Karl Marx, Georg Simmel and the China Price

             One theme of this blog is that the great sociologists still offer provocative and important insights about everyday life. In this case Karl Marx and Georg Simmel turn a spotlight on the human consequences of the China Price.

      Instead of value free, Marx is value laden. You always know where he stands, as in this fiery line towards the end of (Volume One) of Das Kapital. “Accumulation of wealth at one pole is, therefore, at the same time, accumulation of misery, the torment of labor, slavery, ignorance, brutalization and moral degradation at the opposite pole.”

    The assessment appears after one of Marx’s most enduring insights: His discussion of floating, latent, and stagnant populations. Labor –human beings- were often a surplus commodity under capitalism. Sometimes the surplus occurred because capital moved its locations, the workers were displaced and they floated until they found another job or drowned. The latent population existed in the countryside. Made redundant by factors like mechanization or the move to different crops, this latent labor force totals, by some estimates, 175 million Chinese men, women and children. In The China Price, Alexandra Harney says the street term in Chinese is “blind wanderers”. Labor remains latent until it is are needed, the people then work for whatever they can get; and, by setting strict limits on who can live where, Chinese authorities callously discard the latent population whenever it is no longer needed.

    The latent population then floats but without the right to live anywhere. Bottom line: It is perfect weather for the capitalist and a perfect storm for labor.

       The stagnant population refers, today, to people who lost their jobs or never had one in the first place. In the United States we create a group composed of men and women who are no longer looking for work. They give up and the capitalist will only use them when demand requires digging very deeply into the stagnant population that normally has no value to a competent capitalist.

      For Marx the historical saving grace was that the expropriators would eventually be expropriated. Instead, in 2008 the wretched reality is that the largest floating, latent, and stagnant population in the history of the world is ruthlessly yet adroitly managed (from a capitalist perspective) by a Communist government. It is a monumental irony but if you read about the workers conditions in contemporary China you can close your eyes and think you are reading Frederick Engels, The Conditions of the Working Class in England in 1844. Harney describes one Chinese “factory” where the young women routinely work fourteen hours a day. After work, they are pickle squeezed into a small space full of bunks. Getting in and out of bed is difficult and should someone need to use the facilities, they trip their way “to a tiny dark closet with a porcelain-lined hole in the floor.” The next morning they start over again; and they pay a penalty of 13 cents for every minute they are late.

           Among others, Wal-Mart and Reebok underwrite these conditions. They deserve to be pilloried and public pressure to improve the labor conditions has moved the companies to employ auditors who monitor the corporate contractors. Unfortunately, Disney, Target, Kohl’s and others hire people who work with a severe handicap. “The sourcing group and the compliance group could almost be on different planets” One makes money, the other is an expense deducted against profits. The result is that labor auditors often turn a blind eye to second factories (where the real work is done) and to “fabrication engineers”. With software and other artful subterfuges the fabricators help suppliers prepare positive reports that allow corporations to boast that they are ethical employers.
          Even with the fabricators, less than six percent of Wal-Mart’s contractors worldwide receive a mark of no or only minor violations; and Georg Simmel’s helps explain why. In a critique of Marx, Simmel argued that labor had little to do with economic value. In reality economic value derived from a comparison between two or more objects. Economic value existed only when the demand for something was compared with the demand for other things. People therefore created economic value because when they bought and sold anything the exchange (my money for your stock) was always rooted in an “objective measurement of subjective valuations”. In Simmel’s work it is the demand for the object that creates value; without demand the object is as valuable as a factory in Detroit or a worker who demands a pension and health benefits.

      Simmel offered this insight in 1899; today it gets plugged into a world where commerce is thoroughly globalized, more and more countries are technologically equal and the dominant economic system is a form of capitalism that approaches “purity”.  As Thomas Friedman noted in The World Is Flat, “there is almost nothing about globalization that is not good for capital.”

       Corporate procurers therefore engage in what Simmel called the “lively interaction” that creates economic value. They compare supplier prices in one locality (say urban China) to supplier costs in another locality (say rural China or Vietnam) and they then squeeze their suppliers for lower and lower prices. The threat is both obvious and powerful: Compared to your prices, I can get the same thing made for less in these two or three other locations. So, find a way to give me (Wal-Mart, Kohl’s, Disney) a better price or lose my business.

        The economic value derives from the price comparison cited by Simmel; and the real threat of suppliers losing business places the floating and latent labor populations described by Marx in the worst position since the dawn of capitalism. In the United States the stagnant and floating populations grow as I write. Meanwhile, an outfit like Timberland can buy a shoe for $20 in China; they sell it to the retailer for $50 and the retailer sells it to us for $100. All the while, wages for the workers are paltry and (for example) unpaid overtime is increased as Chinese, Vietnamese, Honduran and other suppliers squeeze the literal lifeblood out of their workers.

    As one of Harney’s informants put it, “the executive feels compelled to do this because that’s the real world. We have to face these things. We have no choice. We have to ship our goods.”

      It is a measure of systemic brutality that might leave even Marx speechless. Certainly it does not seem to bother either one of our Presidential candidates. And their silence is also our own every time we buy goods and services that acquire their economic value by using the “China Price” as the point of comparison for computing corporate profits.