THE COERCION OF LABOR OUT OF LABOR-POWER AS A WHOLE
UNEMPLOYMENT, FIRING AND CONTRACTS
“‘[We] must destroy the idea of the iron [rice] bowl. . . . [The idea that] workers can be hired but cannot be fired exists nowhere in the world. Workers can be fired in the Soviet Union and Eastern Europe’”— reported in 1968 as a quote of Liu Shaoqi.
(Hong Yung Lee, The Politics of the Chinese Cultural Revolution, p. 131.)
One major difference between neoclassical “economics” and Marxist “political economy” is that the neoclassical economists do not speak of labor-power, only labor. To Marxists, labor-power is only the capability to do work that people bring to the market. Labor is the actual work. When a capitalist hires a worker, he pays for the worker’s labor-power. Except for wages by piece-rates or the like it is usually too cumbersome to contract and pay for each task that a worker does.
Consequently, the neoclassical does not have a theory of firing except as a short-term cost or cost of turnover. On the other hand, the Marxian political economy approach recognizes that firing is a basic method for extracting labor from labor-power. Workers who do not accomplish enough are fired, so that capitalists do not have to stipulate exactly how much work they want done in their contracts. Coercion can even apply to the hiring and firing of piece-rate workers and is a general rule that the capitalist class abides by to get things done.
Of course, there is the carrot as well as the stick. Workers can be played off against each other over promotions and wage raises. In some Western countries, the unions can largely determine issues of the workfloor in return for stability of the workforce. Corporate welfare programs, retirement schemes and guaranteed promotions and raises all work toward a loyal workforce that wants to work and not be fired.
There is a big movement in China to increase wage differentials and thus link income
to work done. In the original move to bonus-oriented salaries for hard work, firms handed out so
many bonuses that the CCP took this as a sign of egalitarianism. In order to prevent
indiscriminate bonus-granting, the state imposed a tax on enterprise bonuses. At the same time
the limit holding bonuses to two months of a worker’s salary was abolished.
Treasured are the jobs in the urban enterprises because they earn so much more than jobs in the countryside. Loyalty to a particular firm is less important. Any job in the city is guaranteed various subsidies characteristic of a welfare state. In this section, the focus will not be on the carrot of urban jobs but on the stick of contracts, sexism and the state.
Sexism and racism can also be expected from capitalism. Playing off one group of
workers against another is a favorite strategy of capitalism. In China, sexism is a part of tradition
that the state capitalist class draws on to divide workers, as the author will soon demonstrate.
Undoubtedly, racism or ethnic chauvinism play a role too, but the author is not qualified to
explain what relations of domination may exist between the Han nationality and the other
nationalities that make up China.
Neoclassical textbooks leave out the issue of firing in the real world. They teach that labor is simply a matter of hours spent at the workplace. Whether anything gets done—labor—does not matter:
The total supply of labor means the total
number of hours of work that the population is
willing to supply. This quantity, which is often
called the supply of effort, is a function of the
size of the population, the proportion of the
population willing to work, and the number of
hours worked by each individual.
Missing is any discussion of how hard a worker works. Moreover, class power seemingly does
not affect economic behavior. “Economic theory assumes that the same principles underlie
each decision made within the firm and that the actual decision is uninfluenced by who makes it.
The key behavioural assumption is that the firm seeks to maximize its profit.”
The radical
rejoinder to the assumption that power does not matter is to ask what would happen if the worker
tried to fire his boss in order to maximize profits for the firm? Clearly there are some
limitations concerning the relative powers of classes that influence profit-making
decisions. By assuming as given the existence of the institutional relationship of firing,
neoclassical economist is serving a very crude ideological purpose—the mystification
of class relations.
However, the Chinese economists, as explained earlier are more conscious bourgeois
propagandists than their Western counterparts. They recognize the difference between actual
work completed and the potential to do that work. They have a theory of firing and they intend to
use it. “Nor will workers strive for high production in a system in which they can always be
hired but never fired.”
The post-Mao economists would like to pass this off as a “law” of
human nature. The people are inherently lazy and unchangeable according to these
economists. Thus, the new policy is to fire workers for efficiency reasons.
In fact, the
Chinese report that in some places only 40% of workers dismissed are given jobs in other places.
In Beijing 88.2% of a group of 1700 extrabudgetary and illegal workers were fired. One half of
2200 illegal workers total have been fired.
Undoubtedly, the fact that there are 7 million
additional unemployed workers each year in China also hurts the position of these fired workers.
Hong Kong sources convey a Chinese report that “the central task of this reform is to
reduce the number of permanent staff and workers and to practice the system of contract
workers.”
The new drive is necessitated by the chaos in capital construction to be discussed in
the section on the anarchy of production.
The swelling capital construction ranks and the excessive
number of permanent staff and workers have always been a
major reason for the low efficiency in China’s capital
construction. The adoption of the system of contract workers
is conducive to streamlining state capital construction ranks and
The reason for the increased use of contract workers is unabashedly coercive. A report from the Yantai Prefectural Construction Company in Shandong Province is paraphrased as saying
that when the system of contract workers is
adopted, the enterprises are able to increase
or reduce the number of workers according
to the needs of different tasks and that the
contract workers, who are more willing to obey
orders and bear hardships and who usually
have a higher rate of work attendance, are
better than the permanent workers. The use
of contract workers will help the enterprises
raise their labor productivity.
According to some Chinese economists, regulations for the use of contract workers should allow
that contract workers be paid more than permanent workers, thus driving a further wedge into
working class unity for the benefit of making the workforce more temporary in nature.
In any case, the new use of contract workers is only the tip of the iceberg. Now, a new
“labor contract system” is being prepared for the nation, as apart from the old “contract
workers.” So far “7.8 percent of all workers in state-owned enterprises” or 7.5 million workers fall
under the new system.
Already as seen, the independent financial unit in the countryside is now
the family which contracts out to the team or more directly to the state. Now the labor system in
the cities is going through a series of experiments and reforms.
In order to eliminate the maladies of “the
iron rice bowl” and “everyone eating from the
same big pot” existing in our present labor
system, a series of experiments has been
developed in the labor contract system, in
Shanghai, Beijing, Guangxi, Henan, Jiangsu,
Gangu, and Heilongjiang. . . . Marked results have been
While the Chinese ruling class has a theory of firing that the Western economists do not have,
the Chinese are learning about the mystification potential of law and contracts from the West.
The Chinese rulers are now talking about the equal status of parties to a contract as if there
were no classes and class power. In neoclassical theory, contracts are voluntary and the
mobility or freedom of “factors” of production is assured. The Chinese rulers are going in for this
mystification of the social relations of capital too. “A labor contract is also a type of economic
contract, and therefore possesses the normal characteristics of an economic contract; that is,
both contracting parties are of equal status, and draw up a certain agreement voluntarily and
according to law.”
However, “Naturally, when setting out the labor contract system, it is
necessary for us to use foreign law documents for reference, but this is by no means to say that our
labor contract system can be equated with the capitalist labor contract system.”
In short, the
Chinese ruling class would like to make use of that great ally of exploitation—the law—but in the
process can not help offering the very critique that exposes class rule.
Class power can also be seen behind the new policy of labor immobility in the labor
contract system. “According to the agreement, the laborer becomes part of the unit’s staff
and workers, undertakes a certain type of work and abides by the internal regulations of the
unit; while the unit issues wages according to the quantity and quality of labor.”
At another
point in the same report, there is a discussion of “buying and selling labor,” as if to say that the
Chinese state capitalists have done better than the Western capitalists in buying labor, not just
labor-power.
In any case, the class power behind issues of labor mobility even smacks of
corporatism. “Labor service companies” are to be set up to collect up workers to distribute and to
take care of. “Social insurance and welfare may be the responsibility of labor service
companies.”
Furthermore, “collective welfare facilities should be set up, so as to provide
conditions beneficial to workers’ housing, convalescence, rest, and recreation.”
Moreover,
“strengthen the work of labor service companies, making them responsible for the management,
technical training, introduction to employment, self-help through production, and personnel
awaiting employment and for social insurance and welfare work.”
If these labor service
companies really come to play all these roles of discipline and welfare, they will bring about a
new chapter of corporatism in the world. If corporatist style unions set up by the state are to
coopt the working class and provide workers what they need, where will the money come from?
Will this entail an expansion of existing welfare efforts or a consolidation of old ones? This is not
known yet, but in 1986 the Chinese government credited labor service companies with cutting
down unemployment since 1979.
Labour service companies now total 38,674. They have set
up 75,000 production enterprises, 108,000 commerce,
catering and service enterprises, and 26,000 construction,
transporting and loading service companies.
They have provided jobs for 5.57 million people and their
sales volume from 1981 to 1984 was 477 billion yuan.
One of the main points Huang Shilin, the author of a 1983 article on the labor contract
system, tries to make is that the new system should not be confused with contract labor.
This
new system, originally envisioned by Liu Shaoqi,
can easily give people the impression that
the implementation of the labor contract
system is merely a question of using part
of the labor force of an enterprise as
contract laborers, and nothing more than
adding social insurance and welfare to what is
basically temporary work; it will, therefore,
be very easy for people to treat such workers