-------------------------
Via Workers World News Service
Reprinted from the Aug. 21, 1997
issue of Workers World newspaper
-------------------------

Big business sees economic downturn

By Fred Goldstein

The tremendous strike of the UPS workers, the first great effort of the labor movement at a counter-offensive after almost 20 years of attacks, has shaken all the bosses and their establishment. It is no less than an attempt to change the relationship of class forces in the country.

Behind the scenes the corporate ruling class is struggling to cope with the new situation. Its publicists in the media loyally come forth with stories of hardships of small business, etc., to try to isolate the workers and whip up sentiment against the strike.

But among the more subtle thinkers of the bourgeoisie, another line of argument, aimed at the AFL-CIO leadership itself, is beginning to develop. It goes like this:

The capitalist boom is based largely on the new downsized, two-tiered, part-time, contingent worker economy--that is, on low wages and speedup. True, it is somewhat unjust and hard on the workers. But if organized labor tries to combat this new arrangement too vigorously, it will drive up wages, squeeze profits, and cause the bosses to raise prices--which will threaten inflation.

Alan Greenspan will then intercede with a rise in interest rates and choke off the boom, both in the stock market and the economy. The crash will bring the workers right back to where they were in the first place, or worse.

This argument was put forward by the liberal economics writer for the New York Times, Louis Uchitelle, on the first page of the News of the Week In Review section on Aug. 10. "Tight labor markets," wrote Uchitelle, "... give the UPS drivers leverage to demand a higher wage. If ... productivity has not risen ... then the higher wage ... will squeeze profits. Either that or the companies will raise prices to preserve profits, pushing up the inflation rate.

"And if that happens," continued Uchitelle, "stock prices seem destined to fall, puncturing the larger economic boom. For workers the world shakes. The very act of earning more threatens to consign them to doing worse."

So, goes this argument, President Ron Carey of the Teamsters, AFL-CIO President John Sweeney and the entire labor leadership had better think hard about this new counter-offensive. Don't overdo it or you will bring the whole house down and labor will suffer most. In short, to struggle is futile.

BIG BOSSES FEAR COLLAPSE

This argument that blames the labor movement for bringing on an economic crisis fits very well into the propaganda war against the UPS strike. But the truth is the capitalist class and its consultants do fear that their orgy of profit making is coming to an end.

When they discuss it among themselves behind closed doors, however, they are much more candid about the fundamental causes of a coming economic crisis. An article in the Aug. 7 Wall Street Journal offered a window into the thinking of top corporate planners.

Twenty executives from giant multinational corporations like Mobil, Union Carbide, Dow Chemical and other "capital- intensive" companies spent two days in early August closeted with their top advisers at a get-together in Monterey, Calif. Their mood was "surprisingly somber," according to Bernard Wysocki, the Journal reporter.

"I feel like the prophet of doom," was how R. Duan Dickson, a director of Mercer Management Consultants, welcomed them all to the meeting. "It's our belief that the downturn has started. I can't tell you how far it's going to go. But it could be a very ugly one."

CAPITALIST OVERPRODUCTION

The purpose of the meeting was to project what these multinationals could expect in their industries between now and the year 2000. The answer: "growing overcapacity, world- wide product gluts, price wars, shakeouts and consolidations."

The Journal report continued: "The problems extend beyond the oil, chemical, paper and other industries that process raw materials. The global auto and airline industries are building capacity rapidly, and some experts expect shakeouts in them, too, by 1999. Already U.S. retail space and semi-conductor manufacturing capacity are widely acknowledged to far exceed demand."

A Union Carbide vice president, Joseph Soviero, "cites an odd but basic problem in chemicals," the Journal continued. Soviero says that "the profitability that the industry sees during the good times has always led to overinvesting. And it has this time."

In other words, it is high profits, not high wages, that lead to over-investment and eventually a crisis of overproduction.

The Journal continued: "So far, demand isn't a big problem. In many industries it is growing steadily, though slowly. What is developing is too much supply, stemming from the recurring problem of over-investment."

CRISIS IS GLOBAL

The meeting punctured the argument that globalization has somehow transformed capitalism and insured it against crises.

There's a "new twist," continued the Journal. "More than in past cycles, this one is increasingly global. New factories are going up everywhere, especially in the emerging nations of Asia and Latin America. And the markets for the products they turn out are increasingly global, too. So while U.S. factories, mines and power plants are running at a relatively high 83 percent of capacity, the huge additions of capacity to Asia and Latin America could strongly affect global markets."

The problem is acute in auto making. "Everybody and his brother is getting into it," says W. Van Bussman, who is chief economist at Chrysler Corp. Auto capacity in Central and South America will double to 5 million a year by 2000 and will nearly double in Asia outside of Japan and South Korea to 9 million.

"The result," concluded the Journal, "could be several million cars floating around the globe looking for buyers."

The fierce competition between Boeing and Europe's Airbus, each offering attractive deals, is leading to overproduction in the aircraft industry, "producing more supply than the market can absorb." John Walsh, a consultant at the gathering, predicted that 900 aircraft will be ordered next year--nearly double 1995--but the airline directors will soon begin to delay and cancel. "It's complete chaos," he said.

Ted Semegran, a chemical analyst at Brown Brothers Harriman, spoke about the cyclical downturns. "I've gone through about five of them," he said, and he now perceives "a classic capacity buildup."

ANARCHY OF PRODUCTION

Most revealing is the mentality that drives the corporate predators toward inevitable disaster. "Why don't many executives see capacity problems build ing up?" asks the Journal. "One reason is ego: Companies figure that when the bloodbath is over, they will emerge the winners."

In this discussion among themselves, none of the corporate bosses sees the wage pressure of the workers as the fundamental problem in the world capitalist economy. No, the problem is their success in squeezing ever higher profits out of the workers.

Does this insight on their part change anything? Not at all. They are super-exploiters and will resist the workers' struggle for wage increases with all their might. But when they try to present a dispassionate analysis of what is causing the crisis, they all must cite the classic and insoluble problems of capitalism as analyzed in detail by Karl Marx: capitalist anarchy and overproduction, which flow inevitably from production for profit.

They even go so far as to analyze their own profit lust as the driving force behind over-investment in high-profit industries, which lays the groundwork for overproduction and collapse.

The "bloodbath" they refer to is the struggle to subjugate and conquer their corporate rivals. They don't say a word about the bloodbath visited upon millions of workers who are laid off during a crisis. Or the millions who will never get their jobs back after the "shakeouts" and "consolidations" take place.

Because of the anarchy of the capitalist system, in which production is driven not by a plan but by the quest for profit, none of them knows precisely when a crisis will break out. But being at the helm helps them discern trends that lead to crisis.

The working class and its leaders should certainly take note of these corporate deliberations in order to map out strategy for defending the workers in the event of a collapse. They should answer back and show that the crisis is not caused by the working class, but by the bosses and their chaotic system.

LABOR MUST PREPARE

All the more reason to reject the poisonous advice of the likes of Louis Uchitelle and other bourgeois publicists, who pose as sympathetic to the workers but would drive the labor movement into passivity with threats of a recession or depression.

They would like nothing better than for the working class to be totally cowed and asleep when the next crisis hits. But that is the worst possible situation, for it would enable the bosses to pass the crisis completely onto the backs of the workers.

The fact that the UPS strike comes just when the bosses are worrying about a downturn should spur the Sweeney leadership and Ron Carey and the Teamsters to pursue the struggle as far as they can, drawing in as many layers of society as possible on the side of the strikers.

From the point of view of the labor movement, the working class and the oppressed people in general, the best possible situation in the event of a collapse of the stock market or a downturn in the economy is to be in a high state of mobilization and organization--that is, to be actively and aggressively engaged in the class struggle.

It will put the labor movement in the best position to take whatever offensive measures are necessary to stop layoffs and turn back the bosses' attacks.

- END -

(Copyright Workers World Service: Permission to reprint granted if source is cited. For more information contact Workers World, 55 W. 17 St., NY, NY 10011; via e-mail: ww@workers.org. For subscription info send message to: info@workers.org. Web: http://www.workers.org)

Copyright © 1997 workers.org