"Nowhere, hardly excepting even the Irish domestic industries, are such infamously low wages paid as in the German domestic industries. Competition permits the capitalist to deduct from the price of labour power that which the family earns from its own little garden or field; the workers are compelled to accept any piece wages offered to them, because otherwise they would get nothing at all, and they could not live from the products of their small-scale agriculture alone, and because, on the other hand, it is just this agriculture and landownership which chains them to the spot and prevents them from looking around for other employment. This is the basis which upholds Germany’s capacity to compete on the world market in a whole series of small articles. The whole capital profit is derived from a deduction from normal wages and the whole surplus value can be presented to the purchaser. That is the secret of the extraordinary cheapness of most of the German export articles."

--"1887 Preface to the Second Edition of the Housing Question" by Engels

[MIM adds:
Today, German workers receiving the minimum wage are in the top 10% of the world, so we have to say the conditions changed. However, the principles or theory involved here is still the same for the Third World.

We received the following letter from Australia on this subject.

Dear MIM:
Allow me to draw your attention to Engels's preface to "On Housing," as I think it may be relevant to extracting surplus-value in China (and other Third World countries) since the land was privatised, of course as always under capitalism. The peasants are being forced into the cities as proletariat, but a lot of small and medium industries were started on the backs of the old collective commune and village enterprises in the countryside. This small local industry is of great importance. Engels speaks of the peasants in Germany with their "own little garden" compelled to accept any piece wages offered etc "The whole profit is derived from a deduction from normal wages and the WHOLE (my emphasis) surplus value is PRESENTED to the purchaser."

This may be the case in China today--the land ownership itself being a main cause keeping the wages of Chinese labour down. Hundreds of millions of them.

This, if so demonstrates that apart from a quick gain for some in the early '80s when Deng made some subsidies, the privatisation of land rather than being good for the people and lifting their income, is the main reason they are so easily being so cheaply exploited now for export for the benefit of imperialism of course.

They cannot mechanise the tiny plots so they are tied down to a miserable income subsistence incomes and no hopes of improvement until capitalism takes its course and they are turned off the land for capitalist farming.

Deng hooked them up on Hollywood dreams of all getting rich under capitalism. Of course, it's not working. Most development they have is factories for the imperialists and fancy looking land destroying infrastructure. Everything produced in factories is mostly exported.

An important point to remember about China is that WE tend to see competition on the world scale affecting "our" jobs. But that competition, a central part of capitalism's drive for profits is NOW INTERNAL in China too.

The enterprises and regions, that is the capitalists are competing against each other internally: "one capitalist kills many" and this in already desperately poor conditions for the poor workers and peasantry as above. No unions, no effective factories acts as in early capitalist England, no self-imposed policing of competition by the capitalists etc.--lots of small industry in the country--it could easily develop into the kind of labour conditions Rewi Laly the New Zealander wrote about in Shanghai in the 1920s.

So I don't believe wages will get better in China. In fact, they will get much worse. HOLLYWOOD DOESN'T DELIVER.

So as Mao would say, "one divides into two and the situation is excellent for class struggle." We have a lot of people in China with experience of revolution and socialism and the Great Proletarian Cultural Revolution and their conditions are worsening as their already low wages will be driven lower.

The compradors attempted to build up a labour aristocracy in China too, based on the old working class city residents' rights and Soweto-style temporary work permits for the peasantry coming to the cities.

That residence permit system is apparently being worn down now. The peasants are now in the cities in their tens of millions and are probably able to sell their labour cheaper than the city workers who don't have farms. The countryside is being sucked dry of able-bodied peasantry men and women, leaving the old and the young to manage their farms. Country workers are living in barrack like conditions in the city.

Internal contradictions between the workers and capitalism must be sharpening in China. A lot of these new workers are the old poor peasantry.

The Chinese rulers are raking it in. See their foreign reserves in hundreds of billions fast approaching a trillion in reserves. I suspect a lot of the Hong Kong reserves are Chinese owned too.

These reserves are the profits the savings of surplus value of the compradors who are too FRIGHTENED to invest it in China for fear of revolutionary confiscation, so it is invested in the United $tates especially. And all they need is their aeroplane tickets to Taiwan or the United $tates. If that happened would the United $tates rescue them as in the old days and take them to Taiwan again?

They are trying to keep the wages low in China, because that is the main selling point, their main game as comprador-managers of labour for the imperialists, for a cut in the surplus-value without re-investing much of their own capital. They want the imperialists to invest their money and save their own for the bolthole.

The compradors don't sell so many products themselves. The imperialists do that. The compradors' main business is labour management and percentages in ownership as partners--Mafia gatekeepers, for a cut in the surplus-value from exports.

They themselves do not want to create a modern CHINESE industry and commodity market or certainly not improves wages in China. That is their reason for existence. Their whole business depends on keeping low wages not just for, but in addition to the usual capitalist profit making reasons. If they do not keep them the lowest the imperialist will move to India or Indonesia. So the military will play an increasing role as the workers demand better wages and conditions. The ruling class is scared. The foreign reserves prove that. It is their bolthole money. They are scared. If they were not scared, they would reinvest capital they have seized in Chinese industry. Instead, they invest in imperialism.

They know the actual conditions, so we should be confident if they are too frightened to invest--not on faith alone, but because the material conditions of the class contradictions are developing.

Now wouldn't that be something! Hollywood discredited because it didn't deliver and the biggest proletariat in the world inheriting a modern industrial base!

It could happen very soon.

As Mao advised, have faith in the workers and peasants of China. They have the rich experience and not much inheritance of generations as labour aristocrats.

--Australian reader
January 2006 ["US" is not used in MIM style for the noun, so we changed it to "United $tates" in the text above.]

[MC5 responds to letter writer:
This expands on what MIM has been saying. The comrade points out that we need not rely on an argument of extra-economic coercion in China to see wages as low. One good bourgeois coup followed by the privatization of land then makes all workers and peasants think they are voluntarily agreeing to wages that happen to be much lower than what would be normal without the privatization of land.

The quote from Engels should also help with all the thick-headed people who keep saying surplus-value arises in production not exchange, as if that is an answer to Arghiri Emmanuel or as if surplus-value is not then redistributed in a variety of bourgeois partnerships and forms. Here the surplus-value goes to the purchaser as Engels pointed out--mainly the Western labor aristocracy today.]