Shortly before he died, the great free-market economist Milton Friedman was asked about his thoughts on China.

Is China's massive growth a sign that its Leninist way is successful? Can an authoritarian free market really work as well as a democratic one?

Friedman's response was blunt. "Political freedom will ultimately break out of its shackles. Tiananmen Square was only the first episode. It is headed for a series of Tiananmen Squares. It cannot continue to develop privately and at the same time maintain its authoritarian character politically. It is headed for a clash. Sooner or later, one or the other will give."

It may just be that something gave today.

China's government released a sweeping change in labor laws today. The new legislation, released by the Standing Committee of the National People's Congress, requires written contracts for all employees, pushes companies to provide full-time status (and lifetime benefits) to temporary workers after their contracts have been renewed twice, and strengthens the power of the country's national labor union.

Not coincidentally, this change comes just weeks after a breaking story of a massive slave labor industry scandal in the rural province of Shanxi. Outrage exploded across the country when it was found that hundreds of farmers, including many children, were forced to work without pay and were enslaved in brick kilns against their will.

These events are significant, because under China's authoritarian regime, Chinese don't have freedom of speech or freedom of the press. Dissent is not tolerated. Authorities can arrest and imprison people who threaten stability, as the party defines it, and any group that dares to protest is treated brutally.

So when public outrage leads not to government censorship and discipline, but instead to accommodating changes to the legal system, this is a sign that the authoritarians are letting their grip slide. It's no leap to political freedom, but it's still something.

Despite the progress that the new laws promise to make, China still has a severe problem with enforcement. The enormity of the country's landmass and population make it almost impossible to monitor a majority of companies, and the opportunity to "cheat" creates a competitive spiral that tends towards the often cheaper alternative of non-compliance.

Perhaps in this case social unrest will become the country's secondary monitoring system. As communication improves and information is allowed to travel more freely, lawbreakers will start to fear their neighbors first before the police.

Posted by Michelle Smith on June 30, 2007 12:27 AM