits don't matter. Up is down and down is up.

Thiago, what parts of the paper do you find erroneous? The conceptual framework? The source of data? The way data is interpreted? I think being specific about such issues will be more helpful than mere sarcasm without argument?

The parts where apologist of totalitarism try to whitewash communist slavery by claiming Chinese workers, who have nothing to lose but their chains, are not being explored. The same workers who are denied every single right civilization deems necessary to protect workers.

That's my line, Thiago!

Are Chinese peasants forced to leave their villages and rice paddies to go to the big city and make Nike trainers and plastic doo dads? Maybe the US should make sure that those peasants stay where they belong, a couple of centuries back in time.

I think that what most people mean by exploitation is different to the monopsony meaning of exploitation.

Exploited compared to what? Subsistence rice farming? Romanticized bucolic life in a pre-industrial "green and pleasant land"? Investment banking? Yoga instructors?

Exploited compared to OECD living standards...

Bottom line people understand that adding over a billion competent desperate poor workers to the global economy increased supply and reduced bargaining power of first world workers. They can't just say they wish they stayed poor non-competitors because it would help their own standard of living, so they talk about exploitation.

I suspect it is still true but I have not checked recently.
But until recently over 100% of the drop in manufacturing employment
in China came from plants owned by the government.

Manufacturing employment in China consist of rapid growth in the private sector and major declines in public manufacturing employment. If the paper uses total manufacturing rather than just private manufacturing employment the paper is probably worthless.

What, the research found out they actually got two bowls of rice and three 30 second bathroom breaks every 12 hour shift?

>"exploitation/monopsony in the manufacturing sector is not as severe as previously reported. Here is the paper, by Linan Peng and Joshua Ingber, both of GMU"

Well that is one surprising conclusion!

Who you going to believe, the theorized outcome of our economic models, or your lying eyes?

In the model, those workers who leaped to their deaths from the factory roofs were only counted as 3/5ths of a person.

Compare to US workers going postal or opiate overdosed ??

So, if I was to write an acedemic paper about working for the USPS, and how it was not as bad as popularly understood... would I do a chapter on that phrase "going postal"?

> So, if I was to write an acedemic paper about working for the USPS

You seemed to be ignorant about the term "going postal". It has become generic about work place violence NOT restricted to Post Office. It is definitely a security issue and unlike the leapers which only involve themselves, "going postal" not only involves the people concerned, many of their co-workers are also casualties. There are two Wikipedia pages specifically on this.

"Going postal is an American English slang phrase referring to becoming extremely and uncontrollably angry, often to the point of violence, and usually in a workplace environment." (NOT restricted to Post Office.)

Luckily you have not made a fool of yourself by writing the paper.

Current news:

"Gunman opened fire after being told he was losing job, police say"

Comments for this post are closed