United Airlines and market socialism

Louis Proyect lnp3 at panix.com
Mon Dec 9 08:32:48 MST 2002

In a paper titled "Worker Ownership on the Mondragon model: Prospects
for Global Workplace Democracy"
(www.workersnet.org/bowman_stone_monograph.htm)that I first heard
defended at the Brecht Forum about 5 years ago, Elizabeth A. Bowman and
  Bob Stone argue that worker ownership under capitalism can eventually
bring about socialism. They say, "Once such a cooperative sector of the
world economy is properly launched, it will tend to displace capitalist
firms, ultimately saturating production with more socialist property
relations and unraveling essentials of capitalism itself."

If anything, the degeneration of Mondragon itself should make us think
twice about this approach. But the bankruptcy of United Airlines, a
worker-owned firm, should even go further and make us question whether
worker ownership buys the working-class anything, even in terms of a
decent life under capitalism.

This is from www.wsws.org, a website that blends useful analyses such as
this with bonkers Healyite ultraleftism:

So-called employee-owned companies are also capitalist enterprises. They
operate to make a profit and are subject to all the laws of the
capitalist market. They must meet competition on the national and global
arena through the capitalist methods of cost-cutting and downsizing.

Even the claim that workers are the genuine owners of United Airlines
and other "employee-owned" companies is false. It is the banks and
financiers who funded the deal who are the real owners.

These "worker buyouts" follow a definite pattern. Generally a company
that is in trouble turns to its unions for concessions in an attempt to
force the burden of the crisis onto the backs of the workers. There are
threats of mass layoffs or closure. Workers are told they have no choice
but to give up huge cuts in pay and accept the destruction of working

They are told they must agree not to strike. In exchange they are given
shares of stock in the company, usually with the stipulation that the
shares cannot be sold for a certain number of years. More often than
not, the shares often turn out to be worthless.

Take the case of McLouth Steel, a "worker-owned" company in Michigan
that went bankrupt and closed in 1996, following a 1988 buyout organized
by the United Steelworkers union. At the end, McLouth workers with the
highest seniority were earning pay barely half that of workers at other
major mills. When the mill finally closed, the supposed worker-owners
were not even given advance notice. Most learned about it through the TV
news and the newspapers.

In the case of United, while the employees have been given a nominally
controlling share of stock, 53 percent, real control of the company
still rests in the hands of the same management team as before. The
beneficiaries have not been the workers, but the union bureaucrats. The
three airline unions each obtained one seat on the company board of

Workers paid for their stock by handing over more than $5 billion in
concessions and agreeing to other cost-cutting measures, such as the
replacement of some unionized jobs with contract employees. The buyout
agreement created a low-cost subsidiary, United Shuttle, where workers
are paid at a rate 30 percent below Southwest Airlines, United's major
short-haul competitor.

In a letter to the United Airlines board of directors filed with the
Security and Exchange Commission, the Air Line Pilots Association and
the International Association of Machinists declared, "We believe that
our plan will catapult the company light-years ahead of its competitors
by enabling it to serve the global community more flexibly and
efficiently than any other major American carrier and to compete head to
head with 'low-cost carriers' in the short-haul marketplace."

full: http://www.wsws.org/correspo/1998/may1998/sj-m5.shtml


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