Precarity, American-Style: The American Enterprise Institute and Small Businesses

This post is a continuation of my series of posts on economic precarity and the precariat.  Past posts explored the manifestation of precarity in Russia and China, two nations which returned to the capitalist fold at the end of the 20th century after abandoning free-market capitalism during the early and middle decades of the 20th century.  More recent posts have explored the spread of precarity in the United States, a nation which has been characterized from its birth by a cultural emphasis on laissez-faire, free-market capitalism and the defense of the "property rights" of those who are wealthy.  This post continues the exploration of precarity in the United States.

At the outset, I'd like to state my belief that the solution to the problem of economic precarity and rampant wealth inequality is to create a society in which the role of small businesses is central and in which private concentrations of wealth and power above a certain size are eliminated by a steeply progressive tax with no loopholes for the rich.  Such an arrangement would fulfill the ostensible goal of socialism without requiring the government to be the owner of the societal means of production.  For such an arrangement would place the means of production directly in the hands of even the poorest of people.

I can already hear the screams of rage which the emergence of such a society would produce among the leaders of the American right wing.  That's okay - sometimes people need to see their sacred cows turned into hamburger.  Yet one area in which we all seem to agree is the importance of small businesses in the American economy and the need to provide support to these businesses.  Presidents and members of Congress from both sides of the aisle have made strong and warm statements of support for small business from the days of Reagan onward.  Indeed, the Republican Party in particular has branded itself the champion of small business.  This has been part of the Republican Party's branding of itself as the party of economic growth in general and of the promotion of economic policies which guarantee prosperity for all.  (Of course, the fact that Republican policies have created many more losers than winners is blamed on the losers, but that's a story for another post.)

Can the Republican Party truthfully say that it has been and continues to be a champion of American small business?  The answer to that question can be found in the policies and activities of some of the lobbying groups and think tanks which are part of the American right wing.  Let's look at one of those groups today, namely, the American Enterprise Institute, or AEI.  According to Wikipedia, the AEI is "...  a center-right think tank based in Washington, D.C., that researches government, politics, economics, and social welfare... Founded in 1938, the organization is aligned with conservatism and neoconservatism ..."  To call them "center-right" may be quite misleading, as their membership has included several figures who are very much hard-right - figures such as Robert Bork, Newt Gingrich, John Lott, Antonin Scalia, and Dick Cheney.  In addition, the AEI is closely aligned with the Koch brothers, according to a Sourcewatch article.  Moreover, some of the recent posts and articles on the AEI website have seemed to give support to the regime of Vladimir Putin.  The AEI has become the dominant brain trust of the American right wing, "the crown jewel of the conservative policy infrastructure," according to a recent Johns Hopkins University case study.  

In 2005, the AEI published a paper titled, "Are Small Businesses the Engine of Growth?"  The abstract of that paper provides a concise summary of AEI's desired policy toward small business: 

"It is a common belief among entrepreneurs and policymakers that small businesses are

the fountainhead of job creation and the engine of economic growth. However, it has

become increasingly apparent that the conventional wisdom obscures many important

issues. It is an important consideration because many government spending programs, tax

incentives, and regulatory policies that favor the small business sector are justified by the

role of small businesses in creating jobs and is the raison d’etre of an entire government

agency: the Small Business Administration (SBA). This paper concludes that there is no

reason to base our policies on the idea that small businesses are more deserving of

government favor than big companies. And absent other inefficiencies that would hinder

small businesses performances, there is no legitimate argument for their preferential

treatment. Hence the paper suggests ending all small businesses’ subsidies." [Emphasis added.]

The paper sought to make a case for eliminating all government agencies and programs that support or incubate small businesses, both at the Federal and State levels.  It twisted a number of statistics in its attempt to make its case, attempting for instance to convince readers that the net gains in job creation  should be ignored in favor of gross job creation when analyzing the impact of small businesses during any time period of analysis.  This position, by the way, is proven false by the fact that reputable agencies such as the World Bank do count the impact of net job creation in evaluating economic performance.  For an example of the paper's mishandling of statistics, consider the part where the author tries to use gross job gains and gross job losses to "prove" that employment in the small business sector was much less stable than in large companies during the year 2000.  The author neglected to notice that during the time period in question, the net addition of jobs by small businesses was always positive, and for firms between 1 and 49 employees, exceeded 10 percent.  Lastly, I would point out the laughably false claim made by the paper that "... larger employers offer greater job security. For both new jobs and the typical existing job, job durability increases with employer size."  (That has definitely not been my experience as a working stiff and cubicle rat!  I guess the author of the paper never heard of the words "downsizing" or "redundancy"!)

The 2005 AEI paper cited above was part of a sustained effort on the part of American conservatives to make a case for eliminating all government support for small businesses.  One such example is the article, "Terminating the Small Business Administration" (2011), along with articles published from 2008 onward which suggested that government support of small businesses leads to negative economic growth.  I argue that the AEI paper, on closer examination, does not present a scientifically rigorous or accurate case.  However, it definitely does express what rich American conservatives want to do to American small businesses.  Consider the following quotes:

"... the real job growth comes not from people dreaming of being small business owners but from people committed to building big companies." [Emphasis added.]

"The paper will examine whether the pervasiveness of the belief that small businesses are the economy’s main source of job creation is warranted. Section 2 will show how this belief is the foundation for many government policies. Section 3 will expose the statistical fallacies that lead people to see job creation patterns where none exist. Besides it shouldn’t matter. Although job creation receives enormous attention in policy discussions, it is rather misplaced. The mere creation of jobs is not by itself an appropriate economic policy objective. Economic growth whether it takes the form of additional jobs or increase of productivity in existing jobs is all that matters. The paper concludes that there is no reason to base policies on the idea that small businesses are more deserving of government favor than big companies." [Emphasis added.]

In other words, the AEI has backed a policy which favors the continued growth of large companies, and the continued growth of American economic productivity even when that growth is not accompanied by the growth of jobs.  We have already seen the results of such a policy in action, namely, in the jobless "recoveries" from economic crises which occurred during the presidencies of Ronald Reagan and both Bushes.  Such "recoveries" left a lot of people out of work for a long time, while those who still had jobs were subjected to ever-increasing demands on their time from their employers in the name of increasing productivity.  To put it another way, these "jobless recoveries" resulted in ever-increasing concentrations of wealth among the richest members of society while drastically increasing economic precarity among everyone else.  It is quite telling that the AEI has pushed so hard for the elimination of all government help for small businesses even though large corporations are the biggest recipients of corporate welfare from both Federal, State and local governments.

Let us close with a couple of questions.  Does real job growth come not from people being small business owners but from people committed to building big companies?  Is it true that the only thing that matters is economic growth, regardless of whether it takes the form of additional jobs or increase in productivity in existing jobs?  I'd like to give my answer to these questions, but I don't have time today, so that will have to wait.  But as a partial answer, consider the following questions:

• How many really big companies can exist in a society whose economy is of finite size?
• Why should most people rally behind continued economic growth if the fruits of that growth are not fairly and equitably distributed?
• Who wants to volunteer to be one of the many poor, disenfranchised, and unemployed who are produced by a system in which the fruits of increased productivity are not fairly distributed?
• Who wants to volunteer to be a member of the salariat in such an economy if the only way to be a member of the salariat class is to work 80-hour weeks?

Precarity, American-Style: Causative Factors

Today's post is a continuation of my series of posts on the subject of precarity.  Today's post will be rather short, since I don't have much time.  However, when considering the state of precarity in which an increasing number of people in the United States now live, it is helpful to study the occupational and economic factors which have led to our present troubles.  As we study economic precarity in the United States, we should therefore consider the following factors:

• The decline of small businesses in the U.S.  This has been due to "the tilting of the playing field to favor massive companies over small businesses," as reported in a 2020 article by Business Insider.  (See also "Monopoly Power And The Decline of Small Business" for a 2016 snapshot of the problem.)  Note that the laws passed by the U.S. Congress and the executive orders issued under the Trump administration only made this worse.  However, the Biden administration has begun taking steps to reverse small business decline by helping small businesses compete for Federal work, as reported by the Federal News Network in a 2023 article.

• The shifting of tax burdens from the rich to the poor.  A striking case in point is the number of states (red states, particularly) whose legislatures and governors have turned them into tax havens for the rich.  (See also, "How the Ultrawealthy Devise Ways to Not Pay Their Share of Taxes," NPR, August 2022.)  Thus these states have come to resemble enclaves of dirty money that are found in the Cayman Islands.  Note that the U.S has recently surpassed the Caymans to become the "world's biggest enabler of financial secrecy" as reported by the international Consortium of Investigative Journalists in May 2022.  But these are merely one part of the overall shift of tax burdens away from the rich which began in the 1980's under Ronald Reagan.

• The use of monopoly and oligopoly power to create monopsony and oligopsony labor markets.  We all know that a monopoly is a state in which there is only one supplier of a particular good or service which is needed by many buyers.  The monopolist can therefore charge whatever price he wants, even if the price is horribly unfair.  Oligopoly is the condition in which there is more than one supplier, yet the total number of suppliers is very small.  Examples of oligopoly include Airbus and Boeing among aircraft manufacturers, or Microsoft and Brave and Alphabet (owner of Google) among Internet search providers, or CVS and Walgreens and Rite-Aid among drugstores and pharmacies.  A monopsony, by contrast, is a situation in which there is only one buyer of a good or service which is offered by many suppliers.  An example of this is a situation in which there is only one employer who can offer jobs to people in a large geographical area.  Thus the many people in this area become horribly dependent on the one large employer, and if that employer uses his power maliciously or suddenly goes out of business or decides suddenly to cut costs, many people will be devastated.  Oligopsony works the same way.  Monopsony and oligopsony are the natural outcome of monopoly and oligopoly.

• The shifting of regulatory burdens from large businesses to small businesses.  A prime example of this is the case of trying to use your own personal car to earn money by giving people rides.  Most cities and states have laws that prevent you from doing this as a private individual.  In this case, there are only two legal ways you can earn money by giving people rides: go to work for a taxi company, or become an "independent contractor" for a multibillion-dollar ride-hailing service such as Uber or Lyft.  The regulatory burden on these ride-hailing services is very small, as seen in the cases of ride-hailing drivers who are injured on the job, or passengers who are sometimes assaulted by the ride-hailing drivers.  Regulatory burdens are now crafted by state and local legislators for the purpose of expanding opportunities for big businesses by smothering small businesses who can't afford the costs of regulatory compliance.

• The innovation-depressing strategies of big businesses.  It can be argued that once a monopoly or oligopoly economy is established, the big players in such an economy will tend to fear innovation, since innovations can be disruptive and can even destroy the pre-existing monopoly or oligopoly arrangement.  Thus it is no surprise that large businesses (and wanna-be large business owners) have evolved egregious strategies to stifle any potential innovations that might threaten their interests.  One such strategy is the misuse of the "non-compete agreement."  These are agreements which employees force new hires to sign, in which the new hire typically agrees not to work for any other business or start their own business within a certain time frame and within a certain geographical area.  Certain versions of these non-compete agreements also force the employee to give up all rights to any invention or intellectual product which the employee may devise while employed by his employer and for a certain time period after the employee stops working for the employer.  (If you work for such an employer, I can understand why you would not be motivated to think very much while on the job!)  The abuse of non-compete clauses in employment contracts has moved the Biden administration to start taking steps to ban them (see this also), which should provide immediate relief from employers who want to try to turn their employees into personal property.

Future posts in this series will examine these factors in more detail, along with other factors such as the absence of single-payer health care coverage in the U.S.  But for now, consider these factors as the means by which the wealthy in this country seek to prevent the American precariat from building individual and collective self-reliance.

Precarity, American-Style: Introduction

Every child had a pretty good shot

To get at least as far as their old man got

But something happened on the way to that place

They threw an American flag in our face

- Billy Joel, Allentown, 1982

This post is a continuation of my series of posts on the spread of economic precarity among the majority of the world's population.  The opening posts in this series explored precarity as a global phenomenon and characteristic of economies in both the developed world and the developing world which are dominated by rampant free-market capitalism.  Subsequent posts described how precarity came to characterize even those societies which withdrew from global capitalism for several decades in the 20th century but which returned to the capitalist fold during the last decade of the 20th century.  It is now time to consider the case of a nation which has been dominated by the "free market" arrangements created by its wealthiest citizens from its founding to the present day - namely, the United States.   It is time especially to examine the late-stage outworkings of those arrangements.  Those outworkings can be summed up as the spread of precarity throughout the United States.  We have looked at other peoples' messes.  It's time to look at our own.

A quick review: the first post in this series defined precarity as "the state of being uncertain or likely to get worse," and, "a situation in which someone's job or career is always in danger of being lost."  That first post also said,

The Journal of Cultural Anthropology describes precarity as ". . . an emerging abandonment that pushes us away from a livable life . . . [It is] the politically induced condition in which certain populations suffer from failing social and economic networks . . . becoming differentially exposed to injury, violence, and death."  The University of Georgia has an article on its "Neoliberalism Guide for Educators" webpage which describes precarity in concrete human terms, starting with the questions "Have you ever or do you currently live paycheck to paycheck?  Do you work 40 hours a week or more and still can't afford rent?"

The University of Georgia webpage cited above describes how precarity was not always a feature of modern American life.  That page describes how under President Lyndon Johnson, the United States began to construct a social safety net that actually worked to bring economic advancement to all Americans and not just the rich.  The page also describes how wealthy business interests organized from the 1970's onward to begin to unravel that safety net in order to protect and expand their dominance over the American economy.  Today's post will explore how the resulting increase in precarity spread throughout the United States.  We will see that, to use a word picture, many of those who thought that they would make out all right by being friends of wolves wound up becoming lamb chops themselves.

Let's consider first a paper titled, "Changes in Precarious Employment in the United States: A Longitudinal Analysis" (Oddo, et al, Scandinavian Journal of Work, Environment and Health, December 2020).  This paper introduces the term "precarious employment" (or PE, as the authors abbreviate it) and describes it as "the accumulation of multiple unfavorable facets of employment quality."   In plain words, PE is the accumulation of those factors in a person's job which make the job more like Hell than Heaven.  The paper measured PE in terms of the following seven variables:

1. Material rewards - that is, the relative adequacy or inadequacy of wages
2. Work time arrangements - that is, how long a person has to work as well as how much control the worker has over his or her own schedule
3. Stability - that is, whether the job has a stable employment contract or whether it is unstable (as in temporary, seasonal, contracted limited-time, etc.)
4. Workers' rights - that is, whether the employer offers benefits such as health insurance or retirement, as well as protection of workers from exploitation
5. Collective organization or empowerment - that is, whether employees are helped or hindered in their attempts to organize themselves for collective bargaining power
6. Interpersonal relations - that is, whether workers have to deal with toxic bosses or bosses who don't allow the workers to control how they do their jobs
7. Training and employability opportunities - that is, whether there is room for growth and advancement in the job

A high score in each of these variables indicated a workplace that provided healthy, long-term employment.  A low score in these variables indicated a workplace of precarious employment.  The authors of the paper measured changes in these variables over time for various populations and geographic regions in the United States from 1988 to 2016.  They then used this data to construct a precarious employment score (PES) for each group and region.  The authors found, unsurprisingly, that the overall PES for the United States increased during that period, rising from 2.96 in 1988 to 3.43 in 2016.  They also found, unsurprisingly, that the PES increased among historically oppressed groups in the United States, such as African-Americans, Latinos, women, and people without advanced education.  However, there were some rather surprising findings as well.  Men showed an 11 percent increase in precarious employment during this time, as compared to a 6 percent increase for women.  Precarious employment also increased significantly among those Americans with bachelors or advanced degrees.  Most surprising of all was the large increase in precarious employment among workers with higher wages.  

As far as regional variations, the American South showed the highest percentage of precarious employment and highest increase in PES.  This is significant because of the way in which state governments in the South have turned their states into attractive places for foreign manufacturers to set up plants - particularly automotive plants.  Yet this strategy has not translated to increased prosperity for the majority of people living in these states.  This may have to do especially with the fact that, starting from the 1970's onward, automotive plants in the United States have increasingly relied on the use of temporary staff to meet just-in-time production targets, as noted in an interview given by Professor Timothy Minchin of La Trobe University in 2021.  Professor Minchin has also written a book about the activities of foreign-owned automakers in the United States.

It is interesting that the beginning and growth of widespread precarity in the United States coincided with the terms of Republican presidents from Nixon onward.  This is especially significant when we examine the presidency of Donald Trump.  The Trump administration used to boast that it had achieved nearly full employment for Americans.  However, what actually happened was that there was a huge expansion of precarious, low-wage work under Trump, whose labor policies classified huge numbers of gig and temporary workers as "independent contractors" without rights to health or retirement benefits or other job protections.  Note that the term "gig worker" includes not only those highly-skilled, college-educated people who can craft a somewhat sustainable life out of present-day flexible, short-term economic arrangements.  It also includes the many, many people who were tricked into working low-skilled menial jobs without benefits for chump change wages, first by FedEx in the 1970's and 1980's, then by Uber, Lyft, Airbnb, and Door Dash, among others in more recent years.  As a result of the expansion of such arrangements, the United States has the highest percentage of low-paid, precarious workers among any OECD economy, as noted by Kathleen Thelen in her paper titled, "The American Precariat: U.S. Capitalism in Comparative Perspective."  At present, around 25 percent of the American workforce falls into the category of low-paid precarious workers.

These facts and considerations are quite naturally a big concern to me, because I am an African-American, and I have had to live my life watching many of my people suffer the malignancy and oppression of American society.  I have also experienced some of that malignancy and oppression myself.  This experience has taught me that the oppression of even one person threatens the peace of everyone who is not yet oppressed, or, to put it another way, allowing injustice against one leads eventually to injustice against all.  This is why I can't look the other way when I see others being oppressed, even when they are not of my "tribe".  But I think that what has blinded the eyes of many white Americans (especially among the privileged) over the last few decades has been the appeals to naked self-interest which have been pitched to them by the masters of the American economy.  So I'd like to return to a theme set forth in the opening paragraphs of this post, namely a description of how precarity has begun to bite even the members of the formerly "middle-class" or "upper middle-class" in recent years.  

Consider therefore a 2019 book by Alyssa Quart titled, Squeezed: Why Our Families Can't Afford America.  I am in the middle of this book right now, and have learned some surprising things, as well as being reminded of things I already knew.  One of the surprising things is how many degreed working female professionals suffer discrimination and career damage simply from the act of having a baby.  Another thing is the link between increasing overall precarity and the increase in costs of child care for working parents.  (Child care and other forms of paid personal care represent one of the fastest-growing segments of the U.S. economy, by the way, although personal care workers receive the lowest wages.)  Yet another thing is how people who once considered themselves well-off find their neighborhoods becoming hostile to them as those neighborhoods are taken over by the super-wealthy - a surprising case of how gentrification hurts even those who thought they were insulated from its effects by being part of the dominant culture.  Case in point: a game between two high school varsity baseball teams.  One was "decently middle-class" while the other consisted of kids from a wealthier nearby suburb.  Each group was cheering their own team, but the wealthier kids - and their parents - began to taunt the kids from the other team by chanting "Lower Average Income! Lower Average Income!" and "Can't your parents afford to feed you?  Can we call Child Protective Services?"  Quart's book also describes the shock and surprise which many formerly smug professionals are experiencing as they witness the dwindling of the value of a college degree in the United States.  We will consider these things in a future post, by the way, as this phenomenon is not just limited to the United States.  As noted in a previous post, Chinese degree-holders are finding out that there are fewer jobs than graduates in the Chinese economy.

As we explore the theme of precarity in the United States, we will consider the mechanisms by which precarity began to appear from the 1970's onward.  We will see, rather surprisingly, the link between these mechanisms and the increasing difficulties faced by small businesses and would-be entrepreneurs over the last four decades.  We will also ask what is to be done about the precarious situation many of us now face.  Here's a hint: I don't believe the answer lies solely in electoral politics or issuing policy recommendations.  While these things can be important, they are not enough by themselves, since they leave the locus of power outside of those communities which are suffering the most from precarity.

Here I speak as a Black man who has studied strategic nonviolent resistance and who has experienced cognitive liberation of the kind which moves me to challenge existing situations of oppression.  My study of precarity in the United States has shown me just how dire the African-American situation is.  But my attempts over the last six or seven years to organize my brothers and sisters for collective action have left me rather frustrated.  So I'd like to ask, How will we begin to change our situation?

First, let's say straight up that passivity and magical thinking will not help at all.  I am thinking of some of the people I have tried to organize and how they have told me that I should join an organization that helps people instead of bothering them.  But my answer to that is to quote from The Little Red Hen.  Others have seen what I was asking them to do and have said in essence, "Well, I don't have the time or resources to help organize my people where I live.  But I know that there are places where we do see Black doctors and lawyers and bankers - I think I'll move there!"  My answer (especially to those who tell me that such a magical place exists in the American South) is to say that there is no "Big Rock Candy Mountain" that they can run away to, and that they are lying to themselves in order to avoid the sacrifices, hard work and potential risks of collective action.

The inescapable reality is that the only thing that will reliably alter our situation is our choice to begin to organize ourselves for collective action.  As Maciej Bartkowski said in his book Recovering Nonviolent History, 

"The guilt of falling into . . . predatory hands . . . [lies] in the oppressed society and, thus, the solution and liberation need to come from that society transformed through its work, education, and civility.  Victims and the seemingly disempowered are thus their own liberators as long as they pursue self-organization, self-attainment, and development of their communities."

Or, to quote from Alex Soojung Kim-Pang,

"Collective action is the most powerful form of self-care."  (Emphasis added.) 

Precarity in the United States: A Preview of Coming Attractions

I have begun research on my next posts in my series on precarity and the precariat.  My focus will shift from precarity in formerly communist countries to precarity in the United States.  I believe we will see a surprising similarity of patterns to those patterns we observed in the Russian and Chinese cases.  We will also see that very few people in the Unites States can afford to be complacent anymore.  I have gathered a lot of material, and like a person who has just binge-shopped a gourmet supermarket, I'll need time to digest it all.  In the meantime I may write a post on another subject tomorrow, but if I do, it will be a short post.  Those who want to get a head start on me in my research on precarity, American style, can consult the following sources:

• The Educated Underclass: Students and the Promise of Social Mobility, Gary Roth, Pluto Press, 2019.
• Immigrant Labor and the New Precariat, Ruth Milkman, Cambridge: Polity Press, 2020.  (Note: Try not to order an e-book copy of this through the John Wiley website.  Wiley has e-book download policies that will make you want to kick furniture and punch walls...)
• "Not 'Just' a Barista: The Story of Portland's College-Educated Baristas, Ned William Tilbrook, Portland State University, 2020.  (Now this sounds interesting!)

And there's much, much more!  Stay tuned . . .

Another Expose of An Evangelical Cult

Here is a link to a couple of interviews of another former member of the Assemblies of George Geftakys, who describes the horrible upbringing she experienced as a child of one of the main leaders in this group.  The interviewer is also a survivor of the Assemblies.  These interviews were very interesting to me because of my former involvement in this unhealthy group.  They are also interesting because of how they illustrate the influence of bad men from the toxic evangelical mainstream, men such as James Dobson.  As I said a while back, all the assertions of the American Religious Right are utter crap.  A caution about these interviews: they contain strong language and deal with triggering experiences.

A Dogfight Against Putin's Flying Monkeys

This will be a short post.  I am trying to get my weekly schedule under control.  However, there is continuing news about the Russian invasion of Ukraine, and there is therefore need to provide commentary to put it into context.

First, it appears that Vladimir Putin has begun to launch extra squadrons of flying monkeys in order to spread disinformation and to influence world opinion in his favor.  Several thousand such monkeys organized a protest in Germany to oppose the German government's decision to send more effective arms to Ukraine to help drive out the Russian invaders.  And the government of China's Xi Jinping has also tried to pressure the people of Ukraine into accepting a false "peace" which would do nothing to protect them from continued Russian aggression.  There are also the usual highly-placed mouthpieces in the West who are trying to cast doubt on the rightness of the West's continued support of Ukraine.  However, ordinary citizens in the West have begun to organize their own rallies to demonstrate their continued support of the people of Ukraine and their continued opposition to the thuggish Russian invasion.  And Poland has begun openly supplying Ukraine with military aid.  

The Russian government knows that if the West supplies Ukraine with adequate weaponry, the Russian invasion will be decisively defeated.  Therefore the voices of Putin's flying monkeys may well represent a cry of desperation.  For anyone who is genuinely confused about the character of Russia or of the thug named Vladimir Putin, please read the posts I have linked on the sidebar of this blog under the heading, "Russia."

P.S. I still need to do research before I write the next post in my series of posts on precarity and the precariat.  In future posts in this series, I hope to illustrate the connection between the oligarchs who rule Russia and China and some of the oligarchs who have taken root in the West.  Also, there is a bright bit of good news: the Russian invasion of Ukraine has motivated Europe to engage in a massive build-out of renewable electricity generation capacity.  This has resulted in a situation in which today Europe produces more of its electricity from renewables than from natural gas.  If Russia was hoping to use its oil and gas reserves as a tool to enslave the rest of the world, hopefully the Russians are now starting to realize that they have shot themselves in the foot.

The Precariat In The East: The Chinese Case

Today's post is the fourth installment in my series of posts on precarity as a feature of 21st century life and the precariat as a global cultural phenomenon.  For context, please also read Part 1, Part 2 and Part 3.  In the third post in this series, I wrote the following:

But the precariat has also arisen outside of the West.  What has been striking is its origin and spread in those regions which withdrew themselves from global capitalism in the early 20th century only to return to the capitalist fold near the end of the 20th century . . .

Today's post will consider the emergence of the precariat in China during the last forty-five years.  And it must be said that while precarity is a definite sign of economic inequality in a society, it is also true that there have been unequal societies in which precarity did not exist.  Chinese history spans both cases.  In fact, according to a paper titled, "Understanding Inequality in China" (Yu Xie, University of Michigan, 2010), ". . . inequality has been a part of Chinese culture since ancient times."  Historically, this inequality did not contribute to precarity among the poor in Chinese society.  However, this culture of inequality was a contributing factor in the precarity that emerged after the death of Mao Zedong.  So let us consider the evolution of inequality and class mobility in China from ancient times to now.  

Ancient China

In ancient China, the emperor was the only person with a permanent hereditary position of wealth, privilege, and power.  According to Yu Xie's paper, the emperor governed by two means: first, by the promulgation of the doctrines of Confucius and Mencius who taught that the mission of rulers is to work for the public good; and second, by the use of a vast corps of semi-autonomous administrators and bureaucrats scattered throughout the provinces of the Chinese empire.  The relationship between ordinary peasants and the emperor and his bureaucrats was therefore shaped by two points of propaganda: first, that the emperor and his administrators were actually working for the public good, and second, that for the emperor and his administrators to do their job, structural inequality was necessary.  According to Mencius, "‘There are those who use their minds and there are those who use their muscles. The former rule; the latter are ruled.  Those who rule are supported by those who are ruled.’ This is a principle accepted by the whole Empire . . ."  Therefore, the mission of the peasants was to use their labor to provide material support to this cadre of rulers.  

In order to make sure that the peasants did their part to support their rulers, a system of taxation was developed, and as part of that system, a system of personal registration (hukou (户口)) and household registration (huji (户籍)) was developed.  According to a paper titled, "Governing neoliberal authoritarian citizenship: theorizing hukou and the changing mobility regime in China" by C. Zhang, Queen's University Belfast (2018), this household registration system ". . . continuously served important social and political functions, including military conscription, taxation, local policing, social security and mobility control, for about two millennia in the centralized bureaucratic empire . . ."  Note especially the mention that from time to time, the huji system was used to limit the ability of subjects to move around from region to region in the empire.  This is corroborated by a mention in another paper of how the Qin dynasty used the huji system to limit movement of individual subjects from region to region: "The Qin people [sic] could not freely move outside an administrative unit to which he or she belonged; thus, they had to use credentials for traveling and transfer certain personal documents when moving from one unit to another."  ("In the Government's Service: A Study of the Role and Practice of Early China's Officials Based On Excavated Manuscripts," Daniel Sungbin Sou, University of Pennsylvania, 2013)

Even with this system of registration in place, however, social mobility was still possible in ancient China.  For the rich, whose riches under the existing economic and cultural system were not easily inheritable, there was always the possibility of downward economic movement.  According to Yu Xie's paper cited above, ". . . except for the emperor, the aristocratic and privileged classes were not stable . . . In fact, the emperor did not want the inheritance of the aristocratic and privileged class."  People who got too rich could in fact be repressed and have some of their possessions confiscated.  Also, poor people could advance their family prospects by investing in the education of their sons.  By this means the next generation could climb the rungs of the Chinese meritocracy and become administrators themselves.

By these arrangements, ancient Chinese society was conditioned to accept inequality as the "inevitable" price of the promotion of the social welfare of the entire society.  The system worked and was acceptable to all as long as emperors and their administrators actually ruled for the benefit of all, and as long as there was some room for social mobility among the poor.  However, between ancient times and the present, China underwent subjugation by Western powers, followed by a revolutionary fight for independence.  As a result, its internal systems went through a period of readjustment.  

Maoist China

Maoist China inherited most of the existing cultural institutions which had endured from ancient times.  Maoist China also inherited the toxic mess which Western colonialist powers had made of Chinese society.  However, the responses of the government of Mao Zedong to this mess created new challenges.  One of Mao's early goals was to transform China from a primarily agrarian society to a modern industrial society as quickly as possible.  This led to such disasters as the Great Leap Forward which was launched in 1958.   

In 1958 the system of internal household registration was also transformed into a much more rigid modern hukou system modeled on the Soviet Russian system of propiska (пропи́ска).  It is interesting to note that in its original form, the Russian propiska system, hundreds of years old, was designed to prevent the upward social mobility of Russian serfs.  The Chinese system, borrowing from the Russian system, thus created a society which was the opposite in certain key aspects from the socialist promise of a "classless" society.  

The hukou system had the following elements:

• Starting in 1958, all people had to be registered according to birthplace.
• The person's birthplace was the determinant of whether the person received State welfare services and what kind of services would be received.
• Those whose birthplace registration was urban received State services.
• Those whose birthplace registration was rural received no State services.  Any welfare services they received had to come from communal social arrangements in their village of registration.
• Those whose birthplace was urban were categorized as non-agricultural.  Those whose birthplace was rural were categorized as agricultural.
• The children of the people registered in 1958 inherited the hukou status of their parents.  The children of these children, in turn, inherited their parents' hukou status.  Thus even if you were a child born in the 1990's in a city, if your parents had a rural hukou status, you inherited the same rural hukou status.

The Maoist hukou system created a social hierarchy in which the members of the Communist Party were at the pinnacle.  Immediately below them were the city dwellers who were involved in industrial production.  Below them were the rural peoples, whose mission was to provide food to the industrial urban centers and the leadership of the country in order to fulfill the mission of rapid industrialization.  Therefore, the social mobility of the rural, agricultural hukou holders was severely restricted.  Anyone who held an rural agricultural hukou who tried to move to a city without permission was likely to be severely punished.  Moreover, anyone from the countryside who moved to the city without permission would be denied access to the social services available to the residents of the city who held urban, nonagricultural hukou status.  And the Chinese government made it very hard for anyone with a rural hukou status to change to an urban hukou status.  (See "China's Household Registration (Hukou) System: Discrimination and Reform", Fei-Ling Wang, Georgia Institute of Technology, 2005.)  According to "China’s Hukou System: How an Engine of Development Has Become a Major Obstacle" (Martin King Whyte, Harvard University, 2009), the holders of rural, agricultural hukou comprised 80 percent of the total Chinese population in Maoist times.

One last feature of note in the Maoist system was the danwei (单位) system.  A danwei was a work unit organized in Maoist China.  According to Wikipedia, the workers assigned to a danwei were the bottom rungs of the social hierarchy whose head was the central Communist Party.  Danwei referred not only to the place of work but also to the organization of the work unit.  The danwei also served the purpose of dispensing social welfare benefits to their subjects.  Thus things like health care, schooling and day care for children, and other benefits were dispensed to workers through their danwei.  Once assigned to a danwei, it was very hard for a worker to be fired, because the danwei provided an "iron rice bowl" to their workers, a system of social welfare and livelihood that, while often not comfortable, at least prevented them from having to live a precarious existence.  While this security had its good features, it was part of a system that did not deliver prosperity and national advancement as rapidly as was wished by some of the more forward-thinking members of the Chinese Communist Party.  Therefore, after Mao's death, Chinese social arrangements were again altered in order to attempt to harness capitalism as an accelerator of growth and advancement.  While the alteration did produce results, it also accelerated the increase of inequality in China and began to introduce a rapidly-growing element of precarity in Chinese society.

From The End of Maoism to Today

The changes wrought by the reforms begun in 1978 have been profound.  Two changes are especially relevant, as they have contributed most greatly to the emergence of the precariat in China.  The first is the smashing of the "iron rice bowl" danwei system.  According to Wikipedia, when individual private enterprise became possible once again, private enterprises and foreign multinational corporations were able to out-compete state-run danwei.  This led to the weakening and shrinkage of the danwei, and the increasing number of workers who were thrust out of stable careers with guaranteed benefits into an uncertain labor market.  Thus these refugees from the danwei system became an element of today's precariat in China.  In losing their danwei, these displaced workers lost the social units that once gave them status, identity, and access to benefits.

The hukou system was also changed.  The changes have been coordinated between the Chinese government and large holders of capital in the Chinese economy, and their goal has been to create and expand a large, flexible, and cheap workforce.  The elements of this change are as follows:

• Restrictions on physical movement under the Maoist hukou system have been relaxed somewhat but definitely not eliminated.  
• Hukou status has largely remained unchanged in the sense that it is still difficult for holders of rural hukou to change their status to urban.
• Legal migration of rural residents to urban centers is more possible now than in Maoist times.  However, rural residents who do migrate are still denied access to the social welfare services and legal citizenship rights granted to holders of urban hukou.  
• This arrangement has therefore created a very large class of migrant workers who are paid very cheaply and have few or no rights.  
• Those who migrate legally are more likely to be integrated into the formal economy of the cities to which they migrate, whereas those who migrate illegally tend to wind up in the informal economy.
• Whether formally or informally employed, these migrant workers are not granted stable, long-term employment contracts.  Therefore they comprise another very large sector of the Chinese precariat.
• Many of these people are forced to work like dogs, as evidenced by the "996" schedule imposed by many employers, a schedule which was only recently ruled illegal by the Chinese Supreme Court.
• Those who migrate illegally are subject to the threat of violence either by the State or by their employers.

One other thing to note is that in China as elsewhere, education is no longer the guaranteed road out of precarity into a more stable life.  A 2021 paper titled, "After the Foxconn Suicides in China: A Roundtable on Labor, the State and Civil Society in Global Electronics" describes the exploitation of young Chinese students by the tech industry, thus highlighting the struggle of the large percentage of youth in the Chinese precariat.  This is also pointed out in another paper titled, "The Chinese Race to the

Bottom: The Precarious Lives of Unemployed University Graduates in Beijing’s ‘Ant Tribe’".

Lastly, it should be noted that although the precariat in China is expanding, expressions of resistance to exploitation are beginning to appear as well.  For further information on these, you can read the first pages of Building China: Informal Work and the New Precariat by Sarah Swidler.

I have one or two more global regions to examine in sketching the precariat as it exists in the world today.  Those will require more research, so the next post in this series may need to wait a couple of weeks.