book intro, Part I

Les Schaffer schaffer at
Fri Feb 23 21:43:50 MST 2001

[ bounced > 30 kB from Michael Yates <mikey+ at>, Part I ]

Here is the intro to a book I had been workin gon.  Now I'm not sure I
think it is worth writing.  Comments welcome.

Michael Yates

Labor Unions and the Nation State in the Global Economy


The Benign Rule of Capital

In 1981 the socialist, Francois Mitterand, was elected president of
France.  With support from the communists, Mitterand had run on a
social democratic platform which included nationalization of certain
industrial conglomerates and banks as well as a Keynesian program of
increased social welfare spending and progressive taxes.  The world's
capitalists did not approve of these policies and began to engineer an
assault on the French currency and massive capital flight.  The
resulting economic crisis, marked by a deterioration in the exchange
value of the French franc (making imports more expensive and French
capital more vulnerable to foreign purchase), generated a political
crisis as well.  Mitterand's response was to quickly abandon his
social democratic program and move steadily to the right.  As Daniel
Singer put it, "Mitterand did exactly the opposite of what he had
promised.  He ‘normalized' France.  He did his best to adapt it to
capitalist competition and consensus politics...."1

The early 1980s were the years of Ronald Reagan and Margaret Thatcher.
The long crisis of capitalism which began in the mid-1970s brought
with it an employer offensive against working people and an
ideological rebirth of neoclassical economics, the political program
of which has been dubbed "neoliberalism."  Reagan spoke of the "magic
of the marketplace," arguing that only competitive and unbridled
capitalism could solve the world's problems.  Thatcher bluntly stated
that the abject failure of the Soviet Union and its satellites to
solve fundamental economic problems and to guarantee basic human
freedoms demonstrated clearly that capitalism was superior both
materially and morally.  Furthermore, she pointedly indicated that the
crisis within capitalism proved the bankruptcy of the Keynesian state
intervention model, what people in the United States would call
"liberalism" and those in the rest of the refer to as "social
democracy."  To Thatcher and Reagan, the only possible and the best
course of action was simply to submit to the dictates of the
marketplace, to Adam Smith's famous "invisible hand."  Attempts to
somehow control the market or to overcome what economists refer to as
its "failures" only made things worse.  Raising the minimum wage, for
example, simply increased unemployment.  Giving people welfare
payments just made them lazy and reduced the society's productiveness.
In Thatcher's famous phrase, "There is not alternative."

The notion that a regulated capitalism was a contradiction in terms
was given strength by the alleged effects of modern technology on
capital mobility and on the power of the state to regulate the
economy.  It is argued that technology, itself the product of
competitive capitalism, is creating a "new economy."  And the "new"
economy is a "global" economy.  Globalization means two things.
First, capital now moves around in search of profits much more rapidly
than ever before.  Both finance capital, which roams the globe at warp
speed, and physical capital, which moves more slowly but still fast
enough, are no longer bound within the confines of any nation.  Modern
technology allows business to move from high-cost to low-cost places
and to integrate production into a worldwide input-output chain.  An
insurance company headquartered in the United States can have its
clerical work done by home workers in Ireland.  Computer programmers
in India can design programs for use anywhere in the world.  Second,
globalization means that the nation state is no longer capable of
regulating capital.  Just as soon as one nation tries to control
capital, capital leaves that nation, forcing it to back down and
eliminate the controls.  Capital, in other words, is steadily
transcending the nation state.  This is the lesson of Mitterand's

An expression such as, "There is no alternative," might seem to have a
pessimistic connotation. However, this is not the case according to
the proponents of neoliberalism.  If we are willing to let the market
have its way, we will all be the long-term beneficiaries of its magic.
There will be short-term losers, but in the end, unregulated
capitalism will give rise to rapidly rising productivity, the
production of an unimagined variety of high-quality goods, higher
wages, and a better life for all people.  It is the duty of the state,
therefore, to do whatever it can to allow the market to work it
miracles.  Governments must first rid their societies of the Keynesian
delusion that it is possible to regulate the market, if for no other
reason that the new global capitalism makes it irrelevant Then, they
must work to create a society in which capital has as free a reign as
possible. Thus we have seen the signing of a variety of "free trade"
agreements such as the North American Free Trade Agreement and the
formation of free trade zones such as the European Union.  The World
Bank and the International Monetary Fund have become more aggressive
in promoting the neoliberal agenda and pressuring the nations which
depend upon their largesse to abandon national models of development
and jump on the neoliberal bandwagon.  The World Trade Organization
now stands as the ultimate promoter and arbiter of free trade,
empowered to rule that any nation's interference with the rights of
capital is illegal and subject to severe sanctions.  The wisest thing
any government can do is to make itself subservient to the WTO, to
insulate itself from any domestic attempts to subvert the benign rule
of the market.

There has been a strong ideological component to the neoliberalist
arguments just described.  Margaret Thatcher, for example, has denied
that there is such a thing as a "society."  There are only
self-centered and self-interested individuals trying to maximize their
satisfaction by choosing that combination of consumer goods which
makes them most happy.  In other words, individualistic consumers face
the inevitable market and make rational choices.  But this is not a
bad thing, because egotism and selfishness are deeply imbedded in
human nature.  Far from competitive capitalism being something alien
to us, it is the economic system most in accord with our human nature.
It is the only system which gives full reign to truly human
activities.  Attempts to control it much less supplant it are,
therefore, fundamentally anti-human.

Labor Unions in the New Global Economy

If nation states cannot effectively intervene in the marketplace, then
what can be said about labor unions?  Unions have historically been
seen as organizations through which working people collectively
struggle to improve their material circumstances.  Neoclassical
economics has little use for unions, seeing them as reducing the
social welfare by distorting the natural workings of the labor market.
However, all but fanatical neoclassical ideologues had to admit that
unions were capable of improving the lives of at least their members,
especially when a government enacted laws giving workers certain
collective rights.  Of course, traditional economists said that unions
did great harm to nonunion members, by restricting their employment
opportunities or lowering their wages, and to society as a whole by
lowering productivity and causing inflation.

Today, the champions of the new world order say that unions as
ordinarily conceived cannot very likely benefit even their own
members.  Historically unions have been instruments of class struggle,
that is, they have formed on the basis of the idea that the interests
of workers and employers are fundamentally opposed.  Because
capitalism renders them impotent, individual workers must join
together in a common mass to confront their employers and secure from
them through struggle improved wages, hours, and terms and conditions
of employment, as well as dignity and respect.  But in the"new global"
economy, all of this is changed.

In the "new" economy, unions are anachronisms.  Today, it is said that
people identify themselves primarily as consumers, ever on the lookout
for new and better products to enhance their lives.  Each person is a
unique individual trying to develop his or her full potential as an
individual human being, mainly through consumption.  Notions such as
solidarity and common rule, the bed rocks of union consciousness, are
alien to the singular consumer.  Unions imply the loss of the
individuality so prized in the "new" economy.  To the extent that
people have any group identity at all, it is as members of generic
interest groups.  People are supportive of a clean environment, in the
sense that they will take it upon themselves as individuals to be less
wasteful, to recycle, to join wilderness clubs, to erect gardens, and
so forth.  Or they are in favor of good schools, mainly so that their
children can grow up to fully participate in the ever-changing "new"
economy.  Or they are physical fitness buffs, eating healthy foods and
exercising so that they can be consumers for a very long time.  Unions
are not necessary for people to do any of these things, and they may
appear detrimental to a clean environment (as when the miners' union
opposes a judge's ruling against the corporate destruction of an
Appalachian mountaintop) or to good schools (as when the teachers'
union opposes the regular testing of public school teachers).

As workers, people will find themselves in one of two circumstances in
the "new" economy.  They may be independent contractors, busy
investing in their "human capital" as they make themselves
consistently employable.  These folks will consider themselves to be
more akin to sole proprietors than to workers.  They may network with
other similarly situated persons, but they will not show solidarity
with them.  To do so would, in fact, be dangerous, as each
mini-entrepreneur is in competition with every other one.  Individual
independent contractors moving from one job and one place to another
and thinking of their pay not as a wage but as a price for their
services will be inhospitable to the very idea of a labor union.

If, on the other hand, people find themselves in an actual workplace,
they will find that in the "new" workplace, employers have structured
things in such a worker-friendly way that most employees will find
unions unnecessary. Firms today have much flatter hierarchies than in
the past, and this means that the distance between employer and
employee is not nearly as great as it used to be.  Employers now see
themselves as providing a workplace in which "associates" can achieve
personal growth both inside and outside the workplace.  As one scholar
put it, the supervisor is no longer a boss but "a meaningful matrix
for interpersonal communication."  Employers encourage associates to
identify with the company by providing them with a panoply of
benefits, such as on-the-job training and pay for online and in-class
education.  They also furnish amenities such as recreational
facilities, social events, and various types of counseling.  Why join
a union and pay dues to obtain what the employer is already providing?
Not long ago, I visited a glass factory in Meadville, Pennsylvania to
help some of the workers form a union.  It was interesting to see that
the youngest workers, those who grew up in the "new" economy, liked
being called "associates" and clearly identified with the company and
not the union.

Even those workers who do not buy into the concept of company loyalty
may still sympathize with the employer.  They may hop from employer to
employer seeking ever-increasing wages and benefits, and in the back
of their minds will be the goal of becoming entrepreneurs themselves
in the near future.  Such workers are not likely to form unions.  They
certainly will not want to be stifled by union seniority and work
rules; they will want to be judged on their own individual merits, and
they will want to be free to try their hand at any job available.

The global nature of the "new" economy is hostile to unionization.
Mobile capital will simply run away from the unions or create
conditions in which unions cannot survive.  Manufacturing plants in
the United States will move to Mexico or some other low-wage haven
whenever their labor costs increase too much.  If computer programmers
here form a union, their work can be contracted out to programmers in
India or China at a fraction of the cost.  As I have already noted,
all sorts of clerical work can be shipped overseas or even to women
working at home here.  And if a government should enact legislation
that protects workers or makes it easier for them to organize, capital
in both its financial and physical forms will leave the country,
compelling the government to either accept a faltering economy,
rescind the legislation, or stop its expansionary economic policies.
International labor organizations might seem to be a solution to these
problems, but the barriers in terms of language, culture, and distance
make this an unlikely prospect.

The notion that unions are unnecessary in the "new" economy does not
sit well with liberals and social democrats.  Among these are not only
politicians but also thousands of scholars in the field of industrial
relations.  While firm believers and proponents of the "new" economy,
social democrats still argue that unions are or could be an important
component of it.  Unions can overcome certain inefficiencies inherent
in the marketplace and actually make the "new" economy grow even
faster, while at the same time helping individual workers to fulfill
their goals more easily and at less personal cost.  However, to do
these things unions will have to be completely transformed.  "New"
unions will be needed in the "new" economy.

Liberals and social democrats argue that unions will have to cooperate
with employers, preferably under the aegis of the state, to create an
economy that can win the competitive struggle for markets.  That is,
unions must help employers to shape a competitive advantage in global
markets.  By doing this, unions can actually enhance the ability of
individual workers to help themselves.  The advantage of having unions
involved in the "new" economy is that they keep employers on their
toes and prevent them from taking the "low road" to profitability:
low- wage workers producing poor or average quality goods (profitable
in the short run perhaps but not over the long haul).

In a recent book, three industrial relations experts from universities
in London summarize this position nicely:

Kochan and Piore [names mentioned in this paragraph are those of
industrial relations scholars] suggest that union leaders will have to
be more active in joint efforts with employers, to bring individual
employees more directly into the process of decision making on
shop-floor issues that affect their jobs, and to adapt current rules
to the demands for more flexible and productive work systems.  In
addition, union leaders will need to continue to press for more access
to, and participation in, high-level management planning and decision
making, before decisions are made.  Stanley Crouch suggests that if
employers seek to construct a new company-level personnel policy, the
challenge for the unions is whether they can make themselves useful to
workers by being involved in the new channels of participation being
constructed.  If the union response is the negative one that such
channels fail to give workers real power, it is quite likely that
workers themselves will find the personal level of involvement useful
and in some respects preferable to the more bureaucratic form of
standard union representation.  Wiser than outright opposition to such
participation would be a union strategy for providing services to
enable workers to make the best use of it.  The extreme case of a more
integrative model of union-employer relations would be a productivity
coalition with the emphasis on union-management cooperation to improve
company performance.

The focus, then for the "new" unions must be on individual workers and
individual company performance.  Specifically, unions can help to
finance and/or negotiate contract provisions that provide skill
training for workers, and unions can begin to provide an array of
personal services to members.  These latter might range from legal,
health, and travel services to personal counseling, credit cards, and
credit unions.  Unions must win a seat at the table of corporate
decision making by gaining membership on corporate boards and other
high-level committees, so that they can play a role in corporate
policy as it is made and not after the fact.

Unions can help employers attain greater flexibility in many
ways. They can agree to eliminate job descriptions and allow employers
to assign given workers to a variety of jobs.  "New" employers have
been promoting multi-skilling for workers, and unions can support
this.  Unions can encourage employers in their efforts to achieve
greater time flexibility through the implementation of longer work
shifts and more elastic shift scheduling, and they can agree to allow
the employer to schedule mandatory overtime, albeit at premium pay.
Unions can accommodate more numerical flexibility by lessening their
opposition to contracting out and employer use of part-time and
temporary workers.  In terms of the explicit productivity agreements
described at the end of the above quotation, United Auto Workers
consultant and scholar, Barry Bluestone, once recommended that the UAW
guarantee contractually a six percent annual increase in labor

If unions do all of these things, they will help their national
capitals compete globally and thereby insure that their members will
not be displaced by international competition.  In addition, if unions
forge a tripartite alliance with national capital and the nation
state, they can promote the establishment of global labor standards,
taking labor out of competition to a certain extent by not allowing
corporations to take the "low road."  For example, a
labor-capital-state alliance in the United States can fight for at
least minimum labor standards in trade agreements (NAFTA, etc.) and in
the operations of international trade organizations such as the IMF,
World Bank, and the WTO.  Where nations form common markets (as in the
European Union), a similar alliance can help to establish labor
standards (a la the Social Charter) across national boundaries.

The Globalization Hypothesis

Globalization has become the "mother of all explanations" of working
class distress.  The decline in working class living standards in the
advanced capitalist countries over the past 25 years has been due,
according to what we might call the "globalization hypothesis," not to
the collapse of the labor movements of these countries, but rather
both have declined under the weight of the hyper-mobility of capital.
Not only has global capital crushed national labor unions, but it has
created a world in which it is no longer possible to reverse these
trends within any one nation.

Spokespersons for capital, including most economists and most
politicians, tell working people that globalization is an inevitable
outcome of irreversible market processes.  Unions and working class
political parties are now, for the most part, obsolete unless they can
get workers to understand that only if they are willing to help their
employers to compete effectively in international markets.  This they
can do by becoming "team players," striving in any way they can to
become more productive.

The dominant view, that globalization has crippled the nation state
and national labor movements, can be called the "technological" view.
Modern electronic technology has so increased the mobility of capital
that we have entered a qualitatively unique phase of capitalism.
Capital can defeat any national forces arrayed against it by simply
threatening to move capital or by actually moving it somewhere else.
Labor unions cannot hope to challenge employers in such a situation.
And the national state, even supposing that it wanted to, cannot use
Keynesian techniques to stimulate the economy, because as soon as it
does, finance capital goes to work to undermine state policies and
force them out of existence.

There are also those on the left who hold this view.  Some have
concluded that capitalism has won such a decisive victory over
socialism that only the narrowest kinds of local interest group
politics are now possible.  We can fight, for example, to expand the
rights of gays and lesbians, or we can perhaps fight to keep a WalMart
out of our town, but we can not hope to fight against global capital
much less renew the socialist project.  Other leftists claim that
globalization, by creating a sort of global government, will
eventually force workers and their allies to confront capital
internationally.  This is seen as a good thing, since it forces
workers in the advanced capitalist countries to give up any pretense
of privilege vis-a-vis workers in the poorer nations.

The French Again

Just when the "There is no alternative" thesis appeared to be forming
the basis of a left-right consensus, the voices of dissent began to
cry out.  The 1994 Zapatista rebellion in Mexico, shrewdly using the
very electronic technology thought to be the prime mover of
globalization, declared war on the North American Free Trade Agreement
and, in effect, on global capitalism itself.  Then, during the winter
of 1995 French workers revolted against attempts by the government to
reduce the pensions of public employees, cut social welfare
expenditures, and move toward the privatization publically-run
entities such as the railroads.  Led by railroad workers, hundreds of
thousands of people marched and demonstrated throughout the nation,
crippling public transportation and bringing much of the economy to a
halt. For the first time in many years, a broad front of workers,
students, immigrants, the dispossessed, and intellectuals came
together to challenge capital and its government accomplices.  Again
to quote Daniel Singer:

After twenty years or so of nearly total ideological domination, the
very refusal, rejection, and resistance were vital.  As long as the
idea that there could be no alternative was accepted, explicitly or
implicitly, the search for one was unthinkable.  This is why the
significance of this French break cannot be overestimated.  It is a
crucial beginning.  But it is only a beginning.  On the basis of this
negative achievement, the genuine search for a radically different
society must begin. . . . The recurring refrain of the French winter
of discontent, we saw, was the proclamation, "If this is the future
offered us and our children, we just do not want it.". . .

What began is southern Mexico and in France has to spread around the
globe.  Workers in the rest of Europe have become restive; in Norway a
general strike occurred in the spring of 2000.  Workers in South Korea
have been militantly organizing and striking against corrupt
governments, anti-labor legislation, and the selling of national
companies to the big global conglomerates.  In the late fall of 1999,
protests shook Seattle and brought the meeting of the World Trade
Organization to a halt.  Since then, there have been mass
demonstrations in Washington, D.C. against the International Monetary
Fund and the World Bank, and these protests were mirrored by others in
numerous parts of the world.  These protests have brought together a
wide array of groups and movements, including unionists,
environmentalists, and radicals of every stripe.  All appear to be
moving toward the idea that global capitalism is the root cause of
most of the world's miseries and that something can and must be done
about it.

Capitalism not Globalization

There is no question that the vast majority of the world's peoples are
suffering increasing economic and social distress.  Consider the
following quotations from a United Nations report: "The richest fifth
of the world's people consumes 86 percent of all goods and services
while the poorest fifth consumes just 1.3 percent.  Indeed, the
richest fifth consumes 45 percent of all meat and fish, 58 percent of
all energy used and 84 percent of all paper, has 74 percent of all
telephone lines and owns 87 percent of all vehicles."  "The average
African household today consumes 20 percent less than it did 25 years
ago." " Of the 4.4 billion people in developing countries, nearly
three-fifths lack access to safe sewers, a third have no access to
clean water, a quarter do not have adequate housing and a fifth have
no access to modern health services of any kind."  While the situation
in the developed capitalist economies is much better, still there is
great suffering there as well, from high unemployment in Europe to
extreme poverty in the United States to rampant stress in Japan.

In contemplating the reasons why so many people demonstrated so
fervently against the WTO in Seattle, Martin Hart-Landsberg says,

. . . a substantial and growing number of working people are angry
that their working and living conditions have shown little if any
improvement during this period of economic expansion.  In addition,
many are coming to understand that this situation is not the result of
a natural, evolutionary process (often called "globalization"), but
rather of conscious choices that reflect political interests defined
primarily in terms of capitalist imperatives.  And, many are also
beginning to realize that working people throughout the world face
similar trends and political processes, and that joint action is not
only possible, but necessary, if positive changes in living and
working conditions are to be achieved.

I believe that Hart-Landsberg is correct.  It is not globalization but
capitalism, freed of any Keynesian or nationalist fetters, which is
the motive economic force in the world today. Globalization is nothing
new.  By some measures, for example the ratio of exports to Gross
Domestic Product, capitalism was as global at the beginning of the
last century as it is now.  From it beginnings in rural England
several hundred years ago, capitalism has always been an expansionary
system geographically.  First, capitalism spread, under the aegis of
the English state, to the rest of Western Europe and from there,
largely by armed state force, to the rest of the world.  This tendency
of capitalism to grow outward was somewhat obscured by the special
period of post-World War Two prosperity, with its partial control over
capital flows and national, Keynesian employment policies.  But this
period was very much an historical exception, the result of two world
wars, a great depression, and national revolutions in the former
colonies of European capital.  The economic crisis of the mid-1970s,
the containment and co-optation of Third World nationalism, and the
collapse of the Soviet Union and its satellites brought this period of
capitalist exception to an end and put capitalism on what might be
called its natural trajectory. Over the past decade, capitalism has
moved well on its way to finally becoming a truly international
system, in the sense that no corner of the earth and no part of our
lives are outside of its dominance.

[ end Part I ]

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