R eading on “global commodity chains” and sweatshop labor

1. Reading on “global commodity chains” and sweatshop labor What happens in global commodity chains? Production of shoes, clothes, toys, consumer electronics Design Factory investment, ownership, & management Manufacturing (some call “sweatshop labor”) Marketing Where does each function take place? Core? Semi-periphery? Periphery? Which functions command the biggest share of the profits? 1

2. Background to reading on “global commodity chains” and sweatshop labor DependencyWorld Systems Core Core Periphery Semi-periphery Periphery World systems theory There is some potential for countries in the periphery to develop and move into the “semi-periphery,” although they are unlikely to catch up to core countries. Global commodity chain studies draw on the insights of dependency/world systems theory 2

3. Chinese Development in Comparative Perspective • China was extremely backward in late 19th and early 20th C • Agriculture—failed to keep up with population growth leading to extreme poverty • Little industrial development

4. China Faced Severe Military Threats • Repeatedly defeat in war • Opium Wars 1842, 1860 • Sino-Japanese War 1895 • Resulted in limits on sovereignty • China “carved up like a ripe melon” • treaty ports, foreign “concessions,” • extra-territoriality

5. Chinese Development in Comparative Perspective China’s early failed response to the challenge of the West Contrasts w/ Japan resistance to “Westernization” China: how to adopt Western technology without Western values? Internal crisis population pressure 1600s: 125 million; mid-1800s: 400 million peasant rebellions 1850-1880—est. 100 million deaths

6. Chinese Development in Comparative Perspective China begins to catch up Successful industrialization Military implications

7. Origins of the Chinese Communist System • Communist Party of China founded 1921 • Fights for power • People’s Republic of China founded 1949

8. Origins of the Chinese Communist System • Sources of support for Communist revolution in China • redistribution of land to peasants (land reform)  appeal to socio-economic interests • resistance to Japanese invasion (1937-45)  appeal to nationalism

9. Origins of the Chinese Communist System • China looks to Soviet Union for model of “catch-up” development • Soviet-style planned economy • Totalitarian regime under Mao Zedong

10. Chinese Development in Comparative Perspective China attempts to adopt Soviet-style planned economy Contrasts w/ Soviet Union Compare starting points of “First Five-Year Plans” Soviet—1927 China—1953 Even more backward (Gerschenkron) China: Lower agricultural output (Soviet 5x higher) China: Lower industrial output (Soviet 4x higher)

11. Chinese Development in Comparative Perspective • Lenin’s innovation • vanguard party leads proletariat in establishing socialism • Mao’s innovations • vanguard party leads peasantry–not proletariat—in establishing socialism • voluntarism (where there’s a will there’s a way) • Contrast orthodox Marxist emphasis on real material conditions • mass mobilization

12. Chinese Development in Comparative Perspective • Mao tries to compensate for China’s relative backwardness • “Great Leap Forward” 1958-61

13. Chinese Development in Comparative Perspective • Mao tries to compensate for China’s relative backwardness • “Great Proletarian Cultural Revolution” 1966-76 • part struggle over correct model for economic development • part struggle for power w/in CCP (Chinese Communist Party)

14. Impetus for Reform in China • Crisis of political legitimacy • Communist utopia?  or economic stagnation • Per capita household expenditures • Increased only 2.2% 1952-75 • 1975 per capita consumption • Grain, cooking oil, meat  lower than in 1950s 14

15. Impetus for Reform in China Crisis of political legitimacy Nationalism (wealthy/strong China)? Demonstration effect/challenge of East Asian “tigers” South Korea, Taiwan, Hong Kong, Singapore 15

16. Reform in China and Comparisons with Russia Communist Party welcomes reform Cultural Revolution chaos in China  made reform more welcome/more urgent to Communist Party cadres Contrast: entrenched bureaucracy in Soviet Union

17. Reform in China and Comparisons with Russia • China introduces market forces • Mao’s death creates political opportunity • Communist Party begins economic reform 1978 • Under new leader Deng Xiaoping

18. Reform in China and Comparisons with Russia Economic China still a largely agricultural economy as of 1978 Huge opportunities for growth through industrialization Contrast: Soviet Union had already completed transition from agricultural to industrial economy

19. Reform in China and Comparisons with Russia • Contrast:“Shock therapy” in Russia • Gradualism in China • Introduce market forces into agricultural sector first

20. Reform in China and Comparisons with Russia • Contrast “Shock therapy” in Russia • Gradualism in China • Gradual change in smaller industrial sector • Froze plan obligations at 1984 levels • Introduced prices “on the margin” • made reform less painful in China

21. Reform in China and Comparisons with Russia Russia—neo-liberal-informed policies destroy state sector China—market-oriented policies link state and market Fundamental change in strategy From planned to market economy With active but more selective state intervention Pre-WTO: high tariff barriers, bank loans for state industry tax breaks for exporters, key industries

22. Developmental Outcomes in China Spectacular economic growth About 9-10 percent per year since the late 1970s Increasing incomes on average (7-fold increase in 20 years) 1985: $293 2006: $2,025 Improving literacy 1978: 37 % of adults illiterate 2005: <10 % Improving infant survival 1978: 41 deaths per 1,000 live births 2005: 23 Major drop in absolute poverty Between 1990 and 2004 the number of people living on a dollar per day fell by 246 million, while total population rose by over 156 million. Growth has helped to lift several hundred million people out of absolute poverty, with the result that China alone accounted for over 75 percent of poverty reduction in the developing world over the last 20 years.

23. Social Implications of China’s Economic Reforms Symptoms of a “19th-Century-style” capitalism Large and growing income inequality 1983: 0.28 (gini coefficient) 2001: 0.447 Environmental degradation China has 20 of the world's 30 most polluted cities, largely due to high coal use and motorization. Lack of protection for vulnerable social groups Poor Unemployed Elderly Sick