The Labor Share Question in China
January 1, 2014
In the past two decades, China's economic growth has been increasingly dependent on investment. To maintain the growth of investment, China must sustain a fairly high rate of profit, and the fall in labor's share has been seen as a crucial factor to sustain profitability.… Although the mainstream economists have widely admitted there is a downward trend for labor's share in China, they explain this trend with a story that has nothing to do with class struggle. In this story, the decline of labor's share is caused by sectoral changes, mainly the decrease of agriculture and the increase of industry and services as a percent of GDP in the reform era…. [But] Does the decline of labor's share result from sectoral changes?… [In fact] the decline of labor's share resulted from the loss in the power of the working class during the transition to capitalism. Sectoral changes have disguised the class conflicts in this historical process.
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