Sunday, 24 November 2013

US Politics and Economics v The UK and EU - Part 7

As I wrote in 2010,

“Josef Steindl in “Maturity and Stagnation in American Capitalism” (Monthly Review Press 1976), argued that in the 1930's it was the existence of Monopoly and Oligopoly that enabled very large firms to resist the need to restructure. They were able to use their massive size to push the burden on to others, and also to use their huge Balance Sheets to simply sit it out. I would argue that that is also precisely what the US giants like GM, Ford, and GEC did. To the extent that they did restructure, it was not into new areas of production, not into the new dynamic industries of technology, and so on, but into the burgeoning financial sector, which they could simply tack on or grow from their existing activities.

In short, the cleansing function of a generalised crisis was not allowed to do its job thoroughly.”

But, as I wrote there, its not that a restructuring of capital was not taking place. It was, and the type of restructuring in the US and in the UK, in particular, on the one hand explains, and on the other is explained by, the strength of Conservative parties in both countries. On the one hand, a process of de-industrialisation was taking place, in which large sections of big manufacturing capital was relocating to rapidly developing economies in Asia and elsewhere, with large supplies of the kind of cheap, unskilled labour it required. 

In Capital I, Marx asserts the fact, witnessed generally, that wherever wages are low, labour is expensive and vice versa. What he means is that low wages encourage capital not to invest in machines and new techniques, and vice versa. So low wages encourage low levels of productivity, which increases unit costs of labour. So, in the 19th century, wages in Europe were 50% of those in Britain, and conditions worse too. Yet, Britain was far more competitive, precisely because its workers were backed by far more capital in the shape of better bigger machines etc. But, in these developing economies low wages were, in fact combined with the latest machines in many cases. That is because, those machines had already been developed in the West as an alternative to higher western wages, and as a result of the commodities being produced entering their mature stage. The production techniques were then simply transported to these developing economies, where wages were a fraction of those in the West, and yet could still be above those generally applying within the local economy, thereby meeting the requirements of Fordism and social democracy. In fact, during this period there is a rapid development of bourgeois social democracy in many of these developing economies, sweeping away the Bonapartist regimes that existed there previously.

There is no way that western workers could then compete with production of mass produced, low value goods from these economies, because it would simply not have been possible to reduce western workers wages down to those low levels. To do so would have caused civil unrest to a destabilising degree, and the collapse of aggregate demand that would in any case have ensued, would have sent the global economy into a Depression far greater than that of the 1930's.

The restructuring that occurred was then both that this de-industrialisation took place, but also that the manufacturing industry that could continue to operate profitably in the West was led to become itself more efficient by shedding some of its non-core operations. They were sub-contracted out to a range of small firms of engineers, joiners, electricians, cleaners and so on, some of whom in turn sub-contracted out their work to home-workers and so on. At each stage of decentralisation, the wages of those employed to carry out the work tend to be lower, the conditions of work worse, the security of employment less, until today we reach the situation of millions of workers working on temporary contracts, and zero hours contracts etc.

In an article in Capital & Class 19, in Spring 1983, entitled, “The Decentralisation of Production – The Decline of The Mass-Collective Worker?”, Fergus Murray set out the various means by which this kind of restructuring was taking place. 

The process then of de-industrialisation, whereby the older huge manufacturing enterprises move to low wage economies, as part of a process of globalisation, goes along with a process, which increases the number of small companies, and thereby increases their social and political weight. Some of the changes in technology also facilitate such a change. For example, even before Eddie Shah established “Today” as an alternative to the Fleet Street dominated press, the path had been opened up by the development of a plethora of small “instant print” workshops that were able to massively undercut the traditional print shops, by utilising computers and word processors to do the typesetting and graphics, and utilising the latest print technology including photocopiers to produce large or small quantities at low cost, and to order.

On the one hand, bourgeois social democracy had failed to keep its side of the bargain, as the Long Wave Boom ended, and unemployment rose, whilst living standards failed to rise. Workers either failed to vote, or else turned to the more reactionary bourgeois parties. With the increased social weight of the small capitalists within these conservative parties, their own social-democratic wings became subdued, and the interests of small capital were pushed forward.

Back To Part 6

Forward To Part 8

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