Labor’s Betrayal

 THIS ARTICLE FIRST APPEARED IN MARXISM-LENINISM TODAY (6-3-18)

“Nor can I understand how men who aspire to the leadership of labor are able to sacrifice labor’s interests in favor of the Democratic Party. I cannot understand men to whom a visit to the White House is more important than getting the workers out of the dog house.” Wyndham Mortimer
 
At a time when ex-FBI chief James Comey’s self-serving, self-righteous book becomes a bestseller, in a season when ex-Secretary of State Madeleine Albright, the enthusiastic apologist for genocide against Iraqi children, joins Comey on the bestseller list with a preposterous lecture on fascism, it may well be time to retreat to the library.

I found some solace and much enlightenment from a dusty, cobweb infested paperback in a corner of a basement book self. I had read Organize! some years ago, maybe forty or more years ago. Published posthumously by the author’s daughter and a colleague, the book is a memoir of one of the US working class’s most valuable leaders-- Wyndham Mortimer-- at one of labor’s most important junctures.

The first time that I read Organize! In the 1970s, I thought it another chapter in the rich legacy of US labor militancy, one of many engaging stories of the militant roots of the then powerful institutional US labor movement.

Reading the book today, I am struck by the foretelling of the labor movement’s decline, the causes of the decline, and its source in misleadership. Light is shown on the devastating effects of anti-Communism and opportunism in the US labor movement. The sad, pathetic state of the labor movement today brings the accomplishments of Mortimer and his comrades into even sharper relief than it did forty years ago.

Who was Wyndham Mortimer?

Wyndham Mortimer was the son of an expatriate English/Welsh family that settled in Central Pennsylvania coal country. Like many coal-patch youth, Mortimer went to work in the mines at age twelve. He later worked in a steel mill, on the railroad, as a street car conductor, and finally at the White Motor Company in Cleveland. Throughout his working years, he had both a deep understanding of the exploitation of working people and a burning desire to remove that burden. His experience and study took him from the United Mine Workers, to the Socialist Party, to the Industrial Workers of the World, and finally to the Communist Party, a logical journey that equipped him to lead the fight to win the organization of industrial workers.

He learned from his railroad experience that not all forms of unionism were the same. The Brotherhood of Railway Trainmen (BRT), for example, preached the philosophy of “identity of interest” between workers and capital. He confronted the Grand President of the Brotherhood with the question: “You tell us the interests of the company and us workers are identical. What then is the reason for this union we call the BRT? Why don’t we join the same organization as the [railroad] carriers?”

The same question could be asked today of most AFL-CIO union presidents who advocate class collaboration or labor-management cooperation: Why do you need a union if the capitalists and the workers share common interests?

Mortimer garnered another valuable lesson from the encounter. Grand President Lee shouted back: “You are a socialist!”

“And I found out quite early that any time any organization or any individual spoke up in favor of the working people, they were immediately labeled [socialist or] Communist-- even though they might not have known the difference between Communism and rheumatism!”

And the old craft-union AFL was soon recognized to be no friend of the industrial worker, placing every obstacle in front of Mortimer’s organizing efforts in the auto industry. In the summer of 1932, Mortimer and his fellow workers approached the Cleveland Federation of Labor for help in organizing White Motors. CFL executive secretary, Harry McLaughlin dismissed the request: “Why, no one can organize that bunch of hunkies out there.” Unfortunately, this kind of craft-union insularity and elitism still infects too many of the trades.

At the famous 1935 AFL Convention, Mortimer stood by John L. Lewis when he raised the question of industrial-union organization. Apart from the celebrated punch-out of Carpenters’ union president, Bill Hutcheson, Lewis and his allies organized a challenge to the vice-presidency of the reactionary, vocal exponent of “identity of interest,” Matthew Wohl. Though they failed to defeat Wohl, they signaled that class-struggle unionism was on the industrial-union organizing agenda. The Committee of Industrial Organizations (CIO) was born from these encounters.

                             Organizing the Unorganized

It should be an embarrassment to present-day trade union functionaries, who have overseen the decline of trade union membership, when Mortimer becomes almost apologetic that workers of his era were so accepting of their fate: “To those who marvel at the docility of a working force that could accept this kind of insanity, let me explain the conditions existing at the time. Unemployment was widespread… Men were kept in a state of fear, workers were fired on the slightest pretext, or for no reason at all… In the absence of a union, some workers became sycophants and stool pigeons… So great was the fear of losing the precious job that men would even work through their lunch periods.” And yet skillful and dedicated leaders were able to overcome these obstacles to build the most powerful, militant movement in the history of US labor.

Today, labor “theorists” and their Democratic Party colleagues decry the backwardness of the workforce, blaming the sorry state of labor on the workers themselves. They fail to correct the growing sentiment that workers are “deplorables”-- uneducated, bigoted, and uncultured.

It takes Wyndham Mortimer to remind us that workers, like everyone else, are subjected to the worse prejudices, baseless rumors, and crackpot thinking that popular culture can conjure. Prior to the great organizational drive, “Fisher #1 [General Motors plant] employed about eight thousand workers in 1936. The Black Legion boasted a membership of three thousand in the plant at that time. Its membership was composed exclusively of white, protestant, gentile, native-born individuals. This fascist outfit was another powerful obstacle put in the path of the union… This group did not stop at murder if it served their ends. A number of union organizers had, in past years, been found shot. A bullet would be left on their chests and applications for membership in the union were found scattered about.”

Nevertheless, by the end of the year, the workers at Fisher #1 were at the center of what was one of the most militant labor actions in US history, an action that firmly planted the foundation of the United Automobile Workers Union (UAW) and gave impetus to the explosive growth of the CIO-- the General Motors sit-down strike.

And Wyndham Mortimer, along with Robert Travis, were the lead organizers of that action. In the words of Mortimer’s colleague, Leo Fenster, “Nothing that the UAW had done before, nothing that it has done since, had that kind of impact on events. The UAW has since, to a considerable extent, taken care of many of the problems of its members. But it has done so within the routine of the status quo… But this was the one occasion when the status quo was wrenched loose from those who would cling to it, when the establishment was yanked from its moorings, when the sacred, inviolable, indispensable open shop was turned into its opposite-- the union shop.”

A former UAW leader and Communist, Fenster did not live long enough to see the UAW’s full retreat from even the “routine of the status quo,” but he correctly understood the dramatic achievements of 1936-37.

For the first time, US workers en masse refused to accept the sanctity of property rights by refusing to leave the plants “owned” by US corporations.

US Workers overcame the differences of race and national origin to empower their class, a victory that led to the CIO becoming the most integrated institution in US society (second only to the Communist Party).

The notion that the boss could fire workers at will was defeated in the first CIO contracts, along with many of the other privileges claimed by management.

Mortimer and other Communists’ success and popularity in building the UAW did not go unnoticed by the more conservative elements of the leadership. The year after the settling of the Flint sit-down strike, the reactionary UAW president (Mortimer was first vice president) attempted to expel the most militant leaders of the union on the ludicrous charge of delivering the union to the Communists. Of course the attempt failed and was repudiated at the next UAW Convention.

Nonetheless, anti-Communism, careerist intrigue, false “leftism,” and Democratic Party influence combined to marginalize Mortimer’s influence and leadership. Like most CIO Communists, his continuing commitment to strengthening the hand of the workers and weakening the power of capital stood in the way of the center-right forces who sought to consolidate personal power and distance themselves from the rank-and-file. Despite his retirement in 1945, Mortimer continued to reflect and write on the labor movement.

                            Reflections on Labor’s Direction

● The modern-day wedding of the Democratic Party and the labor movement began with the Roosevelt administration and the New Deal. Despite the cult-like admiration of workers toward Roosevelt, especially encouraged by the more conservative elements of the labor leadership, Roosevelt’s efforts on behalf of labor were greatly exaggerated. Little was accomplished without a firm and insistent push (threat?) from the left. In Mortimer’s words: “I have dealt with President Roosevelt only because millions of American workers regard him as labor’s friend. Certainly destroying food and plowing little pigs underground was not the work of a friend when hunger was widespread in the land. We should understand that ‘friends’ of ours are not found among millionaires.” Were he alive today, Mortimer would thus find no “friends” of labor in Congress.

● “The time has come to convince the workers and common people of America that we must produce wealth to use and not to make people rich. I am well aware of the fact that we in America have been brainwashed and intimidated until such words as peace and socialism are never mentioned in polite society. But these two words must be heard loudly and constantly.”

● In January of 1950, Mortimer wrote an open letter to the CIO urging affirmative action to bring African American participation into the all-white leadership: “If the present leadership is sincere in its claims of opposition to Jim Crow, a most convincing way to demonstrate its conviction would be to do something about demolishing discrimination inside the unions. It is not an accident that the two largest unions in CIO, the UAW and USA [Steelworkers], with several hundred thousand Negro members in their ranks, do not have ONE Negro in any elective post. The Negro membership is not represented because, in my opinion, the present leadership does not want them represented.” The first Black elected to the UAW International Executive Board was Nelson Jack Edwards in 1964, a shameful delay abetted by the McCarthy-era purging of Communist and left-wing leaders from the CIO.

● Mortimer foresaw the abandonment of rank-and-file activism and its replacement with legal and financial maneuvers. He attacked the UAW’s $25 million strike fund when the union had a no-strike contract: “No ‘defense fund,’ however big, has ever won a battle between capital and labor, for the very good reason that the class struggle is not fought with money. If money were the deciding factor, then our fight would be hopeless… The UAW was built and won its right to live without any money. The great struggles of 1936, 1937, and 1938 were won because the American working class supported us, and any future struggles will be won in the same way… Trying to match monopoly capitalism’s bank balance is the greatest piece of hypocrisy, and the most dangerous delusion that any fast-talking phony labor statesman ever put over on the rank and file.” (1951)

● By 1950, Mortimer exposed the secretive, treacherous collaboration between US Cold Warriors and the leadership of the labor movement. He named the names of labor functionaries who enjoyed lucrative salaries to help undermine labor militancy in Europe and Asia. He traces this to the “...Foreign Service Act of 1946. This act provides, among other things, for two categories of ‘Labor Advisors’... The list of ‘Labor Advisors’ is too long for this letter, but they infest Europe and Asia like an army of locusts, spending their time and our money trying to weaken and destroy the organized labor movements…” This sordid activity morphed into the insidious AIFLD and exists with many bogus “solidarity” actions of the US labor movement today.

● While many leftists, even Communists, were seduced by the social democratic “road” to socialism in the 1950s, Mortimer stands out as a clear-headed, unmoved advocate of revolutionary socialism. In a 1949 response to an article lauding British “socialism,” Mortimer responded sharply:

You say, “British socialism is not abhorrent to UAW members.” Again, you say, “Most UAW members believe in a future non-Marxist world that includes privately owned corporations, paced by cooperatively owned activities and government-owned authorities-- the so-called mixed economy, like Sweden, like Britain, but with the UAW and Roosevelt and Senator Norris [a New Deal icon] added.

Now isn’t that a precious piece of nonsense?

I would remind you that surplus value would be perfectly safe with either Roosevelt or Norris. Their crime, in the eyes of monopoly, was that they saved capitalism from itself....

The British coal baron who formerly held a million pounds in coal securities [before nationalization], is now the holder of a million pounds in government bonds upon which he is guaranteed six per cent. Is this what you call a “middle” economy?

For my part, I am waiting to see what the [UK] social democratic government will do in the present economic crisis. Will it drop its policy of gradualism, and tackle the emergency on socialist lines? Or will it drop all thought of socialism in order to reassure Wall Street, thereby getting another billion dollars and a breathing spell? My guess is that it will forget the working class. It will seek to transmute the gold of working class militancy into the lead of passivity and subservience [Labour began a retreat and was pushed out of power in 1951].

Social democrats in general show a touching faith in the infallibility of capitalism-- a faith not shared by the more shrewd and clear-sighted capitalists themselves.

● Today’s trade union movement bears the deep scars of the purges of hundreds, of thousands of Communists like Wyndham Mortimer, Communist-sympathizers, and militants from the labor movement. By driving the most visionary, most uncompromising, and most dedicated fighters from the organizations that they were essential in building, the labor movement was destined for a decline that is today on the verge of restoring the open shop (80 years after labor’s victory over the open shop). With a Supreme Court decision looming, a decision that will likely make the open shop the fate of public workers in every state (It is already legislatively established for public workers in 28 states), how does the labor movement meet this attack?

With dollars spent on lawyers and lobbyists. And today, at the last minute, with text messages, phone calls, and letters begging members to commit to future dues payment!

On May 30, my local paper carried an advertisement sponsored by the AFL-CIO, between ads for a mattress sale and weight loss solutions, appealing for workers to visit the Internet and join a union. An impressive response to a life-or-death challenge!

Mortimer saw it coming in the midst of the 1950s purges. Writing in 1951:

[The treacherous, anti-Communist union leadership] plan to make the American labor movement the staunch ally of monopoly capitalism in its war against the exploited and poverty stricken peoples of the world. And here at home, their witchhunting, disrupting, and raiding of other unions, is treason to the working class…

They eagerly enlisted in monopoly’s army set out to cripple the unity and solidarity of the world’s working people… and their job is to disrupt, confuse, and, if possible, destroy the labor unions of those countries.

They have scuttled the once powerful CIO. They have assassinated the greatest hope American labor ever had, and have dealt the working men and women of America a cowardly blow from which they will not recover for many a long day.

A blow from which they have yet to recover.

Greg Godels

zzsblogml@gmail.com

Many thanks to Roger Keeran who encouraged me to write about Wyndham Mortimer. His book The Communist Party and the Auto Workers’ Unions  is a classic on the subject.

Labor at the Crossroads?

Does the labor movement in the US have a pulse? Given the unrelenting drop in union density (the percentage of workers organized into unions), many have concluded that labor is in decline both as an effective weapon for workers and as a social force in US politics.

It is easy to forget that some of the largest industrial unions arose from small, but determined organizing committees that faced brutal company resistance. Despite these obstacles, they grew into powerful forces shaping the political and social agenda both in industrial cities and on the national scene within little more than a decade. Unions birthed by the modest Committee for Industrial Organization in the mid-1930s sprung into powerful instruments for social change. It was a long standing tenet of labor advocacy that workers could not be organized and gains made during a period of high unemployment and diminished profits. And yet some of the US’s most militant unions came into being and won in the throes of the Great Depression. In the period immediately after World War II, labor was often the decisive factor in approving and electing officials, largely through its pervasive influence on the Democratic Party.

Today, the labor movement remains yet the most resource-laden, influential element in a progressive movement itself relatively powerless and adrift owing to the failing strength and near-dormant militancy of labor.

The United Autoworkers Union (UAW), one of the pillars of the industrial union movement of the 1930s, dramatically reflects this failing. Autoworkers today at one of Detroit's big-three auto companies can start at a wage as low as $14 an hour, an hourly rate conceded in 2007. At that time, the UAW agreed to a two-tier wage and benefit system that left new employees with roughly half of the package earned by existing workers. Today, over 30,000 UAW big-three employees are stuck in low wage hell (tier 2) out of a unionized work force of roughly 80,000 unionized employees (Bloomberg Businessweek). At Chrysler, a new hire makes a bit more ($15.78/hour), but more than half the workers are stuck at tier 2. At the same time, Bloomberg reports that Chrysler earned an adjusted net profit of $2.4 billion in 2014 and GM and Ford are expected to earn $7 billion and $6 billion this year, respectively. Profits are robust, but wages are dismal.

But matters are even worse with the UAW-represented auto parts companies. According to the Wall Street Journal, new hires at American Axle and Manufacturing Holdings Inc make as little as $10/hour, reportedly comparable to what a local Wal-Mart pays in Three Rivers, Michigan. It is not uncommon for UAW workers at parts manufacturers to make in the $11-12/hour range.

In the last decade, the average hourly wage for parts-manufacture workers was down 23%; the average hourly wage for auto-manufacture workers was down 22%.

For the most part, UAW workers' compensation is on a par or little better than non-union auto workers in the US.

Given this bleak recounting of the UAW's failure to deliver for workers, two questions rush to mind:

1. How did a once militant, democratic, independent, and socially engaged union-- a model of class awareness and struggle-- reach a point where it can deliver a contract leaving workers with little more income than workers at the local Wal-Mart?

2. How will such a union maintain and grow in size and influence if it can promise to achieve no more than declining wages and benefits and parity with non-union shops?

For those of us who see a strong, fighting labor movement as necessary for developing any kind of vibrant and effective progressive movement, answering these questions is unpleasant, but essential.

The decline of militancy began with the purges, the legal restraint, and the raiding of the most powerful industrial unions, a blow inflicted in the early Cold War. And the UAW was at the cutting edge of class collaboration, redbaiting, and the expulsion and raiding of militant unions, beginning with the election of the social-democrat, Walter Reuther as president in 1946.

The vanguard of the trade union movement lost its most militant, class-conscious leaders to anti-Communist inquisitions, at the same time it was battered by the constraints of Taft-Hartley legislation, and met corporate power with a fragmented movement.

In its place, a careerist, bureaucratic leadership faced the future with an historic compromise: a Cold War compact that traded labor peace and support of imperialism for wage and benefit increases roughly commensurate with the rise in productivity. The US ruling class gladly conceded this policy in order to receive US labor's blessings in its brutal assault on class-oriented workers' organizations throughout the rest of the world. The crass, opportunistic labor leaders guiding much of organized labor enthusiastically retired the strike weapon and replaced it with a lame notion of “bargaining” that appropriately fit the naive embrace of labor-management collaboration. Accordingly, be-suited labor negotiators sat across tables from be-suited corporate negotiators in a friendly ritual of trading minor concessions and counter-concessions.

Into the last quarter of the twentieth century, US corporations faced dramatic challenges to profitability. Unsuccessful military adventures and rampant inflation from profligate military spending and competition from lower wage rivals employing cutting-edge technologies drove the ruling class to sever its unspoken deal with US labor leaders. The rulers unilaterally reneged on their commitment to “sharing” the fruits of labor. Instead, they launched an all-out war on labor while insisting that labor must surrender its previous gains to improve US competitiveness. Even today, few labor leaders will acknowledge that they have been betrayed by their former partners. With no imagination, no ideology, US labor leaders continue to plead with their “partners” for some accommodation, some willingness to return to benign bargaining.

The excellent labor historian, Roger Keeran, explains this development in the UAW as follows:

The peak of the red-baiting assault on labor occurred in 1947 with Taft-Hartley and the 1948-49 CIO expulsion of the so-called red unions.   So, what happened between then and the first significant concessions by the UAW at the bargaining table in the 1980s? Of course the losses of the Cold War expulsions and anticommunism was the main explanation, but there were a couple of other things.  For nearly 30 years, the Big Three did not face serious competition, and thus could raise wages and increase benefits by passing the cost to consumers.  This changed with the rise of competition from Japanese and European auto makers, who by the late 70s had rebuilt their factories devastated by World War II and were beginning to make inroads in the American market.  Secondly, for years the UAW and others were able to live on the reputation and the gains produced by the militant years. But the earlier militants, even the non-Communist ones, were eventually superseded by leaders with no experience and no stomach for struggle.  For awhile, these leaders were able to pull some rabbits out of hats by trading previous gains in some areas for small wage gains.  

Soon they ran out of hats.

Many commentators acknowledge this one-sided class war, but few place its cause in the sell-out of class struggle prompted by Cold War perfidy.

The Other Side of the Coin

The class collaboration spawned by the McCarthyite purges created another toxic byproduct: the unrequited fealty of the labor movement to the Democratic Party. Before the purges, the left core of industrial unionism had a close, but critical relationship with the Democratic Party. The new born industrial unions played a large role in revitalizing the Democratic Party in urban areas, providing the troops and organization for Democrats to return to power given an opportunity afforded under the banner of the New Deal. To some extent, New Deal Democrats recognized the debt owed to organized labor and very often responded with a generally pro-labor agenda.

But with the ruling class betrayal of the unspoken post-war pact came a similar betrayal of labor on the part of the Democratic Party. By the election of Barack Obama only a handful in the Democratic Party leadership carried forward the New Deal perspective. Nor does the Party pay more than lip service to labor and its agenda.

Yet top labor leaders continue the charade of a partnership with capital and the Democratic Party. They defend the imperative of corporate “competitiveness” by generously sacrificing the membership's wages and benefits; they donate millions of the membership's collective resources to re-elect Democrats who scorn labor's needs.

We desperately need a fighting union movement, larger and more militant than what we have inherited. Clearly the “partnerships” that have been fostered only result in a toothless, shrinking, and aimless movement. Without a new direction, there will be no need for a union like the UAW that can promise workers no more than what comparable workers make in the non-union sector, that forge no radical alliances, that provide no independent leadership, that offer no hope for real change.

But history shows that there are alternatives. The history of the UAW, the CIO and its predecessors show what a few dedicated organizers and leaders can accomplish. And history shows what a militant, class-conscious, class-partisan union movement can mean to the fight for change.

Many thanks to Roger Keeran for his helpful comments on an earlier draft.

Zoltan Zigedy

zoltanzigedy@gmail.com

Class against Class

Every commentator of every stripe concedes that US workers have been battered over the last five years since the onset of the global economic crisis. What most fail to concede is that the battering was the direct result of a one-sided class war.

From every perspective, measured by every economic indicator, all US workers-- those organized into trade unions and those not-- have been hammered relentlessly. Unemployment, measured by the government's least telling index, remains unconscionably high. Labor force participation, a better measure of the job picture, continues to decline. And the jobs that do become available are unprecedentedly part-time, low-paying, or temporary.

Wages are stagnant or declining in every sector and labor's share of national wealth continues to atrophy. Benefits are under attack with workers’ contributions to existing benefits growing and employers’ share shrinking.

The oft-cited road to success for working class youth-- a college education-- has proven fool's gold. The average student is saddled with $25,000 in student debt and a marginal job that retards getting out of debt and capturing meaningful savings.

At the same time, a “recovery” has occurred: production and national wealth have rebounded to and surpassed their pre-crisis levels. Profits and profit growth are well above historic levels and trends. And the stock market has revived energetically.

The widely heralded “recovery” has only been a recovery for the very wealthiest. A recent study by the formidable economic research team of Saez and Piketty shows that 95% of the income benefits of this one-sided recovery have accrued to the top 1% of income recipients. The other 99% must settle for a tiny share of the meager remaining 5% gain in income!

That US workers’ fate and the fate of their employers and their minions are on two separate, divergent tracks is undeniable. That these two tracks are sustainable is entirely a different matter, a matter to be settled when workers embrace a fight back in the struggle between classes.

While pundits from across the political spectrum acknowledge the huge and growing chasm between the rich and working people (see, for example, Paul Krugman's Rich Man's Recovery, The New York Times), they offer little by way of explanation and even less toward addressing and correcting the condition.

Instead, they deplore and regret, condemn and rue the sorry plight of working people in the face of burgeoning wealth channeled to the privileged. They trot out a host of tired, ineffective nostrums that consistently evade changing the dynamics that invariably generate growing inequality. Slogans like “tax the rich” warm the blood, but get no political traction. And on the rare occasion when tax increases and the like survive political mine fields, the rich find ways to evade them. Given the political power that inequality confers to the wealthy, it should be no wonder that even modest reformist proposals are decisively aborted by the best “public servants” that monopoly corporations and their wealthy owners can buy.

What, then, are the dynamics that generate inequality? What really accounts for the ever widening income and wealth game between a tiny minority and the vast majority of US citizens?

No understanding of economic inequality in a global capitalist economy can begin without an acknowledgment of class. The existence of social classes is the unwelcome analytic tool that capitalist apologists devote careers to denying. Media savants and academic authorities choke on the word “class.” To them, class division is a distant memory of hereditary aristocrats and down-trodden peasants. Surely, they affirm, the rise of representative government has eradicated class distinctions.

To avoid the obvious, liberals and so-called “progressives” have created a class that simply hangs in the air, absent any supporting structures: the middle class! A favored idea embraced by politicians, top labor leaders, and social workers, the middle class is said to shrink, decline, or disappear; yet no one tells us where the lost members go!

This slick trick hopes to mask the simple fact that the US is not a classless society.

Contrary to popular mythology, social life in the US is not all harmony and bliss. Instead, it is one of conflicting and incompatible interests. Moreover, the sharpest differences, the differences that determine material well-being, are differences of social class. The great contribution of Marxism is to reveal exactly how class is best understood-- not as social position, profession, or subjective perception, but as a material relation between employer and employee. That is, the most useful discrete divide is between those who engage the labor of others and those who provide that labor. The former constitutes a class of employers and their minions; the latter-- a much larger group-- constitutes the working class.

Even a casual reflection on the relation between the two classes in capitalist society exposes a sharp and irreconcilable difference of interest. Those who employ labor share no other goal than maximizing the profit of their enterprises. Put simply, from the Mom and Pop store to the largest monopoly corporation, owners are in business to make money. While small enterprises are limited in scope and intensity, larger enterprises, especially those with investors and shareholders, are driven relentlessly to achieve greater and greater rates of profit and sums of profit.

It is the logic of capitalism to reduce the costs of economic activity and command a greater share of that activity for the owners, investors, and shareholders. From the perspective of the worker, “reducing costs” translates into a relentless attack on the wages and benefits of the working class. The less that must be shared with the worker, the more that can go toward profit.

Since the dawn of capitalism, workers have recognized the divergence of interest between profit maximization and realizing their desire to improve their economic standing. They have understood the necessity of fighting to both maintain and expand their share of the fruits of economic activity. The history of labor is a history of the development of the instruments (unions, political parties), techniques (unity, strikes, demonstrations), and ideology (class, class consciousness, class struggle) necessary to secure a greater share of the surplus generated by the labor process. And among the most advanced, visionary workers, a world entirely free of the employer/employee relationship, a world without exploitation, a world of common, social ownership, is the goal.

Thus, we can and should measure the success or failure of the working class movement by how well it has fared in the battle with employers for a greater share of that surplus.

And by that measure, or any other, not only the last five years have been a disaster, but the previous three decades as well. Income and wealth distribution has shifted dramatically in favor of the employer class and its attendants. The rich are winning a class war for the lion's share of socially produced wealth. The working class is losing even the gains of the past.

How does this happen?

While the employers have mounted an aggressive assault on workers' wages and benefits, ostensible workers' organizations have failed workers.

The Democratic Party enjoyed the support of the working class thanks to both real and imagined gains won through the New Deal of the 1930s. In the ensuing years, that high point of labor-friendliness dissipated, with its last echoes embodied in the 1976 Democratic Party platform. Of course that platform was betrayed by the Democrat President-elect, James Carter. Never again did the Democratic Party embrace labor's cause, despite Don Quixote-like efforts by Jesse Jackson in subsequent years. While establishment Democrats mocked Reagan's lame “trickle down” economics, a decade later they celebrated the same idea with their absurd slogan that “a rising tide lifts all boats.”

Obama, the latest political “friend” of labor, has so far failed to deliver anything of significance to workers in the five years of his administration, nothing that might have reversed the grinding, painful decline of working class standards of living.

Certainly the top leaders of the trade union movement have served workers no better. Accordingly, they have been punished for their failure by a sharp decline in union membership, a decline that has lead them to panic before their own fate.

Of course their concerns, born of self-preservation, are nothing compared to the devastation of the working class inflicted over the last four decades. Their failure to use the available tools of class struggle, their reliance on cozy arrangements with bosses, and their identification with the health and flourishing of corporations are policies that have proven severely injurious to the working class.

Collaboration that links the fate of the working class to the fate of the corporations has paid off handsomely... for the corporations. A recent study summarized in The Wall Street Journal submits that by the end of this decade, “Adjusted for productivity, average labor costs will beat Japan by 18%, Germany 34%, and France 35%.” The study doesn't bother to mention what this will mean for US workers, of course. Their losses to the gods of competitiveness are capitalists' gains!

To take an example, US auto sales have soared to levels unseen since before the economic crisis first struck. Corporate profits are growing at a record pace.

How do they do it?

First, the US auto industry received massive tax-payer bailouts from the Obama administration, but only on the condition that they close plants and lay off workers! So much for the Democratic Party friends of labor.

Secondly, the industry produces the same amount of vehicles with less than 80% of the former workers, a forced-march increase in productivity.

And thirdly, at United Auto Worker unionized plants, the union submitted to deep concessions. Entry level UAW workers now make $15.78 an hour, a rate commensurate with an annual wage a mere 12% above the level defined by the Federal government as “living in or near poverty.” Once, the UAW wage and benefit package was the gold standard of industrial unionism!

Because of their total capitulation to the auto industry bosses, the leaders of the once proud UAW have resorted to pursuing the organization of the Chattanooga, Tennessee Volkswagen plant by sneaking through the back door. They hope to use a European Union regulation and their cozy relation with the company to secure recognition. How else to “win” a non-union shop when union and non-union wages are virtually equal? (Actually, when relative costs-of-living are factored, they are sometimes better in non-union plants).

Indeed, there is no class war when one side is always in retreat. The rout can only be reversed if workers shed their blind support for the Democratic Party and vigorously exercise their independence. The rout can only be reversed when workers transform their unions into class-struggle weapons and launch a counter-offensive.

The future doesn't have to continue with the past.

Zoltan Zigedy

zoltanzigedy@gmail.com

Notes from the Brink: March 2013

More Workers’ Woes

If it seems like I’m picking on the United Auto Workers union, it’s only because its descent from its once lofty, exemplary stature as one of the most democratic and militant CIO unions has been the steepest. Last month, I wrote of the leadership’s complicity in the gutting of union wage and benefit standards, a gutting that has left starting wages often lower than for their non-union counterparts. I reported that UAW contracts were pressuring management at non-union Toyota to buy out older workers in order to establish a new, lower starting wage to compete with their unionized competitors. UAW union contracts are now the corporate tool for slashing labor costs!

But it’s even worse than I thought. A retired autoworker pointed out that my claim of two-tier employment at UAW shops was incomplete. At Ford, the UAW has acceded to a three-tier system! Below the “entry” level tier, Ford, with UAW agreement, has established a classification of “long term supplemental” that offers the $14-16 entry-level starting wage, but with no job security or benefits! In some suburban, high- income areas, fast food restaurants offer better wages and benefits than this!

Labor Notes Ken Paff reports on a shameful act of treachery against workers employed at a car-hauling company under a Teamster contract. As revealed by a National Labor Relations Board decision, Ford colluded with a UAW local to underbid the Teamster contract and award the work to a lower-paying competitor. The NLRB administrative law judge ordered the voiding of the UAW contract and the re-employment of the laid-off workers with full back pay. According to the decision, Ford arranged the sub-standard contract with the UAW beforehand to secure a lower bid. As a result, the Teamster members who had made about $20 an hour were replaced with workers employed under a UAW contract at $11-14 per hour. According to a leaked document, the collusion would save Ford $9.8 million a year. This sorry deal was known to the top union leadership.

Treachery of this dimension transcends class collaboration and business unionism and sinks to the level of scabbing. Those who gave their lives to organize the UAW must be turning in their graves. Their legacy deserves much better than this insult to labor solidarity.

Currency War

Why is the escalation of the global currency war by the Abe government in Japan significant?

Until now, the leaders of all of the leading capitalist countries have proclaimed open and unrestrained trade—free markets—as a mark of a new level of international cooperation. They have advertised the dramatic growth of international trade as establishing bonds of mutual dependence that strengthen relations and lessen tensions.
But these “interdependencies” were tenuous at best. They temporarily concealed the ever compelled, inevitable drive for competitive advantage, to win at the expense of competitors. Cooperation is alien to a system—capitalism—based upon ever greater accumulation. A deepening crisis quickly surfaced these tendencies.

It was not the Abe government that opened the currency wars, but the US. The doses of “quantitative easing” adopted by the US Federal Reserve cheapened the dollar, making US exports more attractive and foreign imports less so. As a result, there was a marked revival of US manufacturing. In short, US policy makers broke with international cooperation and set out on the road to securing national advantage.

The first to feel the bite from this unilateral policy were many economies in Latin America. Despite the justifiable complaint of their leaders, US investment money flooded these markets, disrupting capital markets, and attacking their exports. Two years ago, Brazil lodged loud complaints against US quantitative easing and its negative impact on Brazilian exports.

Other countries, like the Republic of Korea, Switzerland, and Israel, have acted to protect their currencies, while Australian manufacturing has been seriously slowed because it has refrained from reacting.

The already seriously wounded EU economy has been further disrupted by the currency wars, with the European Central Bank reluctant to retaliate. Germany, with its manufacturing largely immune to price competition, has successfully blocked any strong reaction. The rest of the EU has consequently felt the loss of competitiveness.
It was the Abe government in Japan that brought this escalating contest into the open. Their explicit determination to weaken the yen served as the basis for Abe’s election campaign.

Despite a frantic attempt to get some agreement among the G7 powers, the battle only promises to become more aggressive and destructive. The Brazilian Finance Minister was recently quoted in The Wall Street Journal: “The currency war has become more explicit now because trade conflicts have become sharper. Countries are trying to devalue their currencies because of falling global trade. So many of them are in a difficult situation.”

The tensions emerging in the currency war are leading to sharp military confrontations and threats, especially among Asian Pacific countries. The capitalist sharks are turning on each other.

Here We Go Again!

Signs are eerily pointing toward developments reminiscent of the 2008 crash. Once again an enormous pool of capital is accumulating and overflowing into riskier and riskier areas to find a return. As reported in the WSJ, $149 billion has channeled into money market funds since November of 2012. The Journal notes that these funds are increasingly accepting risk (for example, French bank debt) to secure better returns.

Cash is also flooding equity markets. In only four weeks in the New Year, $38.1 billion was invested in stock mutual funds, more than the previous record in February, 2000 (remember that moment?).

A recent bank of charts published in the WSJ tellingly demonstrates the many signs of an overheated, dangerously speculative economy:

● Issuance of high-yield corporate bonds below investment grade is nearly double what it was in 2007.

● Business loans not required to meet traditional standards have risen sharply (though still well below

2007).

● Total assets in US high-yield, junk bond funds and exchange traded funds are more than double what

they were in 2007.

● Iowa farmland prices are more than double what they were in 2007.

As if there were not enough danger signs in the global economy, another over-accumulation event approaches. Hold on to your hats!

Zoltan Zigedy

zoltanzigedy@gmail.com

Notes from the Brink: The Economy in the Winter of 2013

Workers’ Woes

Workers at a non-union Toyota plant in Kentucky have been offered incentives to retire early in order for management to replace them with new hires at a lower starting wage. The labor cost advantages formerly enjoyed by Toyota—the non-union premium—is no longer available to non-union plants in the auto industry. It seems the wages and benefits long ago won by a more aggressive UAW have retreated to the extent that non-union plants must now secure lower compensation in order to compete!

Since the UAW has conceded starting pay in the unionized industry down to about $14-16 per hour, Toyota seeks to replace older workers making around $26 per hour in their Kentucky plant with new hires at $16 per hour. Thus, the union shops are paradoxically pressuring downward the wages and benefits of non-union employees .

As reported in The Wall Street Journal, industry experts claim that the non-union manufacturers enjoyed a $29 an hour competitive advantage in wages and benefits as recently as 2008. By the end of 2011, they report that non-union labor costs were about equal with General Motors and actually higher than Chrysler!

It is hard to imagine a more demoralizing consequence for the union movement in the US: if only the market, and not a fighting union, is to competitively determine wages and benefits, how does one entice workers to join the union? For the bankrupt UAW leadership, union growth comes only from striking a deal with the employers-- a deal that would promise collaboration and stability at the expense of workers’ pay and benefits.

The decimation of the living standards of US unionized auto workers came with the bailout and subsequent temporary stewardship of the auto industry by a Democratic Party administration. That same administration demanded plant closings and layoffs as a condition of the bailout.

With friends like these, workers are sadly in dire straits.

Clearly, radical changes are in order, changes that cry out for class struggle unionism and independent political action. Without a new direction, US workers will continue the descent towards Depression-era living standards.

Currency Wars 

The 1917 text of Lenin’s Imperialism projected intense struggles between rival capitalist powers. Written during an unprecedented total war between the most economically advanced countries, a war that when settled cost the lives of millions of  people, Lenin’s tract explained the First World War as a contest between empires seeking global advantage for the spoils of capitalist exploitation.

Less than twenty years later, the same empire-building forces were again unleashed to carve the world in a desperate attempt to secure markets and sources of strategic resources. World War Two further confirmed Lenin’s thesis that competing capitalist powers were unable to collaborate and cooperate for some greater, universal good. Instead, competition always begets aggression, national chauvinism, and war.

Many were dismissive of Lenin’s prophecies when witnessing the Cold War expediencies of inter-imperial cooperation against the emerging post-war socialist community. With well over a third of the world’s population in the socialist camp, the imperial rivals found a temporary basis of unity around fears and resistance to the success of socialist revolution. The survival of capitalism tamed the inherent rivalries for that moment.

The demise of that threat with the collapse of Eastern European socialism and the accommodation with capitalism by Asian Communists has unleashed the beast of imperial competition. The global economic crisis only serves to fuel the tensions and expose the rivalries.

I wrote in November of 2008 of the “global crackup”, noting that the US was no longer in a position to impose its will on the rest of the world, unable to slough its problems easily upon others. I drew attention to the logic of capitalist competition that, in the long run, denies any hope of cooperation and common solutions.

Today, that tendency— aggressive imperialist rivalry—has found its expression in a new war, a war waged around the relative value of national currencies.

Rulers understand that in a climate of stagnant or declining world trade, nation-states will draw an advantage from devaluing national currencies; by cheapening money—the medium of exchange— domestic enterprises will be able to offer their products at a more favorable price in international markets.

The US tepid “recovery” from the depths of the crisis has largely been won by hyper-exploitation of a docile work force and the dramatic expansion of exports through the Federal Reserve’s massive devaluation of the dollar via the printing press. The Qualitative Easing programs aim to suppress interest rates and remove the corporate garbage generated by the financial promiscuity of the period before the collapse of 2008. But they also have the not-so-unintended consequence of bolstering the competitiveness of US export manufacturing.

At the same time, US policy makers pointed an accusatory finger at the Peoples’ Republic of China, charging its leaders with currency manipulation. While the charge got little traction from those who closely studied these relationships, it served as a useful diversion from US policies and bolstered rounds of anti-China bashing by do-nothing politicians and labor mis-leaders.

European Union leaders, occupied with the desperate effort to save the Euro, offered little resistance to US currency manipulation.

But with the election of Shinzo Abe in Japan, the currency war was joined. Abe, a right-wing nationalist, exploited the Japanese public’s frustration with years of ineffective governance and economic stagnation to scorn cooperation and offer an aggressive economic program geared towards restoring Japanese competitiveness. Assuming the office of Prime Minister, he launched an aggressive campaign to devalue the Yen. His pressure on the Bank of Japan has already (in less than two months!) produced a drop of 10% in the Yen’s value against the dollar and 15% against the Euro. This means that Japanese products are enjoying a growing competitive advantage in international markets.

International bankers see these moves clearly as the opening salvos in a major escalation of the currency/trade wars. Politicians in countries throughout the world have quietly made similar moves to spur competitiveness, but never with the open audacity shown by Abe.

Perhaps even more disturbing is the unabashed belligerence and arrogant nationalism accompanying these economic moves. The Japanese government has provoked disputes with nearly every Asian Pacific government over barren islands claimed as part of Greater Japan. Imperial aggression is as great a danger today as it was nearly a hundred years ago when Lenin established it as a structural feature of mature capitalism.

A Hushed Mea Culpa       

Capital’s policeman, the International Monetary Fund, has offered a quiet confession of an arcane theoretical mistake of enormous consequence. As the leading cheerleader for decades of the “fiscal responsibility” approach to public programs, the IMF can take dubious credit for the policy of austerity as a general panacea for economic duress. A cursory look at the IMF legacy shows a constant, unrelenting enforcement of balanced budgets and meager public spending. Developing countries seeking IMF loans have felt the lash of austerity as a condition of relief.

A cornerstone of IMF thinking was a little discussed macro-economic assumption of the compounding effects of debt reduction. Where “unschooled” common sense might suggest that removing a dollar of public spending from economic activity would remove at least a dollar from a nation’s gross domestic product, the IMF postulated that it would reduce economic activity by only half of a dollar. That is, the “multiplier” for a reduction of public spending was only .5. The assumption, of course, is the neo-liberal axiom that the dollar spent elsewhere in the private sector MUST always be far more productive, must always be greater than unity and, therefore, must always outweigh the loss of “inefficient” public sector spending.

Unfortunately, the axiom is wrong. IMF empirical studies show that, in fact, the multiplier of public spending reductions ranges between .9 and 1.7. In other words, the negative impact of public spending cuts was underestimated by two to three times! The IMF confessed as much in its October report. Unstated, however, is the negative impact of this “error” on hundreds of thousands, perhaps millions, of people who have lost public benefits to the discipline of IMF imposed “fiscal responsibility”. Even more have suffered from the constraint on economic growth produced by the regimen of austerity.

And yet debt reduction through choking government spending remains a priority of political parties from the far right to the social democratic left.

The Sky is Falling, but not on Everyone yet!  

You would never know it from the Wall Street pundits loudly proclaiming the best January stock market in two years, but the US GDP shrank in the final quarter of 2012 (as it did in the UK, the EU, and even the seemingly bullet-proof German economy).

Generally, negative GDP panics investors and disrupts markets, but we live in special times. To the extent that labor remains quiescent and social movements fail to translate into anti-capitalist uprisings, investors and the capitalist class have made their peace with historically unacceptable unemployment and stagnating, but stable economic growth. It’s the earnings that catch the eye of the investors and the wealthy. And they have been holding up rather well so far.

In fact, they are creating the conditions for another round of risk-taking. Money market funds are flush with cash and seeking greater returns, securitization of debt is on the rise again (securities built on auto loans are greater than at any time since 2005), and banks are again growing their real-estate loan portfolios. Capitalism and the lust for ever greater accumulation never sleep!

Of course it is the very mechanism of accumulation, the search for yield on swelling capital (and the accompanying pressures on profitability), that announces the next round in the crisis.

Zoltan Zigedy

zoltanzigedy@gmail.com