Comments on crisis: Stop looking into the headlights

Various thoughts from Prol-Position on the financial crisis beginning in 2008.

Submitted by Steven. on January 12, 2010

The following are rather more preliminary and turmoiled thoughts in turmoiled times than a collectively debated position...

It’s a production affair!
The current financial crisis is rooted in the crisis of social production: profit squeeze / over-accumulation in the industrialized regions of the world, workers unrest and increasing desires in the newly industrialized periphery, major pressure from the roaming rural proletariat of the South, trying to escape the misery of the soil and village life.

There might be a crash, but no short-cut!
We have to understand the real limits of capitalist social production which are hidden behind the current crisis, not only in order to avoid false short-cuts (demands for regulation of the financial sphere from the moderate left, un-rooted voluntaristic proclamations or "direct-action" from the radicals), but also in order to find a revolutionary answer within the proletariat: not as bank-scratching paupers who have lost their little savings, but as producers who have fueled the frenzy and who are able to produce a different social community. In the following we will try to lay out some of the material limitations of the current capitalist cycle. We will mainly refer to the global automobile industry and we have a reason for doing so: it was and still is the main industry of this capitalist cycle, the "American Century", it is one of the most socialized industries with the longest production chains within the international division of labor, the most resource and human labor consuming sector.

Under the surface of over-production and financial bubbles: a way too productive social cooperation!
The industrial crisis has been simmering since the early 1970s, since then "de-industrialization" was the word of the day, everyone focused on rust-belts and increasing unemployment. In fact most industries were not dismantled but underwent a productivity boost. While it took 20,000 workers to produce 100,000 GM cars in the mid 1970s, today the job is done by 6,000 workers. The same is true for misnamed "post-Fordist" industries, e.g. call centers, where 100 or 200 agents easily displace 1,000 white-collar workers, e.g. in banking or insurances. The expenditure for capital to surround and suck out the remaining workers with ever more machinery increases, the real unemployment and unproductive jobs, too. The enormous increase in productivity meets its consequence: falling relative income and falling profits in the production sphere. This emerges as an over-production crisis. The back-bone of Neo-Keynesianism (give people more money and the economy will recover) has now been broken twice. Firstly, people had the deficit spending power, but it didn't help. Secondly, this crisis reveals that capitalism is not a consumer society: a decreasing share of the social product is dedicated for private consumption, the increasing share flows into the extension of the (war/factory) machinery... dead: No new product-cycle in sight!
Despite all the talk about an information society and post-industrial relations, no social product and mode of production has emerged which would have replaced industrial products like cars, mobile-phones etc. The hailed new consumer goods (DVD-Players, mobile phones etc.) need a tiny fraction of social labor, the Nokia plant in Bochum manufactured 100,000 to 150,000 phones per day and was closed because it was not productive enough. A micro-wave plant in China supplies half of the world demand for micro-waves: you cannot build a capitalist cycle on that! And you cannot build it on IT services. The crisis was the final straw, the new sector which was supposed to be the way out of the automobile crisis and it collapsed within no time! The flight into finance accelerated.

The crisis won't be exported: China and India have to cope with the increasing unrest of a mobile urban/rural proletariat!
The last WTO talks failed, the global South, namely India and China, did not want to swallow the over-production of the North, particularly the agrarian surplus production. This is not due to any kind of anti-imperialist attitude, but due to the major challenge of global capitalism: a rapidly growing proletariat in the global rural South. Most of the rural population in India and China (about 1.7 billion people) depend on wages and commodities - the ups and downs of markets! They have left the misery of village's personal hierarchies and exploitation and find themselves in the social whirl-pool of proletarianization: increase of insecurity and desire. The states of the South need a relatively calm hinterland; they are busy copying with the new urban working class, migrating workers and growing slums. The state tries to tackle the rural proletariat with migration control and histories' largest job schemes. The complete opening of the regional market for the excess production from the North would cause major disruption in a situation of simmering social turmoil: millions of semi-proletarianized households (half depending on wage work, half on agricultural production) would have to compete with industrialized agriculture and be thrown into the social void.

No low wage paradise left: The crisis won't be re-located anymore!
So far the core plants of the automobile sector have not been re-located to low-wage countries, mainly due to the major share of fixed capital: a car plant is heavier than sewing machines or head-sets. If we take a closer look at those industries which actually are relocated, e.g. the textile industry and call centers, then we can state there is no low wage region left to further relocate to in order to solve the profit squeeze by finding even cheaper workers. The textile industry moved from Indonesia, to China, to Vietnam, to Bangladesh and fueled workers' unrest and pressure on wages from below on the way. The same is true, though less riotous, for the new generation of call center workers in the Spanish and English speaking periphery. Wherever new car plants opened in the periphery, major strikes and demands emerged, e.g. during the last months in the "global car" plant of Dacia in Romania or at Ford in St. Petersburg, Russia. Another problem for the "globalized" hunt for cheap wages is the increasing transport costs due to rising oil prices: the production chains are over-stretched.

Social death of the peasant worker: The migrants won't do the job!
So far one of the main ways to undermine a local working class and to re-structure industries was to suck in peasant workers into the new industrial areas. This was true for the beginning of the "Fordist" era in the US, for the "re-construction" in Europe after World War II, for the dictatorships of development of the 1960s to 1980s (from South Korea to Brazil) to India and China today. The problem is that this "peasant"-worker is a dying social figure. In China today the second generation of industrial migrant workers refuses to go back to the country-side, this is what the Turkish "guest-worker" did in Germany in the 1960s and 1970s. Capital has to face migrating proletarians which already have made their experiences with urban life, with factory or wage work, with modern forms of class struggle: e.g. migrating women workers from the Philippines or Bangladesh, who have worked in Dubai, Liberia and Romania and who have learnt how to fight.

The food riots showed a new subject: not the starving desperate poor, but an urban working class!
So far capitalism has been able to "starve out" the poor; the main famines and poverty related massacres took place on the countryside, on the bloody soil itself. The recent food riots showed that capital and state have to face a desperate, hungry and angry, but also highly organized urban proletariat. The food riots in Bangladesh were organized mainly by female textile workers, in Cameroon by taxi drivers and local youth. The forms of urban struggles seem to become more similar, be it in Parisian banlieus or industrial suburbs of Dhaka. The ruling class will need one, two,... many Katrinas in order to beat the urban poor, given that even the missiles on Bagdad or Kabul, the CCTV systems in London or job schemes in Villeurbanne do not seem to be able to sort things out.

Impasses in the factories in the North: neither low wage temp jobs nor humanized team-work solved the crisis!
Facing this dead-lock situation in the periphery, capital has to try harder to solve its crisis in the factories and other spheres of exploitation in the North. In order to do this capital has met a further situation of impasse concerning the development of a "post-Fordist" production model, the attacks of the core workers, the employment of precarious or temp workers, outsourcing to suppliers or sweat-shops. Following short glimpses on the matter.

Fordism re-loaded: capital was not able to overcome the assembly-line!
There were two specters haunting the shop-floor of factories in the North during the 1980s: the automated production and the humanization of work. It became clear quite early on that the new technologies (IT) are first of all used to speed-up work (particularly in logistics) and to tighten control, but that the actual physical work remained more or less untouched. The "humanization" of work got another turn in the 1990s, when everyone was talking about Toyotism, job enrichment and team-work. Since then "team-work" in most factories is a synonym for "peer-pressure" and institutionalized group bullying. Actual "team-work" turned out to be unproductive once placed under the necessity of valorization: role model manufacturers like Volvo returned to the assembly line. There seems to be no way out: value production, abstract labor, has to be met by a material form of production - factory work based on a rigid division of labor and connected to the rhythms of machines. Capital was not able to "revolutionize" its very own fundament - the focal point of workers' reformism was crushed.

Expensive attacks on the core workforce: future focal point of popular discontent?
The last decades have seen hundreds of examples of expensive attacks on the core work-force in the North: Rover in England, VW in Brussels, several GM plants in the US. In the "best cases" capital and state had to pay quite high redundancy payments or social benefits. In "worse cases" workers managed to organize a collective response, e.g. the wildcat strike at GM in Germany 2004 against outsourcing and dismissals.

During the last weeks car makers announced major job cuts or production stops. With the aggravating crisis, the struggle against closures of major plants and or other job cuts could become a focal point attracting everyone who felt fucked over by the current crisis regime. This is much more likely than an organized unemployed movement or spontaneous looting of the stock-market. Therefore capital and state will also calculate the "political price" of a direct attack on the core workers.

Relatively low labor costs compared to costs for capital: Low wages won't help!
If we talk about the major industries, e.g. automobile, chemical, agro-business etc., we can see that low wages won't be the solution for capitalist crisis. In a modern car factory only four to five per cent of the total production costs are spent on wages (including those of the managers). At GM in Germany a temp worker might only get 6 to 7 Euros before tax compared to 14 to 17 Euros of a permanent worker.

Mathematically, lower wages would not change the general costs calculation too much, but in times of crisis every cent counts. Actually the increasing use of temp and low wage work has hit productivity: recently Spain got an official warning by the EU that too many temp contracts would cause a major increase in sick leave and lowering of work performance. Today most industrial workers are not able to identify with "their" company anymore, which for capital is a very high price to pay.

The crisis won't be out-sourced: Crisis and re-concentration of the supplying industries!
One attempt to lower production and wage costs was by increasing the out-sourcing of certain departments. In this process some major car part suppliers grew nearly as big as the actual car manu­facturers, e.g. Delphi, Bosch, Visteon. Everything seemed to fit the picture: a flexible production on demand, just-in-time, and a fragmented work-force. During the last years these myths collapsed: the strike at Fiat Melfi in 2004 finally showed the vulnerability of the supplier-assembly plant link, for a stable production the suppliers started to manufacture in close spatial distance, the wages at the suppliers increased, and in 2005 the crisis of Delphi and Visteon showed the still existing mutual dependency: GM had to save Delphi, pay its workers' pensions and wages, Ford had to jump in and pay out its former outsourced daughter Visteon in order to guarantee production.

In this dead-lock situation credits become crucial: preparing the financial crisis!
Having met these various impasses the industrial capital had to bet on future profits by increasing the amount of credits. This became obvious even before the current financial crisis; major industrial companies had liquidity problems, GM and Ford lost millions with their pension funds on the stock market, Chrysler's leasing bank was close to bankruptcy. The run for money started on a global scale. Proletarians did the same, low wages were compensated with private debts and mortgages - but compared to the state and to companies their indebtedness remained marginal (and within the global proletariat the average Indian rural proletarian household is probably deeper indebted than a US-American working-class family, relatively to both economic output and income). Once the financial crisis kicked in, once the "credits" turned bad it swung back and aggravated the industrial crisis further: particularly the BRIC states (Brazil, Russia, India, China), the only states where, e.g. car production and sales were still increasing, are badly hit by the crisis. Neo-liberalism is dead, major parts of the left have been flogging a dead horse. Time for reorientation...

Stop staring into the headlights: more than ever before the global character of this crisis can reveal the global character of the working class today!
Instead of letting ourselves be hypnotized by the debt clock and share price slumps we should first of all analyze the struggles which relate to this crisis, e.g. the short wildcat strike of Renault workers against the announced dismissal of 1,000 work-mates in Sandouville (France) or of Greek airport workers against a pension scam. We will also have to review the uprising in Argentina during the last crisis in December 2001: only during the first weeks of financial crash everyone seemed united, then the middle-classes got appeased and went back to the election ballots again, the employed workers only went on demos after the end of their shift and the unemployed movement turned into thugs for the new government or got occupied with the struggle for survival. The crisis itself won't unite us, we have to reveal the global character of social production today: within the chains of migration, the global experience of industrial work and urban life, the growing desires of the rural proletariat - which all demonstrates that neither the factory work-organization nor profit margins or interest rate cuts will be able to contain our collective productive unrest!