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Via Workers World News Service
Reprinted from the Dec. 26, 1996
issue of Workers World newspaper
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Boeing+McDonnell = Boeing upsizing

By Deirdre Griswold

The way the proposed merger of the Boeing Co. and McDonnell Douglas is being handled in the media, you would think the only question of interest to the working class is whether or not this move will lead to immediate layoffs.

"Will I still have my job?" is the natural first question to occur to workers at the two companies. The main aim of so many capitalist mergers and acquisitions is to raise profits and reduce costs by slashing the payroll-while maintaining the same level of production, of course.

Boeing's chief executive, Philip M. Condit, made sure to get right before the cameras and deny there would be widespread firings. "There may be some reassignments, but the growth allows us to minimize layoffs," said Condit.

Despite this cheery reassurance, workers at McDonnell Douglas in particular have reason to be nervous. Hundreds of thousands of aerospace workers have been laid off over the last few years, many as the result of earlier mergers.

Major strikes at both companies-last fall at Boeing, this past spring at McDonnell-centered on the issue of job security and outsourcing.

But there is much more involved here than the question of jobs for aerospace workers over the short term.

Given the merger's size and the character of the industry, this development is like a sudden flash of lightning in the night that illuminates the landscape for miles around and makes startlingly clear what was only dimly seen before.

It explodes the most cherished myths about the relationship between the state and private industry. It shows how those who yell the loudest for getting the government out of the economy are in fact the biggest recipients of corporate welfare.

And it sounds a thunder clap of warning over where fierce global competition is headed.

Once there were three ...

This merger is the biggest ever in the aerospace industry. Boeing will pay $13.3 billion to acquire McDonnell Douglas, the second-biggest military contractor in the U.S. after Lockheed Martin.

The result will be the biggest aerospace company in the world, the United States' biggest exporter and the sole producer of jumbo jets in this country. Its only competitor in the global market will be Airbus Industrie, a European consortium.

The merger comes just when Boeing has finished absorbing Rockwell International, another military and aerospace company.

It is expected to set off other mergers among Boeing's competitors. Discussions are under way among Northrop Grumman, Hughes Electronics (now part of General Motors) and Raytheon. Each one of these companies, in turn, is the product of earlier mergers.

This trend toward the further monopolization of the aerospace industry didn't just happen. It was pushed.

In November, the Pentagon announced it had dropped McDonnell Douglas from consideration for the contract to build the Joint Strike Fighter, the giant of all military contracts. That left only Boeing and Lockheed in the running for a deal that analysts say could be worth $1 trillion in sales over the life of the plane-the juiciest government contract ever handed out.

This move more than any other forced the further monopolization of this key industry. Once it was removed from the running for this top-dollar contract, McDonnell faced ruin unless it could amalgamate with Boeing.

Until now, Boeing has produced mostly civilian aircraft. Last year, its business with the Pentagon amounted to $1.78 billion, making it only the ninth biggest military contractor in the United States.

But McDonnell Douglas did $8 billion of business with the Pentagon last year. By joining with McDonnell, Boeing would move up to become the second-biggest military contractor in the country, just slightly behind Lockheed.

Thus, this move is a significant milestone in the integration of what is left of civilian enterprise into the military-industrial complex.

It has already been announced that the federal government's anti-trust board responsible for reviewing this deal is unlikely to raise many objections. Here, as in so many military-related parts of the economy and the government, there is an open door for employing retired officers. The Pentagon's point of view is amply represented.

State intervention on grand scale

All this brings into sharp focus the true nature of the relationship between the capitalist government and private industry in this age of huge transnational banks and corporations.

It shows how the state plays a leading role in restructuring the capitalist economy. It was two government decisions that forced this huge consolidation to take place.

First was the Pentagon's decision to build a single plane, the Joint Strike Fighter, to service not one but three departments of the military-the Navy, Air Force and Marines. Second was the determination to knock McDonnell Douglas out of the bidding.

But haven't capitalist politicians and corporate executives made thousands of speeches saying the state should stay out of the economy? That the government should be downsized? That the market should be allowed to work its magic and determine prices, wages, supply of goods, etc.?

That government interference is incompatible with the free capitalist market?

Ah, but that's what they say when they are arguing for an end to health-and-safety regulations, environmental protection, minimum wage and other government regulations or social programs that soften the toxic effects of undiluted capitalist exploitation.

It's another story when these same silk suits fall all over themselves in the struggle for government contracts. They look more and more to the capitalist state to smooth out-for them, not for the workers-the risks of free-market competition and the ravages of an economic downturn.

Military Keynesians?

You might call them military Keynesians.

The economist John Maynard Keynes advocated what are called counter-cyclical measures as an antidote to recessions. He argued that if the government put money-unemployment insurance, welfare, wages from government-run construction programs-in the hands of millions of workers who otherwise would be paupers in a capitalist recession or depression, their increased purchasing power would "prime the pump" and the economy would turn up again.

The Roosevelt administration tried this in the 1930s. It was of course very popular among the masses. But it did not end the depression. Only a massive mobilization of the economy and the population for war did that.

Most of today's military Keynesians are deadly enemies of social programs like those proposed by the liberal Keynesians of 60 years ago. They want the government to spend the money to bring all basic industry into the military-industrial complex.

Boeing, for example, has been a mostly civilian aircraft company. Its orders have gone up and down with the economy. There are times of great layoffs and times when the company is rehiring-like now, when it has a backlog of contracts.

But if Boeing gets the contract for the Joint Stealth Fighter-and the merger certainly improves its position in this dogfight-then many of its cyclical ups and downs would be evened out. The government would just keep those billions of dollars rolling in, year after year, in good times and bad.

Whether Boeing or Lockheed-or both-get the contract, the Joint Stealth Fighter will start to go into production just around the time that social services will hit rock bottom in order to meet the Draconian demands of balancing the budget by the year 2002. That was another part of the Republicans' Contract with America that the Democratic Clinton administration finally agreed to.

What is happening should be clear by now. It is not downsizing government, or freeing the economy from state intervention.

On the contrary. It is shifting resources away from useful social programs to build up the forces of aggression.

This brings a net loss of jobs, since money spent in the area of services employs far more people than the same amount spent on high-tech production.

It also means that an ever-larger part of the budget is spent on big-ticket items that put nothing back into the economy. They have no usefulness-except war.

State intervention into the capitalist economy is not shrinking-it is being upsized. And that's the way the capitalists want it.

They must use the state in a big way to try and regulate an economic system that is chaotic and uncontrollable.

It was the federal government that intervened with unlimited cash when the stock market crashed in 1987. That postponed an economic collapse.

The U.S. government prevented another financial disaster when the Mexican banking crisis occurred in 1994. The Treasury Department organized a $50-billion bailout.

But not so workers and peasants in Mexico could eat. No, that was so Mexico could continue to pay interest to its U.S. creditors.

Congress didn't authorize on these massive interventions, involving tens of billions of dollars. How different from the endless debate and parliamentary maneuvering that inevitably follows a simple proposal to spend a few paltry million dollars on school lunches for hungry children.

Fierce rivalry with Airbus

While the Boeing-McDonnell merger will eliminate competition inside the United States when it comes to building big jetliners, it will intensify competition with the European consortium Airbus Industrie.

The world aircraft market had been roughly divided among Boeing with 60 percent, Airbus with 35 percent and McDonnell Douglas with 5 percent. Airbus recently beat out Boeing for a very big contract to sell jumbo jets to China.

So this move, greased by the Pentagon and aimed at Airbus, facilitates the doctrine of U.S. world domination spelled out in a secret March 1992 Defense Department document that was conveniently leaked to the media.

The Defense Planning Guidance said no "potential competitor" should even "aspire" to a greater role in the "new world order." This doctrine rests on the view that U.S. economic domination is vital to military domination.

So anything's fair in the competitive war.

Eliminating the Soviet Union as the leader of a group of states based on social ized property instead of capitalist private property has in many ways brought the world situation back to what it was before the Russian Revolution.

In those days, capitalist competition grew so fierce, the struggle for markets so desperate, that the industrialized imperialist countries split into hostile blocs. Germany and Japan are known here as the aggressors. But this was because they came late onto the scene of colonial conquest when the world had already been divided up-mostly by Britain, France, Belgium, Spain, Portugal and the United States, although U.S. imperialism avoided the colonialist label.

World War I was a bloody struggle by the capitalist profiteers to recarve the colonial world. Millions of workers were led to slaughter by their capitalist rulers. Europe was left in ruins.

The war ended only when the Russian Revolution so frightened the ruling classes that they put their rivalries on the back burner to deal with this new phenomenon, a workers' and peasants' government.

Is the world moving once again toward unbridled imperialist rivalry?

The mergers in aerospace are a barometer of the level of competition that now exists between the United States and the European capitalists, particularly France and Germany. Unemployment in Europe is above 12 percent and has been high for many years now, reflecting the growing crisis of capitalism.

McDonnell Douglas was weakened recently when it lost a key contract to Airbus. This helped push McDonnell into the position where its only option was to be absorbed by Boeing.

Airbus, on the other hand, will now be forced to take its own measures to counter Boeing's competitive edge. A likely target would be the Airbus workers in Europe. They will be told they must make concessions to hold onto their jobs.

Socialized production for private profit

European workers, however, have a high level of political experience and sophistication. They know their movement was built by socialists and communists, beginning over a century ago.

In France, Germany, and other countries the workers have been militantly resisting the right-wing offensive generated by monopoly capital.

They cannot fail to notice that the one big thing separating a socialist society from a modern capitalist one is not state intervention, or broad planning. High-tech capitalism, to function efficiently, requires both.

However, competing, contentious entities make planning extremely difficult. And plans can be totally upset by the unpredictable nature of capitalist overproduction.

The basic difference between the two systems is in social relations. Capitalism rests on private property and the division of society into the owners of capital versus the workers.

The capitalist state intervenes in the economy to protect and enlarge the private profits of the capitalist ruling class.

But the socialist state directs the economy in order to produce what the masses need. How well this is done depends on the political strength of the working class in controlling the state.

The ever-greater concentration of capital into fewer and fewer hands, as seen in the merger wave of recent years, brings the socialized character of production into growing conflict with the private character of its ownership.

Put another way, Boeing may become an even greater, more efficient and versatile producer of aircraft. But as long as it is a capitalist enterprise, it will produce more and more planes for mass destruction in the competitive war raging around the globe. And every technical innovation will be accompanied by the threat of mass layoffs.

In a socialist society, however, where the wealth is owned and controlled by the working class, this same industrial complex could provide more jobs, with a shorter work week and better benefits. It could build planes for civilian use without the corroding struggle for profits that pits nations against one another.

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