Last updated: June 4, 2014 6:44 pm
This was not the revolution Marx envisaged but it was the outcome of Deng’s 1992 southern tour, on which the Chinese leader supported reform in cities such as Shenzhen, trying to strengthen party rule by offering the people opportunity. The fact that few Chinese now mark June 4, 1989 is a tribute both to party censorship and to Deng’s gambit.
Deng did not shake up the world alone. When I was an employment correspondent in the late 1980s and early 1990s, the power of organised labour in the UK had already been weakened by Margaret Thatcher’s privatisation of state-owned industries and her defeat of the 1984-85 miners’ strike. Private sector union membership was falling and it continued to decline.
Political and economic upheaval coincided with the advance of the internet and rapid development of information technology in the mid-1990s. That led to the automation of jobs and more cross-border trade – it became easier for supply chains to stretch around the world.
“For the individual as a consumer, it has been wonderful – there are many more products and services, much more choice, and it has all become cheaper,” says James Manyika, an MGI director. “For workers with limited skills, it is pretty awful. They were once protected, but now they compete with others who are cheaper and may be more skilled.”
The strongest effect has been felt in Europe and the US, where the share of income going to labour has decreased from 64 per cent in the postwar decades up to the 1980s to 58 per cent today. One Federal Reserve Bank of San Francisco study found that the sharpest drop occurred in industries such as textile manufacture that were most exposed to import competition.
After a quarter of a century, this arbitrage is easing. Wages in China’s coastal cities have risen, making it more cost-effective to retain production in the US. But that does not guarantee a return to mass employment in manufacturing and primary industries – advances in technology mean factories now employ fewer workers.
Through the lens of history, the best time to be a member of the proletariat in an advanced economy was probably the postwar period up to the oil shock of the mid-1970s – when most of the Chinese and Indian population was poor and agrarian and there was little competition. The era was already ending when China implemented Deng’s plan.