National Sections of the L5I:

The Crisis in the Global Car Industry

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The world economic crisis has hit the car industry with real intensity over the last months. All the world’s major car companies have announced short time working, redundancies or closures. The largest car company and indeed largest multi-national for much of the twentieth century – General Motors — is in its death agony with increasingly desperate interventions of the US-government to just keep it alive.

In continental Europe and Japan – where the most competitive manufacturers are located - capitalists, governments and leaders of the unions and reformist parties alike blame the world financial crisis and the collapse of US-markets for the tremendous crisis of their industry otherwise supposedly “healthy.” Nevertheless they too need billions of Euros or Yen to bail them out, whilst they sharply denounce the US-government for protectionism and “distorting” the market with its aid.

This is pure hypocrisy. All the large imperialist countries, where the bulk of the world car monopolies are located – the US, Japan, Germany, France -, have rushed to aid their companies. France has handed out a major package for Renault and PSA, Germany has introduced measures to simulate demand by subsidising prices for cars.

This shows that – whatever the rhetoric – all the major imperialist countries are resorting to state intervention and aid in the current period. No wonder that the US does most, since its car industry has already been on the bricks before the slump hit the whole world. Already in 2007 GM had to register a loss of 38 billion dollars, whilst German and Japanese multi-nationals like Volkswagen and Toyota announced massive profit increases and record levels both in output and sales.

However, the crisis of the car industry – indeed a world crisis – comes as no surprise. Whilst the financial crisis in the US and breakdown of the credit chains has triggered its outburst, a massive crisis of over-accumulation of capital lies at the root of the crisis.

Even in the years of the last cyclical expansion, at least one or two million cars “too many” were produced (out of a total production of 55 -60 million cars and about 10 million trucks a year). All major companies had to produce with a level of factory utilisation in order to make a profit at all – this itself expressing the large amount of fixed capital in the industry as compared to labour.

Already in the last decade, the capitalists have responded to this by a relentless drive to increase productivity, cut wages, extend the working week and reduce the workforce. They have done so via outsourcing and, to a certain extent, by relocating larger and larger parts of production itself – trying to retain a larger share of the profits for the monopolies themselves at the expense of squeezing their suppliers, who themselves underwent a process of monopolisation, who in turn squeezed their “sub-suppliers.”

However, the outburst of the increasing overproduction and over-accumulation of capital was temporarily ameliorated by the speculative boom, neo-liberalism and imperialist policies. Firstly, the speculative boom and the expansion of cheap credit for better paid salary earners and middle class consumers ensured a high and increasing demand for cars (including for more upmarket models). This was reinforced by low oil prices. The large companies also received tax and price aid from the state even in this period. However, the ever-increased intensity of competition was manifest not only in the constant attacks on the workforce, but also in ruinous price competition, particularly in the US-market.

Now, these accumulated contradictions have erupted and will erupt even more violently in the coming period. In capitalist terms, the crisis in the car industry –as with the entire industrial crisis, can only be resolved by a massive destruction of excess capital.

But, when we speak of the car industry – of General Motors, Ford, Chrysler, Toyota, Honda, Porsche/Volkswagen, DaimlerBenz, Renault, PSA or Fiat – we are speaking of core sections of capital of the largest and strongest imperialist powers of the world. We speak of capitals which are symbols the entire post Second World War capitalist order, indeed of production systems for a large part of the imperialist epoch itself, - Fordism (mass production and consumption), Toyotism (the Japanese management system) etc.

These are now at stake. They are an expression, that the crisis has actually put in question the further existence of central, established sections of finance capital – i.e. as Lenin correctly put it, of a capital formation, where financial and industrial capital fuse under the dominance of the former.

The car industry is a form of monopoly capital par excellence. A few large companies from four countries (US, Japan, France, Germany) have divided up world production and the world marked amongst themselves. Corporations located in one or the other of these states own all car factories in Latin America, Africa, Eastern Europe and most of the Asian sites. Only in China and Italy independent do producers of any significance remain, but which play, in the case of FIAT at least, a dramatically declining role on the world market.

The companies of these four states have entered a new period of increased competition with one another. As the hegemonic power of the United States as the leading imperialist state is increasingly undermined and ever more costly to maintain, so its leading car companies are facing the real possibly of losing the race for the foreseeable future. This is why the US-government is prepared to hand out hundreds of billions of dollars just to keep GM going. This, on the other hand, this is also the reason why the EU-governments – and in particular the German bourgeoisie – categorically reject any notion of handing out money to GM Europe, which might go to the US and toy with the idea of taking out Opel/Vauxhaul away from GM, turning it in into a “European” - in reality a German - company.

The important point here is not, whether or not this or that plan in “viable” in capitalist terms – the question the trade union bureaucrats, reformist and “caring” nationalist bourgeois politicians are obsessed with. The important point is that the question of “restructuring” and “rescuing” the car industry it intimately tied up to the question which capital from with imperialist state/block will survive, be able to force the other to loose more and more share of the world market. This is why, all the governments are forced to “aid” “their” industry, are de facto resorting to protectionism, whilst still praising the “free market” and verbally denounce the protectionism – of the others.

Of course, these hypocritical phrases are not simply blunt lies, but also reveal a real contradiction imperialist, global capital is facing. The period of globalisation has led them to resort to a much higher degree of internationalisation not only of world finance, but also of production and commodity exchange. So whilst many call for protectionism and some government more or less move towards it, they are also aware that this will lead to a dramatic contraction of the world market and a break up of established forms of internationalisation. But this real contradiction – itself an expression of the limits and fetter the capitalist/imperialist system and the nation state constitute for the development of productive forces face – can only be resolved in violent, eruptive forms under capitalism, will therefore lead to a sharpening of competition and much more instable international system as a whole.

In this situation not only do Obama, Merkel, Sarkozy do all the best to save “their industry”, also the labour bureaucracy joins in. In Germany, the chairman of the Opel works council, Klaus Franz, and IG Metall have themselves put forward as “rescue plan” for a European solution”. The British unions shall lobby Gordon Brown for the Vauxhall component of this.

Instead of mobilising the workers against the attacks of the state and the corporations, against bail outs which have to be paid by the working class as a whole via taxation of cuts in social services in order to pay back increased state deficits and by the workers in the companies via cuts, job losses – the bureaucrats themselves back or even advance such plans.

They do so by appealing to “their” state or, in the case of the EU, block and their bosses in order to work out a plan to “share” the burden of making industry survive and indeed become more competitive against other capitals.

This shameful and reactionary policy means to subordinate the workers to “their” national capital and state. Even if it might mean “less” sacrifice for workers currently employed in the car industry via a “European” or “US”-solution, it will only be a solution at the expense of other workers – from other countries or the mass of the working class at home. It will mean to rescue core sections of finance capital not only at the expense of present society, but also by poisoning working class consciousness, tying the workers to fate of “their” capital.

Revolutionaries and all class-conscious workers must reject that reactionary nationalist road. But we must also understand, not only why the leaders of the unions pursue that path, but also why many workers are, unfortunately open, to such proposals. Obviously, the bureaucrats see this as a means to “rescue” their position as mediators between wage labour and capital, containing the workers anger and hoping at the same time to “rescue” an increasingly narrower section of the labour aristocracy as their social base.

In this situation revolutionaries have to denounce the reformist and trade union leaders, denounce their subordination to the bosses and the state and demand them breaking from this and utilising the workers organisations for a common, internationally co-ordinated struggle. But this will not be sufficient. One also has to denounce and explain why the strategies of reformism and pure trade unionism lead to such reactionary conclusions. Reformism itself is a bourgeois workers politics – which, ultimately accepts the limits of the capitalist state and seeks for a “compromise” with the ruling class. Pure-trade-unionism, even if it may sometimes appear more militant, leaves politics and political solutions to the existing political forces – be they reformist or even open bourgeois ones like the Democratic Party in the US.

Moreover reformism and pure-trade-unionism are ideologies that are completely incapable of combating workers’ reactionary ideas, which are fomented by the ruling class agencies (the media, etc) reactionary forces or even the workers bureaucracy itself (as we have seen in Britain with the anti-foreign worker actions). Indeed, in order to be able to mobilise the working class to defend itself and to put forward an alternative to reformist and nationalist cul-de-sacs, the working class itself needs a political programme, showing how to prevent the ruling class making them pay for the crisis and how to reorganise production and distribution under workers control.

In the current situation revolutionaries have to argue in all the car factories, in the suppliers companies, like in all other industries around the slogan “We will not pay your crisis!” as we can see in the mobilisations on 28. March 2009 in many countries. This means:

- Opposing all closures and redundancies! No job cuts, short time work, no reduction of wages! For reduction of working hours!

- Mass strikes, occupations, political demonstrations, organised by elected strike committees, co-ordinations or councils of action in the work places and communities, linked up on a national and international level. These attacks can only be stopped by class struggle action

- No trust in the “experts” of the car companies themselves, the “scientists” employed the by the companies or the state: Open the books, accounts, business plans, ownership structures etc. to working class inspections by workers in the industry, from the unions and other working class organisations.

- No bailout plans for the car industry and its suppliers! For the nationalisation of the car industry without compensation for the capitalists and large shareholders! No to all plans to make workers “owners” of crisis ridden companies by handing them out share certificates in exchange for cuts. Small, working class shareholders (for example. workers who had to take part of their pay as shares) should be compensated by the state a price set by the workers.

- The nationalisation of the car industries has to be done under working class control! This means that it has to be working class organs who, as a first step, oversee, control and can veto all decisions of management – not a fake “democratic control” by some parliamentary commissions or via an extension or reintroduction of class collaborationist schemes of co-determination (Mitbestimmung) or tripartite (company/government/union) arrangements!

- Auto-workers have not only built millions of vehicles, but also the strongest industrial unions, we call on the UAW, the CAW, IG Metall, FIOM, CGT etc. to organise an international conference of workers in the car industry to develop a plan to fight against the attacks internationally and to impose this plan to reorganise the whole transportation industry under workers control.

- In order to bring this about one must have no illusions into the leaderships of the different unions. They have agreed repeatedly to managements’ demands, sacrificing their members’ jobs wages and pension rights. Therefore we combine this demand with the organising the rank and file of these unions into a movement to enforce this policy and to fight to put their organisations under their control.

The crisis of the car industry, the huge over-production also poses the question, what should be the future of this business. The working class needs an answer to this – otherwise, it will not have a real alternative to the bourgeois programmes for downsizing or “rescuing” the capitalists at the expense of their workers. Their answer is to find them “new markets” – i.e. address the problem of overproduction – by increasing this very same production.

This just demonstrates the ultimate madness of these schemes. They do not solve, but maintain or even increase the roots of the problem in the first place. Even if the bourgeois politicians could find massively increasing new markets – say in some semi-colonies like India – this would go hand in hand not only with a new round of sharpened competition simply piling up a future crisis, and increasing the already critical social and environmental hazards.

The solution to the poverty, run down transport systems, particularly, but not only in the semi-colonial world, cannot be turning larger sector of the middle classes and strata into individual car owners. The crisis of the car industry (and transport and other transport producing industries) actually raises the need for a rational, integrated, environmentally friendly transport system.

The capitalist ownership has become an obvious fetter to even addressing, not to speak of solving this question; it is an absolute fetter on the development of the means of production, of society’s productive forces. Indeed the “capitalist solution” envisages destruction of them – not only the devaluation of capital, but also mass closures and the unemployment of millions, i.e. leaving their creative potential idle, superfluous.

This means that we not only advocate nationalisation, but also advocate an internationalist alternative. This has to be linked to the call for a programme of socially useful public works, under workers control, whose priorities are set by working class organs. It the capitalists (and their governments) who say that there is not enough work to do. This is only half-true: it is true, only if production is geared towards making profits, if the market decides which product is “useful” or not.

But of course, there is a lot of work to do, which is socially needed and which is not and cannot be done under the current, capitalist system. Indeed, millions of car workers can and will be employed in a reorganised industry for improving transport. This might even mean more work and more production in some sectors of automotive industry (for example busses for public transport or building vehicles for use on the railways, etc.).

In short this requires planning, a workers plan to reorganise a whole industry. If the car industry has proved something, than it is that planning on a large scale – i.e. in an international chain of production in companies employing up to half million workers – is possible. The required expertise of such workforces is indeed an enormous asset, whose social potential is completely wasted under capitalism.

Such a workers plan, however, poses one question: who, or rather which class can re-organise society. It is self-evident that no bourgeois government can do this – whether it be it led by an Obama, a Brown, a Merkel, or a Sarkozy. It will do everything possible to rescue capital. Rather than hoping for “better” bourgeois governments, the working class needs to fight for workers governments in all these countries – one based on those organs that come into being in the struggles against the crisis, be it workers councils, self-defence organisations against scabs, the police or fascist gangs.

This must be a government which will expropriate the large banks, insurance associations, financial funds, the stock exchanges (and close them after compensating the small stock holders) and large-scale industries like the car industries. It will do so not only to stop the working class from falling victim to the crisis and make the rich pay. It also has to do so, in order to restructure a crisis ridden economy according to the needs of the people, not profit – i.e. to open the road to working class power, a socialist revolution and planning.

Because there are international chains of ownership and production such a struggle cannot confine itself, even from day one, within national boundaries. We have to organise the fightback at an international level, linking up car workers across Europe, the Americas and Asia. All together we can take on the giant corporations and pose transitional solutions based on workers control, that protect all the jobs, reduce the hours on an international level. For in a socialist world we will need to plan development, for the billions living in want, save our planet from environmental catastrophe, banish war and end racism.