Editorial
Blaming the Workers for the Failures of
Capitalism
The bailout of the auto monopolies in
the U.S. and Canada is being accompanied by a massive propaganda campaign
against auto workers, blaming their high wages and expensive benefit plans for
the inability of General Motors and Chrysler to make a profit. This campaign is
part and parcel of the current ideological offensive against the working class
aimed at disorienting and disarming it in the face of the attacks on wages and
working conditions that are planned in every sector of the economy.
There is no truth to the claim that high
wages are the cause of the problems of the North American automobile industry,
or any other sector, for that matter. The root cause of those problems, as is
the case with the economic crisis in general, is the anarchy of production
under capitalism which leads to periodic crises of overproduction. Coupled with
that is the relentless downward pressure on wages that has taken place over the
past 25 years which has reduced the demand for cars and other commodities. The
financial crisis which came to a head last fall and the resulting mass layoffs
of workers has further exacerbated this problem, but the North American auto
monopolies have been in trouble for a long time now.
The reality is that the relatively high
wages earned by a significant section of industrial workers were an important
factor in the post-war boom in North America. Those high wages stimulated
demand for a whole range of consumer goods, including cars, and the taxes paid
by those workers were used to create a modern society with modern roads that
further fueled demand for cars. During the 1950s, 1960s and 1970s, wage rates
in Canada and the United States were significantly
higher than anywhere else in the world, but during that period those economies
grew by leaps and bounds and corporate profits soared. However, by the 1980s
and 1990s wages in Europe and Japan had caught up with North American wages and
in some cases, such as the Japanese auto industry, exceeded North American
wages. So, when the wages of North American auto workers were much higher than
auto workers in Europe and Japan the North American auto giants were highly
profitable, but now that wages in Europe and Japan have caught up or surpassed
North American wages the North American auto industry is no longer profitable.
Therefore, either there is no relationship whatsoever between wage rates and
profitability or it is the opposite of what the propagandists
are claiming.
Of course, in general terms wages and
profits come out of the same pool of wealth created by the labour
of workers, so there is an inverse relationship between the two. A rise in
wages will result in a drop in profits and vice versa. However, the relative
profitability of two competing companies is affected by many other factors
besides the wages they pay their workers. In fact, it is estimated that wages
constitute only about ten percent of the price of a car. Issues of technology
are far more important, as are issues of quality and reliability, two fronts on
which North American auto manufacturers have lagged behind their competitors
since at least the 1980s. Furthermore, there is no indication that the North
American car manufacturers are willing, let alone able, to close that gap.
Therefore, regardless of what concessions they wring out of their workers and
what handouts they receive from governments the long-term outcome will be the
same. General Motors reported losses of $30 billion in 2008, before the current
crisis had even gathered steam. The chances of it turning things around in the
middle of a depression of historic proportions are very slim to none.
Just as the wages and benefits of auto
workers have nothing to do with the current problems of General Motors and Chrysler,
the concessions being demanded of auto workers also have nothing to do with the
long-term viability of those companies. Rather, it is a cynical attempt to
extract a bit more profit from the hides of the workers before those companies
go down the drain.