Blog

The gyroscope-like economy (Part I)

Published 26 May 2020 / By Biao Xiang

Back to Articles

Introduction

This blog is part of the COMPAS Coronavirus and Mobility Forum.

The global economy is a gyroscope. It has to spin fast in order to stay balanced. Social tensions surface once it slows down.

Mobility has become a basic driving force of our economy, and the grammar of how our social lives are organized. That is why halting this movement has created a near-total shutdown of the economy, a result that appears far more devastating than the 2008 financial crisis. While the 2008 financial crisis merely disrupted conventional circulation patterns of money and goods, the pandemic has stopped human activities and removed that foundation of economic life.

The social consequences of the pandemic can be understood through the global economy’s dependence on our collective mobility. In turn, investigations into the causes of its mobility-dependency may deepen our understandings about the economy.

You are socially dead if you can’t travel

The famous ‘social credit’ system in China works due in large part to the punishment imposed: the system blocks the blacklisted from travelling on trains or airplanes. The threat of immobility is a most effective penalty; for many, an inability to travel means social death.

China’s phenomenal development since the 1980s can be read as a story of mobility. Before 1980, Chinese citizens needed special permission from governmental departments or their employer merely in order to purchase a train ticket or check in to a hotel, let alone change jobs or residence. The market-oriented reforms transformed a society of immobility into a hypermobile one. The number of internal migrants (who reside more than six months outside the place of registration) doubled from 121 million in 2000 to 236 million in 2019. By that point, 3.6 billion Chinese were travelling on trains and 660 million by air, compared to 950 million and 87 million in 2003 when the SARS virus broke out. The number of private cars increased from 13 million to 206 million in that time period.

The inability to stop

We have become hostages of our own mobility not because we have been moving so much for so long. Rather, we are trapped by mobility, so to speak, because we have lost the capability of stopping. So how did we get to this point?

The economy became so dependent on mobility because of a wide range of structural and institutional changes. Based on observations on China—which has played such an integral role in the 21st century growth story—I will discuss three such changes, which could be a starting point for exploring more widely applicable hypotheses.

De-materialisation

First, there is a trend of “de-materialisation” with the rise of the service industry, which has been the biggest change in the Chinese economy in the last two decades. Service accounted for less than 40 per cent of GDP growth in 2003, but nearly 60 per cent in 2019.

The service industry is closely associated with mobility. One of the fastest growing sectors within the service industry, tourism expanded 18-fold between 2000 and 2019. The number of domestic tourists as measured in Person-Time jumped from less than 1 billion to 6 billion in that time period. Many workers in the service industry move constantly to deliver service, and also rely on others’ movement to generate demand for said service. These workers include more than 5 million delivery riders (Liang 2020), and more than 3 million couriers, as well as 20 million drivers associated with ride-hailing taxi apps and 1.4 million regular taxi drivers. It seems that the closer its association to mobility, the faster the sector has grown.

“De-materialisation” is not entirely accurate in describing the service industry as movement is made up of material processes. But service activities often appear dematerialised because the transactions leave little trace; taxi drivers, for instance, are paid for each ride they deliver. Once the order is complete, their labour, and even their entire existence, vanishes. Unlike factory work, service labour is typically un-accumulative, not solidified into material forms, and does not express itself through lasting social relations. The apparent “de-materialisation” in the mobility economy is thus related to the second trend: “casualisation.”

Casualisation

In trade and hospitality, 70.8 percent of the Chinese workforce is in so-called “micro-enterprises” with fewer than 100 employees, many of whom do not have stable employment relationships. A survey reported that 80% of couriers have no legal relation with the courier companies whom they work for (Yu and Cai 2020). For casualised labour in the service industry, the financial reward to their work is instant, but the loss of earning opportunity is irreversible. For example: a taxi driver who lost income in two months of lockdown cannot expect that the number of customers would double after the lockdown lifts. They rely on constant mobility for incomes. Casualised labour not only moves from one place to another, but also from one job to the next. In the end, spatial movement and institutionalised precariousness are two sides of the same coin.

The rise of the “gig economy” shows even more clearly the relation between labour casualisation and mobility. Capital behind platform technologies do not seek profits by possessing workers’ labour power, which is then turned into commodities through material production. Instead, platform capital purchases workers’ movement, which is tightly monitored. This is part of the process—and the third change—that I call “logistification.”

Logistification

Logistification is the trend that capital maximises returns and pursues monopolist positions through the management of circulation. The rapid development of the logistics sector itself is an obvious manifestation of logistification.

Officially recognized as an industry in 2003 and included in the national five-year plan for the first time in 2006, China’s logistics industry surpassed that of the United States in market size in 2013, the same year that China became the world's largest trader. The total turnover of logistics increased from RMB 4.5 trillion (USD 0.64 trillion) in 2007 to RMB 283.1 trillion (USD 40 trillion) in 2018. Instead of factories and assembly lines, warehouses and shipping lines epitomise the capitalism we know today. At the end of 2016, the industry employed 50.12 million persons, accounting for 6.5% of the country’s employment. And among them, 56% are self-employed, an example of how logistification and casualization intertwine.

These three changes—de-materialization, casualization and logistification—mean that the economy could inevitably collapse if circulation stops. They made us hostages of mobility.

Read The gyroscope-like economy (Part II) here.

An earlier version of this article titled “Hostages of Mobility” appeared in Pandemic Discourses, a blog co-published by the India China Institute and the Julien J. Studley Graduate Programs in International Affairs at The New School for Social Research.

References

Liang, Naifeng. 2020. “Influencing Factors of Delivery Riders’ Occupational Identity and Policy Response: Based on a Survey in Huizhou, Guangdong", Logistics Engineering and Management. Issue 1: 110-116 (Chinese).

Yu, Xiao and Cui, Xiaoli. 2019. "How to protect the legal rights and interests of courier boys". Fangyuan. Issue 2: 58-61 (Chinese)