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The crisis in the global car industry: imperialism, monopoly and resistance

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The crisis in the global car industry has lead to huge job losses and fuelled arguments amongst the great powers over protectionism as they scramble to save ‘their’ capitals. Martin Suchanek argues it is a crisis of monopoly capitalism and calls on the working class to resist the bosses’ attacks.

The world economic crisis has hit the car industry with real intensity over the last months. All the world’s major car companies have announced short time working, redundancies or closures. The largest car company and indeed largest multi-national for much of the twentieth century – General Motors – is in its death agony with increasingly desperate interventions by the US-government to keep it alive.

The attacks on the workforce at General Motors are some of the most vicious in the offensive that is now being carried through against workers in the whole global car industry:
• Peugeot Citreon, which cut nearly 3,000 jobs at the end of 2008, has now announced 11,000 job losses globally as it posted a net loss of €343 million for 2008.
• General Motors has announced plans to slash 47,000 jobs worldwide; the biggest ever single round of job losses in US corporate history. The companies share price hit a 60-year low, and the US government had demanded job losses in return for saving the company from bankruptcy.
• Nissan plans 20,000 job cuts worldwide over the next 12 months.
• BMW plans 8,000 job cuts in the same period.
• Crysler announced plans to cut 3,000 jobs globally, and Toyota and Ford have announced similar cutbacks. While, in Italy, Fiat executives told the government 60,000 jobs could go in Italy, if the government does not provide bail out funds.

In continental Europe and Japan – where the most competitive manufacturers are located – capitalists, governments and leaders of the unions and reformist parties alike, blame the world financial crisis and the collapse of US-markets for the tremendous crisis of their domestic industries, insisting they were otherwise “healthy.” Nevertheless, they too need billions of Euros or Yen to bail them out, whilst they sharply denounce the US-government for protectionism and “distorting” the market with its aid.

The hypocrisy of this appears lost on them. All the large imperialist countries, where the bulk of the world car monopolies are located – the US, Japan, Germany and France – have all rushed to aid their companies. France has handed out a major package for Renault and PSA, while Germany has introduced measures to simulate demand by subsidising lower prices for cars.

The bottom line – whatever the rhetoric – is that all the major imperialist countries are resorting to state intervention and aid in the current period. No wonder that the US does most, since its car industry has already been on the rocks before the industrial slump hit the whole world. Already in 2007 GM had to register a loss of 38 billion dollars, whilst German and Japanese multi-nationals like Volkswagen and Toyota announced massive profit increases and record levels both in output and sales.

The world crisis in the industry is not, however, surprising. Whilst the financial crisis in the US and breakdown of the credit chains has triggered its outburst, a longer-term and quite massive crisis of over-accumulation of capital lies at its roots.

Even in the years of the last cyclical expansion, at least one or two million cars “too many” were produced (out of a total production of 55-60 million cars and about 10 million trucks a year), i.e. two million more than there were buyers in the global market place. All the major companies had to produce with a high level of factory utilisation in order to make a profit at all – this meant a large amount of what Marxists call ‘fixed capital’ in proportion to the car industry’s labour force.

Already in the last decade, the capitalists have responded to the problem of over-production by a relentless drive to increase productivity, cut wages, extend the working week and reduce the workforce. They have done so via outsourcing and, to a certain extent, by relocating larger and larger parts of production itself – trying to retain a larger share of the profits for the monopolies themselves at the expense of squeezing their suppliers, who themselves underwent a process of monopolisation and in turn squeezed their “sub-suppliers.”

The longer-term crisis of overproduction and over-accumulation of capital in the industry was temporarily ameliorated by the speculative boom, neo-liberalism and imperialist policies. Firstly, the speculative boom and the expansion of cheap credit for better-paid salary earners and middle class consumers ensured a high and increasing demand for cars (including for more upmarket models). This was reinforced by low oil prices. The large companies also received tax and price aid from the state even in this period. However, the ever-increased intensity of competition was manifest not only in the constant attacks on the workforce, but also in ruinous price competition, particularly in the US-market.

Now, these accumulated contradictions have erupted and will erupt even more violently in the coming period. In capitalist terms, the crisis in the car industry –as with the entire industrial crisis – can only be resolved by a massive destruction of excess capital. But, when we speak of the car industry – of General Motors, Ford, Chrysler, Toyota, Honda, Porsche/Volkswagen, DaimlerBenz, Renault, PSA or Fiat – we are speaking of core sections of capital of the largest and strongest imperialist powers of the world. We speak of capitals which are symbols the entire post Second World War capitalist order and, indeed, of production systems for a large part of the imperialist epoch itself: Fordism (mass production and consumption) and Toyotism (the Japanese management system) for example.

The future of these systems and core sectors of industrial production in the imperialist heartlands is now at stake. The crisis has actually put in question the future existence of central, established sections of finance capital – i.e. as Lenin correctly put it, of a capital formation, where financial and industrial capital fuse under the dominance of the former.

The car industry is a form of monopoly capital par excellence. A few large companies from four countries (US, Japan, France, Germany) have divided up world production and the world market amongst themselves. Only in China, India and Italy do independent producers of any significance remain – but the Italian industry is, at the least, in its death throws as a result of this crisis.

The companies of these four major car-manufacturing states have entered a new period of increased competition with one another. The hegemonic power of the United States as the leading imperialist state is increasingly undermined and ever more costly to maintain, so its leading car companies are facing the real possibly of losing the race to control the global market. This is why the US government is prepared to hand out hundreds of billions of dollars just to keep GM going. This, on the other hand, is also the reason the EU governments – and in particular the German bourgeoisie – categorically reject any notion of handing out money to GM

Europe, which might go to the US. They even toy with the idea of taking Opel/Vauxhaul away from GM and turning it in into a ‘European’ – in reality a German – company.

The important point here is not whether or not this or that plan is ‘viable’ in capitalist terms – the question the trade union bureaucrats, reformist and ‘caring’ nationalist bourgeois politicians are obsessed with. The question of ‘restructuring’ and ‘rescuing’ the car industry is intimately tied up to the question of which capital from which imperialist state/block will survive, be able to force the others to loose an ever greater share of the world market. This is why, all the governments are forced to ‘aid’ ‘their’ industry and in doing so are de facto resorting to protectionism, whilst still praising the ‘free market’ and verbally denouncing the protectionism of the others.

Of course, these hypocritical phrases are not simply blunt lies, but also reveal the real contradiction imperialist, global capital is facing. The period of globalisation has led them to resort to a much higher degree of internationalisation not only of world finance, but also of production and commodity exchange. So, whilst many call for protectionism and some governments more or less move towards it, they are also aware that this will lead to a dramatic contraction of the world market and a break up of established forms of internationalisation. But this real contradiction – itself an expression of the limits and fetter the capitalist/imperialist system and the nation state are on the development of productive forces – can only be resolved in violent, eruptive forms under capitalism, and will therefore lead to a sharpening of competition and much more unstable international system.

In this situation, Obama, Merkel, Sarkozy do all they can to save ‘their industry’ but the labour bureaucracy also joins in with this national-protectionist fever. In Germany, the chairman of the Opel works council, Klaus Franz, and IG Metall have themselves put forward as ‘rescue plan’ for a European solution. The British unions lobby Gordon Brown for the Vauxhall component of this.

Instead of mobilising the workers against the attacks of the state and the corporations, against the bail outs which have to be ultimately be paid for by the working class through increased taxation or cuts in social services and by the workers in the companies through cuts, job losses – the bureaucrats themselves back or even advance such ‘rescue’ plans. They do so by appealing to ‘their’ state or, in the case of the EU, block and ‘their’ bosses in order to work out a plan to ‘share’ the burden of making industry survive and indeed become more competitive against other capitals.

This shameful and reactionary policy is nothing less than the subordination of the workers to ‘their’ national capital and state. Even if it might mean less sacrifice for workers currently employed in the car industry via a European or US solution, it will only be a solution at the expense of other workers – from other countries or the mass of the working class at home. It will mean to rescue core sections of finance capital not only at the expense of present society, but also by poisoning working class consciousness by tying the workers to fate of ‘their’ capitalists.

Revolutionaries and all class-conscious workers must reject that reactionary nationalist road: it is quite simply a dead end for the class. But we must also understand, not only why the leaders of the unions pursue that path, but also why many workers are, unfortunately open, to such proposals. The bureaucrats see this as a means to rescue their position as mediators between wage labour and capital, containing the workers anger. At the same time the programmes will result in a smaller, narrower workforce, as the labour aristocracy who survive the cut programmes act as social base for the bureaucratic union leaderships.

In this situation revolutionaries have to denounce the reformist and trade union leaders, denounce their subordination to the bosses and the state and demand they break from this and organise a common, internationally co-ordinated struggle. But this alone will not be sufficient. One also has to explain why the strategies of reformism and pure trade unionism lead to such reactionary conclusions. Reformism itself is a bourgeois workers politics – which, ultimately accepts the limits of the capitalist state and seeks for a compromise with the ruling class. Pure-trade-unionism, even if it may sometimes appear more militant, leaves politics and political solutions to the existing political forces – be they reformist or even open bourgeois ones like the Democratic Party in the US.

Moreover reformism and pure-trade-unionism are ideologies that are completely incapable of combating workers’ reactionary ideas, which are fomented by the ruling class agencies (the media, etc) reactionary forces or even the workers bureaucracy itself (as we have seen in Britain with the anti-foreign worker strike actions). Indeed, in order to be able to mobilise the working class to defend itself and to put forward an alternative to reformist and nationalist cul-de-sacs, the working class itself needs a political programme, showing how to prevent the ruling class making them pay for the crisis and how to reorganise production and distribution under workers’ control.

In the current situation, revolutionaries have to argue in all the car factories, in the suppliers’ companies, like in all other industries, for a fightback on the principle “We will not pay for your crisis!” which has been raised in the mobilisations on 28 March 2009 in many countries. This means:

• Opposing all closures and redundancies! No job cuts, short time work, no reduction of wages! For reduction of working hours!
• Mass strikes, occupations, political demonstrations, organised by elected strike committees, co-ordinations or councils of action in the work places and communities, linked up on a national and international level. These attacks can only be stopped by class struggle action.
• No trust in the ‘experts’ of the car companies themselves, the “scientists” employed the by the companies or the state: Open the books, accounts, business plans, ownership structures etc. to working class inspections by workers in the industry, from the unions and other working class organisations.
• No bailout plans for the car industry and its suppliers! For the nationalisation of the car industry without compensation for the capitalists and large shareholders! No to all plans to make workers owners of crisis ridden companies by handing them out share certificates in exchange for cuts. Only small, working class shareholders (for example, workers who had to take part of their pay as shares) should be compensated by the state for nationalisation at a price set by the workers.
• The nationalisation of the car industries has to be done under working class control! This means that it has to be working class organs who, as a first step, oversee, control and can veto all decisions of management – not a fake democratic control by some parliamentary commissions or via an extension or reintroduction of class collaborationist schemes of co-determination (Mitbestimmung) or tripartite (company/government/union) arrangements.
• Auto-workers have not only built millions of vehicles, but also the strongest industrial unions, we call on the UAW, the CAW, IG Metall, FIOM, CGT, etc, to organise an international conference of workers in the car industry to develop a plan to fight against the attacks internationally and to impose this plan to reorganise the whole transportation industry under workers control.
• In order to bring this about one must have no illusions into the leaderships of the different unions. They have agreed repeatedly to managements’ demands, sacrificing their members’ jobs, wages and pension rights. Therefore, we combine this demand with organising the rank and file of these unions into a movement to enforce this policy and to fight to put their organisations under their control.

The crisis we see in car production today, the huge problem of over-production that has been developing for decades, also poses the question: what should be the future of this industry? The working class needs an answer to this – otherwise, it will not have a real alternative to the bourgeois programmes for downsizing or rescuing the capitalists at the expense of their workers. Their answer is to find them “new markets” – i.e. address the problem of overproduction – by increasing production.

This just demonstrates the ultimate madness of these schemes. They do not solve, but maintain or even increase the roots of the problem in the first place. Even if the bourgeois politicians could find massively increasing new markets – say in some semi-colonies, like India – this would go hand in hand with a new round of sharpened competition increasing the already critical social and environmental hazards.

The solution to the poverty, run down transport systems, particularly but not exclusively in the semi-colonial world, cannot be turning larger sector of the middle classes and strata into individual car owners. The crisis of the car industry (and other transport producing industries) illustrates the pressing need for a rational, integrated, environmentally friendly transport system.

The capitalist ownership has become an obvious fetter to even addressing, not to speak of solving, this question: it is an absolute fetter on the development of the means of production, on society’s productive forces. Indeed the capitalist solution envisages destruction of them – not only through devaluation, of assets but also their destruction through mass closures and the unemployment of millions, i.e. leaving their creative potential idle, indeed, superfluous.

This means that we not only advocate nationalisation, but also advocate an internationalist alternative. This has to be linked to the call for a programme of socially useful public works, under workers control, whose priorities are set by working class organs. If the capitalists (and their governments) say that there is not enough work to do. This is only half-true: it is true, only if production is geared towards making profits, if the market decides which product is “useful” or not.

But of course, there is a lot of work to do, which is socially needed and which is not and cannot be done under the current, capitalist system. Indeed, millions of car workers can and will be employed in a reorganised industry for improving transport. This might even mean more work and more production in some sectors of the automotive industry (for example, busses for public transport or building vehicles for use on the railways, etc.).

In short this requires planning, a workers’ plan to reorganise a whole industry. If the car industry has proved something, than it is that planning on a large scale – i.e. in an international chain of production in companies employing up to half a million workers – is possible. The acquired expertise of such workforces is indeed an enormous asset, whose social potential is completely wasted under capitalism.

Such a workers plan, however, poses one question: who, or rather which class can re-organise society? It is self-evident that no bourgeois government can do this – whether an Obama, a Brown, a Merkel, or a Sarkozy leads it. They will do everything possible to rescue capital. Rather than hoping for better bourgeois governments, the working class needs to fight for workers governments in all these countries – one based on those organs that come into being in the struggles against the crisis, be it workers councils, self-defence organisations against scabs, and the police or fascist gangs.

This must be a government that will expropriate the large banks, insurance associations, financial funds, the stock exchanges (and close them after compensating the small stock holders) and large-scale industries like the car industries. It will do so not only to stop the working class from falling victim to the crisis and make the rich pay. It also has to do so, in order to restructure a crisis-ridden economy according to the needs of the people, not profit – i.e. to open the road to working class power, a socialist revolution and planning.

Given the international chains of ownership and production such a struggle cannot confine itself, even from day one, to national boundaries. We have to organise the fightback at an international level, linking up car workers across Europe, the Americas and Asia. All together! We can take on the giant corporations and pose transitional solutions based on workers’ control, fight to protect all the jobs, reduce the hours not the jobs, on an international level. For in a socialist world we will need to plan development for the billions living in want and to save our planet from environmental catastrophe, banish war for good and finally put an end to racism and all forms of discrimination.