Generals over the White House: 5:THE DECLINE IN STEEL AND AUTO


The new economic crisis, which has long been in the making, has emboldened the military and weakened certain sectors of society which had hitherto been relied upon for resistance to it.

Among the most recent victims have been the very large universities and institutions of learning in the United States.

Never having been more than mild dissenters, and more often spokespeople for the liberal element of the capitalist establishment, bourgeois academia today has become cowed under the double pressure of the surge of the new right and the deteriorating situation in the availability of funds for research and development.


An article in the May 13, 1980 science section of the New York Times gleefully reports how the colleges and universities of the U.S. are throwing the welcome mat out for the military in their search for funding. "Major universities that were once the seats of the anti-war movement, such as Cornell, MIT, Stanford and the University of California at Berkeley, are elbowing one another to get a piece of the $200 million that Congress recently authorized the Pentagon to spend."

This is only one example of what has been taking place for a period of time since the late '70s. The Carter administration's new military budget plans to vastly increase the Pentagon's spending for scientific research and development.

Even in the 1979 budget the government appropriated nearly $30 billion for research and development. It's no wonder, then, that the Times article referred to characterizes the Pentagon's new thrust into the universities as "flush with money and with explicit White House encouragement."

Even before the new capitalist crisis, the military had carried on a quiet war against the civilian establishment in competing for scientific and technical as well as managerial personnel. Now, with the capitalist crisis becoming deeper, even some of the most liberal of the institutions are seeing the Pentagon in a new light.


It has generally been acknowledged that the U.S. government spends more than half of its research and development money for military purposes. This has had the effect of draining away resources and personnel from other avenues of industrial, technological and scientific endeavor.

It should also be noted that much of the so-called non-military spending by the government is also really for the military. As Professor Jonathan King, a well-known MIT biologist, puts it in the very same Times article, Pentagon-backed research fundamentally feeds into military uses.

"It's basic weapons research rather than applied weapons research. All of this 'non-military' research is military research in disguise." This has been going on for many years. In so doing, however, the Pentagon war machine is cutting the ground from under its own feet by undermining the very basic industries which have been responsible in the first place for its much-vaunted military prowess.

Such is the nature of monopoly capitalism which leads society from one blind alley into another. This is a result of the relentless search for military solutions when economic problems cannot be solved on the basis of capitalist political economy.


The draining of scientific, technical, and managerial personnel from the civilian industrial establishment here is at least one factor which accounts for the West German and Japanese success in their economic competition with the U.S.

West Germany and Japan spend relatively little for military research and development in comparison with the U.S. This has made it possible for capitalist West Germany and Japan to make more resources available for research and development in the civilian sector, including steel and auto manufacturing.

This is one of the factors, among many others, which lies behind the ability of both Japan and West Germany to compete in steel as well as in automobiles.


Professor Melman in his Pentagon Capitalism quotes an authoritative study by McGraw-Hill made as long ago as 1968, which disclosed that 64% of the metal-working machine tools used in U.S. industry were 10 years old or older.

"The age of this industrial equipment," he says (referring to drills, lathes, etc.), "marks the U.S. machine-tool stock as the oldest among all major industrial nations." He says further that it marks a continuation of a deterioration process that began at the end of the Second World War. "This deterioration at the base of the industrial system certifies to the continuous debilitating and depleting effect that the military use of capital and research and development talent has had on American industry."

Deterioration in the iron and steel industry is particularly significant and is not a new phenomenon. For instance, the May 1966 quarterly Journal of Economics revealed that the U.S. 1966 quarterly Journal of Economics revealed that the U.S. iron and steel industry had not only lagged significantly in research and development but has been notable for backwardness in adapting new technology. What was true in 1966 is just as true today, even as the steel industry attempts to rationalize its equipment.


During the past 20 years, says Professor Melman, these trends have reinforced the lead the Japanese manufacturing industry has taken in several areas ranging from shipbuilding to civilian electronics. This is equally true of West Germany, although the lead that the latter may have in technology at the present time is not necessarily in the same areas, such as shipbuilding, etc.

This technological lead in some of the vital areas resulting from a greater concentration on civilian research and development than the U.S. could scarcely be due to the peace-loving sentiments of the Japanese or West German ruling class as opposed to the U.S. bourgeoisie.

It is to be remembered that both imperialist Japan and West Germany are, by virtue of their surrender agreements following the Second World War, prohibited from rearming.

It should be noted that also included in the surrender agreements are provisions which, if not clearly and explicitly stated, have nevertheless been binding. These include provisions that the U.S. would give world-market access, including U.S. markets, but not control to Japanese and West German exports.

It is precisely the U.S. role of world policeman -- its role as the dominant military and diplomatic power in the world -- which operates as a disincentive for the further development of scientific innovation and invention as well as for the further sophistication of technology in general. Militarism, which initially operates as a spur, is therefore ultimately a brake on the overall development of the productive forces of society.


The U.S. ruling class was most concerned at the end of the Second World War in rehabilitating their former adversaries, so as to avoid socialist revolutions in those countries, as well as to block even a neutralist attitude by them towards the Soviet Union and other socialist countries.

For a number of years after the Second World War, the U.S. maintained a sort of open-door policy with respect to West German, Japanese, and other European capitalist countries. This was the period after the Second World War which made a capitalist economic recovery inevitable.

The years which saw the Korean War followed by the Viet Nam War continued the upward surge of the capitalist economy, interrupted by several short recessions. The U.S. liberal trade policy at the time in relation to its imperialist rivals was not motivated by a humanitarian consideration or due to any particular peace-loving approach by Washington.


It was understood then that the so-called open-door policy would also accelerate U.S. exports while the imports from Japan, West Germany and the rest of the European capitalist countries would not be formidable. But this turned out to be a false assumption.

While Japan in the very early fifties was producing motor vehicles at about a million a year, it now produces 10 million vehicles annually. In steel, Japan has superseded the U.S. as the leading producer in the capitalist world.

Of course, this is not due entirely to the fact that Japanese and West European countries (especially West Germany) invest so little, relatively speaking, of their research and development funds and personnel in military purposes and invest most of it in civilian industrial research and development. But it is a significant factor.

The latest offensive by the Pentagon against academia is bound to shift much more of the technical, engineering and managerial personnel to military purposes, so as to widen the gap between military and civilian research and development.

Building new, more fuel-efficient cars will of course undermine the sharp rise of Japanese and West German imports into the U.S. But the ability of these two imperialist rivals to still further retaliate is not only conceivable, it is quite probable.


What must also be borne in mind is that a trade war between the imperialist rivals may entail dangerous political consequences for the Pentagon, which sees itself as the policeman of the world. Pushing West Germany and Japan, in particular, too hard runs the risk of a possible switch in allegiance from NATO in general and U.S. imperialism in particular.

The reluctance of the European and Japanese allies to go along with the U.S. on Iran is directly related to the raging trade war in the imperialist world. For West Germany and Japan, neither of whom have oil of their own, to cut themselves off from Iranian and all of Mideast oil would tremendously weaken their industrial capacity to compete with the U.S., which has vast oil resources at home, and in Canada, and can acquire oil in Mexico, Venezuela, Indonesia and other parts of the world, including Nigeria.

The big hullabaloo in the U.S. capitalist press about "unfair competition" in both steel and auto from Japanese and West European capitalism is thus extremely hypocritical. It does not present a full picture to the U.S. working class, which needs to know why there are hundreds of thousands of workers being laid off in the auto industry and why steel plants have been closing for several years now.


With respect to the steel industry as a whole, it should be noted that the crisis there is not really a national phenomenon of the U.S., but has a worldwide character, certainly as far as the capitalist world is concerned, The steel industries in Britain, in France, in West Germany, and in Belgium are all suffering from the same disease. It is called in the bourgeois press "excess capacity" of the steel industry.

As long ago as September 29, 1977, the New York Times carried a comprehensive roundup with the expressive headline, "Crisis deepening in American steel." The article showed that it was a worldwide phenomenon.

Not that there were too many steel mills in the capitalist world, but that the capitalist market could not absorb the amount that was being produced in the light of an increasing deterioration in the world capitalist economy as a whole. There has been so-called idle plant capacity not only in the U.S., but also in Japan, West Germany, Britain and Belgium.

The stagnation in the steel industry, it turns out, was merely the precursor to the present capitalist crisis, which the Carter administration finally officially admitted only recently.

When the demand for steel began to shrink, rather than cut prices to meet competition, these industrial giants, which are in reality monopolies in their own countries, preferred to cut their losses by closing plants and reducing overhead. Where possible, they even raised prices or tried to shut out the foreign imports as a medium for later jacking up prices.

The U.S. had at first a so-called liberal policy towards imports in the hope that the competition would not be severe. Now that the capitalist crisis is on, the competition has greatly intensified.


The answer of the auto and steel magnates is to shut out the imports, which of course will in turn generate more inflation because it will keep out the lower-priced foreign imports.

The capitalist economic crisis of the early 1930s resulted in a wave of protectionism (that is, closing the door to imports which, if followed by all the capitalist countries, ultimately cancels out the advantages for all save the strongest). In the same way, the U.S. steel magnates and some of the auto barons as well (not including GM as yet) are presently calling for protection, but this is merely a device which cannot solve the crisis in auto or steel.

It can, however, set them on the road to sharpening imperialist antagonisms.

Thus it becomes plainer every day that it is competition, which is the very lifeblood of capitalism, that sets the imperialist rivals on the same road they trod during the early 1930s and which ultimately led them to the Second World War.

Mindful of the consequences of such a policy, the Carter administration and the military-industrial complex are attempting to divert the crisis in the imperialist camp into military channels directed against oppressed countries such as those in the Middle East and against the USSR and other socialist countries.


When Japanese Prime Minister Ohira was in the U.S., one of the matters that President Carter took up with him was the raising of the defense capacity of Japan. This is another version of the same thing the U.S. has been pushing on Western Europe, in particular West Germany, that is, pressuring them to raise their defense expenditures.

This is presumably out of tender concern for the protection of Western Europe and Japan from alleged plans of the Soviet Union for aggression against them.

This does not mean urging them to divert funds for technical, engineering and scientific personnel into weapons research and development of their own making.

On the contrary the U.S. version of the so-called defense of Western Europe and Japan is to force upon them planes guns missiles and sophisticated weapons systems made in the U.S. and sold to the imperialist allies at extortionate profits.

This, in part, answers the question as to why the U.S. military-industrial complex is so recklessly diverting funds for military uses, which in a rational society, should be devoted for civilian research, development, and reconstruction which the country so badly needs. It is this diversion of resources which has caused such widespread decay of the principal cities of the United States and which threatens the livelihood of millions upon millions of working people of this country.

May 13, 1980

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