Under Deng Xiaoping’s famous slogan, “liberating the productive forces” (jie fang sheng chan li), the official policy of liberal reform – strong state intervention in the labor market – has worked in support of commodification of labor, rather than constructing a system of social welfare that restricts the impact of market forces in China.

Historically, as a country that has long been an agriculture-based economy, the distribution of labor in China was tightly connected to land. Even until quite recently, that is, after the Chinese Communist Party’s coming-to-power and before 1978, there was no labor market in the conventional sense. Labor mobility was non-existent, or to be more specific, forbidden: In rural areas, even though suffering from extremely low agricultural prices that were deliberately fixed by the central government in order to subsidize urban industry, farmers were fated to be farmers and were completely excluded from the favorable employment arrangements implemented in cities, since rural–urban migration was severely restricted through the system of “internal passports” (hu kou).

This decades-long, suppressive policies on labor mobility had led to disastrous consequences to economic viability of the country.

This is largely why in 1978, Deng’s liberal reforms called for a market economy for socialist China. Overnight, labor power is not only allowed, but encouraged to be put on market for sale. The restriction of hu kou is no longer supposed to exclude the rural population from providing its labor power to any sector of economic activity, and thus should not prevent agricultural hu kou holders from working in cities.

The long-suppressed productivity unleashed after so many years of planned economy has been spectacular. According to official statistics, a 300-million migrant farmer–worker population has been formed over a short period of time.

Questions have been raised regarding this incredibly willing labor: What are their incentives? Is it only because that industriousness, “the most important of traditional Chinese virtues”, as repeatedly advocated by mainstream media outlets, is in the blood of Chinese people?

This brings us to the discussion of price system in China’s labor market.

The price for labor power is not only determined by immediate supply and demand, but is also sensitive to the capacity—and perhaps more pertinent to the contemporary context, willingness—to perform the physical act of working. To put it plainly, the more willing the workers are, the more likely the labor power market will be a buyers’ market.

As Claude Meillassoux points out in his chapter discussing the making of a cost-effective labor force in a given society, when it comes to the price for labor power, there are two kinds of remuneration: the direct and the indirect salary (or fringe benefits). The first resembles what we know as hourly wage, whereas the second “is redistributed through a social agency”.

For most welfare states nowadays, this “social agency” refers to the State, or a statutory agency that manages the social security fund, for example. As regards the Chinese context, it is the household solidarity characterized by auto-exploitation and auto-deprivation of rural households that has played this role.

The prefix “auto” means that, the rural households are not forced, but ‘voluntarily’ decide to send their young and strong manpower to work in urban industries. Because they have been either persuaded by the considerable remittances (the relatively high direct salary earned) by migrant workers they sent off, or simply under the illusion that the young and strong manpower ‘squeezed’ from farming earns far greater financial returns by working in cities, while ignoring the fact that they have been actually covering, by themselves, the part of indirect salary.

The labor price that we observe in China only reflects the direct salary entirely set by the free market, with extremely limited labor rights protection attached; And this pricing mechanism is deliberately constructed by the central government as means of “liberating the productive forces”. The Chinese people were given the ‘liberty’ to exploit themselves—by accepting low salaries, giving up social security coverage, abusing leisure time, and so on—at their own will. This self-exploitation and self-deprivation constitute an important yet largely overlooked social cost of China’s eye-popping economic development.

That being said, it is true that the living standards of Chinese people, in both the cities and the countryside alike, have significantly improved in recent decades. According to the World Bank, more than 850 million people were lifted out of extreme poverty since the beginning of the liberal reforms in the 1970s. This demonstrates precisely why the Chinese people have been working hard—and more importantly, have been willing to work hard—to the point of auto-exploitation: The incentive scheme for this self-coverage of the indirect salary is that the Chinese people are indeed getting rewarded financially, thanks to China’s economic growth driven by their industriousness and productivity.

In other words, the “cost-effective labor force” for the employers is composed by employees who, from their perspective, find their own investment of manpower “cost-effective”. This constitutes the mechanism of the labor-fueled engine of “the world’s factory” over the last few decades.

At this point, it seems clear that, the free circulation of labor as a commodity has been greatly facilitated by the Chinese government from the beginning of Deng’s liberal reform. In line with this notion, China’s socialist market economy does not entail a large number of restrictions that render the market less free than in the West, but quite the opposite. In fact, it may well have been rendered more ‘liberal’ than the West’s welfare states; and China’s economic prosperity inevitably engenders problems similar to—if not more severe than—those in the West, such as concentration of wealth, income inequality, and the rise of anxiety.

Shen Hu recently finished his PhD in Anthropology at Université de Paris 8 Vincennes Saint-Denis.

Xiaorui Wang is lecturer in Department of politics and public administration at Huaqiao University.

To read more, see “‘Liberating the Productive Forces’: Understanding China’s Ascent Through Its Labor Market Evolution from the 1970s to the Early 2000s,” in Science & Society (2020).

Image: Kang En via Flickr (CC BY-NC-ND 2.0)