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Lewisian turning point

In 1954 Sir Arthur Lewis, a development economist, noted Asia's overmanned farms, its surfeit of dockworkers and petty traders, and “the young men who rush forward asking to carry your bag”. He concluded that “over the greater part of Asia, labour is unlimited in supply.” Islands of capitalism existed amid a sea of subsistence labour. For as long as that were true, the capitalist enclaves could grow without wages rising: they only had to offer workers a little more than could be scraped together in the vast economic hinterland. But eventually, the economy would reach a turning-point. The capitalist enclaves would reach so deeply into the country's pool of labour that the remaining supply of farmers, traders, dockworkers and bag-carriers would fall short of demand. At this point, the economy could not grow without wages rising. Mr Cai believes China has already reached this “Lewisian turning-point” and that its arrival can be seen in more assertive workers and wage rises.

Source The Economist (2010) ‘Economics focus: Socialist workers’
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