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GM’s Tragedy: The System Strikes Back

The greatest tragedies among many in the collapse and bankruptcy of General Motors concern what is not happening.  There are those solutions to GM’s problems not being considered by Obama’s administration.  There are the solutions not being demanded by the United Auto Workers Union (UAW).  There are all the solutions not even being discussed by most left commentators on the disaster.  Finally there are crucial aspects of GM’s demise not getting the attention they deserve.

Let’s start with an example of the last.  For 50 years, the world market for automobiles has grown spectacularly.  The company best positioned to have ridden that rising tide to success was GM, the global market leader for most of that time.  Instead, GM failed catastrophically.  Those responsible, who planned, adjusted, and competed poorly, have a name.  They are the corporation’s Board of Directors: the handful of individuals chosen by and responsible to the handful of major GM shareholders.  That Board and those shareholders proved across decades that they lacked the understanding, vision, and flexibility to succeed.  A rising tide is supposed to lift all boats, but GM’s captains managed to sink its boat.

President Obama promises not to interfere in decisions of the next post-bankruptcy GM Board of Directors despite the government being GM’s largest shareholder.  He further promises quickly to sell the government’s shares to “re-privatize” GM (he promises the same for collapsed banks, insurance companies, and other corporations revived by infusions of taxpayer money).  Obama’s plan returns decision-making to the same Boards who just brought us the worst economic crash in 75 years.

GM’s bankruptcy cuts employees and the wages and benefits of remaining workers.  That will further damage already reeling Midwestern states dependent on the auto industry.  Were our culture less subservient to capitalist interests and mentalities, the government would have developed — years ago, but certainly during the last crisis-ridden year — major plans to maintain employment and the regional economy by converting closed auto plants into, for example, production of ecologically sensitive mass transportation systems.  That would be a growth industry as many regions seek to reduce the ecological damage from private automobile-based transportation systems.  Obama supporters talk about such things but his administration does not do them.

Likewise the government might have developed programs to utilize closed plants, warehouses, and showrooms to help laid-off workers organize and operate their own enterprises.  For a tiny fraction of the billions given to banks, the government could finance such workers using their skills, their largely untapped managerial capabilities, and their knowledge of and commitment to local needs.  This, too, is not happening.

The UAW no doubt accepted the horrific terms of Obama’s GM bankruptcy plan because otherwise bankruptcy threatened even worse for workers.  It was “the best deal possible in the circumstances.”  However, those circumstances could have been different if the UAW and its allies had fought for them earlier.  Suppose, for example, that the UAW, other unions, and the political left had fought for and won laws obligating the government to finance massive investments in new enterprises (producing new things and organized in new ways) whenever private capitalists laid off workers in large numbers.  Then the UAW would not have had to accept the sort of horrific deal Obama and GM just pushed on them.  UAW workers would have refused because they would have known the government was obligated to provide them with new jobs, enterprises, and new supports if a bankrupt GM fired them.  The government’s costs of bailing out GM through bankruptcy would have had to include the expenses of providing the new jobs and supports to fired workers.  The government might then have put heavy pressure on GM for a bailout with many fewer lost jobs.  In any case, if such laws had been won, UAW members laid off in a bankruptcy would not face unemployment nor would their communities face the devastation now underway.

The point is that nothing in the Obama-GM tragedy was necessary or unavoidable.  The political struggles not undertaken and the laws not passed created the circumstances that drove UAW capitulation to the Obama bankruptcy as their least awful option.  Knee-jerk apologists for the status quo are wrong to dismiss talk of what might have been.  What might have been — but was not won or even fought for — determines today’s mass sufferings as the GM tragedy unfolds.  Without past labor-left alliances struggling for laws such as the example above describes, the way was cleared for GM and Washington to devise a choice for the UAW that made its members losers either way.

GM played by the capitalist system’s rules.  First, it always aimed to profit by driving its employees as hard as possible and paying them as little as it could.  Second, GM secured the US market for its cars and trucks by blocking the development of high-quality mass transportation here.  Auto workers fought, through the UAW, and eventually won decent wages and benefits that became goals for all other unions and workers for decades.  US citizens’ efforts to get quality mass transportation failed (hence Europe’s far superior mass transport systems).

Under capitalism’s rules, the decent wages and working conditions won by the UAW provoked GM to strike back by moving production where wages and benefits were lower.  Thus GM’s vehicle production inside the US peaked in the late 1970s (over 6 million) and has since fallen steadily (over 2 million in 2008).  GM profited more from the much cheaper labor in China, Brazil, India, and elsewhere.  The big losers have been the hundreds of thousands of laid-off, retired, and the few still employed auto workers, and everyone in Detroit and all the other consequently devastated communities.  This week’s GM bankruptcy creates still more losers to “rebuild GM’s profitability.”

Workers who struggle successfully for decent wages and working conditions always find that the system strikes back.  That’s how capitalism works, how capitalists profit.  Republicans and Democrats alike proudly serve that system.  And the lesson for GM and other workers is. . . . . ?


Richard D. Wolff is a Professor Emeritus at the University of Massachusetts in Amherst and also a Visiting Professor at the Graduate Program in International Affairs of the New School University in New York.   He is the author of New Departures in Marxian Theory (Routledge, 2006) among many other publications.  Be sure to check out Richard D. Wolff’s new documentary film on the current economic crisis, Capitalism Hits the Fan, at www.capitalismhitsthefan.com.


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