Chapter 2 -- Hi Tech, Low Pay

The Scientific-Technological Revolution

Technology and trade union tactics

An example from the distant past can be related to the present to help bring into focus the importance of technological revolutions in relation to the class struggle.

In 1789 an Englishman named Samuel Slater, an inventor by profession, devised a secret design for a machine to make textiles. As a result of this machine it was possible to set up textile factories.

British law at the time would not allow him to export the machine or to legally leave the country himself; if he were caught, he would be subject to imprisonment. That's how much importance was given to technology and its export at that time.

However, posing as a farmer in order to evade the emigration law, Slater was able to secretly leave the country. He memorized the design so that he would have no documents with him in case of investigation. That's how Britain at that time guarded technology and that's how the early ruling class understood the significance of technology in its world struggle.

That was almost two centuries ago. At present the struggle over high technology (that's what Slater's invention was at that time) has taken on an even more momentous aspect from the point of view of secrecy and the secret struggle within the bourgeoisie.

U.S. corporations have retained hundreds of spies abroad in order to garner the latest technological innovations while at the same time using the FBI as a virtual private army to track down their opponents, especially the Japanese.

Where does this technological struggle, the constantly and continually growing technological revolution, leave the workers and the unions? What does it mean under present circumstances?

What it has meant in the last few years is that the ruling class believes that the labor movement and the trade unions in particular are no longer necessary to the system. It sees the unions as an encumbrance, an obstacle in the way of further technological development.

Even the bourgeois liberals no longer feel they need liberalism as such and hence have turned away from an alliance with the labor movement. Liberalism as an ideology is no longer essential to the predatory, avaricious multinational corporations in the struggle for high technology, which is, under the present social structure, absolutely in conflict with the working class.

Plant closings and high-tech obsolescence

In the early 1960s, consumer groups began a campaign designed to point out that a great variety of commodities were deliberately produced to have a shorter duration of usefulness than might be possible given the same manufacturing equipment and technological know-how.

It was a case of planned obsolescence. Thus many products, ranging from home appliances to automobiles and even skyscrapers, were planned to endure for a shorter period than was necessary.

The scope of the products to come under the umbrella of planned obsolescence was legion. However, this did not include the heavy industries, the machines which produce machines; in other words, the industrial structure.

The Second World War, which caused so much destruction of human lives, also took a very heavy toll of property. Among the imperialist countries, it destroyed a considerable part of the infrastructure of Germany and Japan. Whole factories and buildings were bombed to the ground. This happened to a lesser extent in Britain and elsewhere.

The U.S., as is well known, was free from military attack and its industrial structure remained intact. Initially, of course, this was a tremendous advantage at the end of the war. However, in order to rebuild Europe and also Japan, the U.S. spent a considerable amount of money and some equipment under the Marshall Plan to revitalize European industry. The Japanese also started to rebuild along these same lines.

Since whole factories and industrial complexes had been destroyed, this gave a very important impetus to the development of high technology. In the U.S. the impetus for the development of high technology was almost immediately absorbed by the military-industrial complex, to the disadvantage of civilian industry.

In some ways the capitalists in both West Germany and Japan, and to a much lesser degree Britain, were given the opportunity to build whole new plants based on up-to-date and state-of-the-art facilities. The very destruction that was supposed to have broken the back of the capitalist competition from Germany and Japan gradually was turned to a large extent into its opposite.

High technology took off swiftly over there, particularly in Japan and then West Germany. Whereas earlier planned obsolescence had been applied mostly to means of consumption, from home appliances to construction materials and autos, it now took off and was applied to the industrial infrastructure, the plants themselves.

Accordingly, the life cycle of the new heavy industry, including steel and auto plants, grew increasingly shorter than that of older facilities in the U.S.

The life cycle of the technology in a steel plant by the standards of the 1950s and 1960s was about 14 years, if not longer. However, by the late 1970s, the life cycle of a Japanese plant was about 8 or 9 years, while that of U.S. plants remained somewhere around 14.

By virtue of the quantum jumps brought about by the application of computers and electronics, the very high-technology industrial units now last about two or three years before they become outdated by even more sophisticated technology, whose life cycle is even shorter. This process under the capitalist system is as ruthless as it is relentless.

Any efforts to manage this technology so as not to reduce the workforce turn to nil. Trade unionists who represent the workers must take note of this tendency and know that it is of an international character; that the life cycles of all technologies continually get reduced. The process was much slower but just as pervasive even at the dawn of the capitalist system, when technology first began to be widely applied with the use of machinery, the industrial revolution and so on.

High technology, especially in the era of computers and electronics, continues to take quantum jumps. A plant which just recently may have had ten years to go can now become obsolete as a result of the constant revolution of the means of production. The development of not only products and devices but of whole new technologies makes what otherwise would be a well-functioning, long-lasting plant with a stable workforce obsolete, but only in comparison to the new technologies.

This is what lies at the root of what has become an epidemic of plant closings. In part it is due to the capitalist cycle of production. But while it takes on a more aggravated and epidemic character in capitalist recessions, this tendency prevails as a characteristic of capitalist development in so-called good times as well.

Let's take a look at four fairly recent examples of changes introduced by the high-tech revolution and their effects upon the workers and the trade union movement. One deals with the communications industry, one with construction and earth-moving equipment, one with electronics, and one with automobiles. These four symbolize what is projected for industry in general, but is still in an anticipatory stage.

The end of the AT&T myth

The AT&T Systems Information Division announced in August 1985 that it would be eliminating 25,000 jobs at its various installations. This was the second major layoff at AT&T in less than two years. The significance of this sharp retrenchment of the workforce goes far beyond its numbers. Yet even so, about one-fourth of the 120,000 workers in the divisions involved have been laid off.

Until just recently, AT&T had a nearly absolute monopoly in its field of operations. It occupies a special place at the very summit of highly sophisticated technology.

Before the 1970s AT&T was regarded as relatively less sensitive to the vicissitudes of the capitalist economic cycle than other giant corporations. Jobs there, it used to be said, were much more secure than in other huge manufacturing companies or utilities. All the more has this unprecedented cutback come as a shock to many of AT&T's apologists.

It is a common error to believe that AT&T's recent divestiture, in which it is supposed to have spun off for good its local telephone companies, was all the result of public pressure, that it was a case of the government responding to the needs of the people and that a federal judge by judicial intervention had robbed AT&T of its monopoly status.

Nothing of the sort. It was the swift changes in techno logical development, the revolution in electronics, microwave radio transmission, the need to develop satellite communications and the leap into the Space Age beginning with the Soviet Union's launching of Sputnik which laid the foundation for AT&T's divestiture.

The development of a multitude of new technologies ushered in with the Space Age made it incumbent upon AT&T to look for a solution to its vast new problems by way of spinning off its local telephone companies over a period of time and utilizing the vast money thus derived to shield itself from other corporate competitors.

The continued existence of the AT&T monopoly in its old corporate framework was incompatible with the new revolutionary developments in technology. If it stayed the way it was, there would be a flight of capital away from AT&T into the areas of the satellite sciences, radio microwave transmissions and electronic developments of all sorts, particularly those geared to Pentagon needs. Either AT&T would have to begin the task of transforming itself or it would be outstripped by the newcomers outside its corporate framework.

AT&T is thus an illustrative example of how a giant corporation, no matter how huge, no matter how insulated it seems to be from the ravages of predatory capitalist competition, nevertheless ultimately either falls to the mainstream or becomes successfully dismembered by competing dynastic financial and industrial cliques.

We see illustrated here what Marxism has always taught: that it is the development of the productive forces which changes the economic conditions. The ruling class politicians and judges who seem to have ordained the AT&T breakup were merely responding to new economic conditions facing the ruling class.

Capitalism never fully carries through any of its economic tendencies to the very end. This is remarkably illustrated by the tendency of capitalist competition to turn into monopoly. This tendency is never fully realized. While the general epoch is that of monopoly capitalism, contradictory trends in capitalist development have demonstrated that competition exists side by side with monopoly.

In the last two decades some of the greatest monopolies, like AT&T and others which seemed so monolithic and omnipotent, have all shown a tendency to break up and re-form again and again. This applies to the greatly exaggerated power and supposed monopoly of the OPEC countries, too. The dominant relationship between the oppressor and oppressed has never ceased for a moment to be a fundamental factor in the situation.

The tendency to disintegrate, break up and re-form again and again is a characteristic feature in the struggle between competition and monopoly. Huge corporations turn into conglomerates, later spin off some of their divisions, and again break up and re-form. The underlying element in all this is that capital tends to flow to wherever the rate of profit is higher, but retreats as soon as the tendency toward lowering the profit rate makes itself evident.

The divestiture of AT&T and its deregulatory aspects are merely a reflection of what has been taking place in the anatomy of the capitalist economy resulting from the growth of the productive forces. The growth of the productive forces always upsets established relationships in the constellation of conflicting forces and groupings in the ruling class.

The havoc AT&T wreaked on the workers by unloosing such devastating cutbacks mirrors the general crisis which the high-technology establishments are experiencing. High technology was supposed to be if not altogether immune from unemployment, then at least only marginally affected. Now this myth has been thoroughly demolished. There are now severe cutbacks not only in high-technology companies like AT&T but in all the semiconductor establishments as well.

Mass layoffs have taken place all around Silicon Valley in California and there have been significant slowdowns in other high-tech regions of the country as well, such as in the Boston area around Route 128.

This experience demonstrates how false is the notion that unemployment has been plaguing only the so-called Rust Belt in steel, mining, other metal industries and coal. One is supposed to forget that there has also been a tremendous erosion of jobs in textiles, housing, lumber and agriculture.

Of all the arguments that have been advanced to embellish the so-called new information society, the most banal one is that it tends to increase the demand for more and more scientific personnel, that it requires more and more skilled workers, and that these together with management personnel constitute a base that is sheltered from the crisis of capitalism.

It is true of course that some elements of the capitalist economy respond to capitalist economic stagnation and crisis earlier than others. But it is simply a matter of timing.

What is afflicting AT&T today will surely surface tomorrow in IBM. Moreover, it will make its way (if it has not already done so) into the broad service sector which has been indirectly fed by high technology in the first place.

Mass layoffs at Caterpillar

The Caterpillar Tractor Company is the world's largest producer of earthmoving equipment, which is mostly used in construction projects of all kinds, oil drilling and mining. In early December 1985, investment analysts praised Caterpillar for announcing plans to further reduce its workforce, which had already been cut from 90,000 in 1979 to 53,000. The company wanted to lay off 10,000 additional workers over the next five-year period, while maintaining the same output.

This posed a strategic problem for the unions involved. The Caterpillar workers had already gone through a six-month strike, and these big layoffs made such struggle even more difficult.

Caterpillar's plans called for transforming the step-by-step assembly line system in its existing plants to a system where work is done in stages in various factory areas. These "factory cells," it is claimed, would speed production and lower costs through automated materials handling and processing. This plan is an example of a new manufacturing philosophy called "down-sizing" which also lends itself to more outsourcing of component parts.

Another element to its $600 million automation program would focus on robotics and computer-aided manufacturing systems which would involve not only more automated materials handling, but also more robots in welding and foundry work.

Such a drastic reduction in the workforce to less than half in only ten years, which evokes such praise from the banks and investment houses, is another prime example of what is in store for the workers. This profound transformation in manufacturing methods, which is still only in its early stages, will be felt by all the unions and indeed constitutes a classwide assault on all workers and oppressed people.

It should also be noted that these layoffs came at the height of the so-called capitalist recovery, when the crisis was supposedly over and companies should have been rehiring. This is supposed to be the pickup in the economy brought about by the Reagan program. But if this was true, and these layoffs were occurring in a period of recovery, then what will happen in a downturn?

The implications of this for overall trade union strategy are extremely serious, and demonstrate once again the need for new strategic conceptions.

The GE-RCA merger

As the largest non-oil merger ever, costing over $6 billion, the merger or acquisition of RCA Corporation by General Electric will have far-reaching effects on a global scale. It is especially important that the workers involved understand the significance of the merger historically and as part of a broad social process that goes beyond local or even national boundaries.

By virtue of their vast facilities, often in other countries and not unionized, these corporate monsters have gained broad social, political and diplomatic leverage against single unions. These concentrations of capital are classwide organizations to which the workers in the unions have to develop a classwide perspective, nationally as well as internationally, in order to be able to get a firm handle on how to fight the companies.

The unions have to both go beyond the strictly legalistic character of union contracts and go outside of the capitalist-labor property relations in order to be able to combat the corporations effectively. This is more important than it was 60 years ago, when both these giant companies were rapidly expanding the workforce. Now they are contracting it, a fact which is statistically undeniable.

Even during the 1970s, GE reduced its U.S. employment by 25,000 and RCA cut its domestic workforce by 14,000.1 It is no answer that they increased employment abroad. That merely illustrates the continual flight of capital from one area to another, depending on both economic and political conditions, for capital will go wherever the rate of profits is highest at a particular moment.

It is also not true to say that the flight of capital is from the Frost Belt of the U.S. to the Sun Belt, because statistics now show a flight of capital from the South back to the Northeast and the Midwest (see Appendix A). However, this is accompanied by higher technology and lower wages.2 The fact that there has been a certain upturn in the capitalist economy only emphasizes that when the downward cycle begins again, the process of dismantling these so-called new plants will become just as barbarous as it has been with the older ones.

One of the many important lessons that can be learned from the GE-RCA merger is the need for the workers to establish vigilance committees, which can ferret out information in advance of mergers, acquisitions, layoffs and so on, in order to prepare the workers for sudden turnabouts by these predatory giants. Even greater is the necessity, even if only in embryonic form, for the absolutely indispensable education of the workers: the development of union consciousness into class consciousness, and with it an appreciation of international cooperation between all the workers.

Furthermore, a truly classwide perspective in relation to such important mergers or acquisitions shows that, notwithstanding all the suffering they impose on the workers everywhere, the basic content of these developments is to lay the solid and indestructible foundation for socialism. The objective economic content of the scientific-technological revolution is that it socializes the labor process with virtually lightning speed, showing the ripeness and maturity for a socialist takeover by the workers of the means of production so they can be used for the benefit of humanity and not for private profit.

This GE-RCA merger in particular has an economic and technological significance which could potentially have great social value in the struggle for socialism. GE and RCA may overlap, but they could be integrated so as to have great sociological importance. Their merger lays the material foundation for genuine socialist construction.

In the old days, when a steel company bought an iron ore mine, constructed a railroad to transport its raw materials, or acquired coal mines, it became an integrated entity, and from the perspective of socialist construction was progressive. It organized production in such a way that workers' control would potentially be able to function more efficiently.

It is an altogether different matter when a steel or other company buys a gambling casino, a racetrack, a tourist resort or other entities that are wholly unrelated to the development of its original specific purpose. This kind of buying and selling is for the sole purpose of garnering huge profits, particularly in a wildly speculative period which is characterized precisely by such deals.

Many mergers are motivated solely for the purpose of manipulating the cash acquired from one of the corporations. In these cases, there is sometimes not the remotest connection between the productive processes of the companies involved. For that reason, there soon develop divestiture procedures or spin-offs, which happen when one of the corporations either is milked of its cash or puts up some of its valuable assets to be sold for cash. In the past, both RCA and GE have in this way spun off parts of their acquisitions acquired in other mergers.

In the 1960s, a characteristic form of the concentration of capital was the conglomerate. A variety of different and unrelated businesses were absorbed into a consolidated company. The diversity of products thus brought under one corporate roof was believed to shelter the conglomerate from capitalist economic crisis.

What made this attractive for a short period, however, was the fact that the 1960s was a time of relative capitalist stability and prosperity, due most of all to the Viet Nam war. Under these conditions, the unions did not perceive much of a threat to their position coming from the conglomerate trend.

The buyouts and acquisitions of recent years, however, are quite different. Not only have they come in a more downward phase of the capitalist economic cycle, but the top priority of the cost reduction aspect of this newer concentration of capital is the elimination of jobs.

All this brings into sharp focus the urgent need for the workers to be able to pass from rudimentary trade unionism, based on trade, plant or industry, to a classwide understanding of their key role in production.


Ever since the General Motors Corporation announced that it would build a new Saturn plant in Tennessee, and even before the actual site for the plant was chosen, there began a widely heralded and unprecedented publicity campaign that this would be the technological miracle of the latter half of the 20th century. Indeed, it is claimed that this type of plant will lay the basis for the U.S. to win the race in low-cost cars with the Japanese and other competitors.

There are two aspects to this question: that of labor relations in the new plant, and the public presentation by the company of its technological and competitive significance from the viewpoint of efficiency and low-cost operation.

How it will affect the workers is given secondary consideration in the capitalist press. What is stressed in most of the major capitalist newspapers and electronic media is that it will inaugurate a new era in labor-management relations, that indeed it will be the answer to what they call the fruitless confrontational aspects of the collective bargaining process, and that what will result from the UAW-GM agreement is a new spirit of cooperation. This is supposedly based on the new, more modern concept of involving the workers in decision making and of doing away with monotonous, repetitive and, needless to say, extremely arduous work by combining several operations.

Outside of the UAW ranks themselves, the popular impression is that this will modify if not undermine the rigid division between the managerial staff and the workers. The workers themselves will have more of a say in what they do and what they produce.

View of UAW militants

Needless to say, the militant workers in the UAW immediately saw through all this. A summary of what was actually being proposed by the company was leaked to the press on July 9, 1985. It was analyzed by Jerry Goldberg in Workers World newspaper.3

The contract not only set a base pay at about 80% of what workers at traditional plants will earn later in this decade, but the Saturn plant will operate with only one unskilled job classification and three to five skilled classifications. By contrast, traditional plants have as many as 100 classifications.

The Saturn contract makes no room for work rules and lets management transfer workers more easily within the plants, allowing the company to eliminate many jobs. The Workers World report gives these details:

"Pete Kelly, who is a member of the UAW International Executive Board, had this comment to make: `Saturn at its core is a threat to the union.' The new agreement eliminates the union shop committee. There will be no union representatives on the shop floor to handle grievances and other worker problems. At Saturn a union-management consensus system will replace the shop committee.

"The proposal eliminates seniority except for unusual circumstances when worker abilities are equal.

"Under Saturn, all workers will be salaried. Raises for each individual will be based on meeting productivity, quality, production and attendance goals, as well as profit sharing. As Kelly correctly pointed out in objecting to those provisions, `The union fought for 40 years to get rid of incentive pay.'

"Supposed job security is a key element of the deal. Some 80% of the workforce will receive `guaranteed employment' unless `severe economic conditions' or `catastrophic events' occur [in other words, a recession--S.M.]. The other 20% of the workers will be `associate members' who will not receive blanket protection from layoffs. `That creates a second class of citizens in the UAW,' Kelly said.

"For the past five years the union leadership has swallowed the company line that foreign imports represent the greatest problem facing the autoworkers. `Buy American' is the UAW's main slogan. In taking this line the union leadership has accepted the company argument that to become competitive with the Japanese the companies must cut U.S. labor costs $2,000 per worker."

There is no question that these terms are extraordinarily onerous and are a break with the UAW's traditional progressive stance over the many years the union has been in existence. However, at the time of this writing the agreement is only an executory contract. It will take many months if not a couple of years before the plant becomes operational, at which time the contract would go into effect.

Thus, what the company and the labor officialdom propose, the workers may very well dispose. There's many a slip between the cup and the lip.

Another `Ford revolution'?

The way the Saturn project has been presented as constituting a technological breakthrough has led many to anticipate nothing less than a second auto revolution, having effects as profound as those Ford introduced with the mass production concept.

It is worthwhile examining this for the project is being presented to the public as a big boon. It is bound to create a tremendous number of jobs by the sheer volume of investment projected--$5 billion according to some estimates.

It is said that the Ford Motor Company, by introducing new methods and a new concept, was able to create hundreds of thousands of jobs which ultimately made work for millions. Is it not possible that the Saturn project could result in similar accomplishments with another radical departure from the accepted norms in labor relations and production techniques?

Let us see.

What was the essence of the Ford Motor Company's concept and technique? It introduced mass production. It brought a new principle into the production process.

There's no new principle in the Saturn project, an analysis shows. Henry Ford's mass production methods were based on two general ideas: 1) division and specialization and 2) the use of tools and machines in the production of standard, interchangeable parts. The total production operation was carefully divided into specialized tasks made up of relatively simple, highly repetitive motion patterns and the minimum handling or positioning of the workpiece.

This permitted the development of human motion patterns that were easily learned and rapidly performed. The simplification and standardization of component parts permitted large production runs of parts which were readily fitted without adjustment.

Smaller tasks and more finely delimited methods reduced the variability in technique. The worker became more removed from responsibility and the authority to integrate his or her task was left to others.

The assembly line epitomizes the whole Ford concept and practice. There's no need to go into the exhaustion, boredom, hazards and hardships of the assembly line. That should be well known. But the Ford revolution also had a progressive social aspect to it.

The Ford introduction of mass production, what amounted to micro-division of labor in the plants, dramatically reduced the cost of a motor vehicle and was followed by a vast expansion of employment. Ford was also able to pay the highest wages and introduced the five-day week.

Because the Ford concept enabled the production of many millions of vehicles, it fostered and cultivated the growth of satellite industries and generally constituted a significant contribution to capitalist production in the U.S.

It was on that basis that the Ford Motor Company until the late 1930s was preeminent in the auto field on a world scale. It became a tremendous multinational corporation with its own sources of raw materials and so on.

The Ford method and concept therefore led to an expansion of capitalist production. The Saturn project, however, is based on a contraction of the existing workforce.

The Ford concept and strategy resulted in wiping out the old craft unions to a large extent. The problems that skilled workers had in the early days are documented in the struggles of the Mechanics Educational League, which was an organized expression of the skilled trades in the auto industry. It later dissolved and became the skilled crafts part of the UAW.

The Saturn project is still in the planning stage, is only an executory contract which still has to be put into effect. The intention, however, is to wipe out as many as 100 job classifications. Even if only half that is consummated, it will amount to a vast contraction, in other words, the opposite of what happened in the earlier Ford concept.

The concept behind the Saturn project is calculated to undermine the older, standardized, minutely calculated micro-division of labor and supplant it with multiple operations by workers, who it is claimed will be working together with more cooperative methods.

Of course, cooperation and division of labor are not specifically capitalist aspects of production. Division of labor has existed over the ages, and so has cooperation. This was so even in ancient times, long before the dawn of the modern age. The Egyptian pyramids were built on the basis of division of labor and cooperation. It is impossible to conceive of any production not having some degree of division of labor and cooperation.

What makes the Saturn project different from early forms of cooperation and division of labor is that it is done on a specifically capitalist basis, the aim of which is the chase after profits based on commodity production.

It remains to be seen in what respects the Saturn production concept will differ from the old Ford-GM method. A great deal is being said about how the introduction of sophisticated and even exotic technology will do incredible things, of how intelligent workers cooperating in groups will have renewed pride in their work, and that this will result in a better car.

Some of this is sheer propaganda by the company. But won't the new technology be so effective that it produces an even greater number of vehicles at lower cost? Wouldn't a new technology superior to that of the Japanese, Germans or Koreans help close the gap with them?

The GM-Hughes merger and military technology

The truth of the matter is that GM is relying not so much on new technological inventions and scientific developments from its own laboratories and science centers as on the transfer of technology from its acquisition of the Hughes Aircraft Corporation.

What is involved in the GM-Hughes merger is a very deep and profound shift of the civilian industry toward the military-industrial complex. It strengthens the hand of the Pentagon in its long-standing attempt to become the central organizer of the capitalist economy.

Up until the day of this acquisition, General Motors was the number one civilian producer in the country--the largest auto manufacturer and the largest complex of industrial facilities. As of June 1985, it became not just the number one auto producer but the number one defense electronics company as well.

By merging with or buying out Hughes Aircraft, General Motors became inextricably bound up with the production of missiles, satellites, radar, surveillance, guidance and other military products. It thus became integrated with the military establishment on a really large scale.

While before this buyout defense contracts were only 1% to 1-1/2% of GM's gross production, it is now estimated they will make up more than 6%. More important than the percentages, however, is the direction of this development. It is a qualitatively different kind of merger. It marks a giant leap of civilian industry into the arms of the military-industrial complex.

Even though General Motors is so huge in comparison to Hughes Aircraft, one must reckon with the fact that it is not Hughes (that is, an individual giant corporation) which will exercise influence over General Motors. That would be absurd. Rather, it is the Pentagon, which has at its disposal hundreds of billions of dollars and therefore towers over any corporation, including GM.

It should be noted that the Ford Motor Company has also become involved in military production. This will compel more and more civilian producers to follow the trend. It is part and parcel of the Pentagon's effort to militarize U.S. industry.

For a long time the auto industry, in particular, was viewed by a variety of liberal thinkers concerned with the struggle against imperialist war as a mainstay for peaceful coexistence with the USSR and other socialist countries and as a brake on the Pentagon. This was regarded as the material basis for the existence of a moderate grouping within the bourgeoisie, with economic roots in the civilian sector. This merger comes as a severe blow to this view.

However, it is part of a longer-term trend. The principal motivation for the GM-Hughes merger and its most immediate basis can be directly traced to the Star Wars project, which has been pushed so feverishly by the Reagan administration. It is important to take into account this extremely significant political development, which gave the final stimulus to the GM-Hughes merger.

In this "most open of open societies," the most important economic and political processes are carried out in secret. Only when they are completed are they brought out into the open as an accomplished fact. The GM-Hughes merger was a textbook example of this.

This extraordinary development could not have been achieved without undercover cooperation among the holy trinity--high industry, finance and the government. What its effect will be on the auto workers and the Hughes workers remains to be seen. It most certainly will entail layoffs for many thousands sooner or later.

It shows how the most important decisions governing the direction of the economy and affecting millions of people are decided by a handful of business executives who are not elected by the people and who are not even subject to veto by the government.

We know now that the deal between Hughes and GM was long in the making. But it is the political process that gave it such a huge lift. Once the appropriations process in the Star Wars scheme was terminated with the presidential signature, the Pentagon opened up the process of bidding for research and development. Then began an explosive scramble by all the elements of the military-industrial complex to grab whatever they could of these most luscious contracts, where super-profits are most extravagant.

It must be understood that we are dealing not with a "few" billion dollars worth of military contracts, but with hundreds of billions. Such is the dimension of the Star Wars project. No large corporation, not even such an enormous one as General Motors, could stand outside the orbit of this magnetic attraction for super-profits.

Aside from anything else, this merger illustrates how utterly hypocritical are the assertions of giant corporations like GM that they are opposed to the government having a hand in private enterprise, that they are against bail-outs or government assistance or involvement. Certainly GM has been the loudest in proclaiming its independence of the government. Now it is completely intertwined with it.

This deal is so enormous that it certainly warrants being used for more than the transfer of technology. More important for General Motors at the moment is that, in purchasing Hughes Aircraft, it enhances its profitability, precisely because Hughes is a huge prime military contractor.

In fact, a formidable problem arises when the deal is viewed as a source for the transfer of technology from aerospace to auto manufacturing, as the company has claimed. The transfer of military technology on a mass scale to civilian auto production in particular may present insurmountable problems, at least for a considerable period of time, if the aim of reducing the cost per vehicle is taken into account.

Experience has shown that the transfer of military technology to civilian production, on the basis of production for profit, has brought about enormous problems. Several examples come to mind that are detailed in Seymour Melman's book Profits Without Production.4

"Until now," says Melman, "no major military-serving enterprise has demonstrated an autonomous ability to carry out the sort of occupational switch that is needed to go civilian."

Conversion means changing over the physical resources, the skills of all workers and the ways of organizing work to serve civilian rather than military goals. "Organization [of a conversion] is a problem area because of certain characteristics of military industry. The decision goals and occupational practices of [military] industry encourage cost escalation. Cost maximizing is feasible because subsidies from the federal government offset extraordinary increases."

Hughes Aircraft is not the exception to this, but the rule. The government's largess to Hughes Aircraft is well known, as it is with other military contractors.

"Military products are often designed to increase military `capability' regardless of cost," says Melman. "Given that priority, reliability takes second place, as do such considerations as ease of maintenance and minimum cost for accomplishing a given function."

Melman gives two well-known examples of military industry contractors who attempted to change over part of their production facilities and even labor force to civilian work: the Rohr Corporation of Chula Vista, Calif., and Boeing-Vertol, a division of Boeing Company.

Rohr built the cars for BART (Bay Area Rapid Transit) in San Francisco, as well as for the Washington, D.C., subway system. Boeing built the MBTA (Massachusetts Bay Transportation Authority) buses. In both cases the costs were enormous. The systems didn't work well and took long years for proper operation. There were frequent vehicle derailments, malfunctioning of the air conditioning system, cooling motors and fans when the motors burned out too quickly, and so on.

There is another recent example of the difficulty created when technology developed by military contractors is used for civilian purposes. In the New York City area, Grumman buses, like those of the MBTA in Massachusetts, soon became notorious for improper functioning, compelling the city to sue the company.

When GM announced the acquisition of Hughes, the capitalist press mentioned here and there the difficulties that might be incurred because of the different "lifestyles" of the two companies. But none mentioned the real problem: how to transfer the exorbitant costs of maximized technology to civilian production, where the objective is to produce a low-cost competitive vehicle.

As a Pentagon protege, Hughes, like the other principal prime military contractors--General Dynamics, Boeing, and Rockwell to name a few--is not concerned with minimizing costs but with maximizing them. Therefore, when its military technology is transferred to civilian production, the burden of this cost will first be put on the workers in the Saturn plant. We thus see that the new technology is bound to be far more costly and that the workers will have to pay for it.

Furthermore, the auto industry historically is the one last area where civilian competition has existed on a wide international basis. These new technologies, whose shorter life cycles add more to the costs, spur on the tendency toward conversion to military production.

This is what Saturnization means.

Military reorganization of the economy

Aside from the profit motive involved, where does the steam come from for all this? Who pushes the scientific-technological revolution at such a feverish pace? The AFL-CIO report discussed in Chapter 1 makes no mention of it, but automation, workerless factories, and all the rest are being pushed vigorously by the Pentagon. The Star Wars program is the prime example of and an outgrowth of this phenomenon.

Right after AT&T announced its imminent layoff of tens of thousands of workers, a company spokesman said it was now ready to forge ahead with Star Wars research. "Can computer software handle anything Star Wars throws at them?" was the question posed by members of the Senate Armed Services Subcommittee on Strategic and Theater Nuclear Forces. "I believe the answer is yes," replied Solomon Buchsbaum of AT&T Bell Laboratories.5

The Pentagon since before 1983 has been attempting to make a quantum leap into an area which was previously regarded, at least in peace time, as off-limits. It is attempting to become the central organizer, not merely of the war industries, but of the capitalist economy as a whole.

The term "centrally organized economy" has generally been applied by bourgeois economists only to socialist countries. The very term has been anathema to big business. For decades bourgeois economic dogma has held onto the fiction that in the U.S. individual corporate enterprises are dominant; that "free enterprise" and capitalist competition reign supreme; and that it was only the Rooseveltian New Dealers and their latter-day administrators of the capitalist state who injected the government into what is normally regarded as the private sector.

The truth of the matter, however, is that monopoly capitalism in the U.S. has been steadily and relentlessly fusing with the capitalist state for decades, and is intertwined with the military in a thousand and one ways.

It was General Eisenhower who coined the term "military-industrial complex" to describe the infrastructure that was set up during World War II and that was never really demobilized after the war. What is now contemplated by the Pentagon is not merely adding to the existing structure, which has expanded enormously over the years, but creating a new concept altogether. It envisions the organization of the basic elements of the capitalist economy under the aegis of the Pentagon in so-called peace time.

There is a struggle, a virtual war, going on over whether and how to do this. A glimpse of this was aired in 1983, on a special segment of the PBS program "Frontline" entitled "Pentagon Inc."6

The program dealt with the existence of a little-known group that has tremendous power and authority. It is called the Manufacturing Technology Advisory Group (MTAG) and it includes representatives of both the military and the principal defense contractors. The ambition of this group is to become the MITI of the United States. (MITI is the ministry set up by the Japanese capitalist government which is said to direct the goals of the Japanese economy.)

Air Force General Bernard Weiss explained how the military views MTAG: "To me," said Weiss to a meeting of MTAG that included many military contractors, "I look upon all of us here today in your organizations that you work for as the MITI that will take the U.S. out of the position that it's in today in productivity and quality and move it back to being preeminent in this world."

Now, that requires a considerable reorientation of U.S. industry and commerce. It means that this group would, in the words of the PBS narrator, "set the direction for our industrial future. They make up an economic apparatus every bit as rich and elaborate as MITI. But it is the military here controlling the money and the goals are set by military men."

In Japan, of course, only a very small percent of its gross national product is involved in military research and development as against the huge expenditures in the U.S.

Another speaker at the MTAG meeting shown on PBS was a General Skantze, whose title "Head of Manufacturing Command" was not explained, nor were his job classification and scope of authority.

General Skantze was more specific than General Weiss. "Since our war-fighting equipment comes from the industrial base," he said, "the condition within that base must be addressed and corrected. We now have an effort underway to provide a planning system that will guide our industrial base investments and will eventually integrate technology, opportunity and business investment planning. It is a top-down approach we call `Industrial Base Planning.' " (Our emphasis.)

"We plan to maximize application of mechanization and automation," he continued, "and we plan a paper-free factory with planning, scheduling and control by the latest computer hardware and software techniques. We thus expect a factory that can perform at least one full shift per day unmanned."

What all this signifies is that the Pentagon is aiming at capitalist regimentation of industry, high-technology industries in particular, and the capitalist economy in general. The whole purpose of it, the Pentagon made clear through these spokesmen, is not to coordinate and plan for useful, cooperative production for the people. It is, as they make very plain, to compete not only with Japan but the whole world, militarily and economically.

Planning while retaining the ownership in the private hands of the capitalist class and having the Pentagon as the central planner is the very opposite of the centrally planned economies in the USSR, China and other socialist countries.

There production is planned for use. Here, as the generals make very clear, the planning is to strengthen competition, which leads to struggles abroad, intensifies antagonisms among the capitalist cliques here, and above all lays the basis for not a capitalist boom but for an even more devastating capitalist crisis, which the brass think they can contain through military regimentation.

Mussolini, Hitter and Tojo thought so too. They did not succeed very well, as we all know. Neither will the Pentagon.

It was a frequent theme in the middle 1950s, that is, between the Korean and Viet Nam wars, that because of the Pentagon's enormous power to maximize costs and its authority to hand out lavish and extravagant contracts for defense orders, the capitalist state thereby acquires the ability to abolish capitalist economic crises altogether.

Of course it is all too true that the capitalist state can accelerate military contracts and thereby temporarily stave off an economic crisis. But it is also all too clear that when that fails, they resort to military adventures. In fact, the 20th century is full of examples of militarism giving a temporary respite to the capitalist system, only to later bring on a deeper and more profound economic crisis.

In fact, there is no scientific basis for the view that militarization of the economy can avoid capitalist crises. The capitalist state is only the collective organizer on behalf of the individual capitalists. Insofar as its economic function is concerned, it appropriates an additional portion of surplus value or unpaid labor from the workers above and beyond what the individual capitalists have the power to extract. It thus intensifies the exploitation of the workers by the capitalists, adding more burdens as a result of its political role, including that of collecting taxes, and its special role as a repressive instrument against the working class and oppressed people. None of what the Pentagon and the capitalist state do alters the fundamental relations between the classes.

The whole purpose of the capitalist state is to enhance the accumulation of capital. But the biggest obstruction to abolishing capitalist crisis is capital itself and the private ownership of the means of production. However the capitalist state may seek to intervene in the organization of the economy, it leaves unaltered the fundamental relation of exploitation. And it is this which generates the chaos and anarchy in capitalist production.

Liberal thinkers are often blinded by what appears to be the omnipotence of the capitalist state because of its power of repression. But while it has tinkered with the economic laws of motion governing capitalist society, it has been unable to alter them in a way that would purge the system of crisis. It only succeeds in delaying the crisis, which is then even more disastrous when it comes.

The crisis in agriculture

The very acute agricultural crisis the U.S. is experiencing at the present time, which is deeper and more profound than any other crisis in agriculture since the early thirties, is not merely the result of capitalist over production. Contrary to widespread popular misconception, it is also very much the product of the scientific-technological revolution. Some aspects of this began well over a decade ago.

"Agriculture's preoccupation with scientific and business efficiency has produced a radical restructuring of rural America and consequently of urban America," wrote Jim Hightower, a former USDA official, in his book Hard Tomatoes, Hard Times.7 "There has been more than a green revolution out there. In the last 30 years there literally has been a social and economic upheaval in the American countryside. It is a protracted, violent revolution and it continues today."

This revolution, says Hightower, has been fueled by "funds to the land grant college complex" which "has been the scientific and intellectual progenitor of that revolution."

Hightower quotes the Des Moines Register to show that the land grant universities have devoted "the overwhelming portion of their research and educational funds to the promotion of agricultural technology in the service of the highest income farmers and bypassed poor farmers and rural communities."

Thus, the huge profits go to large corporate enterprises, particularly the huge corporate farms and ranches, what Hightower calls the "vertically integrated and conglomerate corporations," which own "the seed, feed, chemical, credit, machinery and other `input' industries and the processing, packaging, marketing, distributing, retailing, exporting and other `output' industries.

"Increasingly, agricultural production is vertically integrated. The markets are concentrated and dinners are prepackaged by corporate America. ITT serves up Gwaltney ham and Wonder bread. The turkey comes from Greyhound Corp.'s Armour division. Dow Chemical brings the lettuce, while Tenneco provides fresh fruits. Count on Boeing for the potatoes and American Brands for Mott's apple sauce. Coca-Cola serves orange juice, and for dessert there are strawberries from Purex.

"Ralston Purina, Del Monte, Tropicana and Safeway are taking control of agricultural production, reducing farm laborers to contract laborers. Commodity after commodity is being groomed under vertically integrated contract, including 95% of the broilers, 75% of processed vegetables, 70% of citrus, 55% of turkeys, 40% of potatoes and 33% of fresh vegetables.

"These percentages," the author adds, "are increasing every day."

Every lever in this scientific-technological revolution in agriculture is controlled by the same industrial and financial plutocracy which is so well known for its stranglehold on industry in general. While it has been regarded in the past as divorced from agriculture, in reality it has absorbed most of the agricultural sector.

Two articles written more than a decade later have verified this trend. The first was in the Wall Street Journal and proclaimed that "U.S. agriculture is in the midst of a radical restructuring. Middle-sized farms are vanishing; the growers are going high-tech; some sectors are robust and developing, some are sickly and dying. None are what they used to be."8

"Medium-sized farms," continued the Journal, "generally defined as having $40,000 to $100,000 in annual sales, are shaping up as big losers. Large enough to be awash in debt but too small for the maximum in technology and efficiency, such farms are increasingly being squeezed out of business.

"Snapping up much of their land are bigger, more efficient operators. About 12% of U.S. farmers now account for 63% of farm sales. The largest farms, those with sales over $250,000, rose 54% in number from 1978 to 1982."

The article cited a bank economist from the Kansas City Federal Reserve Bank, a constituent part of the national Federal Reserve Bank, who gave his judgment on the course of the agricultural crisis and the scientific-technological revolution: "We will see a greater and greater concentration of the assets of agriculture in fewer and fewer hands."

A continuation of this trend was reported in another article more than a year later in USA Today.9 It cited a January 9, 1986, Census Bureau report that "more people left U.S. farms in 1985 than in any year since 1976, bringing U.S. farm population to its lowest level ever. The report comes at a time of crisis in U.S. agriculture. The Census Bureau said 399,000 left farms in 1985--bringing the percentage of farmers in the population to an all-time low of 2.2%. The departures are mostly younger families forced out because of economic adversity, forcing them to sell off or go out of business. The farm population peaked at 33% in 1916, but dropped steadily until the late 1970s. Other reasons are declining birthrates, aging farmers and technological changes."

In a general way, everything said in these two articles is correct. However, they obscure what is truly fundamental and crucial for an understanding of agriculture in the U.S. in general and the agricultural crisis in particular. This is especially true of the way the Bureau of Labor Statistics (BLS) gathers and reports data.

They leave out of consideration the basic characteristic of capitalism in agriculture: the private ownership of land and its relationship to wage labor. This omission is of critical importance. Reading these two articles as well as much of the general literature on farming, one gets the impression that the fundamental factor in U.S. agriculture is the so-called independent, individual property-owning farmer. This leaves totally out of consideration the vast and often uncounted agricultural workers, the wage earners--some of whose wages are so meager they can scarcely be called that.

The other fallacy in much of the popular literature on the agricultural crisis is to divide farms into large and small depending on acreage. This leaves out of consideration that a farm may be relatively small in terms of the number of acres but have great intensity in the application of capital, machinery and high technology. It may also employ huge numbers of agricultural workers. There are many such farms spread throughout the length and breadth of the country, from California to Florida, Arizona to New Jersey and all the way up to Maine and the state of Washington.

Since its dawn, the capitalist system has been characterized by a sharp contrast between town and country, between rural and urban life, between the workers on the land and those in the factories. While the scientific-technological revolution has done much to blunt this grave contradiction, it has at the same time sharpened the contradiction between the working class as a whole, including agricultural workers, and the capitalist class.

Unity and solidarity between those who work under the sun and those who work under the factory roof are more urgently needed than ever. A great deal of attention especially needs to be paid to putting the so-called "illegal," migrant workers within the framework of the organized trade union movement, which such organizations as the United Farm Workers (UFW) and the Farm Labor Organizing Committee (FLOC) have set out to do.

Writing more than 70 years ago on the development of capitalism in agriculture in the U.S., Lenin wrote: "Hired labor is the chief sign and indicator of capitalism in agriculture."10 How striking this is, considering that even today in the U.S., the movies, television, literature and songs dwell on the family farm, leaving the wage laborer largely invisible!

"The development of hired labor, like the growing use of machinery," said Lenin about the U.S., "is evident in all parts of the country, and in every branch of agriculture."

In his painstaking study and statistical analysis of agriculture in the U.S., Lenin pointed out that in the 1910 U.S. census, all the farms were divided according to areas, just as had been done in the 1900 census. But unlike that earlier census, the one in 1910 did not divide the employment of hired labor according to the same classifications. Thus, wrote Lenin, "we are deprived of the opportunity of comparing the small and large area farms according to the number of hired laborers they employ."

The effort continues to hide the significance of wage labor. Little attention is paid to the special exploitation of the agricultural worker, who more often than not is a migrant worker. Many are Black, the legacy of the sharecropping and tenant farming to which Lenin gave considerable attention in his study. Perhaps the majority, however, are so-called "illegal" immigrants from Mexico, Central America and the Caribbean. "Illegal workers make up an estimated 50 to 70% of the nation's migrant workforce on the farms," according to the Wall Street Journal.11

Unless the agricultural crisis and more specifically the scientific-technological revolution in agriculture is put in the context of the capital-labor relation, as we did earlier, one gets a completely distorted viewpoint, not only of the current agricultural crisis, but of the nature of capitalist agriculture in general.

Agriculture is now experiencing the same phenomenon observed in industry generally, where high technology is displacing workers and the substitution of lower-paid for higher-paid jobs is taking place. There has been a proportionate loss of jobs by comparison with previous periods. As Table 1 (see Appendix B), taken from the study series on "The Underbelly of the U.S. Economy" shows, "employment among farm workers (including farmers and farm managers, farm laborers and supervisors) declined in actual numbers from 4.2 million in 1964 to 3.1 million in 1974. From 1979 to 1982, the number declined by 15,000 to 2.7 million. Thus farm workers have declined as a percentage of total employment from 6.1% in 1964 to 2.7% in 1982. After 1982, the BLS no longer reported on this category of worker. [Not much has changed since Lenin!--S.M.] Overall employment in agriculture, however, has continued to decline from 3.4 million in 1982 to 3.3 million in 1984."12

The scientific-technological revolution in agriculture should also be seen against the historical background of the centuries-long struggle to maintain the family farm, owned by the individual proprietor, free from the onslaught of capitalist development. The Homestead Act, passed in 1862 by the U.S. Congress, provided for the transfer of 160 acres of unoccupied public land to each homesteader on payment of a nominal fee. This was to fortify and strengthen the individual farmer in the face of the onrushing development of capitalist accumulation in industry. It was supposed to be a shelter against the big landgrabbers, the industrial and real estate magnates, the railroads. (Of course, all this was done with no regard for the sovereign rights of the Native peoples.)

But as Marx explained long ago, and as Lenin was to repeat many times, capital subordinates to itself all the varied forms of land tenure and reorganizes them in accordance with its needs, not the needs of the individual owner. Marx in Capital analyzed the extremely varied forms of land ownership, such as feudal, clan, communal, and state forms, and demonstrated how each in its own time became subjugated to the concentration of capital in the hands of a few and stronger capitalists. In the present monopoly stage of capitalist development, the historical mission of the scientific-technological revolution resulting from the law of capitalist accumulation is to facilitate the socialization of agriculture in the same way it has socialized industry, that is, while at the same time retaining the private ownership of the means of production, which is in irreconcilable contradiction to the social character of production.

What role does the state play in this? The capitalist state tries to counteract the effects of large-scale production, which becomes ever more concentrated as a result of the scientific-technological revolution. The state does this by intervening on behalf of the capitalists while giving the appearance of continuing to enhance the socializing trend of capitalist industry. It takes over an increasing number of bankrupt enterprises, especially the huge ones, and bails them out as was done with the Chrysler Corporation and with Continental Illinois Bank and hundreds of smaller banks.

Even the Reagan administration has allotted billions in subsidies to agriculture, the purpose of which is frankly stated: to strengthen the "viable enterprises," meaning the huge monopolist agribusiness corporate owners and controllers, and to facilitate the death of the smaller ones. On the other hand, the capitalist state has been forced all over the imperialist world to disgorge a great deal of what it formerly nationalized or subsidized and return it to the individual capitalists. This is done as a means of strengthening and intensifying capitalist exploitation over the workers and opening up new avenues of exploitation, especially in the oppressed countries, under the aegis of the strongest and most powerful multinational corporations.

Nationalization, denationalization and deregulation are all functions of the capitalist state as an oppressor and exploiter. These tendencies transcend conservative and liberal administrations, reactionaries and progressives, so-called socialist administrations as in France, Spain and Greece, so-called Labor governments as in Britain, Norway, Sweden and Belgium and blatant, unrestrained reactionaries like the Reagan administration.

It is instructive to compare the way the bourgeoisie has lamented over the collectivization (socialization) of agriculture in the USSR, China, and other socialist countries, especially the so-called forced collectivization, and contrast it with how they have welcomed the capitalist "collectivization" of farming communities here, which is done with much cruelty and is so remorseless and relentless. The apologists for the capitalist monopolies find only the highest praise for this kind of collectivization or socialization. It is progress. It is the future.

But viewed in another light, viewed from a revolutionary perspective, this trend has laid the objective basis for socialism. Seen over a longer period, it has facilitated the task that the workers will have of reconstructing society. Decaying capitalism, with its perennial economic crises of capitalist overproduction, its billions upon billions of bushels of "surplus" corn, wheat, soybeans, etc., can find no better solution than to foreclose farms, making agricultural communities more destitute and compelling rural people to flee to the cities to increase the vast pool of the unemployed. As the article in USA Today showed, they are leaving the farms in droves, at a rate of close to 400,000 a year in 1985. They will become more and more integrated with the working class.


1. Bluestone, Barry and Bennet Harrison, The Deindustrialization of America, Basic Books (New York, 1982).

2. New York Times, Dec. 22, 1985.

3. Workers World, July 25, 1985.

4. Melman, Seymour, Profits Without Production, Alfred A. Knopf, Inc. (New York, 1983).

5. USA Today,, Dec. 9, 1985.

6. "Frontline," Public Broadcasting System, Feb. 21, 1983.

7. Hightower, Jim, Hard Tomatoes, Hard Times, Schenkman Publishing Co. (Cambridge, 1973).

8. Wall Street Journal, Dec. 9, 1984.

9. USA Today, weekend edition, Jan. 10-12, 1986.

10. Lenin, V.I., "Data on the development of capitalism in agriculture," Collected Works, Progress Publishers (Moscow, 1964), Vol. 22.

11. Wall Street Journal, May 15, 1985.

12. Morehouse, Special Report No. 3.

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