Is Shanghai a Gobal City

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Is Shanghai a Global City?

By Wai Kit Choi and David A. Smith, Sociology, UC-Irvine

This research will examine how modern capitalist development shapes the growth and decline

of different modes of labor control in Shanghai and Hong Kong from the early 1900s to the

contemporary period. A mode of labor control, as Immanuel Wallerstein defines its, is the mode inwhich labor is recruited and recompensed in the labor market (Wallerstein 1979, 17). Examples of

modes of labor control include slavery, sharecropping, tenancy, wage-labor, self-employment, etc.

The modes of labor control from Shanghai and Hong Kong to be examined in this research are:

(1) the contract labor system in Shanghai from the early 1900s to 1942, (2) colonial Hong Kongs

system of state-coerced wage labor from 1902 to 1932, (3) the system of migrant labor and (4)

informal wage labor in both cities following Chinas market reform in the early 1980s and Hong

Kongs subsequent transformation into a global city from the same period.

Different modes of labor control in the two different cities wax and wane during a century ofmodern capitalist development, though in Shanghais case it was interspersed with a period of

socialist planning. How then do we explain the prevalence of one mode of labor control and its

subsequent decline? The central issue in this research is how the trajectories of capitalist

development in these two cities reciprocally affect the growth and decline of each others modes of

labor control.

In the first section of this proposal I will specify the research question and introduce theories

relevant to answering my research question. In the last two summers I took two research trips to

Shanghai and Hong Kong. While parts of the findings from those trips are for two other projects

(Choi 2004; 2005), in the second section of this proposal I will discuss the data collection from those

trips relevant to this current project and the methodology to be adopted for future research trips. In

the third section I will discuss the general significance of this research.

I. Theories Explaining the Growth and Decline of Modes of Labor Control

How do we explain the relationship the growth and decline of different modes of labor control

under capitalist development? Orthodox Marxist theory explains that the birth of capitalism is

inextricably tied to the emergence of free wage labor as the dominant mode of labor control. In

orthodox Marxist theory, wage laborers are conceptualized as free wage laborers in two senses: (1)

They are free from owning means of production, that is, they are deprived of alternative means of

subsistence, and they primarily live on the wages they earn. (2) They are also free in that, unlike

slaves or serfs, they are not coerced into working for an employer due to the threat of violence but

only because of economic necessity. As capitalism develops, free wage labor will increasingly

replace other modes of labor control. Since under capitalism there is only one dominant mode of

labor control, from an orthodox Marxist standpoint, there is no need to explain the growth and

decline ofdifferentmodes of labor control.


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Multiple Modes of Labor Control Under Capitalism

Many sociologists challenged this simplistic account of the relationship between capitalist

development and modes of labor control (Koo, 1990, 2001; Sen and Koo, 1992; Tilly, 1981, 1983,

1984; Wright, 1997; Wright and Singlemann, 1982; Wright and Martin, 1987). For example,

Alejandro Portes and Saskia Sassen claim that capitalist development does not lead to the elimination

of alternative modes of labor control by wage labor. In many developing countries and global citiesof the developed world today, we see the persistence and even the expansion in the number of

informal wage laborers who undertake low-paying part-time jobs or homework while supplementing

their incomes with self-employed activities such as windshield cleaning, wristwatch battery

replacement, or recycled-paper collection (Portes 1985; Portes and Benton, 1984; Portes, Castells

and Benton, 1989; Portes and Sassen-Kobb, 1987; Sassen 2000, 2001). In contrast to the orthodox

Marxist theory, Portes and Sassen show that many people, rather than being archetypal free wage

laborers, become informal wage laborers since they cannot rely exclusively on their wages but must

resort to alternative means of subsistence in order to survive.The idea that there are multiple modes of labor control under capitalist development and that

free wage labor does not necessarily dominate can be supported by cases from Shanghai and Hong

Kong. Many scholars of Chinese labor history (Chesneaux 1968; Honig 1986; Hershatter 1986; Perry

1993) note the prevalence of the contract labor system in different industries in China during early

twentieth century. Owners of cotton factories in Shanghai at the time did not directly recruit workers.

Rather, this was conducted through middlemen who were often members of a secret society, the

Green Gang. The middlemen would go to the villages where they had ties, pay a lump sum to a

young womans parents for a period from one to three years, then bring her to the city. Wages were

not directly paid to the female workers but to the middlemen who kept a portion for themselves then

redistributed the rest.

In colonial Hong Kong, a new law, the Employers and Servants Ordinance. No. 45, was

introduced in 1902 to strengthen the old Master and Servant Act. The new law not only covered

contracts between employers and domestic servants but applied to all employment contracts. Under

the new law, a breach of contract on the part of the workers could lead to criminal prosecution;

workers could be fined, or even face imprisonment. Until 1932, the year this law was abolished,

wage labor in Hong Kong was not free wage labor since state coercion was used to discipline wage

laborers. I refer to this as the system of state coerced wage labor.

In the contemporary period, we also witness in Hong Kong and Shanghai the rise of informal

wage labor and the system of migrant labor. Since the early 1980s, Hong Kong became

deindustrialized because of massive relocation of factories to mainland China. Hong Kong then

transformed into a specialized and financial service-based global city with a polarized occupational

structure. The top tier is composed of high paying management or consultant positions at

multinational investment banks, law and accountant firms. The bottom tier consists of low paying

temporary or even part-time clerical and janitorial positions. Many full-time factory wage laborers

then became casual or informal wage laborers in the service sectors following the closure orrelocation of their factories (Lui and Chiu 2001; Chiu and Lui 2004; Forest, Grange and Yip 2004 ).


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On the other hand, in many mainland Chinese cities today, Shanghai for instance, we see the duo

dynamics of informalization of state sectors workers and the proletarianization of migrant laborers in

foreign-invested enterprises (Lee 1998, 2002). However, the mode of labor control that the Chinese

migrant laborers are subordinated to is not the typical free wage labor system. As Dorothy Solinger

observes, many migrant laborers from the rural areas do not have an urban hukouan official

household registration that allows them to live legally in the cities. These migrant laborers are thenexcluded from mainstream labor markets and have less job freedom than official urban residents

(Solinger 1999: 198). Furthermore, corporeal punishment and physical assaults are used in many

foreign-managed factories to discipline migrant laborers (Chan 2001: 46). The migrant labor system

is then different from the system of free wage labor where coercion is absent. The different modes of

labor control in Shanghai and Hong Kong are listed in the following table.

Table 1: The Four Modes of Labor Control from Shanghai and Hong Kong

Mode of Labor Control Contract Labor State-Coerced Wage Labor Informal Wage Labor Migrant Labor

Central Feature Indirect hiring Employment contracts based

on legal coercion

Flexible terms of

employment

Exclusion from

rights

Place Shanghai Hong Kong Shanghai/Hong Kong Shanghai/Hong Kong

Period 1900-1942 1902-1932 Contemporary Contemporary

This research will then explain the growth and decline of these four modes of labor control that have

existed in Shanghai and Hong Kong during the two cities last hundred years of modern capitalist

development.

Explaining the Growth and Decline of Different Modes of Labor Control

Given that there are multiple modes of labor control under capitalist development in Shanghai

and Hong Kong, over time some modes grow while some others decline. There are three approaches

that help explain the mechanisms of their growth and declinethe production function account, the

embeddedness account and the incorporating comparison approach.

Production Function Wallerstein agrees that a variety of modes of labor control exists under

capitalism. In explaining the co-existence of different modes of labor control--why there are many,

rather than just one mode of labor control--he points out that each particular type of mode of labor

control is best suited for particular types of economic production (Wallerstein, 1974: 87).

Wallersteins answer helps explain the growth and decline of different modes of labor control. When

the type of production with which a mode of labor control is associated is flourishing, this particular

mode of labor control continues to expand. But when that mode of labor control can no longer fulfill

its productive function or when that production is shrinking, that mode of labor control begins to

wane.

Embeddedness Two sociologists, Giovanni Arrighi and Gary Hamilton (Arrighi et al 2004; Hamilton

et al 2004), recently intervened in the debate about the sprouts of capitalism in imperial China.

Allying themselves with Kenneth Pomeranz and R. Bin Wongs position (Pomeranz 2000, Wong

1997), they challenge traditional Western historiography and argue that that there were sprouts of

Chinese capitalist development even before Western capitalist penetration in the mid nineteenth


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century. Hamilton argues that there was even capitalist industrialization in late Imperial China. As

an alternative to the Fordist systems of production that emerged in the nineteenth and early

twentieth century in the West (Hamilton 2004: 203), Chinese industrialization in the textile industry

was characterized by a putting-out system structured by buyer-driven commodity chains.

Drawing on the notion of embeddedness from Mark Granovetter, Hamilton explains that

household mobility and a fluid class structure in late Imperial China at the time help account for theparticular type of industrialization that existed. Hamiltons point then is that we can explain the

specificity of a particular type of capitalist development by examining how production is embedded

in a holistic social organization structure. Hamilton does not address labor issue in his work, but we

can extend his insight to explaining the growth and decline of different modes of labor control in

China. Perhaps the growth and decline of a particular mode of labor control in Shanghai and Hong

Kong is also determined by its degree of embeddedness in the overall local social structure.

The third approach to explain the growth and decline of different modes of labor control in

Shanghai and Hong Kong is by examining the economic ties between the two cities and their nichesin the global economic order. The method of comparison adopted in this research, incorporating

comparison, aims precisely at capturing such interconnection.

II Methodology: Incorporating Comparison, Interviews and Archival Research

The method I will use to compare Shanghai and Hong Kong is neither one of individual

comparison nor universalizing comparison. The former aims at capturing particularities while the

latter aims at universal laws (Tilly 1984b: 87-115). Rather, I will use a method that Philip

McMichael refers to as incorporating comparison (McMichael 1990), the purpose of which is to

identify interactions between the different local units and show how they form a sub-system of its

own. What type of economic interaction exists between Shanghai and Hong Kong? Recently there

has been discussion of the competition between Shanghai and Hong Kong. There may be

competition between them but what is equally important is the capital and labor flow between the

two cities that mutually re-configure their paths of capitalist development and modes of labor control.

For example, Wong Siu-Lun shows how industrial capital and talents from Shanghai after the

Chinese communist liberation of the mainland fueled Hong Kongs export-led industrialization

throughout the 1950s (Wong 1988) while currently Hong Kong is Shanghais largest source of direct

foreign investment. The economic flow between the two cities during different periods of global

capitalist expansion can also explain their changing modes of labor control.

I speak Cantonese and Mandarin fluently and I also read and write Chinese. My mastery of

Chinese helped me enormously while I was conducting preliminary research in Hong Kong and

Shanghai in the past two summers. While there I collected both quantitative and qualitative data. In

Hong Kong, I collected data from the census, records from the Legislative Council meetings,

economic and judiciary statistics from the Hong Kong Public Records Office and university libraries.

While in Shanghai, I went to the Shanghai Municipal Archive and Shanghai Library.

In addition, through the help of different senior centers in Hong Kong, I was also able toconduct oral history interview with 9 Hong Kong men and women in their 80s to 90s on job searches


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and labor conditions in Hong Kong from the 1920s to late 1940s.

The next stage of this research will involve more interviews and statistical analysis of

quantitative data on the two cities economic and labor development. I will also conduct similar oral

history interviews with Shanghai workers in their 80s and 90s and compare their experiences to those

of the older Hong Kong workers I already interviewed. Equally important are recent informal wage

laborers and migrant laborers in the two cities. A difference between the migrant laborers in the twocities is that in Hong Kong has a high number of Filipina and South Asian migrant laborers in the

city and I will also interview them.

III Why is it important to study modes of labor control?

The Noble Laureate in economics Joseph Stiglitz and Saskia Sassen each wrote a book titled

Globalization and its Discontents (Sassen 1998; Stiglitz 2003). They argue that globalization leads to

downward social mobility for many peopleand that it exacerbates poverty and income inequality in

different parts of the world. In Stiglitzs account, the opening up of markets in the developing worldto goods from the developed world lead to the bankruptcies of many self-employed direct producers

in these developing countries. For example, due to their inability to compete with imported U.S.

agricultural products, many self-employed Mexican farmers, similar to the Chinese farmers, have to

leave their lands and become migrant laborers in the sweatshops in maquiladora. In Sassens account,

increased economic ties among different regions of the world transform many metropolises into

global citiescities where multinational corporations establish their regional headquarters to

coordinate their transnational business activities. As it is illustrated by Hong Kongs experience,

many former full-time factory wage laborers then became casual or informal wage laborers in the

low paying service sectorsrestaurants, sub-contract cleaning companies, retail, etc. following the

closure or relocation of their factories.

Self-employed direct producers, wage-laborers, informal wage-laborers, etc., are

modes of labor control. The movement of people from one category to another indicates the decline

of certain modes of labor control and the growth of some otherone mode of recruiting and

compensating labor becomes obsolete while another mode becomes prevalent. Different modes of

labor control have different impacts on the income of laborers because they compensate laborers in

different ways, transformation in modes of labor control could entail downward social mobility for

those involved.

This research examines how the global expansion of capitalism during different historical

periods affects the growth and decline of different modes of labor control in Shanghai and Hong

Kong. This is an important issue. The globalization-induced downward social mobility increases

poverty and income inequality, which will in turn generate resistance to globalization. If we are to

gauge the consequences and future direction of globalization, it is then crucial to understand how

global free market expansion, through the mediation of local capitalist developments, transforms

modes of labor control.


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Is Shanghai a Gobal City