Low wages more production and higher profits: the US economy is doing well

Well the squeezing of more productivity out of existing workers along with the slashing of wages is producing healthy economic results in the US according to the owners of capital. The latest report from the Boston Consulting Group predicts a “renaissance for American industries” over the next 5 years.

I was in Detroit and Kokomo Indiana over the last few years with auto workers who have seen their wages cut in half, lost benefits and Union rights on the job and have seen thousands of jobs eliminated and plants closed due to overcapacity and investment abroad where Labor power is cheaper and workers rights non existent. This is what the bosses' "renaissance" means for us.

So for investors, things are looking up as American workers wages creep ever lower. The US was the world’s biggest manufacturer for 100 years but has slipped in to second place behind China which accounted for 3% of world manufacturing only 20 years ago and now has  19.8% of global manufacturing with the US a close second with 19.4%, ahead of Europe.  How ridiculous is the claim that the US doesn’t “make things” anymore although I guess if weaponry is included in that 19.4% that might skew the data a bit.

Another factor is that the problem with developing a large urban proletarian population as China has done over the last 25 years is that this working class senses its strength and ultimately demands a greater share of the pie and the Chinese workers have done this, under a dictatorship. There have been numerous strikes and disputes in Chinese manufacturing plants and several successful strikes at Honda plants that have raised wages considerably; you can do a search or check out the China Label on the right if you want to read more.

So the combination of a weaker Union presence on the job and lower wages in the US on the one hand and wages creeping up in China on the other is causing the industrial capitalists to look at investing more at home. With Chinese wages on the rise, low waged production can increase here for sale to the Chinese and others as our wages are brought down to par. Chinese wages are still about one tenth of the US on average so we can go down a lot more yet to make the US economy a “successful” one, meaning a place where profits can be made, and isn’t that what it’s all about?

So more bucks in Chinese workers’ hands and, another added extra, a weaker dollar, and the American industrial capitalists can rev up exports. Of course, this could be derailed if the Chinese bosses heed the likes of the AFL-CIO’s Trumka and start calling for them to “Buy Chinese”. Who will buy the goods that our new low waged “competitive” workforce makes if they do that? Productivity is to great for us all to buy these goods plus, we don't have the cash as we produce more value than we are paid for, that's how profit is made.

The modern entrepreneur

My my; there seems to be a bit of a dilemma here for me. The economy is doing well because our wages are lower. Exports will grow especially as traditionally low waged workers, in China in particular get a few more bucks in their pockets. But the Chinese want to expand domestic production and want their workers to buy Chinese products in order to boost sales. But the top Union leader in the US says we should buy American products but won’t the Chinese then say the same thing to their workers and------damn, won’t this cause an awful mess?

It looks to me like the general direction the owners of capital have in store for all workers is to drive us down to the same low level. Chinese wage costs are lower but are going up and ours are going down so it will maybe reach that equilibrium. The lower cost for the owner of capital for the use of a Chinese human being’s labor power is offset by the gap in productivity. According to the Financial Times, the productivity of the average Chinese factory worker has risen ten fold over the last 20 years and is presently about a third of the US counterpart. But with China’s rapid development and huge reserves, this gap will close also.

It seems to me that this is a bad deal for workers all round, for us and for the Chinese. I was a delegate to the California Labor Federation’s Bi-annual Conventions a few times and introduced a few resolutions form my local Union. I always introduced one on the need for an independent mass workers party. At that time I used the term Labor Party, I would not do that now. This forced the executive secretary to say something. In his opening address to the 20th convention in 1994, then Executive Secretary, Jack Henning said:

"The two party system can't give relief because capitalism in large finances both parties. In one way or another. We may say it finances the Republican Party more. But have you ever known Democrats en masse to turn down the enticements of capitalism?
"There should originate, in the leadership of the AFL-CIO, a call to the unions for the only answer that is noble: global unionism is the answer to global capitalism.
"We were never meant to be beggars at the table of wealth. We were never meant to be the apostles of labor cannibalism on the world stage. We were meant for a higher destiny. We were never meant to be the lieutenants of capitalism. We were never meant to be the pall bearers of the workers of the world."

Henning was a powerful and eloquent speaker. He didn’t do anything about it but in his comments here is the answer to the race to the bottom. If we don’t want to all sink to the lowest common denominator our only alternative is global Unionism and global politics. We cannot build global Unionism and solidarity if we are competing with workers outside our borders in order to defend market share and profits for American capitalists; the same for the Chinese. Only together can we rise up, it’s no different than the failed idea of the Team Concept domestically except the obstacle of national unity is used to hinder our progress, where international class solidarity would advance it.

And the idea that the crisis workers face under capitalism, or the crisis of capitalism itself can be solved by retreating behind the walls of the nation state is fundamentally flawed. The existence of a world economy is an objective fact, and cannot be reversed; although a global nuclear war might do the job. The existence of political and geographical entities within this global economy each with their own industries and in competition with each other in a life and death struggle for profits is an obstacle capitalism cannot completely overcome.

I’m no expert, but the only lasting solution to this dilemma that I can see---- and I am open to hearing alternatives----is that through global working class unity on the job and in the political sphere, we can take control of production, of industry and this includes the ownership and allocation of capital, and produce what we need to live a decent and productive life; we can rationally plan our productive activity not leave it to the market and the profit motive. A world federation of democratic socialist states is what can solve this problem