Over the last week or so I have been having a discussion with comrades at the Socialist Project in Canada, who very kindly have been sending me a copy of their e-bulletin. You can get it free by subscribing via the above link.
I wrote to them concerning an article they had about the auto industry in Canada. The correspondence is below. I agreed with them to reproduce it here as part of my further comments, in order to open up wider discussion.
The main points I would want to raise initially relate to the questions of the international division of labour – for which see some of my recent blogs – and the question of Workers Plans for Production, which ties into what I have been writing about Co-ops.
Firstly, Herman in his response states,
“Auto companies do not exactly compete on "world markets" in the sense that they are not competing in a North American market with Chinese-made and priced vehicles that are imported en mass into this continent. Actually, competition tends to operate on the basis of regional markets, such as Europe, Asia and North America. In this way it is wrong to argue that GM must lower its costs to match those of Chinese or Indian workers - who produce mainly for Chinese and Indian markets. When it comes to mass producing passenger and commercial finished vehicles there is no global labour market, although those who firmly support full capital mobility and trade liberalization see this as an ideal to work towards.”
I don’t think this view is correct. The following gives some general background BERA On The Auto Industry .
As an indication This Link points out that South Korea alone exported 700,000 cars to the US last year compared to just 5,000 US imports to Korea!!!
Moreover, for some time the scale of Auto production has been such that in order to obtain the necessary economies of scale it is necessary to produce to meet the needs of a global market. Whilst, the US and North American market remains the biggest single market, North American producers are dependent upon sales into the world market in order to produce on that kind of efficient scale. Yet, North American producers seem unable to compete against European producers such as VW, who have been able to locate substantial amounts of production in Eastern Europe, let alone with the increasing production of autos and auto parts by a number of Asian economies, including now a growing industry in India.
Indeed, that failure of the North American producers to respond to changing market requirements by producing smaller, more fuel-efficient cars, whilst Asian and European producers have been increasingly supplying that demand in the North American Market, appears to be one of the reasons why North American producers such as GM have done particularly badly in the last couple of years, as fuel prices rose sharply.
No doubt, North American producers COULD respond to those changes in consumer needs, but they would still be at a competitive disadvantage compared to Asian producers of similar range cars. In part, that disadvantage resides in the wage differential, in part it resides, in comparison with European producers in the legacy costs of large pension and health costs for retired employees – at least in the US – due to the absence of a socialised healthcare system.
In the short-term workers in North America can respond to the crisis in the auto industry, by refusing to accept responsibility for it, but as Marx spelled out, short of socialism, Capital will always win out in such bouts of strength in the end. If the Capitalists simply shut up shop, workers can – and should – occupy the plants, but they still need wages, and ultimately that means they have to produce something. A Workers Co-operative can produce goods in a more competitive way than a private Capitalist enterprise, but as I’ve set out in recent blogs on the Economics of Co-operation, there are limits! Its no good investing workers time, effort and Capital producing goods that those workers have previously produced, if the conditions of the Capitalist market mean that they cannot do so profitably. It is necessary in developed economies for workers to establish Co-operatives in those areas of production where they do not face international Capitalist competition from low-wage economies.
That is why I raised the question of the Lucas Plan, because it did demonstrate how workers can come up with those kinds of ideas of alternative production. The problem with the Lucas Plan was that it could not have been implemented within the context of “Workers Control” within a private Capitalist enterprise, for the reasons I have set out elsewhere i.e. outside a situation of dual power, Capitalists are not going to allow workers to “Control” production, and their Capital! Such plans only make sense in the context of Workers Ownership and, thereby, control of the means of production.
But, in the US and North America in particular at the moment, I see vast potential for such new industries to develop, because Capital needs desperately to come up with solutions to some of the problems it faces, such as new forms of energy, and means by which of dealing with environmental problems such as Global Warming. It will probably, also have to deal with questions of resource shortages as production around the globe is ramped up, and both natural raw materials get used up, and traditional synthetics, which have relied heavily on oil by-products, become too expensive. Base technologies for many of these solutions already exist in the form of bio-technology, and nano-technology, and once Capital feels the risk-reward is right to develop them, these new industries will probably form a dynamic cutting edge over the next 50 years. If workers could get involved in developing them through their own Co-ops, they could make a significant advance.
I have to say that I am not at all convinced that attempts to restrict the free movement of Capital and goods is not Protectionism. It seems to me that that is precisely what it is. Workers should by all means refuse to pay for the crisis that arises from the consequences of such “Free Trade” – consequences which as Marx pointed out are destructive and thereby lay bare the real class struggle. Workers should combine internationally to support workers in Asia and elsewhere to unionise, and to raise wage rates etc. But, the argument “We shouldn’t allow imports from Country A, because wages are low,” is not an argument a Marxist should advance, because without the increase in production, and consequent demand for labour in Country A, that arises from its being able to trade and sell its goods on the world market, workers in Country A, NEVER WILL be in a position to unionise, to organise adequately, and push up their wages. That has been the lesson of developing economies over the last 100 years or so.
And, in the meantime, who would police such arrangements? As Herman says, thre are no “democratic” institutions, certainly no workers institutions that could police such arrangements, so the only people who COULD police them is the individual Capitalist States!!! Similarly, Herman although, recognising the role of that State as an enemy of the working class, still ends up looking to it as the saviour of the working class!
“That's why I would argue for a nationalized sector to replace the auto companies, that would include the energy sector, and work along side a publicly owned financial sector, to produce the kinds of goods that you argue for: mass transit, ecologically responsible manufacturing goods and services, etc. This can't be done privately, and could only be made to work publicly, if it were part of a larger political movement to run enterprises differently and create a different kind of economy.”
There is no reason why this State capitalist enterprise would be any more efficient, let alone any more “socialist”, just because it incorporated a larger area of economic activity. The means of production would still be in the hands of the Capitalist class, and of that class’s state! As Herman says, if a political movement existed that could bring these means of production under Workers Control, then maybe something progressive could arise out of that. But, what this really amounts to is the idea that this could happen during a period of dual power, because outside such a situation there is no way that Capitalists let alone their state are going to give workers such control. The experiments with “Municipal Socialism” were necessarily a failure, precisely because there is no more chance of socialists having real “power” or “control”, simply by forming a Majority in the Council Chamber, than there is of them forming a majority in Parliament, so long as the machinery of the permanent state remains in the hands of the Capitalist class!
That is the question, which has to be addressed. How do Marxists enable workers to deal with the intervening period, during which time State power resides with the bourgeoisie. Simply wishing that away and raising false hopes in “The State” whether national or local will not do, for the reasons Marx set out in the Critique of the Gotha Programme. And a failure to explain to workers that although they can make temporary victories through their own militant action will not do either, for the reasons Marx set out in his letter to Rouge. We have to point out to workers that by its nature Capitalism will constantly suffer crises, which the Capitalists will attempt to resolve at the workers expense – through job cuts, wage cuts or both. Workers can resist, and may for a time succeed in their resistance, but without taking over the means of production the workers will ultimately be thrown back. They need to own the means of production. The bosses will resist that too, which is why ultimately they will need to take state power. But, workers will not come to that realisation, or accept that conclusion automatically or simply because Marxists say that. They need proof, they need to know, understand and believe in an alternative, a replacement. That is why the only solution during that intervening period is the development of Co-operatives as part of an overall strategy of class struggle.
Thank you for sending me your e-bulletin. Its always good to get information from around the globe. There were two things I wasn't sure about in your piece here though. First, I agree with you that its crap to blame UAW members for GM's problems. However, I do think we have to face a bit of reality. Productivity has clearly risen as the figures you give show, but my understanding is that GM's productivity was previously low compared to other auto firms in the US such as Honda. If we compare US auto-workers wages with those of auto-workers in China - who work with the latest kit, and also have high productivity - then we can see the problems GM must have competing in the world market, and consequently that GM's workers have competing in what is now a global labour market. Finally, on this point. My understanding is that the biggest labour costs that GM face is not those of current workers, but the huge costs it faces for that much bigger number of former worekrs in the form of their healthcare and pension benefits.
Now, none of that should be taken as in any way excusing GM, apologising for them or any other such crap. But, if we are going to deal with the situation - and I'm sure you'll tell me if any of the above is wrong - we have to deal with the facts to know what is possible. I'm sure you would not for example, support Nationalist policies such as Protectionism as a solution. WE should of course, give whatever support we can to Chinese workers to get higher wages and better conditions, but that is not going to be a short run soluiton. Besides the fact that I don't support statist solutoins or calls to the bouregois state to act in workes interests, nationalisation is no solution, because all experiecne is that if the State took over GM, the first thing it would do would be to initiate huge job losses, and would probably run it even more bureaucratically than the present lot.
I don't know if you are familiar with the Lucas Plan. It was developed by workers in Britain during the 1970's at the Lucas Plant which amde car electrical component and aerospace equipment. The workers looked at ways of producing socially useful commodities at a profit, and with workers control. I think that GM workers rather than trying to compete against low wage auto production from the rest of the world should look at the possibility of producing high value added products - that could sustain high wages and high skills - via a Workers Co-operative using much of the existing GM equipment, and workres skills. Obama says he favours all htis high tec alternative energy stuff, so what about a plan to do just that electric vehicles, solar panels, and so on and demand funding from Obama for a Workers Co-op with a Workers Plan for production of such stuff.
Thanks for your thoughtful comments.
Here in Canada autoworkers belong to the Canadian Auto Workers (CAW), which split from the UAW in 1984, over the issue of concessions. The Canadian region of the UAW rejected the idea of concessions and so was forced to start a new union.
Auto companies do not exactly compete on "world markets" in the sense that they are not competing in a North American market with Chinese-made and priced vehicles that are imported en mass into this continent. Actually, competition tends to operate on the basis of regional markets, such as Europe, Asia and North America. In this way it is wrong to argue that GM must lower its costs to match those of Chinese or Indian workers - who produce mainly for Chinese and Indian markets. When it comes to mass producing passenger and commercial finished vehicles there is no global labour market, although those who firmly support full capital mobility and trade liberalization see this as an ideal to work towards.
On the other hand, I - and many other socialists - would argue that auto production and wage rates need to be highly regulated, the former, by democratically/politically-constituted institutions (that don't currently exist), and the latter, by unionization. Limiting the free movement of capital of the ability of capitalists to ship products wherever and however they wish is not the same thing as "protectionism", but needs to become part of democratic planning, working towards the production of needed goods and services as much as possible, locally, serving the needs of national and regional communities and trading for mutually beneficial needs.
Arguing that Chinese or Indian capitalists or US-based capitalists in these markets should be able to sell massively into North American or European markets is really not a form of international solidarity, but an acceptance of principles of neoliberal globalization and would only result on massive job loss. Opposing it is hardly what one would denounce as "nationalist" or "protectionist". The real questions have to do with regulating overall vehicle production, access to markets and, even more importantly, reducing our reliance on private cars and moving towards environmentally sustainable options, such as mass transit, non-fossil fuelled vehicles, and the production of other goods that would help the transformation to environmental sustainability.
I would have to agree with you, though, that what are called "legacy costs" - the private provision of services to worker such as pensions and other benefits that should be socially provided - (and, in the US, that includes basic medical care) - places a terrible burden on companies that compete with those who have a very small number of retirees (such as the so-called "transplants" in North Amerca, such as Honda and Toyota). This can only be relieved by socializing those costs, which requires a political movement to demand it.
As for your reference to the Lucas Aerospace example, I would heartily agree that the model has always been an inspiration to many of us on this side of the pond. I would, however, analyze this experience a little different than you. While the collective ability of workers to develop socially responsible products is key, the idea of developing it in the form of a private capitalist profit-making enterprise, would not work. There are hardly any real networks of worker co-operatives in Canada and the US, and developing this kind of enterprise in the context of capitalist Canada or the US would only recreate the current problem that exists in all privately owned auto companies. Financing, sourcing of parts and materials and competing in all of the market segments would force the company to act just like other capitalist enterprises. That's why they call capitalism a system, because of the systemic patterns that force all market entrants to act similarly.
Which brings us to public ownership. Like you, we here know that the capitalist state runs enterprises in ways that recreate the traditional forms of exploitation and market operation, as well as with a kind of bureaucratic hierarchy which also does not provide positive models for the kind of enterprises we would like to see. As well, if state-owned enterprises accept the logic of the capitalist marketplace, the enterprises they run will end up looking like the private companies they are supposed to replace (see the experience of British Leyland).
That's why I would argue for a nationalized sector to replace the auto companies, that would include the energy sector, and work along side a publicly owned financial sector, to produce the kinds of goods that you argue for: mass transit, ecologically responsible manufacturing goods and services, etc. This can't be done privately, and could only be made to work publicly, if it were part of a larger political movement to run enterprises differently and create a different kind of economy. If my memory doesn't fail me, that entire project of the socialists who worked through the Greater London Council and Lucas, was to do this in a way that helped to build a diffferent kind of public sector model.
Our task is to contribute to the building of that kind of a movement,
Herman Rosenfeld, Socialist Project (These are my personal opinions).