Is the Chinese worker to blame or the local capitalist? [on Chinese imports]

Is the Chinese worker to blame or the local capitalist?

With
many thousands of people in the Western Cape employed in the textile
and clothing manufacturing industry, the effects of cheap Chinese
imports as reported by the media is of grave concern. Yet is the media
reporting on all the facts? In this comprehensive, alternative view at
the root cause of problems within South Africa’s blue collar
industries, you will learn that there is much more to the issue of
cheap Chinese imports than meets the eye. Please note that the views
shared in this article are those of the authors and not
necessarily Bruinou.com management.

A great
deal of confusion, both deliberate or through, ignorance, is
disseminated by bourgeois Economists, Trade Unionists, and so-called
analysts, about the effects of cheap imports, and the Strong Rand on
the labour market; and the profitability of local capitalist
enterprises.

Cheap imports (CHINESE)

It is claimed,
that one of the prime factors responsible for the loss of jobs, and
closure of factories, is the cheap imports coming into the country from
CHINA. There is absolutely no doubt, that the price of clothing
imported from CHINA is far lower, than clothing manufactured in South
Africa. The reasons for this, are the low labour costs in CHINA and the
economies of scale (large production runs). It is reported, that the
average labour costs in the textile industry in CHINA is approximately
50 US cents per hour (+- R3 per hour) compared +- $2 per hour(+- R12
per hour) in SA. In absolute terms the labour costs of production is +-
4 times more in SA; and hence the labour costs of production in CHINA
should be at least 4 times cheaper than in SA.

Looking at it superficially, the above statistics imply, that the
South African worker is over paid 4 times; and hence enjoying a
standard of living 4 times better than his CHINESE counterpart. Is this
true? Can we honestly and seriously claim, that the South African
worker is living in luxury? It is calculated that for a worker to cover
their basics and to have any discretionary spending (expenditure over
and above the requirements of basic necessities of life, such as going
to cinemas, expenditure on education etc) the wage level must be at
least +- R3 500 per month. But the income of the average textile worker
is +- R1 500 per month. And if one’s arithmetic is correct the SA
worker, far from leading a normal standard of life, must be living in
poverty-stricken circumstances. LANGA, MITCHELLS Plain, HANOVER PARK
bears testimony to the above statement.

What about
the conditions for the worker in CHINA? Are they worse off economically
than the worker in South Africa? Again, it is reported that the CHINESE
worker can buy nutritious lunch and supper for +- R3 per meal; medicine
and housing is very cheap, because it is subsidized by the STATE. It is
quite clear the conditions of the CHINESE worker, notwithstanding their
lack of political and trade union rights, is economically not worse
than that of the South African worker.

Why is the
average labour cost in the textile industry in SA 4 times higher, than
in China? We have already stated above; the wages earned by textile
worker in SA is barely sufficient for their basic needs, then the
problem does not lie with the high cost of labour(wages); but the high
cost of living in South Africa. But the Bourgeois Economist will claim,
that the high cost of commodities (food, medicine, etc) is directly
related to the high cost of labour, and therefore if the cost of labour
comes down, the price of commodities will come down. This is
unmitigated nonsense and lies. Life experience has time and again
demonstrated, that the prices of commodities, in South Africa in
particular have never ever come down, even when the conditions for a
decline in prices, such as labour costs and exchange rates, makes this
possible. The greed of the Capitalist Class for higher and higher
profits, precludes the fall in prices of commodities. The notion that
market forces (supply and demand) determines prices, is again absolute
nonsense. Prices rise even when demand is low, because the capitalist
must maintain his rate of profit (return on capital). When demand is
high, instead of using spare capacity, or increasing capacity where
spare capacity does not exist; artificial scarcity is created, and
prices rise. When demand is low, workers are retrenched salaries are
cut, profits are maintained. When demand is high prices of commodities
rise, but the price of labour remains the same, profits go up, cost of
living for the worker increases and consequently real wages, again
falls. Inflation is the catch-word to fool the masses. Market forces,
regulating supply and demand and prices, is not only a myth, but a
deliberate fraud perpetrated by the ruling classes.

A
typical example of how prices are not determined by real demand; but by
cartels and speculators, who create artificial demand and push up
prices, is oil. The $15 rise in the price of crude oil, in the last
three months is a case in point; where the demand for oil, is
artificially created by speculators and possibly the oil companies
themselves. The actual situation is, that there exists a glut in oil;
it has come out, that the oil reserves in America, are far higher than
we were given to understand. At one minute, there is an oversupply of
oil, prices fall, OPEC threatens to cut production. The next minute
“demand is high” supply is short, prices rises, OPEC increases
production. One does not have to be a rocket scientist to realize, that
in 2001, oil companies were desperately seeking ways to maintain
profits. The price of oil was in the region of $10 per barrel. The war
in IRAQ, came to the rescue. The overall effect of the Iraq invasion
was that Iraqi oil now came under US imperialist control. The US oil
monopoly is one of the major backers of the US state and thus was a
direct beneficiary of the invasion. Today maneuvers and speculators
have added extra billions in profits to the oil companies. Never before
in history has the oil companies made so much money. SHELL and BP and
EXXON MOBIL are showing close to $20 Billion dollars (R120 Billion)per
annum each in profits (these are sanitized profits; what must the
actual profits be?). This was no unseen market force of ‘supply and
demand’ but a direct, bloody intervention by imperialism. Another
typical example is the name brand sport shoes, such as Nike and Reebok.
Up to 5 years ago Reebok shoes were manufactured in Korea where the
cost to the company was nothing more than $3 per pair. Yet these shoes
were sold in America for over $100 per pair and nearly R500 in South
Africa. Are these prices determined by supply and demand??

Cost
$3 (R18) selling price $100 (R600) profit $97 (R582). Monopoly
capitalism determine prices, not supply and demand. Criminal
profiteering is the name of the game.

The moral of
the story; demand (need) and supply, as defined by Bourgeois Economics,
is not the driving force behind prices, but monopoly capitalists
consciously determine its direction.

Coming
back to the question of cheap imports from CHINA; which classes or
economic sectors benefit, and what are the negative and positive
spin-offs from such imports.

(a)
The Working Class and sections of the lower middle-classes
(street-vendors): For the first time in decades, the poorer sections of
the working class can afford to buy clothing, because of CHINESE
imports. At the flea market, one can buy an adult shirt, or a jersey
from R20 – R25. A jeans or trousers for R35. Kiddies clothing from R8-
R20. Hundreds of thousands of destitute, poor can now clothe
themselves. Thousands of ex-workers now vendors can feed themselves. A
large section of the so-called informal economy, is primarily based on
cheap CHINESE imports; from clothing, to sweets, to cutlery, to
plastic-ware etc. The benefits of these imports are beyond any doubt to
the working class and the vendors. The informal economy which is
primarily trade related depends on these imports. A great pity, that
there has not been similar volume and variety of imports in the food
sector, not only from China, but also from places like INDIA, VIETNAM,
THAILAND etc, which could effectively challenge the exorbitant prices
for food, charged by the monopolies in the production and distribution
sector e.g. TIGER OATS, Pick & Pay etc. Such a scenario could
contribute to the elimination of hunger for millions of families, and
the rejection of dry bread for breakfast, lunch and supper.

(b)
The Formal Distribution CHAINS and PRODUCTION ENTERPRISES: There is a
policy shift, by the big chain stores, such as TRUWORTHS, FOSCHINI,
WOOLWORTHS and EDGARS from buying South African made goods to cheap
CHINESE and INDIAN imports. The reason for this is not that the South
African produced goods, have progressively become too expensive, for
these companies to continue making handsome profits, but because of the
opportunity through the imports of CHINESE and INDIAN manufactured
goods, to make super-profits. The general mark-up by the distributors
on South African manufactured goods, is between 150% and 200%. But the
imports of CHINESE and INDIAN manufactured goods, allows them a mark-up
of between 350% and 450%. [For the overall effect on their published
profits this translates into, see table 1] In other words the imports
of CHINESE and INDIAN manufactured goods are making these merciless
distributors enormously rich, at the expense primarily of the upper
working class, lower middle classes and middle classes. The question
therefore of too expensive locally manufactured goods affecting sales
and fairly handsome profits, for these distributors, is not the issue,
but the sheer greed and ruthlessness of these profiteering enterprises.
They have an insatiable appetite for profits, while at the same time
cunningly and deceptively projecting an image of social responsibility
and patriotism. The slogan “Buy South African” is cynical in the
extreme. In the case of the Rex Trueform company in Salt River,
Cape Town, nothing prevents its distribution and retail arm,
Queenspark, from still buying from it. They could simply take a lesser
mark up instead of chasing the super-profit levels of the Woollies,
etc. [Rex Trueform is threatening to retrench 1000 workers at its
manufacturing plant while many local manufacturers for the clothing
retail sector have placed workers on short time and/or are also
retrenching workers]

Table 1

The
manufacturing units cannot bring their prices down, because the major
share of salaries and wages go to directors and managers. It was
recently reported that the salary of one of the directors of S.A.
Breweries is equivalent to that of 533 workers of the same company.
Furthermore the return on capital in South African industry is one of
the highest in the world. The Imperialist and Capitalist Class come
hell or high water are going to maintain things the way it is.

What
is the solution for the South African worker under these circumstances?
Bourgeois Economists and other commentators DEMAND that the average
wage of workers in the clothing and textile industry and other
industries generally, be reduced from R1500 to R700 per month; thus
reducing the cost of production and hence facilitating the 350% to 450%
mark-up to these big chain stores. Imports will decline, they claim,
more factories, will open, more workers will be employed, but ALL of
them, and we emphasize, ALL of them will be half starving. Classic
slavery is preferable to this new found capitalist wage slavery, with
all its varied manifestations and implications. The arch-political protagonist of this scenario is the DA and its leader TONY LEON.
His concern is mainly the smiles of his capitalist supporters and
members of his party turning a blind eye to the mass of emaciated
working class mothers and their crying children. What do you call such
a person- a monster.

The
trade-union bureaucrat solution to retrenchments and closure of
factories, is to demand from the state, the devaluation of the rand,
and the imposition of higher tariffs (customs duties) on imported
CHINESE goods. But this demand, does not essentially deal with the high
cost of living and the exorbitant salaries and profits DEMANDED by our
capitalist manufacturers and distributors. In fact the demand boils
down to protection of the local capitalist class over those of the
CHINESE working class and CHINESE capitalist class. An alliance
between the textile clothing worker, and the local capitalist
manufacturer is advocated against the CHINESE worker and capitalist by
these so-called worker representatives, ignoring the fundamental
working class principle that there are irreconcilable class interests
between the worker and capitalists. International worker solidarity
between the South African and CHINESE workers, is sacrificed on the
alter of national chauvinism and national patriotism. The benefits to
the broad South African working class through these cheap imports is
totally ignored. That the South African Capitalist Industry cannot
compete on the world market is not the fault of the worker, nor should
it be protected, but replaced by imaginative working class solutions.
But such solutions cannot be forthcoming from this bureaucratic
leadership because all its perks and benefits are dependent on the
maintenance of the capitalist class and the capitalist system.

What
about the South African State, the representative of the Capitalist
Class, in dealing with the crisis which the working class and some of
the capitalist class face. The South African state is fully bound by
the rules of the WTO (World Trade Organisation, an imperialist body)
which regulate trade between nation states. The rules are designed to
favour the advanced Capitalist Imperialist countries such as Europe,
America, and Japan. Any protectionist policies implemented by South
Africa to protect its industry from international Imperialist
Capitalist competition will be regarded as a violation of the rules of
the WTO. Moreover the South African state has adopted the GEAR economic
policy which gives an unquestionable undertaking to support Imperialist
neo liberal trade policies. Hence it will not implement pro-nationalist
policies which may come into conflict with this undertaking. Besides,
China has become a very important market for SA Steel, coal and other
products. Trade between SA and China is increasing in leaps and bounds
and it will be against the wishes of the big SA companies such a Anglo
American if the state follow policies which will jeopardize this trade.
Furthermore the state as representative of the capitalist class must
take the interest of the whole class into consideration, this may
sometime lead to adopting policies which may not be advantageous to all
the capitalist and middle class. Nevertheless in the long run whatever
policies it adopts strengthen the capitalist class and maintain its
hegemony. More than 80% of the mining, agriculture, manufacturing, and
distribution sectors are dominated and controlled by the 5-6 giant
monopolies such as Anglo- De Beers, Old Mutual, Sanlam, Rembrandt,
Liberty Life and note if there are losses on the swings (such as loss
in volumes of local production) there are gains on the merry go round
(such as in distribution sectors from cheap imports). The monopolies do
not lose. Noise of losses and patriotism are made by them to fool the
masses and maintain an acceptable image of concern and care.

What
then should the organized working class do to halt if not to stop this
attack on their livelihood, in fact on their life by the onslaught of
the pro capitalist, imperialist economic policies adopted and
implemented by the South African state?

1)
The first line of defense by the workers is to absolutely halt
retrenchment. Workers anti-retrenchment committees in every sector of
the economy, in every factory and mine, on every shopfloor, must
immediately be formed. These must be independent of the trade union
bureaucratic leadership influence and any other NGO or pro capitalist
organizations.

2)
More and more workers must be encouraged to join trade unions thereby
building strong worker organization and raising the class consciousness
of the workers. At the same time reactionary and bureaucratic trade
union leadership must be exposed and replaced by genuine and dedicated
working class fighters.

3)
There can be no national solution to the local and international
attacks on workers by the banks and other monopolies. What is needed is
international workers solidarity against the attacks of the
capitalists. This also means the building of working class solidarity
between the working class in South Africa and India and China, for
example. We have nothing to lose but our chains!

4)
The prices of all commodities must be made to come down by insisting
that the salaries of management and other hangers-on be drastically
reduced in line with sustainability and expansion of the enterprise. Do
not accept positions on company boards and management. (Editor’s note – Mmmmm…a bit hardline, don’t you think?)

5)
Check the return on capital and large parts of the profits derived must
be invested to expand production and make it more efficient. This will
create more jobs. Do not accept company secrets as an excuse.

6)
South African financial institutions are a major stumbling block in the
development of independent enterprises not only because of red lining
but because of the exorbitant interest and other charges imposed on
lenders. Also the bulk of the workers who are using the banks are
grossly overcharged for services rendered. A more consistent and
determined campaign against these banks must be waged. The immediate
nationalization of all the banks must be demanded in order to
facilitate the development of agriculture and industry. A half hearted
response to the attack of the banks will only lead to apathy and defeat.

7)
Those industries who refuse to co-operate or continue the old way i.e.
retrench, charge exorbitant prices must immediately be taken over by
the workers of that factory. This not a far-fetched idea. It can be
done by bold worker leadership and determination.

8)
A sustained campaign against the high price of food must be waged.
There is ABSOLUTELY NO REASON for the high prices charged by the
manufacturing and distribution companies. In fact serious and detailed
plans must immediately be worked out to take over these companies by
the working class.

9)
The working class will come into conflict with the bosses, the trade
union bureaucrats and the state. Workers defense committees right
across the trade union divide must be set-up to defend the changes
implemented by the various worker committees.

10)
A programme of sliding scale of hours and sliding scale of wages must
become the programme of trade unions and working class organizations.
This will assist in halting the whole process of pauperization and
disintegration of the working class. A close working relation between
the employed and unemployed must be forged to implement this
programme. [A sliding scale of hours means that all existing work
must be divided up among all those who can work, without a reduction of
existing wages, even if this means the drastic reduction of the working
day ; a sliding scale of wages means that wages should go up
automatically if prices go up, especially of food and transport;
workers should not wait for the yearly wage negotiations before there
is a wage increase]

11) The working
class must realize that the time to dilly-dally has long past. A life
and death struggle against the capitalist class and its system must be
waged by the working class. Forward to the formation of a revolutionary
working class party with a progamme for changing the entire, political,
economic and social relations between classes. It has become an urgent
necessity.

Issued by Workers International Vanguard League, 1ST Floor, Community House, 41 Salt River rd, Salt River, 7925 ph 021 4476777 wivl@sn.apc.org