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The global picture of digital labor processes and what are the implications for China?

author:Insight Finance v

I. The international division of labor and cooperation system of the digital labor process

In the digital economy, the Internet, whether used on fixed or mobile networks and devices, provides more and richer functions than previous generations of communication technologies to support a wider range of transactions in the global economy, and new market relations, international division of labor and cooperation systems have emerged.

The global picture of digital labor processes and what are the implications for China?

Although the globalization of the industrial chain is not a new phenomenon, the development of digital information technology and platform economy has affected this process at a faster pace and deeper breadth. Digital information technology reduces the transaction costs of goods and services in the production and distribution, and with the decline of transportation costs and the development of the international market, a new international division of labor and cooperation system of digital labor process has gradually formed.

(1) The flat network characteristics of the international division of labor and cooperation system

The international division of labor in the digital labor process is influenced by the expansion of the object of labor from the physical field to the digital field. In the process of globalized digital labor, not only have data, images, and information in the form of physical entities become common labor materials or labor objects, but digital services such as telemedicine, online education, and online training have also flourished globally. The transportation mode of labor materials or labor objects has also expanded from traditional physical transportation such as sea, land, and air transportation in the past to bitstream transmission in virtual spaces such as digital Internet and local area network.

The global picture of digital labor processes and what are the implications for China?

The international cooperation system of digital labor process has the characteristics of network and flattening. By building a scientific and reasonable division of labor and cooperation mode among different labor participants, it can improve production efficiency and realize the smooth and effective operation of the entire industrial chain. In the historical development of economy and society, along with the development of science and technology, there have been many changes and adjustments in the mode of division of labor and cooperation.

From a global perspective, the application of digital technology breaks the paradigm of the past international cooperation system, and gradually builds a more efficient and convenient international cooperation system based on digital information network.

(2) Digital technology determines the new pattern of international division of labor in the digital labor process

In the formation of the international division of labor pattern of the digital labor process, the level of digital technology has played a decisive role. In the period of industrial economy, the industrial technology required to manufacture machinery and equipment is an important factor affecting the pattern of international division of labor. This law still applies in the era of digital economy, and those countries that carried out digital technology changes earlier and had the advantage of digital technology are often in an advantageous position in the international division of digital labor.

The global picture of digital labor processes and what are the implications for China?

The emergence of new digital information technologies and their early large-scale application in individual countries and regions may further widen the digital divide while creating opportunities for developing countries to catch up with and surpass developed countries. Some developing countries, including China, have seized the opportunity to actively develop and improve digital infrastructure, and have achieved synchronous development with Western developed countries on the new digital technology track, and even surpassed developed countries in some specific fields. However, the gap between developing and developed countries that have failed to seize the opportunities of digital technology has widened and are at a greater disadvantage in the international division of labor.

Second, the inequality of global distribution in the process of digital labor

(1) The Piketty effect of personal income distribution

The pandemic has accelerated the digital and intelligent transformation of various sectors around the world through unnatural evolution, and digital technologies such as artificial intelligence have also posed new challenges to the gap between employment and personal income distribution of the global population. From the perspective of global distribution in the process of digital labor, a very small number of people occupy a large amount of social income and wealth, and some founders of digital enterprises, such as Jeff Bezos, founder of Amazon, Bill Gates, founder of Microsoft, Mark Zuckerberg, founder of Facebook, etc., have obtained a large amount of personal income and wealth with the monopoly of digital capital and digital technology.

The global picture of digital labor processes and what are the implications for China?

In Forbes' 2022 list of the world's top 10 richest people, only three of the richest people have their income from traditional businesses, and the remaining seven richest people have income sources closely related to digital technology and digital industries. In the global picture of the digital labor process, a very small number of people occupy a large amount of social income and wealth, and there is a "Piketty effect" in the global personal income distribution. The French economist Thomas Piketty's book Capital in the Twenty-First Century has attracted the attention of the academic community by studying the inequality of personal income and wealth distribution from a new perspective.

In this book, Piketty conducts statistical research on the distribution of personal income in advanced capitalist countries around the world, such as Britain, France, Germany, and the United States, and points out that the rate of return on private capital tends to exceed the growth rate of income and output for a long time, which will lead to a widening gap between the rich and the poor among individuals.

The global picture of digital labor processes and what are the implications for China?

Piketty thus questioned the science of the Kuznets curve, which states that sustained economic growth does not automatically eliminate the gap between rich and poor and inequality among individuals. Piketty points out that inequality caused by labor income is not mild, while inequality caused by capital income is more extreme.

From the perspective of digital labor process, the application of digital technology in the labor process has greatly improved production efficiency and promoted economic growth, but as Piketty pointed out, economic growth cannot naturally lead to the narrowing of the gap between the rich and the poor of individuals as the Kuznetz curve shows.

The global picture of digital labor processes and what are the implications for China?

On the contrary, because in the process of digital labor, digital technology has continuously strengthened the role of the overall means of production in society and weakened the role of individual workers in living labor, which makes low-income individuals who rely on labor income face more unfavorable sources of labor income, while high-income individuals who rely on capital income have more favorable sources of capital income.

High-income individuals with digital capital and technology can obtain a higher proportion of distribution by virtue of the production conditions of key digital factors in the distribution process. In the process of digital labor, capital uses digital technology to control the proportion of laborers continuously. Compared with traditional labor, digital labor has flexible characteristics that make it more inclined to adopt the form of piece-rate wage, which not only strengthens the work intensity of workers, but also reduces the income level of workers.

The global picture of digital labor processes and what are the implications for China?

Digital capital also lowers the labor threshold through "de-labor skilling", and various intelligent voice assistants and APP processes make the labor that originally required certain skills become labor with a low entry threshold, thereby increasing the substitution of related labor, generating a large number of potential workers, and "race to the bottom" makes the income of digital labor at a relatively low level.

At the same time, the "de-labor relationship" manifested in the process of digital labor makes workers bear the corresponding social security costs, which further increases the profit margin of capital and increases the personal income of capital owners. As digital capital continues to expand globally, the inequality in the distribution of individual income caused by the gap between labor income and capital income described by Piketty will further increase.

(2) Unequal income distribution between countries

Marx once discussed the inequality of income distribution between countries. In the fourth volume of Capital, he pointed out that after the formation of the world market, commodities were transformed from domestic value to international value, and that the ostensibly fair international trade and exchange of countries with different levels of development masked de facto inequality. Each country, as a participant in international trade, has a different medium labor intensity, "so that the average of countries forms a ladder, and its unit of measurement is the average unit of world labor".

The global picture of digital labor processes and what are the implications for China?

In fact, this process is accompanied by the global expansion of digital capital, developed countries rely on their innate technological advantages, acquired global digital rule-making advantages to integrate developing countries into the bottom of the digital production value chain, and workers in developing countries undertake the main labor and become the main body of value creation, but these values are exploited and transferred by developed country platform enterprises that control digital resource technology.

In the process of globalized digital labor, the trend of separating digital science and technology from labor is becoming more and more obvious. Digital enterprises in developed countries increasingly occupy the high end of the global industrial chain, while developing countries that bear the heavy labor are at the bottom of the industrial chain, and technology has become a tool for preying labor. Especially considering the development of digital technologies such as automation and artificial intelligence, even manual workers in developing countries at the bottom of the industrial chain are at risk of mass unemployment.

For example, Foxconn, which produces goods for several large electronics companies such as Apple, once absorbed a large number of labor in developing countries including China and Vietnam, but now part of Foxconn's production lines use intelligent robots instead of labor, and in 2021, Foxconn has used robot technology to reduce the number of employees in the Kunshan factory from 110,000 to 50,000, and continues to invest in the research and development of new intelligent robots.

The global picture of digital labor processes and what are the implications for China?

This trend of premature deindustrialization has made the situation of workers in developing countries more difficult, they may be forced to compete with machines to accept more laborious and heavy physical labor, or they will provide more service labor unique to people, sell their emotional labor, and even personality and dignity.

The inequality of global distribution in the process of digital labor is also reflected in the value created by developed countries by transferring labor in other economies through digital monopoly rents. Globalized digital platform enterprises in developed capitalist countries, such as Google, Facebook, Amazon, etc., have monopolistic trading conditions that other countries do not have, which can speed up the turnover of digital capital, and under the condition of assuming that the profit rate remains unchanged, they can obtain excess profits in the same time and form a higher total profit rate.

The global picture of digital labor processes and what are the implications for China?

With more efficient algorithm matching technology and bilateral effect of more users, global digital platform enterprises can invisibly enhance market reputation, enhance consumer trust in transactions, and reduce the cost of information search and screening in the transaction process. Multinational digital platform enterprises originating in developed countries not only gradually integrate users around the world into the global market system, but also collect large amounts of rent from organizations and individuals in other countries with their monopolistic trading conditions, which further aggravates the inequality of global distribution in the process of digital labor.

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