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From new introduction to ‘High Tech, Low Pay’

How changes in capitalist cycle have impacted workers

Published Aug 8, 2009 3:27 PM

Following are excerpts from a new introduction to the book “High Tech, Low Pay.” This ground-breaking work by Sam Marcy, written in 1986 during the early stages of capitalist restructuring, has long been out of print but will soon be reissued. Fred Goldstein, author of “Low-Wage Capitalism: Colossus with Feet of Clay,” wrote the introduction for the new book.

The workers & the business cycle

One of Marcy’s concerns was to show how the capitalist business cycle put limits upon what the workers could get and what they would have to give up, so long as they accepted the traditional capital-labor relationship. This problem becomes extremely aggravated during the downturn part of the cycle or the “bust” part of the boom-and-bust, which he took up in Chapter 3.

When Marcy wrote this book, the working class had recently lived through the sharp recession of 1980-1982. Official unemployment reached a post-World War II high of 11 percent. The bosses used the recession to demand concessions and carry out restructuring. The unions were thrust onto the defensive. During a downturn, the bosses shrink production and there is high unemployment. Marcy showed that, at such times, if the labor leadership simply confines itself to bargaining for wages and conditions, concessions must necessarily follow. He wanted to signal to the more advanced workers in the labor movement that the next time the cycle turned down again, new strategies would be required to combat the bosses’ offensive.

Marcy’s concern has an urgent relevance in the midst of the current global capitalist crisis, when workers are on the defensive because of the severe rise in unemployment. But it is also timely in a deeper sense because, since he wrote, the capitalist business cycle has changed in general, making the situation even worse as far as the workers are concerned. The “boom” has weakened and the “bust” has dragged on and deepened.

Traditionally, during a capitalist boom the workers can regain some of the positions they lost during the previous bust phase. The bosses, in the race to take advantage of new profit opportunities presented by the capitalist revival, are in great need of expanding their workforce. The reserve army of unemployed contracts sharply. This reduces the competition among the workers, puts them in a stronger bargaining position, and leads to higher wages. At the same time it also leads to much higher profits for the bosses.

The era of ‘jobless recoveries’

As the scientific-technological revolution was progressing “at breakneck speed,” as Marcy put it, there occurred a change in the historic pattern of the business cycle. After the recession of 1990-1991, U.S. capitalism entered the era of “jobless recoveries.” For the first time, employment either continued to decline or remained flat long after the economy began to recover. Jobs were either being lost or remained flat for 18 months after the start of the economic upturn. Prior to that time, there had been a typical lag of one quarter, or three months, between the start of economic expansion and job recovery.

The divergence between economic growth and joblessness caused concern among bourgeois economists for a while. However, after the 1990-1991 recession came the collapse of the USSR and Eastern Europe. There followed a surge in investment abroad, a technology boom at home, and the longest period of economic expansion in U.S. history.

The economists promptly forgot about the jobless recovery of 1991-92. They declared the arrival of the “new economy” and the “end of history,” speculating about the end of the business cycle.

The hopes were that, after 75 years of being constrained by socialist revolution and national liberation struggles, the collapse of the material center of the socialist camp would somehow allow infinite expansion and enable the capitalists to overcome the inner contradictions of their system. But as Karl Marx wrote: “The real barrier of capitalist production is capital itself.” (“Capital,” Vol. 3)

The hopes of the bourgeoisie came crashing down in 2000 with the collapse of the technology bubble and the loss of jobs along with $5 trillion in paper wealth. The vast expansion of capital to every corner of the globe could not eradicate the contradictions inherent in the profit system. It took a speculative boom in technology, with hundreds of companies being created every week, to pump up the economy even with the overseas expansion. The capitalist downturn followed the boom, just as it had since 1825 when the first global downturn took place.

More important than the downturn itself was the nature of the second “jobless recovery” that followed. It turned out that the jobless recovery of 1991- 1992 had not been an anomaly but an ominous harbinger of things to come. During the first 27 months of the next recovery, from November 2001 to March 2004, there was a net loss of 594,000 jobs. It took more than five years for the job level to reach the point at which it had been before the downturn began. According to Stephen Roach, the chief economist of Morgan Stanley at the time, job growth by 2004 was 8 million less than growth in a “normal” recovery.

It is no accident that Marcy focused on the business cycle and its consequences for the workers. The question of the business cycle has been of great concern to the working class since Marx first subjected it to scientific analysis. The boom-and-bust cycle is an essential expression of the fundamental contradiction of the capitalist system. Historically, it has brought both opportunity for struggle as well as shock and disaster to the workers. Understanding it is key to preparing for the class struggle. Studying changes in the boom-and-bust cycle can reveal important underlying features of the evolution of capitalism that the workers need to be aware of.

Marx & Engels on the business cycle

As far back as 1847, in “Wage Labor and Capital,” Marx discussed the question of the workers and the business cycle. Referring to the upside or boom part of the cycle, the period of rapid growth in profits and capitalist accumulation, Marx wrote:

“Even the most favorable situation for the working class, the most rapid possible growth of capital, however much it may improve the material existence of the worker, does not remove the antagonism between his interests and the interests of the bourgeoisie, the interests of the capitalists. Profit and wages remain as before in inverse proportion.

“If capital is growing rapidly, wages may rise; the profit of capital rises incomparably more rapidly. The material position of the worker has improved, but at the cost of his social position. The social gulf that divides him from the capitalist has widened.


“To say that the most favorable condition for wage labor is the most rapid possible growth of productive capital is only to say that the more rapidly the working class increases and enlarges the power that is hostile to it, the more favorable will be the conditions under which it is allowed to labor anew at increasing bourgeois wealth, at enlarging the power of capital, content with forging for itself the golden chains by which the bourgeoisie drags it in its train.” [Emphasis added—Goldstein.]

Engels gave the classic description of the capitalist boom-and-bust cycle in his work “Socialism, Utopian and Scientific,” published in 1880.

“As a matter of fact, since 1825, when the first general crisis broke out, the whole industrial and commercial world ... [is] thrown out of joint once every ten years. Commerce is at a standstill, the markets are glutted, products accumulate, as multitudinous as they are unsalable, hard cash disappears, credit vanishes, factories are closed, the mass of the workers are in want of the means of subsistence, because they have produced too much of the means of subsistence; bankruptcy follows upon bankruptcy.... The stagnation lasts for years; productive forces and products are wasted and destroyed wholesale, until the accumulated mass of commodities finally filters off ... until production and exchange gradually begin to move again. Little by little the pace quickens. It becomes a trot. The industrial trot breaks into a canter, the canter in turn grows into the headlong gallop of a perfect steeplechase of industry, commercial credit, and speculation which finally, after breakneck leaps, ends up where it began—in the ditch of crisis. And over and over again.”

Thus it was Marx who gave a description of the situation of the workers as regards the capitalist business cycle of the time. The period of “rapid accumulation,” that is, the period of the vigorous boom of business following a downturn, has been the most favorable historically for the working class. And it was Engels who described how capitalism goes from crisis to boom to crisis, continuing in that cycle “over and over.”

Even before the 1990s the capitalist business cycle, described a century earlier by Engels, had changed in favor of capital. Marcy, in Chapter 3, focuses on the fact that capitalist recession lengthened in the post-World War II period and that “this is very important in relation to strike strategy, which had a lot to do with the duration of the capitalist economic crisis.” It raises the question of what workers can do if a recession turns out to be protracted and the bosses can hold out for a long time.

To be continued.