Once again, in order to “adjust itself to the market,” American capitalism has found it necessary to throw workers out on the street. The latest government figures released (February 11) place the unemployed at 3,078,000, or 5% of the labor force. Even these figures are challenged as too low. Walter Reuther, president of the CIO, cites the Jobless at 3,750,000, while the United Electrical, Radio and Machine Workers (Ind.) added exactly one million to the government figures above.
What happened? Simply that the manufacturers produced beyond the effective demand of the consumers, and now the process becomes one of destroying inventories. (These are the effects. The fundamental causes will be treated later in the article.) For example, the number of washing machines held by manufacturers and their wholesale outlets went up from 383,000 on October 1, 1953 to 520,000 on January 1; electric ranges increased from 299,000 to 336,000 in the same period, and refrigerators from 613,000 to 870,000. New cars held by dealers or in transit on February 1 amounted to about 600,000.
To attempt any prediction as to when an upturn in the economy will take place, as to whether this is the beginning of a depression or a temporary crisis would be foolhardy. Not Only cannot two economists today agree on analyzing the situation, but also many factors can intervene in the Coming period to give the lie to all forecasts.
Even Eugene Varga, the ranking economist in the Soviet Union, has had to change his tune over the past three months period. Last October he predicted that the United States was going straight and quickly into a major crisis. In his latest Pravda article he states that in some of the months ahead U. S. production may actually increase rather than decrease, although he continues in the main to expect a further production decline.
One thing is certain. Millions of workers and their families are suffering as the workers follow the inevitable path from factory gate to unemployment compensation office to the welfare stations, as they exhaust their jobless benefits. They are losing their homes – in Detroit the number of foreclosures on land contract homes increased 65% in a short period-their furniture and cars are being repossessed by finance companies, which ave also carting a way television sets. This latter is a dire consequence for many workers. What are the unions doing in the face of this situation?
For one thing they are worrying. The CIO fears the beginnings of a depression – unless steps are taken by the Eisenhower administration. The AFL is not as pessimistic. It considers the economy to be basically healthy perhaps because its workers haven’t been hit as hard by unemployment as the CIO in the auto and steel industries – although it also demands government measures.
REASONS FOR CONCERN
The unions have good reasons to be concerned about the situation. Aside from the humanitarian aspects of the misery encountered by their members, there are economic factors, of which a loss in dues payments the United Auto Workers alone has 200,000 members out of Work at present – is not a small factor. The main economic result, however, of this “Call-it-what-you-may situation” is that the unions find themselves in a weak position in bargaining.
Socialists have long pointed out that the unions are limited in what they can do by the very capitalist economy they Support. Now we have proof vivid. With sales and profits dropping, the employers are expected to resist any big boosts in labor costs. They must hold the line on prices, or even cut them.
The unions are putting forth very moderate demands these days. 72% of all January contracts in the files of the National Foremen’s Institute, a private advisory service for employers, were for 8 cents hourly raises or less. 12% of the contracts provided for no raises at all. (“Unions Play it Safe,” Business Week, February 27). The United Mine Workers could have reopened its contract on wages six months ago, but their big, blustering leader, John L. Lewis, has not made any demands because of the dismal economic picture in the coal industry. Another indication of the weak economic position of the unions, and of how their strength rises and falls according to the workings of the economy is the fact that the International Longshoremen’s and Warehouse Union, a supposedly “radical” union has settled for a four cents an hour increase for 8000 workers in eight canneries and on 10 plantations in Hawaii. For 1955 the union has decided to pass up any wage increase at all! Not only is labor presenting modest demands, or no demands at all, but they are less willing to strike to enforce their points of difference with the companies. With many of their members out of work, the unions naturally are not prepared to put more out on the streets. Aside from this is the fact that the strike weapon is not effective during an economic downtrend as it would be in a reverse case. Government strike figures for January were one-third less than for the same month in 1935.
CHANGES ATTITUDE
The economic situation has also impelled unions to alter policies which once they held dear. The United Auto Workers has always been in favor of cutting down to a four day, 32 hour week before layoffs. In this way the available work would be spread among as many workers as possible. Now the union has charged General Motors with hiring “hundreds of workers,” and even putting on second shifts in some of its plants, while thousands of General Motors workers are on a 32 hour week.
John Livingstone, the UAW’s GM director, in a letter to Harlow Curtice, GM president, called for the company to adjust its schedules so that the older employees will get a steady forty hour week. The union leader admitted that this demand might result in the layoff of probationary employees (those who have not worked at least 90 days for the company), but that it “was intended mainly as a warning against new hiring at this time.” (The Union denies it has reversed itself, but claims that GM’s hoarding of workers creates a “special situation.”)
In other words, the United Auto Workers, reputed to be “the most progressive union in the world” is demanding that workers be laid off, and that additional workers not be hired. It is not for us to criticize the union’s attitude, but to analyze it. After all, the unions cannot help themselves. They are organizations seeking to service their members within the framework of the wages system. Economic circumstances force them to take care of the workers with seniority-those who are paying dues -at the expense of non-dues paying probationary members.
EVER-EVER LIMITED
The program which the unions are now trotting forth to combat the unemployment further show them to be ever-ever limited by the capitalist economy. This program does not differ essentially in its basic approach from that advocated in 1949 and early 1950, just prior to the outbreak of the Korean war, when the unemployed. numbered close to 5 million. The only thing which has changed in the union’s “line” is that now it blames the policies of the Republican-Eisenhower administration, and conveniently overlooks the fact that Truman and the Democratic Party were in office in 1949-50.
Apparently the unions will go to any length to attack those persons of that political party they consider responsible for the economic ills of the workers, but they will not move one inch to attack the economic system itself. Nor can they, for they are not in business to change the present economic order, but to get it to work as best they can under the circumstances of the moment.
Both the American Federation of Labor and the CIO have one basic solution to the unemployment crisis: increase the purchasing power of the workers. To accomplish this, they favor increasing the minimum wage to $1.25 an hour, raising unemployment compensation benefits and lengthening periods of benefits, tax relief for those with low incomes, government aids for housing, federal work projects, increased social security pensions, and like measures. All these proposals are designed to pour purchasing power into the hands of the workers who Will spend this money. Sale will be increased, inventories lowered, and retailers, in ordering new supplies of goods, will start the factories in operation once more.
FAILED IN PRACTICE
It appears on the face to be sound theory. But it has failed in practice before. Were not 10 million still unemployed in 1940 after eight years of New Deal pump priming of purchasing power? Did it not take a World War to put the workers back into the shops? In theory also the purchasing power school operates from a false premise. This false premise is that What is wrong with the economy is lack of purchasing power. The appeal of the unions to raise the purchasing power of the workers does not meet the issue.
The workers receive wages – period. This precludes the possibility of being the consuming class. Whilst the workers do consume their living requirements they can not buy back the wealth they produce.
This is not double talk, it’s a description of the vicious circle. The workers produce all the wealth they receive back only wages, which represents their cost of existence.
Effective purchasing power can only come from the consuming class, the capitalists, which is already not lacking in the wherewithal to buy but merely in the ability to use more than they are now using. Pump-priming may mean that more workers will go back into the shops, but what then?
What will happen is that within another short period of time layoffs will begin all over again. The fault lies not in lack of purchasing power, but in the fact that under capitalism production continually runs ahead of effective demand, as indeed it must.
When orders pick up, the manufacturers all begin to produce for what share of the market they think they can obtain. They expand and hire workers. All at once there is again too many goods on the market. Layoffs begin again.
The crisis of capitalism is one of overproduction of the means of production. It cannot be solved in the field of consumption, of purchasing power, when only the effects of over expansion are seen. Is this just theory? An examination of a little publicized – and for obvious reasons – report of the Joint Congressional Committee on the President’s Economic Report will show that it is not.
This committee reports that to have full employment for the coming year there must be an output of $373 billion, but it puts the prospective demand at only $360 billion. Unless “changes occur to take up this $13 billion gap,” the committee stated, “unemployment could rise to four and a half million on the basis of the old Census Bureau method of counting, and to around 5 million on the basis of its new survey method.” (Business Week, March 6, p. 32).
PLANNING FOR NEED
If the crisis is one in the field of production, then the solution must be sought there. The unions cannot find it, because they are hog-tied by their continued support of capitalism, not to alter the relations of production. All they can do is to seek shot in-the-arm solutions in the best tradition of the New Deal-Keynesian economists.
If there are thousands upon thousands of refrigerators, television sets, electrical appliances, automobiles in the hands of dealers while workers lack these goods, and are even losing the ones they already have; if textile mills are closing down because they have produced too many clothes; if the government is stockpiling several billions of dollars of foodstuffs to keep prices up while people go without – then the solution lies in the workers through their political action taking over these means of producing wealth and converting them into instruments for the needs of the whole population, not for the profits of a minority, capitalist class.
We often wonder how many more “adjustments,” how many more “crises” the workers will have to experience, and how many more times the unions are going to offer half-baked, within – the – system remedies before the workers see the need of a basic change in the ownership and control of the means of life.
KARL FREDERICK
(EDITOR’S NOTE: The World Socialist Party, at its last conference in September, 1953, took further recognition of the limitations. of the unions under capitalism, by adopting the following Party Policy on Unions, which has been upheld by a referendum among the WSP membership:
As long as capitalism exists, the working class will be forced by the very nature of the system to organize into unions to defend themselves against the encroachments of capital. At the same time, because these unions are based on the continuation of wage labor and capital and the production of surplus values, these unions cannot, under capitalism, become the means to introduce socialism. At the same time these unions, because of their support of capitalism, are often used to thwart the development of the socialist movement. As a worker, the socialist is also compelled by the very nature of capitalism to join unions, but as a socialist his main objective in these unions should be to use every opportunity presented to educate the workers to socialism. As a member of the World Socialist Party, he will oppose the unions where these unions are engaged in activity inimical to the socialist movement, and will support those activities which enable him to educate the workers to socialism.)
The Western Socialist, March-April, 1954
Related posts:
