How the system works

Louis Proyect lnp3 at
Thu Nov 30 12:28:16 MST 2000

Financial Times (London), May 25, 2000

SURVEY - SLOVAKIA: Workforce pays a heavy price


ZTS was once the biggest industrial group in Czechoslovakia, employing
85,000 workers, a quarter of them involved in defence, at a time when the
country was one of the world's top arms producers.

In Martin, an historic town of 60,000 surrounded by mountains deep in
central Slovakia, the communists built ZTS TEES, the biggest tank producer
in the Warsaw Pact, which employed 16,000 in 1989.

After the break-up of the Warsaw Pact, and then of Czechoslovakia, a shadow
of the once proud ZTS TEES still survives. It now employs only 2,300 and
operates mainly under the name of its chief subsidiary, Martinske
Strojarne, after the state-owned mother company declared itself bankrupt in
1998 with debts of Sk7bn.

Martinske Strojarne operates at 10 per cent capacity, and the few remaining
workers take their time as they turn out outdated but sturdy diesel engines
and tractors for former Soviet Union countries in the huge production halls.

The company limps on: last year, it registered a loss of Sk500m on revenues
of Sk1.3bn. Jaroslav Balogh, managing director, admits it is nearing the
end of the road unless it secures a partner who can provide working capital
and invest in new production lines.

"We have invested almost nothing for two years," says Mr Balogh...


NY Times, November 30, 2000

Steel City, Slovakia


KOSICE, Slovakia - Lukas Cervienka vividly remembers the day the giant VSZ
steel mill here ran out of iron.

It was January 1999, and Mr. Cervienka was sitting in a control room
overlooking the automated ladles that pour 180 tons of molten metal at a
time. The company was so broke that suppliers were refusing to deliver raw
materials, and the company's creditors had hired a new president to prevent
a complete collapse.

"He came in here and asked why we weren't doing anything," recalled Mr.
Cervienka, head of a unit that maintains machinery. "I told him we didn't
have any iron to work with. We didn't have anything to do."

Today, two years later, the mill has been rescued from the brink of
bankruptcy. And it now has a new owner: U.S. Steel, a unit of the USX


All of you know that, from reasons I have not now to explain, capitalistic
production moves through certain periodical cycles. It moves through a
state of quiescence, growing animation, prosperity, overtrade, crisis, and
stagnation. The market prices of commodities, and the market rates of
profit, follow these phases, now sinking below their averages, now rising
above them.

Considering the whole cycle, you will find that one deviation of the market
price is being compensated by the other, and that, taking the average of
the cycle, the market prices of commodities are regulated by their values.
Well! During the phases of sinking market prices and the phases of crisis
and stagnation, the working man, if not thrown out of employment
altogether, is sure to have his wages lowered. Not to be defrauded, he
must, even with such a fall of market prices, debate with the capitalist in
what proportional degree a fall of wages has become necessary. If, during
the phases of prosperity, when extra profits are made, he did not battle
for a rise of wages, he would, taking the average of one industrial cycle,
not even receive his average wages, or the value of his labour. It is the
utmost height of folly to demand, that while his wages are necessarily
affected by the adverse phases of the cycle, he should exclude himself from
compensation during the prosperous phases of the cycle. Generally, the
values of all commodities are only realized by the compensation of the
continuously changing market prices, springing from the continuous
fluctuations of demand and supply. On the basis of the present system
labour is only a commodity like others. It must, therefore, pass through
the same fluctuations to fetch an average price corresponding to its value.

Karl Marx, "Value, Price and Profit"

Louis Proyect
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