European Car Industry

Following the deal to pick up Chrysler with the aid of cash from the US Government, Fiat, is now looking to pick up GM Europe (Opel and Vauxhall) for free, and with cash support from the German Government. For Marxists, the question of ownership is irrelevant. Its not our job to choose our executioner. Its our job to prevent the execution! In other words, we do not have a preference between one Capitalist solution and another, we look to defend the interests of workers, whichever set of Capitalist robber barons are in charge.

Of course, the Trade Union bureaucracy do not see things in those terms. Their whole reason for existence is to do precisely that; to fob the workers off with crumbs off the Capitalist table, to persuade workers that their interests are best served by looking to alliances with one group of “better” Capitalists against some other group of “worse” Capitalists; to negotiate for crumbs off the Capitalists table as the pay-off for such alliances. The same servile mentality runs through the ideology of reformism, and its reactionary twin Stalinism, as the reactionary, Nationalist “No2EU” campaign demonstrates. So, it was no surprise this morning that the response of Tony Woodley to the announcement was to suggest that such an eventuality would be a disaster.

Woodley’s arguments made no sense. He began by talking about the fact that Fiat itself was recently close to bankruptcy. Perhaps a reasonable argument other than the fact that Chrysler IS in bankruptcy, and GM IS only avoiding it on the basis of huge financial support by the US Government. But, besides its not our job to be concerned with advising the bosses of Fiat or any other company about how to run their business. If they want such advice they will have to hand the company over to us the workers, or at least place it under Workers Control; an eventuality that, as I’ve written elsewhere, isn’t going to happen.

Then he said that the deal would mean that the current overproduction of vehicles would continue. Actually, you would think that the deal would be most likely to have the opposite effect! One reason that Fiat and other companies HAVE been in trouble, is precisely due to that overproduction that has existed for around a decade. The logic of the deal for Fiat is surely that it will enable it to rationalise production, and thereby take out some of that excess capacity, putting a floor under prices! But, Woodley’s alternatives WOULD have ensured that the overcapacity continued. His first option was for Opel and Vauxhall to remain under the aegis of GM. Even he recognised that wasn’t going to happen. His second, option was for a car version of EADS to be established with the assistance of EU Governments. This option at least has the advantage of seeing things in EU and internationalist terms, unlike the reactionary Nationalism of “No2EU”. But, were it likely to happen, which, of course its not, then it would only make sense if the Company could produce cars on a large enough scale to make it profitable. That is it would continue the current overproduction. Logically, it would mean that other companies such as VW were then placed in difficulty, saving one group of workers at the expense of another! But, in fact, all experience of such nationalisations by the Capitalist state show that this would not be the case. Every one has been used to use the greater power of the State to rationalise production by shedding labour, and putting in necessary investment, prior to the business being once more returned into the clutches of private Capital.

In fact, what Woodley is doing is avoiding dealing with the very obvious problem that has to be confronted; the same problem that exists in North America, as my previous post in reply to the comrades of he Socialist Project set out. That problem is that we now have a globalised Labour Market, and in respect, of industries such as motor vehicles, the labour costs for production in existing developed economies are just too high to compete with the low-wage production in Asia and elsewhere. European companies have overcome that problem to an extent by sourcing production in low wage Eastern European economies, Asia and Latin America. Its likely that Fiat would look to increasingly shift production towards Albania and the Balkans for that reason. As Marxists we should welcome that, because it means that workers in these countries can better organise and develop, but, also, as Marxists, we have to explain those basic economic facts to workers in the developed economies – not just in car production, but other similar areas, and begin to provide them with practical solutions and alternatives to their problems. Simply calling for “more militancy”, “Socialism Now”, or worse “Nationalisation by the bourgeois state”, are not such practical solutions.

In fact, a European auto industry would be a good idea, but it needs to be an EU Motor Industry owned and controlled by workers. But, for the reasons I set out in my blog on “The Economics of Co-operation”, such an industry has to be different from the existing set up. It needs to be focussed on providing the vehicles of the future. It needs to focus on producing electric cars, hybrids, fuel cell powered cars etc. Such an industry would be much smaller than the existing industry for that reason. It would be a high-tech industry employing very skilled workers. For that reason, it would be necessary to diversify production into many other areas in order to find employment for all those other workers freed from car production. It would be necessary to look at using some of that technology used in producing efficient cars, to be used in other areas, the production of fuel-cell technology for other applications, the production of solar panels and photo-voltaic cells for energy production and so on.

As Engels pointed out where such worker co-operatives are set up, THEN socialists can demand that the bourgeois state treat them on an equal basis to private capitalists. If the bourgeois state can give billions without strings to the banks, and other Capitalists, we can demand it give the same amount without strings to the workers Co-operatives. When it does not, its true class nature is revealed.

As every day passes, the call I made last week that this is the last quarter of the recession is confirmed. Although, the German Retail Sales data out today showed a decline, its likely that part of the reason for that could be the diversion of spending to car purchase in light of the scrappage scheme introduced by the government. IN the meantime the German Purchasing manager’s Index rose by around 10%, and was above expectations, though its still below the 50 level that indicates growth. EU PMI data also showed a similar increase. In the US Pending Home Sales also came out much stronger than expected, and data on manufacturing has seen similar strong results.

I don’t have time at the moment to properly collate and present all this data, but its now becoming clear that this will have been a deep but relatively short recession.