Abstract
This chapter lays out Arthur Lewis’ framework for economic growth with unlimited supplies of labor to explain the development of the global economy. The implication of “unlimited” supplies of labor is that the capitalist sector can hire even more workers without the need to raise wages. All that employers have to pay is a wage slightly higher than the subsistence wage that keeps its workers alive. Any gains in labor productivity do not translate into higher wages, as the mainstream economic theory has it, but in higher profits instead. If the profits, in turn, are reinvested in productive capacity, profits will grow continuously as a share of national income. Although more workers are put to work in the capitalist sector, labor’s share of GDP declines.
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Notes
- 1.
Loren Brandt and Thomas G. Rawski , “China’s Great Transformation,” in Brandt , Loren; Rawski , G. Thomas, China’s Great Transformation, Cambridge University Press, 2008.
- 2.
According to the United Nations , the demographic dividend accounted for 15 per cent of China’s economic growth between 1982 and 2000.
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Mees, H. (2016). Unlimited Supplies of Labor . In: The Chinese Birdcage. Palgrave Macmillan, New York. https://doi.org/10.1057/978-1-137-58886-9_7
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DOI: https://doi.org/10.1057/978-1-137-58886-9_7
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