The UAW crisis: An historic reversal

February 15, 1982

In the course of decades of struggle between capital and labor, between the working class and the capitalist class, there can be many occasions when circumstances make it necessary for even the most powerful trade union to beat a tactical retreat in the face of adverse economic conditions.

This is especially true in periods when the working class as a whole is on the defensive as the result of a worldwide capitalist economic crisis.

When the British mineworkers recently rejected a recommendation by their national union leaders to strike rather than accept the government's terms, it was an extraordinary sign of the temporary weakness which has afflicted the British labor movement as a result of the double blows from the Thatcher administration and the raging economic crisis.

Earlier, the Fiat strikers in Italy barely escaped a crushing defeat and accepted a compromise after a sympathetic general strike failed to bring out the necessary numbers to influence the negotiations.

There is no denying that the ruling class generally has the upper hand during periods of economic downturn, and that the working class has the best opportunity to take the offensive and come out victorious during periods of an economic upturn.

The working class leaders, however, may not often have the opportunity to choose the time or place of battle. It is often forced upon them.

Under such circumstances it is best to estimate the relationship of forces accurately and do what is appropriate to make the most of a difficult situation.

However, the UAW's proposed contract agreement with Ford does not at all fall within this category.

UAW contract represents historic reversal

It is well known that the auto industry has been in a state of depression for several years, and that cutbacks and layoffs have been on the order of the day. Superficially, it may appear that what is involved in the current UAW contract negotiations with Ford is merely a tactical retreat, taking one step backward in order to take two steps forward at a more favorable time.

It would, however, be a mistake to view it as such.

What this contract constitutes is an historic reversal of monumental proportions. It is not so much in the dollars-and-cents area that the proposed contract can be faulted; nor in the fact that it defers the cost-of-living adjustments; nor even in the fact that the moratorium on plant closings and the provisions on further cuts in employment levels are contingent on the company's willingness "to make use of every effort" to maintain the current level of employment.

Ford, of course, hasn't made any binding pledge on that score. The company has merely pledged itself to "try" to maintain the current employment level. The $70 million advance for Supplemental Unemployment Benefits (SUB) will, of course, be helpful. But it is hardly a substitute for a binding promise to recall the unemployed.

The retreat of the UAW, which began with the Chrysler contract last year, is of a truly epochal character. For what is involved here is a wholesale adaptation and accommodation to the demands of monopoly capitalism for a general decline in the standard of living of the U.S. working class. The piecemeal strategy of the UAW does not address itself to this overall phenomenon.

In reality the strategy of the UAW amounts to a surrender in the so-called private sector industry to what Reagan is pushing in the so-called public sector. While giving lip service to the political struggle against Reaganism, the UAW leadership is in fact surrendering both economically and politically in a direct struggle with the auto barons.

This is the fundamental point which is so deftly glossed over by the UAW leaders, while they engage in an orgy of scapegoating Japanese imports and OPEC "devils."

Evolution of auto industry

The union leadership, of course, could not be blamed for the retreat if it were not appraised of the more fundamental factors concerning the national and world situation of the auto industry.

What is most important, however, is to see the contract in the historic evolution of the U.S. auto industry and its labor relations.

The automobile was not invented in the U.S. Quite a number of automotive manufacturers developed it in Europe first.

Why then, did the U.S. auto industry become the largest in the world, accounting for more than one-half of world auto production in the first half of this century?

Only after the Second World War did the U.S. share of the market begin to decline. Nonetheless, during the 1970s, when 25 to 30 million autos were produced each year on a world scale, the U.S. still retained the lion's share of the market.

It should be self-evident that the auto industry is not just another industry. It is indirectly responsible for employing one out of every six workers in the U.S. For longer than half a century it has been the leading star in the firmament of the U.S. industrial and economic empire.

It is hardly necessary to state that the modern automobile is a complex technical system. It is said to be composed of more than 14,000 parts. The subsystems that comprise the complete vehicle have evolved over many decades and are produced in many, many countries.

U.S. contributed mass production

What was it, then, that accounted for the unique and spectacular achievement of the U.S. in the field of auto production? It was the invention of mass production. This was a process which combined precision, standardization, interchangeability, synchronization, and continuity.

The technological advance of mass production spread on a world scale, but there can be no question that it was a U.S. innovation and an outstanding contribution in the process of capitalist development to the field of auto production.

The method had been understood earlier in Europe, particularly in Britain. But they were unable to put it into practice. It was Henry Ford who did this successfully.

Mass production lowered costs

What social significance did this have, aside from being a financial and industrial success?

Mass production of automobiles in large volume proved capable of lowering the unit cost of production without direct or indirect wage-cutting devices. Of course labor-saving devices were constantly introduced, but wages and employment continually rose.

The technique introduced by Ford consisted of two basic elements. First, there was the conveyor system. Second, each worker was limited to a single, arduous, monotonous, repetitive task. While all this may have appeared the very soul of simplicity, the truth of the matter is that it required considerable elaboration in planning and synchronization.

The moving assembly line with all its hardships upon the workers proved to be, from the point of view of social development, a boon to society in general, a boon to the so-called consumer. It had its relatively progressive aspect -- the price of Ford's Model T car, which was originally produced in 1908, dropped from $950 in 1909 to $360 in 1916, and to an astonishing $290 in 1926!

It was no wonder that Ford was soon producing half of all the motor vehicles in the world.

Industry then played progressive role

If the mission of the capitalist mode of production was to raise the level of the productive forces, and lower the unit costs of socially necessary labor in a commodity, ultimately lowering its price, then at this phase of development the industry was playing a relatively progressive role, notwithstanding the early lack of unionization.

To continually lower the price of a commodity, not by direct or even indirect wage-cutting but by progressively raising both the employment as well as the wage level of the workers -- that indeed was a progressive aspect of the capitalist system of exploitation.

Even during the 1950s, and somewhat into the 1960s -- but under different socio-historical circumstances -- the auto industry was given free rein by the UAW to introduce labor-saving devices -- the forerunners of automation -- as long as the employment level remained constant. Indeed, in the '50s it even seemed to increase.

What then has been slowly developing in the capitalist economic structure as a whole and in the auto industry in particular that has produced such a change?

Instead of continuous technological revolutions bringing about lower costs per commodity of socially necessary labor, prices have skyrocketed. This began not with the so-called oil crisis -- we now have a glut of oil! -- but with the early 1920s.

During the period from 1908 to 1916, American finance capital had not fully consolidated all segments of capitalist industry and agriculture and tightly drawn them into its orbit. Continuous technological revolutions, as demonstrated in the auto industry by Ford, brought about lower costs of production and hence cheaper commodities for the people -- lower-cost automobiles.

But the grip of monopoly, which had not yet fully entangled the Ford empire, had by the late 1920s accomplished the feat.

Today GM is known as the principal car maker and controls 60% of the U.S. market. That wasn't always so -- certainly not at the beginning of this century when Ford was developing its engineering and managerial skill. GM, unlike Ford during that period, made no outstanding contribution to the development of capitalist industry in auto.

On the contrary, GM is the result of what today would be called a "merger wave." When it was formed, GM took over Buick, Cadillac, Oldsmobile, Oakland, and a variety of smaller auto firms and swallowed them up.

This huge auto combination, which was not based upon any new or innovative principle in production, soon was on the verge of financial collapse. It was rescued, however, as is frequently the case in the advanced stage of monopoly capitalism, by a syndicate of Wall Street financiers.

Even then it might not have become the giant overshadowing Ford had it not been for the fact that the then omnipotent DuPont chemical empire took over GM. Its financial links to the major credit markets and its fusion with the banks made it possible for GM to become the principal auto manufacturer in the country and solidify its monopolistic position.

From price cuts to price hikes

The raising of auto prices then became common throughout the industry. All auto manufacturing became concentrated in the "Big Three" which still predominate and control the market. Raising secure and extraordinary profits by means of maintaining artificially high auto prices is now the practice, rather than reducing the unit price for the consumer.

The end of the Ford price-reducing era of 1908 to 1916 and Ford's falling into the orbit of the bankers and monopolistic control closed the door to any socially progressive role for the auto industry.

(Ford's constant railing at that time against the bankers was not just an arbitrary psychological aberration. It had its roots in the relationship of the industry to monopoly finance capital in general.)

Now Ford has tried to mobilize all the resources available to it in order to ward off competition from abroad and at home and thereby maintain artificially high, monopoly-controlled prices.

In our last article we discussed the example of Laker Airways. There an individual entrepreneur attempted to introduce mass production in a service industry -- the airlines -- in order to reduce the unit cost per ride. Nothing but financial ruin became the prospect. This was as much the result of conspiracy by the airline and aerospace monopolies as the automatic processes of finance capital.

The auto industry is a monopoly industry which for decades has been under investigation for price fixing, inhibiting and restricting competition, and its ability to dictate to others the size of their market and even the price of their products. It is only now that the Reagan administration has finally decided to drop the decades-old antitrust litigation against the auto barons, along with AT&T and IBM.

UAW contract in context of capitalist decline

The issue of the UAW auto contract must be seen in the context of contemporary capitalist development -- that is, its degeneration.

As we said above, in the earlier period technological revolutions resulted in lowering the unit price of production of a commodity while simultaneously raising the wage and employment level. But monopoly capitalism is now reversing this entire historical process.

High monopoly prices are a basic cause of inflation, second only to the inflation caused by stupendous and utterly incredible war expenditures.

The UAW leaders are well aware of these tendencies. The crisis in auto is at least two-and-a-half years old. It did not come about suddenly.

The UAW leadership, especially Fraser, had an abundance of time to think out a strategy for dealing with this highly monopolistic industry, which covers itself with the thin veneer of competition among the three giant protagonists.

More than two years ago, Fraser himself announced that the auto barons, particularly GM, were beginning to talk the language of the class struggle. This was misunderstood by auto militants and radicals in the progressive movement who thought that Fraser was about to begin a militant struggle against the corporations.

In reality, it was the corporations that were giving him notice that they were elaborating a new strategy for the industry.

This strategy embraces the theory that a general decline, not only in the wage level of the workers, but in the living standards of the masses as a whole, is the solution to the basic problem of monopoly capitalism. The auto industry has become the vanguard of the ruling class in inaugurating a new epoch of general decline in the social and economic standards of the U.S. working class. They see this as the solution to their world problems of capitalist stagnation and galloping inflation.

To meet this challenge, the UAW has to develop an overall program of a political character. This has to be broader than the usual piecemeal economic devices by which the union has met the individual corporations in negotiations on a one-by-one basis. The programmatic character of the auto barons' sweeping demands make it incumbent upon the union to strike back with a coordinated and unified program, based upon an overall strategy that combines a political challenge with a possible economic response.

The union leadership did none of this. Instead, it resorted to the outmoded one-at-a-time strategy of dealing with each auto baron separately; it has suffered huge losses as the Big Three have simultaneously unloosed the barrage of cutbacks and layoffs.

The UAW leadership, therefore, has to think out not merely an economic strategy to ward off the coming general assault of the monopolists under circumstances extremely unfavorable to the workers, but a political strategy of a broad character. The UAW has to address itself politically to the working class as a whole, sound the alarm, and above all try to rally the organized trade union movement under the banner of unfolding a general political counteroffensive against the corporations and Reagan as well.

What UAW leaders should have said

What the UAW leadership needed to do most was first of all gather together its own leadership, appraise them of the perils ahead, unite them on this common strategy, summon the employers, and read them the riot act in no uncertain terms:

"We understand that you face devastating capitalist competition from abroad. It only serves you right! Instead of reducing the unit cost of production by increasing technological innovation without cutting employment or wages, as you did years ago, you are now trying to throw the burden upon us.

"We tell you here and now -- no deal! If you continue with your phony propaganda campaign about Japanese imports, OPEC 'devils,' and so on, we will turn a deaf ear to all this.

"We have a right under the constitution of the UAW to call an extraordinary conference. Should you begin this vicious campaign for givebacks and cutbacks and begin layoffs and shutdowns as you seem to be preparing, we will call a general strike!

"Moreover, we will open a campaign together with the entire labor movement to halt the anti-labor offensive and stop it in its tracks by mass political action. We will supplement this wherever necessary by economic action."

Collusion of UAW leaders with bosses

Knowing, however, what the bosses had in store, the UAW leaders agreed to meet with them at the request of GM and open up a campaign to "educate" the workers to accept a cut in their living standards.

This involved a conspiracy of the capitalist media with the auto barons to give Fraser plenty of exposure to regurgitate the bosses' line on givebacks. He was put on prime time to saturate the workers with the inevitability, if not desirability, of surrendering to the bosses. He presented the workers with two utterly unacceptable evils -- accept the givebacks, or the bosses will continue the layoffs and plant closings.

Never for a moment did they project the alternative strategy of fighting to stop the layoffs and plant shutdowns from the beginning, since they knew what was in store.

It is ironic that the Wall Street Journal, in a recent issue, thoroughly exposed this conspiracy between the UAW leadership and GM on how they would "educate" the UAW workers to accept the cut in their living standards.

One would think that out of sheer embarrassment the labor bureaucracy would retreat somewhat, or at least deny having a hand in the so-called educational project which the bosses demanded and with which they are saturating the workers. To date, however, this has not happened.

If the workers at Ford accept the contract in its present form, the blame will clearly rest upon the leadership. The real issue is not at all that tactical retreats need to be taken here or there in the interest of taking two steps forward later.

The question here is one of sheer collusion with the corporate predators in forcing a general decline of the living standards of the workers and of facilitating an assault upon them by the ruling class as a whole.

For all their glib, anti-Reaganite demagogy, what have these labor fakers shown by their negotiations with GM and Ford? They are doing in the so-called private sector what Reaganomics is accomplishing all too well in the public sector.

Yet they are all reckoning without their host. A revival of the militant working-class movement is inevitable. Resistance to Reaganite reaction and labor bureaucracy collusion is rising. Reagan and his voluntary collaborators will be thrown into the dustbin of history.

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