One core assumption of political economy, going back to Marx, is that the owners of capital will not do anything that benefit workers unless their hand is forced -- either by labor unions or government. When it comes to who gets what under capitalism, the logic goes, raw power is all that counts.
That assumption has been largely vindicated in the past few decades. With labor union membership near a historic low and government dominated by private money, workers are getting a smaller portion of the wealth generated by the U.S. economy. As the New York Times reported last fall:
The government began calculating the quarterly figures on corporate profits in 1947, but it has annual figures back to 1929. Until last year, the record annual share was 8.98 percent, set in 1929. For all of 2010, the figure was 9.56 percent.
Wage and salary income was only 43.7 percent of G.D.P., the lowest number for any period going back to 1929. That figure first fell below 45 percent in 2009.
A central puzzle for progressives is how do you get employers to share more profits with workers? Year after year, most of the typical solutions -- like increasing unionization, raising the minimum wage, and compelling more contributions to worker benefits -- have failed to yield major results in an age of weak government, union busting, and major trends like globalization and technological innovation that favor capital.
Given all that, Foxconn's recent promises that it would raise wages in China -- in effect, raising wages for Apple workers and (probably) prices for U.S. consumers on Apple products -- is significant. Here we have the richest corporation in the world, and its gigantic subsidiary, pledging to pay its workers more in the absence of raw countervailing power in the form of union clout or government edict.
Now, to be sure, Foxconn has not yet raised wages. It has only said that it will, mainly in the form of overtime pay and benefit contributions that are likely to cost the company hundred of millions of dollars. Foxconn has broken its promises before and it could so again.
But assuming that Foxconn does keep its promises, this will stand as another example of how "soft" power can influence corporate behavior. In age where a strong brand is seen as all-important to the bottom line, corporations are obsessively worried about anything that will tarnish their brands. That fear provides substantial leverage for activists and others like, say, the New York Times -- which ran front-page exposes of how Apple products are made in January -- to influence companies. It's not the leverage of union power, but it is real influence nonetheless.
This soft power has mainly won corporate concessions on environmental and diversity issues. But the anti-sweatshop movement, which started in the 1990s, has also won victories on labor conditions in the developing world. And the Workers Rights Consortium, among other players, effectively uses both fear of embarrassment and constructive advice to push companies to improve conditions for workers.
Apple is the perfect target for a public pressure campaign. It is one of the highest profile companies in America and it's carefully nurtured brand -- positioning its products as cool and cutting edge -- has led to phenomenal riches. But reputation can change fast in this age of social media, and if Apple becomes associated with Dickens-like working conditions, and sweatshop denizens committing suicide, then maybe some slice of consumers with a conscience will start opting for Droids. And just ask Nestle -- or perhaps grape growers -- how long it can take to remove a blot on a corporate brand.
Again, soft power is no substitute for the clout of unions or regulators. But with corporate brands more vulnerable than ever to activist attacks, we are moving into new terrain when it comes to policing corporate behavior.