Debate and Theory

Following Marx, some contemporary scholars continue to argue that the systematic deployment of unfree labor via the use of extra-economic coercion is incompatible with capitalist production.Footnote ¹⁰ I will refer to this thesis as the Incompatibility Thesis. However, there are counterexamples to this thesis, and among the literature that most directly undermines it are the studies on the British Master and Servant Act, which demonstrate the existence of unfree labor, not in the capitalist peripheries, but in the heartland of industrial capitalism—namely, nineteenth century Great Britain. For example, under the Master and Servant Act enacted by the Parliament in 1823 and lasting until 1875, breach of contract by a worker resulted in criminal sanctions against the worker. Punishment for the worker could be a fine, up to three months of imprisonment with hard labor, and/or wage abatement. A wide range of workers were prosecuted under this law, including miners, lock makers, and workers in iron factories, pottery factories, and cotton mills. The use of this law as a disciplinary tool to enforce work performance and to bind workers into employment relationships shows that unfree labor was entwined with industrial production in capitalist Britain until the late nineteenth century.Footnote ¹¹

Functionalist Explanation: Rescuing the Incompatibility Thesis

If one is to insist on the validity of the Incompatibility Thesis, then the counterexample above will need to be explained, and a functionalist explanation is often invoked to do just that. The defenders of the Incompatibility Thesis suggest that unfree labor was used under early capitalism as a functional solution to labor scarcity when no other resources were available to the capitalists. They further state that unfree labor became outmoded and was no longer used as capitalism matured. We see the application of this explanation to the British Master and Servant Act. For example, it is argued that this law was adopted when English capitalism was in an early stage of development where technological innovation remained underdeveloped.Footnote ¹² Craft production comprised a significant share in factory organization, and many “capitalists” were just employers operating small workshops characterized by primitive technologies. These “small masters” were dependent on the skills of their workers, whose “negligence” or absence from work could disrupt production. Extra-economic coercion in the form of penal sanction was then used to discipline workers and to lock them into employment relationships to ensure a stable labor supply. As mechanization of industrial production became more widespread, capitalists were no longer as dependent on the skills of the workers. When there was a more fully formed reserve army of labor, the use of extra-economic coercion in the form of the Master and Servant Act to secure labor supply was no longer necessary.Footnote ¹³

Critics of the Incompatibility Thesis: Wallerstein and Sewell

The adherents of the Incompatibility Thesis have too restrictive an understanding of the capitalist labor process. As Wallerstein and Sewell argue, labor deployment under capitalism should not be seen as consisting exclusively of free wage workers. For Wallerstein, capitalism is a “world-system” that encompasses different sovereign territories across the world. A polity can be classified as either a core, semi-peripheral, or peripheral state depending on its position within the international division of labor. Under world-systems theory, unfree labor is not an exception to the proletarian norm. Rather, it is one of the multiple modes of labor control that together with other modes, make up and reproduce the capitalist world-system.Footnote ¹⁴ Sewell makes a similar point while using a different argument. He notes that commodification is central to capital accumulation; it is an abstract process in that it “knows no natural limits; it can be applied not only to cloth, tobacco, or cooking pans, but to land, housework, bread, sex, advertising, emotions, or knowledge, each of which can be converted into any other by means of money.”Footnote ¹⁵ Any object, whether it is tangible or intangible, can be bought and sold for profit-making. Similarly, the production process under capitalism is abstract in the sense that it is not restricted to just one mode of labor control. Capitalist production, as Sewell suggests, involves not just a “homogenous proletariat” laboring in factories, but also entails “sub-contracting, sweatshops, outsourcing and ‘cottage industry.’”Footnote ¹⁶ Though Sewell does not directly address the issue of unfree labor, he regards, like Wallerstein, the variety of labor systems under capitalism as a norm rather than an exception.

Unfree Labor without Functionalism: Burawoy and Steinberg

But when capitalism is seen as composed of multiple modes of labor control, one question arises: What determines which mode of labor control is used? Or to frame the question in terms of the theme here: Why does capitalist production resort to non-proletarian labor? While agreeing with Wallerstein and Sewell's arguments, my explanatory strategy will instead focus on the historically specific context that embeds a system of capitalist production. One author who uses a similar strategy to account for unfree labor is Steinberg, as exemplified in his work on the British Master and Servant Act. The way in which labor becomes subordinated to capital, Steinberg notes, is often treated exclusively as a question of how mechanisms of control are established within production processes or work organizations.Footnote ¹⁷ Similar to Burawoy, who shows how political and ideological apparatuses outside work organizations can also be deployed to enhance managerial control of workers,Footnote ¹⁸ Steinberg underscores the central role that the larger socio-political context plays in the formulation of labor control strategies. Steinberg focuses on demonstrating that extra-economic coercion continued to be part of the labor control regime under capitalism at least until the mid-nineteenth century during the height of British industrialization. To explain why violence against British wage workers persisted, Steinberg examines the British legal institutions during that period and shows how they regulated wage employment relations. In Steinberg's account, it was not the production process within a factory, but the particular way in which the British state exercised its power at that time (more specifically, the juridical context that enveloped nineteenth century capitalist production) that is a key explanatory factor of unfree labor.

Theorizing Shanghai

Underlying the functionalist account is the assumption that capitalism as a social system has its own intrinsic logic of development. An illustration of this assumption is the thesis that free wage labor, i.e. a proletarian work force, is an inherent feature of capitalism that will gradually become generalized as its production process evolves from an earlier to a later stage. Unfree labor, on the other hand, is treated as a momentary deviation from this process of proletarianization, and its deployment by capitalists is explained by its supposed function in production when capital accumulation occurs in its nascence or under “abnormal” circumstances. Under the functionalist approach, the causes of unfree labor are neither historically nor politically specific to a given society as the causes of unfree labor are non-social. Rather, unfree labor is caused by the technical needs of the capitalist production process that impose themselves on any society falling under the orbit of capitalist development. There are instances where the functionalist approach seems correct, but the baoshengong case in Shanghai will demonstrate that it fails as a general explanation of unfree labor under capitalism. I will draw on Burawoy and Steinberg and offer an explanation that focuses instead on the socio-historical context and show specifically how the conflicts and collaboration between different forms of domination contribute to the use of unfree labor under capitalism. By building on Honig, my approach also differs from Burawoy's and Steinberg's in that the contextual factors that I consider important in my analysis include not just state domination, but other forms of domination as well. To account for the baoshengong system, I argue that we must examine the dynamics of contestation and collaboration between different forms of institutional domination that pervaded early twentieth century Shanghai. These diverse forms of institutional domination included patriarchal, gang, capitalist, and state powers.

What is the Baoshengong System?

Following China's defeat in the Opium War in 1842, Shanghai was transformed into a treaty port in which different Western countries established their concessions. The American and British concessions merged in 1863 and became the International Settlement under the administration of the Shanghai Municipal Council (SMC). The SMC was a governing body composed primarily of Western expatriates and had its own police force, as well as its own militias—the Shanghai Volunteer Corps. The French, on the other hand, maintained their own concession with a separate municipal structure. The northern and southern sections of Shanghai remained under Chinese control. In March 1927, the Chinese Communist Party (CCP) organized three worker uprisings and overthrew the warlord Sun Chuanfang. The communists were not able to sustain their victory, however, and in less than a month, the military forces of Chiang Kai-shek, the leader of the Nationalist Party or Guomindang (GMD), and a supposed ally of the CCP in the joint campaign against the warlords, entered Shanghai. Chiang's GMD forces immediately disbanded the worker militias and began a wave of executions of communists and labor activists. The GMD then seized control of the Chinese sections of Shanghai and placed them under a governing body known as the Shanghai Special Municipal Government. In 1937, Japan launched a full-scale invasion of China; the Chinese territory in the city fell under Japanese occupation that same year.

I will focus on the interval between 1927 and 1937 in my examination of the baoshengong system—a decade during which there was a surge in the use of baoshengong workers. As Honig points out, following the defeat of the communist-led labor movement in 1927, the Green Gang was able to strengthen its control over workers in Shanghai, and this created an environment that allowed gang-affiliated labor contractors to expand their baoshengong operation.Footnote ¹⁹ During this period, both Chinese and Western investigators in Shanghai became aware of the baoshengong system as a social problem. Xia Yan, a writer and a communist revolutionary who was working underground in Shanghai, published one of the most influential reports on this topic in 1936.Footnote ²⁰ A Japanese invasion in the following year ousted the GMD from Shanghai and brought factory production to a halt; after that, the baoshengong system went into decline.

The baoshengong was a variant of an indirect hiring system known in Chinese as baogong. Rather than hiring workers directly, capitalists and factory owners often turned to middlemen, such as labor contractors or workshop foremen, for help with labor recruitment.Footnote ²¹ When recruiting cotton-mill workers, the labor contractors primarily targeted young women in the rural areas, and two factors facilitated the recruitment process. First, rampant poverty is important since it helps explain why parents gave up their daughters to labor contractors. People from different parts of China went to Shanghai to escape wars and natural disasters or simply to find some means of subsistence because they were not able to make a living at home. But a large number of them found neither shelter nor jobs and became homeless in Shanghai. The corpses of those who died from hunger, illness, or the cold during winter were frequently found on the streets of Shanghai. In 1935, a peaceful year without military conflicts, 5,590 corpses were collected in the city.Footnote ²²

Second, labor contractors often recruited workers with whom they shared the same regional ties, i.e. tongxiang relation.Footnote ²³ As S. A. Smith explains, one's native place “could be defined at a number of levels by reference to a village, town, county, or province of origin, and this allows individuals to expand their levels of affiliation as they moved further afield.”Footnote ²⁴ For example, two people from the same village in Hunan province are considered tongxiang, meaning people with the same native place association. But even if they are not from the same village but are both from Hunan province, they could still be considered tongxiang. During the recruitment process, labor contractors used tongxiang relations to establish trust with the parents of prospective workers.

The indirect hiring system was used in Chinese, Japanese, and British cotton mills in Shanghai, but they did not all implement the system in the same way, and they also dealt with the problems it raised differently. A labor contractor affiliated with the British-owned Ewo Cotton Mill explained that he began his work with the factory by signing a contract with the manager. The contract stated the level of production that had to be achieved, then the contractor gave the factory a collateral (Vermögen Sicherheiten)Footnote ²⁵ and hired workers for production; if production fell short of the target stated in the contract, payment would be made to the factory from the collateral.

Shenxin Cotton Mills, headed by two brothers, Rong Zongjing and Rong Desheng, employed 31,717 workers and was the largest company in China in 1932.Footnote ²⁶ Shenxin was also one of the companies that used the baoshengong system. In Shenxin No. 9, one of the Rong's cotton mills in Shanghai, one third of its approximately three thousand workers were baoshengong.Footnote ²⁷ There is no indication from available sources that production in Shenxin cotton mills was outsourced to labor contractors in the same way as in Ewo, and the Rongs did recruit their chief foremen, but like their British counterpart, they similarly did not interfere with production nor were they involved in the hiring of production workers. Rather it was the chief foremenFootnote ²⁸ and their lower level foremen and forewomen known as “Number Ones” who decided on such matters. As noted by Sherman Cochran, the Japanese cotton mills owned by the Naigai Cotton Company had initial success in maintaining managerial control over their workers from 1911 to 1924, but following a series of strikes from 1925 to 1927, Naigai ceded control over hiring to the Green Gang and increased the use of baoshengong through labor contractors from 1927 to 1937.Footnote ²⁹ Both Ewo and Shenxin also had baoshengong workers, but unlike Naigai, Ewo officially eliminated the use of the indirect hiring system entirely in 1937,Footnote ³⁰ while Shenxin enjoyed some success in reducing the power of the Number Ones and gained more direct control over its workers in the 1930s.Footnote ³¹

It is important to note that not all the workers recruited by the labor contractors, or Number Ones, were baoshengong. There were non-baoshengong workers as well, and these two types of workers were exploited by the middlemen in different ways. In the case of the baoshengong, all the wages of the indentured workers went to the labor contractors. An example of this was given in a report published by the Shanghai Municipal Council (SMC) in 1938. Following the Japanese invasion of China in 1937, Western powers in Shanghai were able to remain neutral and maintain their rule in the concessions until 1941. Prior to Japanese occupation, many Chinese had fled to the International Settlement for safety. The SMC placed some of these Chinese in refugee shelters and, in the process, they discovered among them twenty-seven baoshengong who were under the control of one female labor contractor. According to the report, the labor contractor obtained permission from the parents to take their daughters to Shanghai after both parties agreed on the amount of payment. The payments made to the parents varied from $25 to $45 while the duration of the contracts were all two years.Footnote ³² The parents would sometimes be given a portion of the total amount, for example $10, and the rest would be given in separate payments. During the contractual period, the labor contractor retained the baoshengong workers’ entire incomes and provided them with food and lodging.Footnote ³³

Non-baoshengong workers fared better, but they still were not able to keep all their wages since they had to compensate the middlemen for giving them the jobs. Eleanor Hinder, who headed the industrial section of the SMC, the governing body of the International Settlement in Shanghai, observed that “[w]orkers frequently pay a sum to a middleman, usually a foreman or forewoman responsible for hiring or discharging labour. A part of the fixed month's wages may traditionally be given as a ‘gift,’ and a percentage of the monthly earnings thereafter may find its way into the foreman's pocket.”Footnote ³⁴ If workers refused to pay, foremen sometimes retaliated with physical attacks. For example, a former worker at the Shenxin No. 9 cotton mill named Wang filed a lawsuit against three Number Ones. They attacked him when he was on his way to work because he had left Shenxin No. 9 for a different factory without giving them any “gifts.”Footnote ³⁵ In his study, Jürgen Kuczynski considers this type of extortion against workers a form of “extra-economic terror” (Der auβerökonomische Terror),Footnote ³⁶and the youth, children, and elderly deployed in the different industries in Shanghai are described as being subject to extra-economic coercion (einem auβerökonomischen Zwang).Footnote ³⁷ The gangsters’ use of violence to exploit workers and other vulnerable groups such as beggars and prostitutes was common, and Kuczynski is right about the prevalence of “extra-economic terror” in Shanghai. However, there is a distinction between using violence to extort money from workers and using it to indenture them and deny them their employment freedom.

Non-baoshengong workers were not held in bondage by the labor contractors but the baoshengong were. The restriction of freedom that labor contractors imposed on female baoshengong workers is illustrated by Li Juzhen's experience. Li was one of the former baoshengong workers interviewed by the government after the Revolution of 1949. She recalled that there was a guard at her dormitory and that the baoshengong workers were not allowed to go outside without permission; even going to a store to buy daily basic items was prohibited.Footnote ³⁸ Xia Yan's report also underscored the lack of personal freedom among the baoshengong workers. The group of young women that he studied worked at a Japanese cotton mill owned by the Naigai Cotton Company. They were invariably escorted by the labor contractors or their overseers when they made their daily trip to the factory from the dormitory. Besides the use of guards, a brick wall was also built around the dormitory to deny female workers easy access to the outside world. Xia Yan estimated that inside the dormitory there were about two thousand baoshengong workers under the control of more than fifty labor contractors.Footnote ³⁹ When the baoshengong workers did not follow orders or tried to escape, physical violence was used, in both the factory and the dormitory, to subdue them. Fan Lanyan came to Shanghai from Northern Jiangsu as a baoshengong in 1926; she recalled how physical discipline was used not only in the factory but also in the dormitory. Beating was the most common form of corporal punishment, but there were others. Xia spoke of a girl who was made to stand for hours with a driving shaft placed on her head by a forewoman. Fan also experienced being made to stand in the cold in winter for a long time before being allowed back inside to work. Beating in the dormitory was to be expected if the labor contractor learned that Fan was disciplined at work. The beating was even more severe for those who tried to escape. Among Fan's group were a small number of young male baoshengong, one of whom tried to escape but was caught. As a punishment, he was hung by his two thumbs and whipped.Footnote ⁴⁰

Rejecting the Functionalist Explanation: The Rise of Yangchenggong

According to the functionalist account, unfree labor is used under capitalism when this practice can execute production more efficiently than can the use of free wage labor. If the baoshengong system was deployed in Shanghai's cotton mills for functional reasons, it should increase efficiency in these mills, and the capitalist owners would have no reason to replace this system. The archival data show otherwise. Super-exploitation by the labor contractors lowered the productivity of baoshengong workers while the Number Ones maximized their own gains by making unnecessary hires, which led to redundancy in production. In response, the cotton capitalists tried to eliminate the baoshengong system, and instituted another system of labor recruitment called the yangchenggong system. As I will explain, unlike the former, the latter was a system of direct hiring by the capitalists, and it was not based on physical violence. The historical records to be discussed below reject the functionalist account of the baoshengong system.

Productivity Undermined

To the cotton mill owners, the labor contractors’ and the Number Ones’ extraction of resources from the baoshengong workers would not have been a concern had factory production not been affected. However, the ill treatment of unfree laborers, in fact, affected production. Fan Lanying recalled that when she was working as a baoshengong she was given only two bowls of porridge and a bowl of rice with bits of vegetables each day. Bathing facilities were also lacking and many baoshengong had fleas and sores on their bodies as well as “rotten feet.”Footnote ⁴¹ An SMC report published in 1940 describes a case where an escaped baoshengong was chased by a labor contractor. The police arrested the contractor and the baoshengong was later found at the hospital, admitted for malnutrition. The general manager of a cotton mill that had baoshengong workers was quoted in that same SMC report as saying that he “realizes that the contractor system [Note: the Baoshengong system] is not good, producing as it does apathetic lethargic workers.”Footnote ⁴² The super-exploitation of the baoshengong by these contractors led to poor health and decreased work efficiency, and it alarmed the mill owners.

The hiring of unnecessary workers was another problem generated by the indirect hiring system. The foremen or forewomen in charge of hiring received a part of a worker's monthly wage as a “gift.” To find factory positions for their baoshengong workers, labor contractors who were not already in partnership with the Number Ones also had to offer them gifts. This means there was a built-in incentive for the Number Ones to increase the number of workers even when they were not needed in production.Footnote ⁴³ But the issue that was perhaps most threatening to the textile capitalist was the obstruction of disciplinary action against workers. While the baoshengong experienced super-exploitation, other workers under the baogong system were not exploited as severely. They were abused by the Number Ones, but the point is that, as Smith notes, the baogong system was also a patron-client relationship.Footnote ⁴⁴ As such, the foremen and Number Ones were expected to give them some degree of protection. At times, they sheltered their workers from the excessive demands of management, such as overtime work or reduced work breaks. Sometimes they were even able to mobilize their workers to go on strikes, as was demonstrated in the Nikko No. 4 mill, the Commercial Press, and the British Cigarette Company.Footnote ⁴⁵

The Turn to Yangchenggong

With the help of engineers who returned to China after having studied textile production and scientific management in Japan, the Rong brothers conducted organizational restructuring in their cotton mills to abolish the system of unfree labor in order to circumvent the power of the labor contractors and Number Ones. They employed two key strategies; the first was to institute a system of direct hiring, and the second was to provide housing and a host of amenities to workers so as to achieve what I call “total administration.” The main battleground for this new organizational structure was the Shenxin No. 3 mill in Wuxi, a city outside Shanghai. There are likely two reasons why this particular mill was selected, which also explain the relative success of the Rongs’ reform. First, the Rongs were originally from Wuxi, and this gave them direct access to potential recruits. Second, the Green Gang had less of a presence in Wuxi than in Shanghai, which made it difficult for the Number Ones and labor contractors in the No. 3 Mill to draw on the support of the gang. As Rong Desheng mentions in his annual chronicle, he hired a Japanese trained engineer to undertake reform at the No. 3 mill as early as 1923.Footnote ⁴⁶ But this initial attempt experienced a setback when some Number Ones organized their workers to attack the managerial staff in 1925,Footnote ⁴⁷ due to management's “less than gentle” approach in dealing with Number Ones. Lou Zhendan was recruited by Rong Desheng to become a manager at the No. 3 mill because he had previously worked at a Japanese cotton mill in Shanghai. In an essay where he reflects on his experience at the No. 3 mill, Lou writes that the Number Ones were extremely conceited, indolent, and did not take their work seriously.Footnote ⁴⁸ Zheng Xiangde was a manager during the time of factory reform and he later became the director of the No. 3 mill. In an interview conducted in 1961, he notes that the Number Ones had poor leadership skills and that they related to their workers as chieftains who ruled the workshops based on their personal likes and dislikes.Footnote ⁴⁹

It was not until the late 1920s that factory management was able to overcome the resistance of the Number Ones and began to make headway,Footnote ⁵⁰ which culminated in the establishment of a direct hiring system known as the yangchenggong program. Lu Hanruo, a manager at the Shenxin No. 3 mill, described in detail the yangchenggong system in 1932. He pointed out that the recruitment process began with the factory sending invitation letters to the village heads in the countryside. The letters specified the eligibility of the applicants: They must be female, between the ages of fifteen and twenty, healthy, gentle, dexterous and somewhat literate. Those who qualified were invited to fill out an application and go to the factory to take an admission test. On one exam day, there were around 200 applicants. Literacy and math skills were the basic parts of the examination. They were also tested for memorization, perseverance, attentiveness, and dexterity. At the end, they also had to pass a medical examination. Out of the 200 or so applicants, fifty were recruited and were to be trained for three months.Footnote ⁵¹ According to an introduction written by the management team of the Shenxin No. 3 mill, new recruits had to take classes on production techniques as well as classes on language, math, and “self-improvement.”Footnote ⁵² Management provided food and lodging to apprentices for free until the young women became formal workers. In 1931, the Rongs took over another cotton mill in Shanghai and renamed it Shenxin No. 9 mill.Footnote ⁵³ The Rongs’ attempt to introduce a more rigorous hiring requirement was illustrated by a lawsuit filed by the former workers of the Shenxin mill. They complained that Shenxin No. 9 went back on a promise to re-employ them after the company instituted the yangchenggong program. Some 2,404 workers were affected and one reason why some of them were not re-hired was a stipulation that excluded those who were under fifteen, older than fifty, women with bound feet, or those who were pregnant.Footnote ⁵⁴ It is not clear how many, if any, of these workers were re-hired, but Shenxin No. 9 mill went on to launch a yangchenggong program.

Commenting on the construction of company housing for workers, Hinder observed that “[f]rom the point of view of the management, this measure ensures a stable work force. Absenteeism is lessened by having workers on the factory compound under supervision, where the familiar excuse of illness may be checked.”Footnote ⁵⁵ Hinder's observation was insightful, but the use of company housing was advantageous to the cotton capitalists for another reason. One of the key goals of the yangchenggong program was to eliminate the middlemen and give the company owners direct control over the workers, and it was through “welfare” programs such as low-cost housing and schooling that the Rongs were able to extend such influence over the workers. The company dormitories that the Rongs built for the workers were called New Village for Workers (Laogong Xin Cun) and they usually had, besides dorm rooms and bathing facilities, a meeting room and an entertainment area.

In the New Village for Women Workers in the yangchenggong program at Shenxin No. 2 mill, there were five main rules, nineteen general rules, nineteen dorm room rules, ten rules for the cafeteria, seven rules for the washing rooms, thirteen rules for the bathrooms, seven rules for the cloth washing room, seven rules for the entertainment area, and eight rules for the meeting room. For the workers living at the New Village, there were altogether ninety-five rules. In addition to the rules, there were also daily schedules for the apprentice workers. One schedule was for the day shift apprentice workers and another for those on the night shift. Day shift workers began their day at 5:00 a.m. and the schedule matched different activities to an exact time until 9:00 p.m., which was the designated bed time. The time between 9:00 p.m. and 5:00 a.m. was the only segment of the day that was not referred to in the daily schedule. Out of a twenty-four-hour day, these eight hours for sleep were the only time the workers were left free by the management. The schedule for night shift workers was no less regimented.Footnote ⁵⁶

The daily schedules and rules show that the factory management tried to regulate the behavior of the workers down to the minutest detail. General Rule No. 19 prohibited workers from entering the dorm during working hours and leaving the dorm during non-working hours without permission from the building manager; Rule No. 9 for the dorm rooms required residents to tread lightly in the room and the hallway; Rule No. 10 for the dorm rooms required workers to close the blinds when sleeping during the day; Rule No. 3 for the cafeterias prohibited talking while eating; and Rule No. 11 for the bathrooms required residents to dress neatly both before and after they showered.Footnote ⁵⁷

Baoshengong and Yangchenggong Compared

Through these draconian dormitory rules, the Rongs were able to exert control over their workers not just on the shop floor, but also in their living space. How was the yangchenggong different from the baoshengong system when the former was a central part of management's “total administration,” and arguably no less controlling than the latter? An important feature of the baoshengong system was the use of physical violence to keep workers in servitude; it was a form of unfree labor. In contrast, workers in the yangchenggong system were neither indentured nor disciplined by violence. The divergence in methods of labor control between these two systems shows that there were two logics of domination. Labor contractors made profits by retaining the baoshengong workers’ wages while giving them the bare minimum for subsistence. Since their profits did not come from the sales of products, their workers’ performance at the production line was not of primary importance to them, and domination was primarily exercised to keep workers in bondage. The cotton capitalists had a different set of considerations; their profits did come from the products they sold, and they were concerned about increasing workers’ productivity. For the Rongs, one way to accomplish this was to ensure that the young women recruited had “good work ethics:” submissive to authority, industrious, self-driven, etc. Unlike the baoshengong case, domination in the yangchenggong system was exerted to bring about a behavioral change among the workers that would result in productivity growth.

From 1995 to 1996, Ngai Pun conducted ethnography at an electronic factory in Southern China that similarly provided housing to its workers, and she introduced the concept of the “dormitory labor regime” to describe the way management expanded labor control to the workers’ living spaces:

Through the provision of housing, management eliminated the distinction between the portion of workers’ time that belonged to the company and the portion that belonged to the workers themselves. As Pun makes clear, some factories in contemporary China still use this method to instill self-discipline in workers. The yangchenggong system, which also aimed at molding young female workers into well-behaved, rule-abiding, worker-citizen subjects, is a precursor to this type of modern Chinese managerial practice.

Another difference between the baoshengong and the yangchenggong system is that the latter allowed for a direct supervisory relationship between the management and workers. This does not mean that the Rongs’ reform completely eliminated third party involvement in management's recruitment of workers. One reason was that the new system did not eliminate the workers’ dependence on the middlemen. The service records of the workers at the Shenxin No. 9 mill from April 1931 to June 1949 showed that all workers had to have a recommender and a guarantor in order to be hired. Even an application for living in the dormitory required a guarantor.Footnote ⁵⁹ The two roles were sometimes filled by the same person, but in most cases they were not. The recommender was related to the applicant through some social network, and often he was someone already working at the factory. However, in the case of the guarantor, it was common that he was unrelated to the factory.Footnote ⁶⁰ The guarantor also had a heavier responsibility. In a 1945 form that was completed by a guarantor, it was stated that he was liable for the losses inflicted on the factory if the worker sabotaged the machines, broke the contract by resigning early, or went on strike.Footnote ⁶¹ While workers were not beholden to the foremen or Number Ones under the new system, they were still dependent on those who agreed to be their recommenders and guarantors. Gift offerings could still persist since being a guarantor was not a small responsibility.

By the mid-1930s, the Rongs had put in place their new management system in a number of their mills. However, there were still cases where the new system and the baoshengong system were used side-by-side in the same mill as in Shenxin No. 1 and No. 9 mills in Shanghai. The number of baoshengong still involved was substantial. For example, out of over 3,000 workers at Shenxin No. 9 in 1936, 1,200 were reported to be baoshengong.Footnote ⁶² While examining the use of the contract labor system in China's pre-1937 mining industry, Tim Wright notes that one reason for its deployment was “the inadequate supply of skilled supervisory and managerial staff, accustomed and trained to work in a large organization.”Footnote ⁶³ The Rong brothers did have experienced supervisory staff at their disposal, and the reform at Shenxin showed that they still could not completely eradicate this system of indirect hiring.

Explaining the Baoshengong: Institutions of Power in Shanghai

According to the functional account, a system of unfree labor is used under capitalism because it provides an efficient solution to the needs of production. This was not the case with the baoshengong. Super-exploitation rendered baoshengong workers unfit for work and the Number Ones maximized gains by making unnecessary hires, which led to redundancy in production and lower profits. The Rong brothers’ turn to the yangchenggong program indicates that the cotton capitalists themselves also did not find the baoshengong system effectual.

Given these different problems, why then did the Rongs implement the baoshengong system in their cotton mills in the first place? An explanation can be found in the complex power relations between different social institutions in Shanghai. I now explain how the contentious and collaborative power relations between the cotton capitalists, the GMD state, the Green Gang and the family patriarchal structure constituted a causal nexus that enabled the deployment of a baoshengong system that was more of a detriment than a support to efficient production.

Industrial Capitalists and the GMD State

Shanghai was China's leading center of economic development before World War II, with the capitalists controlling some of the country's largest businesses and factories. Between 1932 and 1933, “half of China's 2,435 modern factories (defined as mechanized and employing at least thirty workers) were in Shanghai.”Footnote ⁶⁴ Among the richest capitalists based in the city were the Rongs, who maintained a dominant position in textile and flour production among their Chinese competitors.

Although Shanghai's industrial capitalists had huge economic influence, some scholars note that they had a contentious relationship with the GMD state and that, at times, they were even the target of state exploitation.Footnote ⁶⁵ For example, Marie-Claire Bergère suggests Chiang Kai-shek used a “carrot and stick” strategy in his dealing with the capitalists.Footnote ⁶⁶ Chiang absorbed some capitalists into his regime through provision of monetary benefit, but his relationship was also exploitative and coercive to those whose willing cooperation was not deemed important. In Bergère's analysis, capitalists who collaborated with the GMD were those in Chiang's immediate circle, such as his brothers-in-law T. V. Soong and H. H. Kung, as well as capitalists from the financial sector. She notes that the “financial advantages that the new regime's [GMD's] borrowing policies afforded the bankers between 1927 and 1931, and the prospect of official or semi-official careers that opened up before them, encouraged the bankers to rally to the regime and speeded up the process of converting these entrepreneurs into officials or quasi-officials.”Footnote ⁶⁷ On the other hand, manufacturers and entrepreneurs such as the Rong brothers “had been coerced rather than won over.” GMD's stick “for the most part struck the entrepreneurs” while the carrot “went the way of the bankers.”Footnote ⁶⁸ Bergère's point about the relationship between the industrial capitalists and the GMD state identifies one of the factors that led to the use of the baoshengong system in cotton mills. Rather than promoting an environment that was conducive to manufacturing, in Bergère's account, the GMD state was an agent of exploitation in relation to the industrial capitalists. Given the GMD's indifference to their business interests, the Rongs were vulnerable to the dictate of the Green Gang, and the lack of state support also rendered a full-blown struggle against the gang difficult.

The Green Gang and the GMD State

Another Shanghai social institution that played an even greater role in maintaining the baoshengong system was the Green Gang. Honig observes that the story of the baoshengong is not just a story about rural young women and the cotton-mill owners, it is “just as much a story of the Green Gang of Shanghai and how it cornered the cotton mills’ labor market.”Footnote ⁶⁹ Cochran explains that the baoshengong system persisted because one of the Green Gang leaders, Du Yuesheng, had become particularly influential by the early 1930s and incorporated the factory foremen into his organizational structure.Footnote ⁷⁰ Since the Green Gang gave the baoshengong operation its support, the system was able to continue.

The Green Gang that both Honig and Cochran refer to can be traced back to the Ming and Qing periods when the grain tribute system was instituted to bring food supply from Southern China to the imperial capital, Beijing. The Green Gang originated in traditional associations formed by boatmen involved in grain transport along the Grand Canal.Footnote ⁷¹ After the overthrow of the Qing during the early twentieth century, the Green Gang became involved in the opium trade, prostitution, gambling, and labor racketeering. Elizabeth Perry points out that in Shanghai, almost “every line of unskilled labor came to be ruled by native-place barons with gang connections—beggar chiefs, brothel madams, night-soil hegemons, wharf contractors, and factory foremen. Immigrants from the villages in search of work quickly discovered that employment opportunities in the city were dependent upon criminal ties.”Footnote ⁷² The Green Gang was also active in the cotton industry. It established an organization called the Mutual Advancement Party (Gongjin Dang) and many mill foremen, guards, and even workers became members.Footnote ⁷³

Of all the gang's “business” activities, its political partnership with the GMD was perhaps the one that brought the most benefits. In his study of the Green Gang, Brian Martin observes that Chiang Kai-shek initially had insufficient forces to move against the CCP's provisional government in 1927.Footnote ⁷⁴ Chiang requested help from the Green Gang leaders in return for being allowed to continue their opium operation.Footnote ⁷⁵ The Green Gang directly participated in the killing of CCP members and also played an important role during the period of “white terror.” After the elimination of the CCP in Shanghai, the ties between the GMD and the Green Gang leader Du Yuesheng continued to grow, so much so, in fact, that “[f]rom 1927 on, the Green Gang became a political power that all contenders would have to take seriously.”Footnote ⁷⁶ GMD's Shanghai Municipal Government frequently asked Du to act as mediator in strikes because union leaders were often his disciples in the Green Gang.Footnote ⁷⁷ Another area of cooperation between the GMD and the Green Gang was the opium trade. Due to a lack of revenue sources,Footnote ⁷⁸ the GMD decided to monopolize the opium trade, but under the guise of suppression. Du played a role in this covert operation by collecting taxes from Shanghai opium traders on behalf of the GMD. Unlike the industrial capitalists, the Green Gang formed an alliance with the GMD state that allowed them to obtain political and economic benefits in return for the services they provided.

Family Patriarchy

The baoshengong system was gender-specific; the workers who were ensnared in servitude were primarily young women. This system was similar to prostitution in that family patriarchy was an important factor that enabled the supply of women to the gang-affiliated overseers in both textile mills and brothels. Writing about prostitutes in early twentieth-century Shanghai, Gail Hershatter classifies prostitution as a type of work that should be understood “in the context of other forms of paid labor” undertaken by women in the city. Other ways in which women secured their livelihoods besides prostitution included factory labor, domestic work, and concubinage. Notwithstanding the differences between these various lines of work, they shared a common feature: limited autonomy for the women involved. As Hershatter points out, “the Shanghai market in female labor was not a free one.”Footnote ⁷⁹ This means that the loss of freedom experienced by the baoshengong workers was not an anomaly but a common characteristic of the trade in women that existed at the time. In fact, there were even parallels between the ways women were trafficked into prostitution and the baoshengong system. Besides being sold into prostitution by kidnappers who abducted them from their families,Footnote ⁸⁰ women also became prostitutes by being pawned to brothels by parents with financial difficulties. The parents or family members received a loan, then the woman was given up as collateral until the money was paid back to the brothel with interest. During the loan period, which was typically two or three years, the woman could not leave at will and all the income she generated was retained by the brothel. In the patriarchal family, women were seen as more expendable than men; they were the ones whose bodies, labor, and freedom were traded for economic gains.

Such unequal treatment of the sexes within the family was linked to a larger patrilineal system in which filial piety was a key mechanism for patriarchal domination. Women were devalued and became disposable when men were designated the duty of carrying on the family lineage. Beginning in the Song Dynasty (960–1279), Hill Gates notes, “[m]en could, and frequently did, exchange their female kin for money, whether in marriage, adoption, or sale into slavery or prostitution.”Footnote ⁸¹ One way to extract compliance from female family members for these transactions was through moral pressure or, more specifically, the force of filial piety, namely, “a doctrine of sincere submission, a doctrine that prescribes the superiority of the father's role, as well as the manner of obedience given to the person in that role.”Footnote ⁸² This preexisting system of gender exploitation was an important factor that made possible the supply of a female workforce to the labor contractors in early twentieth century China. Patriarchal and gang powers that were specific to Shanghai formed part of a matrix of domination that contributed to the emergence and reproduction of the baoshengong system during that period.

The Rong brothers did not embrace the baoshengong system; it was a product of circumstances they did not choose. The Number Ones and labor contractors, who were the overseers of the system, were affiliated with the Green Gang, which was an ally of the GMD state. The cotton capitalists, on the other hand, did not have as much political sway and had an exploitative, rather than supportive, relationship with the state. This meant that any ill-conceived attempt by the Rong brothers to dismantle the baoshengong system could provoke a backlash from gangsters, and state protection would not be forthcoming. Family patriarchy also played a role in enabling the baoshengong system. If the labor contractors had not been able to obtain workers, the system would not have been possible in the first place. Therefore, the fact that young women were seen as more expendable than their young male family members, that they were the ones whose bodies, labor, and freedom were traded by their kin for economic gains, played a major role in supplying workers for the baoshengong system.

The Green Gang's collusion with both the GMD state and the family patriarchal structure, together with the cotton capitalists’ lack of state support, explain why the Rong brothers conceded to the use of the baoshengong system. The Rong brothers did not find this system useful and were unwilling partners with the Gang.

Analysis

Archival sources, oral history interviews, government reports, and Rong Desheng's personal chronicle are deployed above to reconstruct the historically-specific context in which Shanghai's capitalist development and the use of unfree labor were embedded; an important feature of that historical context are the contentious and collaborative power relations between different social institutions (the GMD state, the Green Gang, the cotton capitalists, and the family patriarchal structure). Though the data presented are from one historical case, they shed light on the general relationship between the socio-political contexts of capitalist development on the one hand, and the mode of labor control on the other. I will now address questions regarding the explanatory logic of this study, as well as draw out the broader implications of the baoshengong system for the debates on Shanghai's labor movement and capitalist unfree labor in general.

The “Ruling Class” and Shanghai's Labor Movement

Although the examination of the baoshengong system presented here neither addresses labor organization nor strike activity directly, it does have a broader implication for the study of Shanghai's labor movement, specifically with regard to the issue of the formation of class consciousness.Footnote ⁸³ Several scholars have challenged Jean Chesneaux's thesis that Shanghai's dynamic labor movement before 1927 indicated the existence of a unifying class consciousness through which workers were able, despite their diverse backgrounds, to coalesce and fight for a common goal. Footnote ⁸⁴ My study adds to their critiques of Chesneaux by problematizing his neglect of the conflicts between Shanghai's different institutions of power.

One of the problems with Chesneaux's approach is explained by Alain Roux who draws on the conception of class from E. P. Thompson. The assumption that workers from different regions, different sectors, and different age groups in Shanghai constituted a homogenous bloc, Roux argues, amounts to treating class as a “thing” when it should instead be regarded as a relationship.Footnote ⁸⁵ Roux's point with this criticism is not that Chesneaux is mistaken about the militancy of the workers or the frequency of the strikes. In fact, Roux even describes Shanghai's labor movement in the 1920s as more mature than anywhere else in China and also more tenacious than the ones in India and Japan.Footnote ⁸⁶ Rather, his point in denying that class is a “thing” is made to underscore what he sees as the fluidity of class formation, a process in which the unity between different workers is thought to be constantly forming and dissolving in alternation. For example, Shanghai's working class consisted of children, men, and women, and they were further divided into different groups depending on the region they were from, the dialect they spoke, the industrial sector they were in, and the fraternal or sororal ties that were formed.Footnote ⁸⁷

Given the heterogeneity of these workers, coordinated group action or class solidarity simply would not arise automatically or naturally. As Roux notes, many of the mass strikes that did have a variety of workers were supported by the GMD and targeted foreign factories, especially Japanese ones.Footnote ⁸⁸ But in those cases where neither nationalism nor government support was present, working class unity was less pronounced. Another factor that conditioned working-class formation in Shanghai during that period were the Green Gang affiliated Number Ones and labor contractors, whom Roux refers to as gourdins ouvriers, a literal translation of the Chinese expression gong gunzi.Footnote ⁸⁹ To Roux, these labor bosses were “apolitical and corporatist” (apolitique et corporatiste)Footnote ⁹⁰ and did not challenge the capitalists so long as they could be assured of getting paid. But when their interest was threatened, as in the case of Ewo where the British management attempted to abolish the baoshengong system, they mobilized their workers against the capitalists.Footnote ⁹¹

My research on the baoshengong system supports Roux's analysis in that it shows exploitation of workers by the Number Ones. However, with my focus on the conflicts and collaboration between different forms of power, I add to Roux's argument by noting another problem of Chesneaux's study. Both the Green Gang and the capitalists are identified as the agents of labor exploitation in Chesneaux's account. For example, when examining the worker uprising in 1927, Chesneaux notes that the movement was crushed by an alliance that consisted of Chinese bankers, compradors, cotton mill owners, the Green Gang, and the GMD.Footnote ⁹² Chesneaux is correct in his explanation, but just as the working class should be seen as a relationship rather than a “thing,” the unity between the different components of the ruling class was also not a permanent fixture but a relationship that was constantly dissolving and reforming. As my research shows, the Number Ones perpetuated the baoshengong system in cotton mills despite opposition from the cotton capitalists; this means that though both groups exploited workers, there were also conflicts between them. By emphasizing the collaboration between these different groups, Chesneaux minimizes the conflict between the different ruling factions and underrepresents the complex dynamics characterizing the social and political power struggles in early twentieth century Shanghai.

What about Colonial Domination?

The GMD state is the only type of state power examined in this study. The colonial states, though also occupying sections of Shanghai, are not treated as part of this causal nexus. Of the different colonial powers, only two, the Japanese and the British, had companies with significant investments in the city's cotton mills. Like other foreign firms that lacked local knowledge and ties, these cotton mills also turned to labor contractors for help regardless of whether this was their preferred method of recruitment. For example, the Japanese-owned Naigai cotton mills had had a system of direct hiring, but following a series of strikes between 1925 and 1927, labor recruitment in the company also fell under the grip of the Green Gang.Footnote ⁹³ There is no strong indication of collusion between the Japanese colonial state and the Green Gang before 1937, especially when the latter had a partnership with the GMD state. British cotton mills had a contentious relationship with the labor contractors. After Japan's invasion of Shanghai in August 1937, it became difficult to hire workers and the baoshengong system was disrupted. With the system in disarray, the British-owned Ewo cotton mill took advantage of the situation, and in November of the same year announced the cessation of worker hiring through labor contractors.Footnote ⁹⁴ The British authority in the International Settlement went further in countering the labor contractors through their attempts at abolishing child labor. The reason behind their efforts, Kuczynski suggests, was to preempt strikes in their territory.Footnote ⁹⁵ By obtaining workers through labor contractors, Japanese and British cotton mills were supporting the baoshengong system the same way the Rongs were, but the Japanese and British colonial states in Shanghai did not collaborate with the Green Gang as the GMD state did, so these colonial states are not considered as part of the causal nexus in this study.

Capitalist Unfree Labor as a Transitory Phenomenon That Wanes Over Time

Supporters of the Incompatibility Thesis can argue that the British Master and Servant Act and the baoshengong system are abnormalities that occur only in the early stage of capitalism, which will wane as capitalism continues to develop. In fact, they could even argue that this is exactly what the Shanghai case shows, since the city today has become even more capitalist than before, while the baoshengong system no longer exists. In contrast to the supporters of the Incompatibility Thesis, scholars such as Wallerstein and Sewell suggest that capitalism is compatible with different modes of labor control, among which is unfree labor. The Shanghai baoshengong case supports these scholars’ position, and its eventual demise does not allow for the inference that capitalist unfree labor is just a transitory phenomenon. As has already been shown, the use of the baoshengong in capitalist production grew out of the historically specific context of early twentieth century Shanghai. On the other hand, capitalism is developing under very different historical circumstances in the city today and is no longer accompanied by the same nexus of powers. After the Chinese Communist Party's seizure of power in 1949, GMD state functionaries fled to Taiwan, the Green Gang was eradicated, and the labor contractors became irrelevant. It was not until Mao Zedong's death that China, under the leadership of Deng Xiaoping, re-embarked on the path of capitalist development in the late 1970s. What all this shows is that the absence of large scale indentured labor under Chinese capitalism today is anything but automatic as it took a revolution to eliminate the baoshengong system, and that the development of capitalism is not always a continuous process, but can also be a discontinuous one. The Shanghai case does not support the view that the more capitalism develops, the more proletarian (i.e., free wage labor) the work force becomes. Rather, it shows the importance of socio-historical context in determining how labor is recruited and controlled under capitalism.