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Sunday, August 23, 2020


Before trying to make some sort of coherent sense out of my reflections of the past several days, let me say a few words about what is now called the “gig economy.” Recall that in Das Kapital, Marx argued that one of the central mystifications of capitalism is its misrepresentation of workers as petty commodity producers who come into the market with their product, labor, and exchange it freely and without compulsion. As I have argued in the books and articles I have written about Marxist theories, this misrepresentation conceals the exploitation of labor by capital that lies at the base of the capitalist economic order.

As you are all aware, it is at the very end of chapter 6, “The Buying and Selling of Labor Power,” that Marx with bitter irony speaks of the marketplace as “a very Eden of the innate rights of man (where) alone rule Freedom, Equality, Property and Benthem.” But though the capitalists seek only to extract a surplus from the workers, they are, Marx argues, doomed to bring about their own downfall, for in bringing the workers into the factory in order more efficiently to exploit them, the capitalist enables the workers to discover their common class interests, on the basis of which they organize into progressively broader coalitions, giving them the strength collectively to confront the capitalists. The capitalists are, ironically, their own gravediggers, Marx believes.

During the century after Marx published his great work, workers throughout the capitalist world successfully organized unions that struggled, at times with great peril and cost, to improve working conditions, shorten working hours, raise wages, and even secure what came to be called fringe benefits such as paid vacations, pensions, and even health insurance. I still remember the old bumper sticker: “unions, the people who brought you the weekend.”

The capitalists never gave up their efforts to weaken or destroy unions and take back the benefits they had been forced to concede. In the United States for a long time labor unions were the base, the backbone, of the Democratic Party. Their needs and interests were paid attention to, they were courted at election time, they were given pride of place at national conventions, and they managed in this way to win legislative victories that dramatically improved the condition of working men and women. We can perhaps date the reversal in the fortunes of the labor unions to Ronald Reagan’s successful attack on the air traffic controllers union shortly after he took power in 1980. But capital did not rely only on its Washington political employees in its struggle against the workers.

Its most effective antiunion weapon was of course the international outsourcing of jobs that had been protected by union contracts. The American economy became a service economy not because automation took the place of human labor but rather because lower paid workers in other parts of the world were offered the jobs unionized men and women in the United States had been doing.

But in what must be considered a truly world historical irony, American capital has been increasingly successful in transforming its workforce into precisely that cadre of petty commodity producers that 19th century ideological rationalizers of capitalism misrepresented workers as being. Thus was created the gig economy. Capitalists discovered that if they got rid of their full time unionized workforce, to whom they had to pay decent wages, guaranteed pensions and healthcare and paid vacations, they could compel them to offer precisely the same labor services as “entrepreneurs” producing commodities to be sold in the free marketplace.

Thus a traditional taxi company that hires drivers, pays them wages, and may run the risk of being confronted by a union of drivers demanding decent wages, is replaced by Uber or Lyft, which contracts with large numbers of "independent entrepreneurs" who drive their own cars, pay for their own gas repairs, and perform the same services that a union of taxicab drivers would perform. There is no garage whether cabdrivers will meet, get to know one another, recognize their common interests, and organize.

But whatever the ideology of the gig economy, the underlying reality remains the same. Capitalists exploit and workers are exploited.

Tomorrow I will try to weave all of this together so that perhaps I can make some sense out of what has become of politics in the United States in the 21st-century. Now I must prepare for my sister’s 90th birthday party.


David Palmeter said...

I question whether it’s accurate to say that “The American economy became a service economy not because automation took the place of human labor but rather because lower paid workers in other parts of the world were offered the jobs unionized men and women in the United States had been doing.”

It is true that lower foreign labor costs in industries like textiles and shoes were the main reason why those industries have disappeared in the US. They were, and still are, the cutting edge industries of the industrial revolution—where any country, or section of a country, begins to industrialize. When those industries left New England for the South to take advantage of low wage non-union labor, it didn’t matter to the New Englanders who lost their jobs whether they went to the American South or Southeast Asia.

The US long protected its textile and shoe industries with high tariffs and import quotas. You may remember when Pat Buchanan first ran for President advocating, among other things, greater restrictions on imports, he was embarrassed when the press pointed out that he was driving a Mercedes. The tariff he would have paid on that Mercedes was around 2%. The tariff his cleaning lady would have paid on imported pajamas for her kids was more than 30%. Tariffs on consumer goods are regressive.

And while the tariff on autos was, and still is, low to non-existent, does anyone believe that the “low” wages paid German (Mercedes, BMW, Volkswagen, Porsche) or Japanese (Lexus, Acura, Honda, Toyota) or Swedish (Volvo) workers are what leads Americans to buy their cars? In fact, many of those companies now produce in the US. BMW—not GM or Ford—is the largest exporter of US-made cars. Auto industry jobs were lost primarily to managerial incompetence. (Try using the word “Cadillac” to mean “luxury” to anyone under 30, as in the attempted “Cadillac tax” in Obamacare. You’ll be met with a blank look. If you were to say “BMW tax” they’d get it.)

Kodak was for years a mainstay of the upstate New York economy. Along came the PC and then—especially—the smart phone, and it was bankruptcy for Kodak. Low wage foreign workers had nothing to do with it. In the 1980s it took 10 man-hours to produce a ton of finished steel; today it’s less than an hour. Import competition may have hastened these steel industry changes, but they certainly would have happened in any event.

My father worked on the assembly line in a Remington typewriter plant in upstate New York. So did his father, his brother, and his brother-on-law. There were typewriter plants in many small upstate cities and towns. Not anymore. The first thing that hit them was IBM’s electric typewriter. The others were slow to follow, and one by one they began to fold. Then along came word processors and then the PC—and that was the end of the typewriter industry. My home town had a population of 50,000 or so in the 1950s. Today it’s below 30,000.

At one point when I was in high school, I went through a juvenile delinquency phase: skipping school, not doing homework, getting lousy grades. I was in big trouble when my homeroom teacher detected that I’d been forging my father’s signature to my report card. My parents were angry and upset, and told me that if I didn’t change my ways, I wouldn’t get a scholarship, and without a scholarship they couldn’t afford to send me to college. I told them that I wasn’t interested in college; I’d get a job at Remington. I still remember what my father said when he heard that: “The day you walk into that plant is the day I’ll kick your ass.”

I think he meant it. In any event, low wages paid to foreign workers isn’t why I didn’t follow the family practice of working on an assembly line and went into the service instead. I think I have a lot of company.

Jerry Fresia said...

"We can perhaps date the reversal in the fortunes of the labor unions to Ronald Reagan’s successful attack on the air traffic controllers union shortly after he took power in 1980."

I think the "date" is correct. But what drove the decline of unions, I would think, would be re-aligned coalitions of owners and powerful corporate elites (ever since the middle of Carter's term) that has become the backbone of realignments in both parities. Reagan, was assigned the role of holding together the realigned coalitions of non-owners that would elect Reagan and thus afford the realigned coalition of owners control of the state so that their private interests would become the state supported national interest: decrease of the social wage, privatizing much of previous state activities, strengthening the empire with massive increases in war spending and execution, deregulation, the withering of the state and of unions.

I don't know without research exactly who makes up this realigned coalition of owners but their interests have come to be known as neoliberalism. We wouldn't be too far off I think if we also referred to elites within this coalition as finance capital. So dominant they have become that they control both parties. Thus the 2020 Dem convention was a non-policy bipartisan affair that essential purged the "left" in favor of republicans faces, who with Dems, have governed ever since Reagan, Trump being no exception.

Anonymous said...

David Palmeter makes some good points. Others, well, not so much.

Take this question:

"And while the tariff on autos was, and still is, low to non-existent, does anyone believe that the “low” wages paid German (Mercedes, BMW, Volkswagen, Porsche) or Japanese (Lexus, Acura, Honda, Toyota) or Swedish (Volvo) workers are what leads Americans to buy their cars?"

The extra money Americans pay for Mercedes, BMW, Porsche, Lexus, and Volvo vehicles buys those Americans prestige. Given enough money, some people are willing to pay for that. David Palmeter should know, for he is a proud owner of a Volvo, as he once informed us in this blog.

Besides, low wage is a way to lower the final price of a car; it's probably the cheapest way. It's not the only way. Technology, I seem to remember, is another. :-)

Another Pesky Anonymous

Eric C said...

@DavidPalmeter, when businesses moved factory operations from the North and Midwest to the South, at least the businesses and their new Southern employees were still paying taxes (in theory) that could be turned around to help meet some of the needs of the communities left behind in the North. When operations moved across borders, American communities lost both jobs and tax revenues.

Whenever someone claims that the shift of manufacturing operations to non-US plants has had a negligble impact on American manufacturing job opportunities relative to the impact of automation, I just think about all the non-food items most of us buy regularly. Whether we are talking about medications, clothing, furniture, computers, mobile phones or other techno gadgets, they are all made or assembled outside the US, usually with raw materials also produced outside the US. Most of the stuff bought at Walmart or from Amazon is made outside the US. The robots that may be doing some of the work manufacturing these items need to be manufactured and maintained, but that work, too, is being done by workers in those foreign locations.

Eric C said...

The Republicans with Reagan, who ironically was himself the only president to have ever been a member of, let alone a leader of, a labor union, went all out to kill the unions. But don't let Jimmy Carter off the hook.

Union support helped Carter squeak into office in 1976 in what was up to that point the third closest race of the 20th century (popular vote margin 2%). After Carter got into office, he turned his back on labor, foreshadowing the same neoliberal impulses we would get years later with Clinton and Obama. Labor and liberal Democrats sought labor law reforms, including repeal of the "right to work" section of the Taft-Hartley Act. Carter did not push congressional Democrats to support these measures, and conservative Democrats allied with Republicans to water down the legislation that was eventually enacted, leaving Taft-Hartley section 14(b) intact.

"A Break in the Carter-Meany Connection," WaPo 06/15/1977
"'Tough Talk' Reported Between Carter and Labor," NYT 04/07/1977

Historian Harvey J. Kaye traces the rift between leaders of the Democratic Party and organized labor back even farther--to Johnson's failure to force Senate Democrats to override the filibuster and allow Taft-Hartley to be repealed during the 1960s. Johnson had held Democrats' feet to the fire to get the Civil Rights bills passed, but when the time came to put the same effort into passing labor reform, Democratic Senator George McGovern was allowed to vote in 1966 against the effort to repeal the law. When McGovern was being nominated to become the Democratic Party's nominee in the 1972 presidential election, George Meany and other AFL-CIO leaders walked out of the convention. McGovern went on to lose 49 states, including his home state of South Dakota, to Nixon.

Harvey J. Kaye interview on David Feldman Show, 9/10/2019 @49:08

"Leaders of Organized Labor Remain Largely Hostile to McGovern's Candidacy," NYT 05/14/1972

Eric C said...

A bad link above:

"'Tough Talk' Reported Between Carter and Labor," NYT 04/07/1977

marcel proust said...

"We can perhaps date the reversal in the fortunes of the labor unions to Ronald Reagan’s successful attack on the air traffic controllers union shortly after he took power in 1980."

I think the date may be a few years earlier when deregulation of the transportation industries began. Before then, (if I may simplify) freight rates on trains and trucks were set by the ICC, limiting competition. Companies were restricted with respect to the routes they could serve. The CAB played a similar role for airlines. This high degree of regulation led to limited competition in both industries, perhaps as far as effective cartelization. Capital found it more convenient to share a small part of their profits with labor then to squeeze labor hard. I think that in the post-WW2 era, the lack of foreign competition for US heavy mfg played a similar role (in reducing competition) in the auto and metal industries. As competition, both domestic and international, became more intense, capital became less generous.

And lest one blame Carter solely for this turn of affairs, my recollection is that Ted Kennedy played a big role in trucking deregulation, the explanation I heard being that much of the Kennedy wealth was invested in trucking.

marcel proust said...

RE: LBJ and McGovern.

A labor economist friend who has long been close to several unions told me that LBJ told Meany that in the 89th Congress (1965-7), he didn't believe that both Taft-Hartley repeal and Civil Rights were doable, but promised to get it done in the next Congress. Of course by then, the Vietnam War was devouring all reform efforts of any sort.

I had not known about McGovern's role against TH. Thank you for that bit of information.

David Palmeter said...

Pesky Anonymous

Thanks for the "Pesky" identifier. One Anonymous after another can be confusing. A pen name would be even better.

I'm not clear on your point regarding prestige cars and low wages. My point was that, whatever the reason for imports that drove Cadillac, Lincoln, and Chrysler down the prestige ladder,it wasn't low wages.

Volvo is a "prestige" car? Safe, sturdy, reliable,last for years--yes. But prestige? Not where I come from.

David Palmeter said...

Eric C
Your point that when jobs move from one section of the country to another, they remain in the country is true. The cities and towns that get those jobs benefit, and so do consumers everywhere. The same is true of imports. Foreign workers benefit and so do consumers here. Moreover, there is a less easily seen benefit from imports deriving from the fact that when foreigners sell something to us, they get dollars and those dollars eventually get spent in the U.S. benefitting still others in this country.

This is simply the way markets work in a capitalist world. I think the problem we have, in the context of this world, is that we have a lousy social safety net. People who are injured by the “creative destruction” of capitalism aren’t likely to be consoled by the fact that their jobs were “creatively” destroyed. To the textile worker in New England whose job went to North Carolina, or the typewriter worker in upstate NY whose job was made obsolete by technology, or the auto worker in Detroit whose job went to overseas, it makes no difference.

John Stuart Mill observed long ago that the gains from trade are so great that the winners can fully compensate the losers and still can come out ahead. So far, few countries have taken advantage of that fact, certainly not our country.

LFC said...

Re Meany and McGovern:

Meany supported LBJ's Vietnam policy, as I recall (Meany was a Cold Warrior in the days when the AFL-CIO's positions on foreign policy really mattered, at least within the Dem Party).

So even if McGovern had not voted vs repeal of Taft-Hartley, Meany likely would not have supported him. McGovern's loss in 1972 resulted from a bunch of factors coming together, i.e. it was a kind of 'overdetermined' perfect storm, and Meany's opposition, while it certainly didn't help McGovern, was only one of many reasons for McGovern's landslide defeat. The Dem convention that year was something of a p.r. disaster, w McGovern giving his acceptance speech around 2 in the morning, his pick of Eagleton as v.p. imploded, and basically his campaign never recovered. I think he wd have lost to Nixon probably in any case, but it did not have to be a landslide by any means -- that was a result of contingencies more than underlying 'structural' reasons.

David Palmeter said...

I've long thought that the McGovern campaign misplayed his WWII experience. He was a true combat hero while Nixon mostly shuffled papers in the Navy. Probably because in 1972 war itself was hardly popular, his campaign didn't stress his experience. When the subject came up, he should have downplayed any implied personal heroism and, stressing that he knew what war was, didn't need any lecturers from someone who spent most of the war behind a desk. The WWII generation was very much alive at that time and they probably would have responded favorably to such an approach,

The candidate who played the war hero role perfectly was JFK. When asked he was all "Aw, shucks, I had no choice; they sank my boat," while meantime the campaign itself was ballyhooing it at every turn. The candidate who handled it the worst was Kerry. He was the first to tell you what hero he was. He got swift-boated.

Eric C said...

The loss of union influence within the Democratic Party is not the same as the nationwide decline in union membership, but they are obviously related. Union membership had been declining for a quarter-century before Reagan. That dropoff was just pushed into a much steeper rate of decline under Reagan, with no recovery occurring during the subsequent Democratic administrations.
Union density 1917-2017 (Figure B), Heidi Shierholz, Economic Policy Institute

Eric C said...

@DavidPalmeter, I don't think anyone disputes that there have been numerous benefits to trade expansion for American workers/consumers who are in the 99%. The risk of a hot war against a number of the nations that were joined in the trading, most notably China, was probably greatly reduced. The question is whether the net impact of offshoring and outsourcing was beneficial to working-class Americans. Having more choices from which to choose in the market is not necessarily a benefit if you have reduced buying power because your wages have been eaten away or because you or your loved ones are out of a job.

Another one of the effects of offshoring on Americans that is important but very difficult to quantify is the impact on our shared global environment in terms of climate change and pollution. Offshored businesses, operating outside the reach of legal authorities that the American worker can influence politically, have been largely free to engage in activities that can hurt Americans in the long run.

We agree that the social safety net has been inadequate. But I, for one, don't see why we must limit our vision for how our country could be improved to the confines of capitalism, with or without an improved safety net.

LFC said...

Kerry first came to national attention as a leader of Vietnam Veterans Against the War who gave Senate testimony that was widely covered at the time. His 2004 campaign did not hide this by any means but it also tried to stress his military record (and absurdly had him salute at the beginning of his acceptance speech at the convention and say "Sergeant or Lt. (I think it was Lt.) Kerry, reporting for duty.")

I don't even remember the specifics of "swift boating" except that it was a claim by a few (I forget how many) of those who served w him that the campaign exaggerated his role.

Kerry was a very competent Secretary of State in the Obama admin second term, and he was, within the limits of mainstream center-left Dem politics, a good Senator. He was not a great presidential candidate, however.

Anonymous said...

LFC said: "...I don't even remember the specifics of "swift boating" except that it was a claim by a few..."

Swift boating was not just a claim by a few but was the centerpiece of the entire GOP convention that year. For those of us who lived through that period, it was a ghastly political attack that went unanswered by the Kerry Campaign. It later became the blue print for attacks against superior Democratic candidates by unqualified Republican hacks.

Even candidates with visible loss of arms and limbs lost to candidates who never served in the military. This attack pattern later morphed into widespread sowing of doubts about Hillary's qualifications in social media. So what was once a hit-and-run political attack like the Willie Horton ad on TV that doomed Dukakis became a sustained movement that ultimately even those like John McCain with solid bona-fides were not immune.

--Dave F.