by Jeff Mackler / November 2005 issue of Socialist Action newspaper
Twenty-three years ago when Continental Airlines CEO Frank Lorenzo used U.S. bankruptcy laws to gut union contracts, he was portrayed as the bad guy exception in the ranks of the corporate hierarchy. Demonstrating a blatant contempt for workers, Lorenzo was corporate
America’s front man in pioneering the slash-and-burn tactics that obliterated Continental’s union contracts. Thousands of flight attendants and pilots were laid off and replaced with scabs who worked longer hours at half the union rate.
Today’s version of Frank Lorenzo is the “compassionate” Robert S. Miller of the Delphi
Corporation. Miller is a prime example of corporate America’s modern intellectual hit man, expert at stealing billions from working people in the name of adjusting to the new era of worldwide capitalist economic warfare, politely called “globalization.”
Today, half of the 12 Lorenzo-era U.S. airlines don’t exist, also victims of the merciless “survival of the fittest” competition inherent in capitalist production.
Miller’s credentials include service on the board of directors at Bethlehem Steel and again at United Airlines, when the bankruptcy device was employed to dump company pensions while simultaneously demanding 50-60 percent wage cuts.
His new assignment is to leverage Delphi Corporation’s recent Chapter 11 bankruptcy filing into billions of dollars in union concessions. An Oct. 15 New York Times article, “The Hammer of Bankruptcy at Delphi,” has Miller stating, “My job is easy in comparison to
[United Auto Workers President] Ron Gettelfinger’s. Ron has the job of helping half a million members adapt to a new reality brought on by the forces of globalization.”
I couldn’t help but wince at Miller’s contemptuous familiarity as he described “Ron’s” dilemma in “helping” UAW members to “adapt” to the mysterious forces of globalization.
Delphi, among the world’s largest auto parts suppliers, was a General Motors “spin-off” six years ago, and is likely still under GM control through backwater channels. The UAW tops agreed to the sell-off provided that Delphi upheld the union’s contract until 2007.
But Delphi, driven by inexorable market forces—that is, the deadly capitalist competition that has reduced Delphi profit rates to minus figures—couldn’t wait to take its pound of flesh. The “bankruptcy hammer,” in reality, the decisions of the judges of the capitalist state, has been employed to accomplish the dirty deeds that Delphi requires.
Miller faces a featherweight obstacle that his forefather Lorenzo didn’t. Lorenzo simply used the then-existing bankruptcy laws to tear up union contracts. However, labor’s “influence” in the Democratic Party, in light of the Lorenzo experience, was used to amend the law to require the boss class to “negotiate in good faith” before it ended the charade and turned over the job of dismembering union contracts to a “neutral” bankruptcy judge.
The New York Times reporter Joseph Nocera’s interview with Miller (Oct. 15, 2005) accurately summarizes Delphi’s position: “Delphi needs a more competitive cost structure, and bankruptcy is the only way to get there. The company, which lost $2.4 billion last year,
simply can’t sustain any longer a labor force that gets $65 an hour in overall compensation, and allows workers to retire with full pension and benefits after 30 years, even if they’re only in their late 40s.”
Of course, these are Delphi’s poor-mouthing figures, concocted to evoke sympathy for its cause and encourage others in the corporate world to follow suit, while driving a wedge between so-called middle-class unionized Delphi workers and other sectors of the working class whose overall wage and benefit levels are significantly less.
The Times didn’t bother to ask the UAW for its take on the data. Today, newcomers starting out in the auto industry under UAW contract earn close to $18 an hour. After three years, in accord with previous UAW contract concessions that reduced starting wages by 30 percent, they eventually, in six-month increments, reach the approximate $25-$27 hourly rate that is
standard with the Big Three.
Based on a 40-hour week, that works out to an annual gross income of roughly $50,000. Subtract local, state and federal taxes, and the figure is reduced to somewhere in the range of $35,000, a modest working-class income still insufficient to meet basic family expenses without another full-time worker in the family. The above figure should be further adjusted downward to account for inflation. In September the rate jumped 1.2 percent, the highest
monthly increase in 25 years. This reduces the above figure by several thousand dollars.
Miller’s Times interview revealed that he had more in mind than complaining about “high-paid workers.” Nocera spells it out. “If it [the UAW)] wants to hold on to its rich pension plan, it will have to agree to new, lower wages that will amount to a two-thirds cut in pay. If it refuses to negotiate wages downward, he [Miller] will seek permission to terminate the Delphi pension plan, just as United Airlines and others have done in bankruptcy. It’s one or the other.”
Miller’s threats took place in the context of the UAW’s now concluded negotiations with General Motors Corporation (GM), where for the first time in history, the UAW, led by President Gettelfinger, agreed to major concessions in health-care coverage for working
members and retirees. UAW’s GM retirees will now be required to pay deductibles, monthly premiums, and co-payments for some services, including X-rays.
The deal saves GM at least $1 billion a year, according to the UAW. We have not seen the fine print. The average retiree family will now pay up to $752 yearly as opposed to zero. Working members will take a pay cut of $1 per hour to further subsidize GM’s health-care obligations.
GM estimates that it will save $15 billion of its anticipated $71 billion in long-term retiree
health-care costs. GM’s CEO Richard Wagoner hailed the agreement as “the single biggest cost reduction we’ve probably ever been able to announce in a single day in the history of GM.”
But this is just the beginning, says Wagoner, top dog of one of the world’s largest corporations. He warned (The New York Times, Oct. 21), “It’s a very important first step. I didn’t say it was the last step, and it’s not the first step. It’s a validation of the view that they understand that the success of their union and the people they represent is tied very closely to the success of our business.”
GM simultaneously announced plans to speed up its plans to close assembly and supply plants. It estimates that 25,000 jobs will be lost in the process.
Concession after concession
The UAW’s retreat will resound throughout the labor movement. For decades UAW contracts, whatever their limitations, were a model to be emulated. They were the historic product of the union’s power and victories won in class-struggle confrontations with the nation’s auto barons 60 and 70 years ago. But the UAW’s more recent contract “victories,” including the maintenance of health-care and pension provisions over the past three decades, came at a high price. In 1979 UAW membership stood at some 1.5 million. Today, it stands at less than 624,000 members, less than half of whom are autoworkers.
As opposed to its post-World War II high, where virtually every autoworker in the country was under a UAW contract, today the figure stands close to 60 percent. Japanese cars, Toyota and Nissan, now account for close to 40 percent of the U.S. market, with a hefty proportion of these “imports” manufactured in the U.S. in non-union plants.
UAW bureaucrats have negotiated concession after concession, while still maintaining fairly decent wage and benefit contracts for an ever-declining number of autoworkers. Their “partnership” with the boss class includes agreements as to which plants will be closed
and which, in accord with protecting the jobs and prerogatives of select sectors of the union’s
hierarchy, will remain open.
But the general trend in auto production in the U.S. and worldwide is the relatively rapid closure of plants that can no longer operate competitively in the context of rapid technological innovation and new super low-wage opportunities in poor countries.
The UAW’s partnership with the bosses includes a fundamental acceptance of all the essentials of the profit-making system. To remain competitive on world and U.S. markets, ever more modern production technologies must be substituted for workers. One-third of all autoworker jobs have been lost to technology and automation.
Another third of jobs have been lost to production shifts to low-wage countries. The rest have been lost to speed-up and downsizing, to “spin offs,” outsourcing, the use of part-time workers, overtime, and all the rest. The UAW bureaucracy’s best efforts to keep their bosses profitable at workers’ expense have not and cannot stem the tide.
Like the corporations, which never fail to whine about their losses and insist on union concessions in the face of ever-sharpening global capitalist competition, union bureaucrats like Gettelfinger argue that they have been forced to retreat against their will. Says,
Gettelfinger, “It is the classic play-off of worker against worker, and it is a race to the bottom in terms of wages and benefits.”
Gettelfinger understands that whatever concessions the UAW grants in the U.S. will in turn be used by foreign competitors to demand the same and more from workers abroad. The whipsaw effect has reduced workers’ living standards everywhere. But Gettelfinger, and the
parasitic union officialdom he represents, still play the game.
The promise of restoration when “prosperity” returns has never been fulfilled. The UAW’s “partnership” is a one-way street, with the workers giving and the employers taking. It cannot be otherwise if the rules of the capitalist game are accepted.
GM recently reported the largest third-quarter losses in a decade, $1.6 billion. Its losses for the first nine months of 2005 totaled $4 billion. Ford lost $284 million in the third quarter. Its 2005 SUV-driven profits were halved as compared to 2004.
Delphi lost $2.4 billion in 2004 setting the stage for its Oct. 14, 2005 bankruptcy filing and its very real threat to reduce wages to the levels of its production facilities in the underdeveloped world.
Delphi’s CEO is also demanding billions of dollars in bailouts from GM. Either GM pays or its major parts supplier goes under. If GM obliges Delphi, it is likely that it too will run to the bankruptcy courts to shed its pension obligations to hundreds of thousands of UAW retirees.
Smelling blood, Ford announced “significant plant closures.” Daimler-Chrysler declared its intention to seek similar concessions.
Marxist explanation of capitalist crisis
Life itself has demonstrated that there cannot be an end to the concessions. The descent to “Third World wages” is appearing on the horizon for the first time in the modern era. Just what are these “forces of globalization” that are employed by Corporate America to demand massive cutbacks?
The New York Times asked Clark University labor-relations professor Gary Chaison for his view on the matter. Chaison noted, “Like all of the big industrial unions, the UAW has never figured out how to deal with globalization.
“What they do is they have a conference, or present papers, or talk about cooperation between unions and social movements in other countries. They don’t know how to take wages and working conditions out of the realm of competition. And they don’t know how to deal with something that is beyond the jurisdiction of their own membership.”
Chaison didn’t bother to instruct The Times how he would advise the UAW to “take wages and working conditions out of the realm of competition.” That’s because the system of competition itself, capitalism, the private ownership of the means of production—for profit—cannot be separated from wages and working conditions. No capitalist economist or Marxist
economist has ever contemplated doing so. But Karl Marx did offer a rational explanation for the periodic crises of recession, depression, and catastrophe that have plagued capitalism for its 300-year history.
He began with the simple proposition that the value of any commodity is derived from human labor power. Marx observed that the introduction of technology into the productive process had contradictory results. On the one hand, it qualitatively increased the number of
commodities produced. On the other it reduced the amount of human labor power, or value, embodied in each commodity, two self-evident propositions. At the beginning of this process the capitalist is quite pleased with the result, especially the first sectors of the corporate elite to introduce the new technologies in the name of capturing a larger proportion of the market.
It is far better to end up with a profit of, say, $5 each in the production of one million widgets
manufactured with state-of-the-art technologies, the pioneering capitalist reasons, than it is to secure a profit of $20 each on 100 hand-made widgets. Five million dollars in profit ($5 x one million) is better than $2000 ($20 x 100). Further, the small-time widget-maker isn’t long for the widget business when faced with a manufacturer who can produce the same product, if not a superior one, in qualitatively larger quantities, for a fraction of the cost.
Over time, however, competition among the still-competing capitalists tends to result in ever
more commodities produced by fewer and fewer workers, as each capitalist is compelled in turn to introduce the next level of technology in order to stay in the race for survival.
Eventually, as is the case in today’s crisis-ridden world capitalist system, all markets become saturated with widgets on the one hand, but as a consequence, a reduced rate of profit on each widget, (or automobile, TV set, or pair of shoes) on the other.
While I have purposely and grossly oversimplified the basic features of the dilemma inherent in virtually all capitalist production, the central observations remain valid and fully applicable today.
There is no end to the process other than the “mad race to the bottom” and extinction for the great majority of the original capitalist players. A tiny few price-fixing monopolistic corporate survivors remain while millions of working-class producers are driven to unemployment or low wage service sector jobs. In the U.S. today one million decent-paying, mostly union jobs are lost yearly.
The source of the capitalist profit, Marx demonstrated conclusively, was the appropriation of a portion of the labor power or value imparted to commodities by the worker. Simply put, no self-respecting capitalist hires a worker unless a profit is to be made from his/her labor. But the worker must be paid at least a portion of the value he/she imparts to the commodity
produced in order to survive.
The amount is determined by the class struggle. In times of retrenchment and defeat, the boss class appropriates a greater portion of the value that the worker produces. In times of fightback and advance, the worker wins back a bit more.
But as a generalization, the fluctuation between the good times and the bad times is sufficient only to allow the worker to survive and live like a worker, minus or plus a few improvements or losses, without ever accumulating sufficient capital to become a
capitalist in his or her own right. In short, at the end of the workers’ lives, they leave with what they came in with—nothing.
On average, in the U.S. and worldwide, they receive in wages and perhaps some other benefits only what is required to reproduce themselves as a class at the service of the boss. We are what Marx called the modern-day “wage slaves.”
The steady decline in average profit rates is a direct product of the operation of the system as a whole. It is what Marx called, “the tendency of the average rate of profit to fall.” But this “tendency” is just that. The capitalist bosses have no intention of bending to the fundamental economic laws that govern the operation of its system.
To survive, they are compelled to fight over an ever-increasing portion of the value the worker needs to survive. They attack wages, hours, working conditions, pensions, fringe benefits, and all the rest. When this proves insufficient they call on the capitalist state they control to lend a hand. This takes place in the form of gutting social services and increasing working-class tax rates in order to pass on the proceeds to the failing capitalists.
The recent unprecedented tax cuts for the rich, engineered by both the Clinton and Bush
administrations, account for the transfer of trillions of dollars from working people to the rich.
Exploitation of workers abroad
Globalization of production is also a synonym for transferring work to low-wage countries. It began in the U.S. with the shift of production from the North to the low-wage “right-to-work” Southern states and then to Mexico. Even here the maquiladora assembly-line plants proved to be “expensive” for the needs of U.S. capital.
Why pay a Mexican worker $5 a day when a Guatemalan or Salvadoran worker can be bought for $2.50? Indeed, why not transfer operations to Southeast Asia or to China,
where some sweatshops employ teenage women in factory dormitories at six cents an hour!
But even here, the exploitation and degradation of working people doesn’t end. Whatever advantage that one competitor might gain by moving to low-wage countries is soon offset by all other serious players, who are compelled to do the same to survive. When there is no longer an advantage to be obtained by exploitation abroad, the battle resumes (or continues
uninterrupted) at home, with GM, Ford, Daimler-Chrysler, etc., compelled to attack every last
vestige of the social gains won in past struggles.
Once again, it is the inherent working of the system itself that accounts for the current crisis in the U.S. auto industry and in all others.
The crushing effect of “the tendency of the average rate of profit to fall” is now fully operative. It was muted for a time when, following the slaughter of 80 million people during the imperialist World War II, one component of the world’s capitalist competitors, the United States, emerged victorious. All others, U.S. “allies” and “enemies” alike, saw their productive capacities reduced to near zero, destroyed by war.
But today, the world stands on new economic foundations, on a Europe and Japan and now capitalist China, rebuilt and fully competitive on all fronts. The startling phenomenon of a world covered with shining new factories and high-technology farming, able to provide a life of abundance and leisure to every person on earth, stands in dramatic contrast to the increasing poverty rates experienced by the populations of every nation.
There is no solution to capitalism’s inherently destructive nature. Racism, sexism, homophobia, the poisoning of the environment, global warming, imperialist war, and neo-colonial conquest are the inherent biproduct of the system’s functioning.
UAW call for slowdown at Lockport
How can working people fight back today? There is no simple answer, but a few valuable propositions remain intact. First and foremost, working people have absolutely no interest in any form of partnership with the employing class, either at the level of union-management relations or in the political arena. Despite the unprecedented decline in union membership,
unions still retain the potential power to reverse the present trend and win. They remain organized in the decisive sectors of the economy such as transport, basic manufacturing, communications, power generation, and construction.
They can defeat all union-busting efforts provided that they are united, that they return to the kind of militant class-struggle solidarity that gave rise to the early battles that defied all reactionary laws and armed bodies of the capitalist state.
A single example of an important union with a fighting leadership that is capable of mobilizing the ranks to say “no” to any concessions and “yes” to a battle to the end might well spark the first in a series of struggles that once again demonstrate that labor can fight effectively and win.
Such a defiant stance, the example of a real fight, coupled with a direct appeal to the rest of labor movement, will bring forth what is best and decisive in organized labor, a willingness to come to the aid of their beleaguered brothers and sisters who are risking everything for the common good.
Today we are witnessing what are perhaps the first signs of a willingness to fight and win. An Oct. 28 Detroit Free Press article entitled, “Action by UAW could slow work at Delphi,” states, “Union leaders at one of Delphi Corp.’s largest plants are circulating a call for a work action that could slow down production at the nation’s largest auto supplier. It was the first shot across the bow by unions since Delphi proposed severe pay and benefit cuts.”
The reference is to a flyer distributed by UAW local leaders at a Delphi plant in Lockport, N.Y., where 4700 union members make radiators and other vital auto components.
The Free Press quotes five-year UAW Delphi worker Dave Savino’s response to the UAW plant leadership’s vague proposal for a “work to rule” or slow-down campaign. Savino explained that “the mood among the workers is grim. We were basically told [by the UAW leaders], ‘Do your job, but don’t go the extra mile,'” Savino adds, “We’re so angry that we’re ready to go on strike right now to fight for what we believe in.” For Savino, it appears that “what we believe in” is the right to a job itself and to keep what Delphi workers have fought
for their entire working lives.
To make clear what a Delphi slow-down would cost potentially dissident UAW locals, the Free Press also quoted Delphi’s CEO Robert Miller, who bluntly told the paper, “Any plant that wants to be at the top of our plant closure list should engage in industrial action as a way of sending that message.”
These are the words of a class-struggle fighter, but a fighter on the boss side, the capitalist side, of the class line.
The UAW flyer, in contrast, employs the language of frightened bureaucrats, more concerned with possible company law suits about union “contract violations” than with providing clear and decisive strategies for the ranks. The union flyer reads, “It may not be in your best interest to go above and beyond for any manager representing the company that is attempting to strip you of everything you have earned.”
The Delphi/UAW contract today contains a “no strike” provision, essentially an agreement that the company is free to tear up union contracts, close plants at will, and obliterate pensions while insisting that their UAW “partners” play by the rules of the game. But if Delphi workers did close their plant, as they did seven years ago in a strike that cost the auto
barons $2 billion in a matter of days, they would send a clear signal to all UAW members that the battle has been joined. And if UAW members employed at the Big Three auto plants across the country did the same, the stage would be set for a fight, the likes of which have not been seen for some 60-70 years.
For decades UAW misleaders have operated on the basis of their “one at a time” strategy—that is, the bankrupt notion that striking one automaker at a time would lead to a quicker settlement, as the struck company lost market share to its competitors who remained in production. Indeed, in recent decades the “one at a time” strategy has given way to a “none at a time” strategy wherein the UAW negotiated endless concessions to keep their “partners” profitable. “Strikes are no longer an effective strategy,” so the union bureaucrat’s refrain goes.
But the threat of a strike or the desire to strike and win by a single Delphi worker, in this case Dave Savino, or perhaps by a dissident UAW local leadership was sufficient to elicit the thundering response by Robert Miller. Strike or slow down, he warns, and we’ll close your plant forever.
It is only a matter of time until an important section of the ranks respond, “We will not only close down Delphi’s entire operation, but the entire auto ndustry, and every component of it, and every ndustry that is dependent on it—from rail to trucking and shipping and all the rest. That would get the boss class’s attention and that would begin to change the relationship of class forces in this country.
It is just a matter of time until a class-struggle leadership emerges to take up the challenge. It is absurd to believe that workers will take blow after blow without a response. To the contrary, growing numbers are coming to the realization that concessions bring nothing but more concessions—that is, the “race to the bottom” that we have detailed above.
There are no doubt important factors that have thus far served to cool the potential fires of a
class-struggle fightback. The massive extension of credit, the unprecedented equity that has resulted from a government-engineered inflation in housing costs and the now-dominant two-family income are among the most important. But these too are rapidly reaching their limits.
The coming fightback
When the struggle begins, perhaps in the least expected sector, it will unleash an explosive power that will make what was considered impossible yesterday, a reality and necessity today. Instead of moving plants to low-wage countries, the boss class will be forced to keep them open, reduce the workday without a cut in pay, hire the unemployed, and restore past concessions. Refusal to comply will be met with strikes that go far beyond the struck industry.
What might have begun as an economic strike at a particular plant might well threaten to become a political strike, with far-flung implications for the capitalist class as a whole.
No sector of the working class can win by itself. Solidarity, at a level that far exceeds anything seen in modern times, is a prerequisite for a reversal of past losses and for a resurgent labor movement. The class-struggle fightback that is envisioned here will open the floodgates to the organization of the unemployed, as it did in every other instance when
working people entered the arena of combat front and center and changed the course of history.
The fightback will take on international proportions as labor’s power is used to forge unprecedented levels of solidarity with co-workers around the globe. GM and all other U.S. auto plants will be struck and closed down, while class-conscious union fighters join with
their counterparts at auto plants around the world for the common good.
The fightback will be joined and complimented in the political arena as resurgent labor builds its own independent working-class labor party and opens its doors to the entire working class and allies among the oppressed.
A fighting and mass labor party, whose initial cadre are in formation today, will take labor’s program to the millions and fight for a workers’ government as opposed to a boss’s government. Such a government will be obliged to challenge the capitalist profit system
itself and open the door for a fight for socialism, a new system based on the democratic rule of the working class, the social ownership of the means of production, and a planned economy based on production for human needs as opposed to capitalist profit.
The present labor misleadership in its vast majority will not be a part of these coming battles. The bureaucracy serves today as the agency of the boss class in the workers’ movement. It is tied to the parties of capital and dependent on the privileges acquired as it acts to discipline workers, destroy any semblance of union democracy, and subordinate the
interests of the ranks to the profits of its corporate “partners.”
The coming fightback will be led in the main by the youthful workers who have little to lose and a world to win. These will be youth who have been radicalized in the social and political arenas, who have made the connections between the imperialist war against the people of Iraq and the racism evidenced by the horrific failure to immediately come to the aid of the
victims of Hurricane Katrina—and who are outraged at the endless capitulation of their misleaders. These youth will be joined and encouraged by veteran fighters who have spent decades in the trenches keeping the lessons of past victories alive, organizing and educating the initial cadres.
Few, if any, in the organized labor movement today—not to mention the almost 90 percent who remain unorganized—are content with the status quo. They are looking for an opportunity to fight back and for a new leadership up to the task.