Why is GM still crying poverty?

Last week, Flint, Mich.—home of General Motors and site of the heroic 1937 sit-down strike–was subjected to eight days of events celebrating GM’s 100th birthday. For $15, someone could tour the mansions of former executives. The festivities culminated in a parade of vehicles made during each year of GM’s existence.

Yet around the world front-page news articles about GM were not so celebratory. They focused instead on the people affected by GM’s latest restructuring: the ones who in the past have done the company’s dirty work. For years supervisors imposed discipline—“up to and including discharge”—for a wide range of infractions. Now the tables are turned, and these same loyal servants are among GM’s 32,000 U.S. salaried employees facing job cuts. Equally or perhaps more uncertain are the economic futures of thousands of non-unionized clerical, financial and engineering staff.

Salaried retirees, meanwhile, are furious over losing their health insurance. “I’ve had about 15 phone calls today, and everyone feels as though they’ve been betrayed,” said Jimmy Yawn, a retired supervisor and president of a retiree club. (Detroit Free Press, July 17)

Retiree Dan Young said, “Retirees are going to fight this.” (Detroit News, July 16) They may follow the example of the National Chrysler Retirement Organization, which had its first meeting of 400 last week and vowed to fight cuts they are facing, including the elimination of term life insurance.

GM CEO Rick Wagoner rushed to dispel rumors of a GM bankruptcy, and stock prices rose from a 54-year low with the announcement of the company’s latest rescue strategy. With the goal of improving GM’s liquidity by raising $15 billion, the plan also calls for selling off unnamed “assets” and using other assets as collateral to secure credit.

Whose jobs are being put on the line in exchange for a quick fix of cold cash?

The question remains whether there will be even more concessions from the Auto Workers union. UAW President Ron Gettelfinger has, very belatedly, said: “We have done a lot. No, there’s nothing more we can do,” meaning the workers can’t make more concessions. (Detroit News, July 17) Yet the UAW leadership has allowed GM to delay making its initial lump-sum payment to fund the Voluntary Employee Beneficiary Association that was established in last year’s contract to fund UAW retirees’ health insurance.

Will these take-away measures reverse the fortunes of a company reportedly hemorrhaging $1 billion or more a month? GM lost $3.3 billion in the first quarter of 2008 and expects little change in the second quarter. Merrill-Lynch analyst John Murphy said some “refer to the confluence of negative factors as the perfect storm or the 100-year flood.” (Detroit News July 17)

Last fall UAW members at GM, Ford and Chrysler ratified four-year contracts granting historic concessions to the automakers. GM anticipated a 50 percent savings in labor costs–which even at that time comprised less than one-tenth the cost of a vehicle–over four years.

On top of that, the workforce has been slashed dramatically since the contracts went into effect. Some 17,000 UAW members at GM resigned or retired this month after taking buyouts.

While U.S. car sales have plunged for every automaker except Honda, GM has broken sales records in Asia, Africa, the Middle East, Latin America and Europe.

How can it be that GM is now the victim of a “confluence of negative factors”? It’s true that the steep drop in sales of trucks and sport utility vehicles has hit GM hard. Hooked on the $10,000 in profits they were reeling in with each SUV, the bosses resisted shifting their lineup away from big gas-guzzlers. In addition, GM’s financial arm, General Motors Acceptance Corporation, strayed into the crisis-ridden mortgage market.

Still, with so many other factors working in the company’s favor, how could this 100-year-old company be facing the economic equivalent of a 100-year flood?

These analogies with natural catastrophes are not accidental. The implication is that everyone affected–bosses, workers and retirees alike–should all pull together for the common good, for the survival of the corporation during a disaster beyond its control.

For decades U.S. labor leaders have operated under the assumption that only a profitable company can maintain job security. Demands for higher wage increases, more vacations and better benefits have become dependent on the fiscal well-being of the employer. This thinking only leads to further concessions and the acceptance of unilaterally imposed wage-and-benefit cuts in the vulnerable unorganized sector.

The way out of this dead-end strategy begins with understanding the relationship between labor and capital. Capitalism is based on one class exploiting another. Workers sell their labor power–their capacity to work–to the capitalists. Workers are paid only for certain hours of labor so they receive what they need to subsist and reproduce new workers. But the workers put in additional hours of unpaid labor that amount to surplus value–profits–for the capitalist. Only by the theft of workers’ labor does the capitalist realize a profit. The leaders of the 1937 Flint sit-down strike understood this.

Capitalism is driven to maximize profits by constantly modernizing equipment. This decreases the number of workers–or the hours of labor—needed to make a product. At first, each improvement yields enormous profits. Later, the changed relationship between fixed capital (machinery, raw materials) and variable capital (labor power) leaves the capitalist with fewer workers to exploit. In addition, the boss is saddled with huge debts to pay for the restructuring. This causes profits to fall, which in turn leads the boss to impose wage cuts–which the union needs to resist.

It is in this general context of overproduction that all of these take-backs or concessions need to be understood–and rejected.

The owning class has developed the productive forces to such a vast extent that they have outgrown the limitations of private ownership. Suddenly there is too much technology, and the boss is now, as Karl Marx described 160 years ago, “like the sorcerer who is no longer able to control the powers of the nether world whom he has called up by his spells.”

It is time for labor to stop cooperating with capitalist wizards and change the recipe of the spells. Only a fighting workers’ movement that rejects capitalist exploitation can restore jobs and ensure security in retirement years.

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