The Capitalist Road: From Chinese Sweatshops to Detroit’s Decay
Dianne Feeley
In the United States, capitalism promotes the myth of the lone individual who rises to the top, overcoming all obstacles through innovation and hard work. The most recent incarnation was Steve Jobs, celebrated as the Thomas Edison of his era, whose technological creativity transformed how we communicate. By his death in 2011, Jobs had amassed a personal fortune estimated at $7 billion.
Jobs was a packaging genius who tightly controlled every aspect of the production and distribution process. His corporate model relied on highly paid managers and designers and, beneath them, a loyal army of low-paid retail employees. It contracted production out to companies in China where workers labored seventy to eighty hours a week in order to meet demand. Sometimes coerced into round-the-clock shifts, these workers had to stand for so long that their legs swelled.
For Apple, this system worked well. In the last quarter of 2011, it made $13.06 billion profit on $46.3 billion sales. Had overseas suppliers been able to produce more, Apple executives noted, it would have had still greater profits.
Since the news surfaced that several factory workers had committed suicide, Apple has been shamed into signing on to a code of conduct for suppliers. But the stressful conditions didn’t occur overnight. While Apple lavished attention on every product detail—with Jobs famously insisting that the iPhone’s front panel be made from glass instead of plastic so it would not get scratched—the fate of its workforce was not a consideration. We now know that in 2009–10, 137 workers were poisoned by breathing in hexane, a component in gasoline that was used to clean the glass on iPhones. It’s much more toxic than alcohol, but it dries faster.
Corporations don’t focus on the well-being of their workforce unless workers collectively make demands or publicity reveals their working conditions. Capitalism, after all, is a social and economic structure where everything is for sale and best obtained at bargain-basement prices. Consequently, it builds an unequal, violent, and increasingly unsustainable society.
The people who organized Occupy Wall Street rejected this hierarchy. In their declaration, they expressed their solidarity in the face of “mass injustice” and aligned with those who are “wronged by the corporate forces of the world.” They saw the problem as a systemic one.
Built Into the System
Although many assume that this economic system and the social relations that flow from it suit people’s competitive nature, capitalism has only been around for a few hundred years. It is a dynamic system centered on market production and continual expansion. Capitalists own the means of producing goods or services (the physical space and appropriate technology) and have access to capital and raw materials. Banks are an essential part of the system because corporations need financial resources. For an enterprise to expand, it needs a flow of capital to buy raw materials, hire more workers, introduce new production methods, purchase more sophisticated machinery, gobble up other companies, or move into other markets.
Credit enables corporations to survive bad times. Capitalists also often use economic crises as an opportunity to drive down wages or purchase at depressed prices companies or resources that might later come in handy. While some capitalists lose out, others are strengthened.
Workers, however, do not possess industrial machinery, raw materials, or capital. We must therefore sell our ability to work: our “labor power.” The majority of us perform production, transportation, or services for the 1 percent who own the means of production and distribution. Under capitalism, labor power is a commodity that, like any other commodity, is exchanged on the market. When that doesn’t happen, one remains unemployed, unable to obtain what is necessary for survival.
What is unique about labor power is that within the unit of measure—calculated in time—the worker can be motivated or coerced to work faster or produce a higher quality commodity. It is human labor that transforms raw materials into commodities to be sold on the market. For this reason, capitalists and their managers zero in on how to streamline, speed up, or reorganize the process so workers will produce more efficiently.
Karl Marx, who spent his life dissecting the dynamics of capitalism, described the workday as divided into two distinct parts. In the first, the worker produces a value equivalent to his or her wage. In the second, production continues, but all value goes to the employer. Marx termed this portion unpaid labor, or the “surplus value” that the employer keeps. Out of this, the capitalist pays for the upkeep of the facility, the materials used, and interest on the money borrowed. What is left over is the profit.
Capitalists and workers need each other, but the power relationship is skewed. They also have different goals. The workers’ goal is to sell labor power in order to have money for commodities we need to live. (Marx summarized this process as “C-M-C”: the worker sells his or her labor power—a special kind of a commodity, but a commodity nonetheless—to earn money. With that money, workers purchase the commodities that enable them to survive.) For the capitalist, the object is to purchase labor power in order to be able to sell a commodity and increase one’s capital. (Marx’s formula for this was “M-C-M”: the capitalist begins with money, invests it to produce a product or service—a commodity—and then sells what is produced for more than their original investment.) Without the capacity to make profit, the capitalist would cease production.
Capitalists, of course, may have a problem realizing their profit, because they usually can’t sell commodities or services until after they’ve been produced. If the product sits on the shelf, its value cannot be realized. It may be useful (and therefore has “use value”), but because it has not been exchanged, it has no “exchange value.” Of course, the capitalist may be able to recoup some value by reducing the price, but this cuts into potential profit.
Capitalism is a dynamic and ruthless system in which the search for new markets, lower costs, and higher quality drives innovation. When I worked at Ford in the 1970s, more than a million autoworkers produced thirteen million vehicles for the US market. Today, while production is approximately the same, two-thirds of those jobs are gone. In the seventies, every worker on the shop floor earned more or less the same hourly wage. In today’s Ford plants, there are long-time workers who still have decent pay and benefits alongside newer workers who earn half their pay with fewer benefits. But there are also temporary workers, who can be dismissed at any time, and contract workers, who may have been working at the plant for years but are not officially Ford employees and therefore don’t acquire seniority. All of them work at a more intense pace than I did in the 1970s.
The method of production has also changed, with more automation and fewer skilled workers who repair machinery or maintain the facility. More parts are produced by outside suppliers. While Ford has had plants all over the world since the 1920s, those plants used to produce for the local market. Today they are part of the global production process.
Once the Big Three—General Motors, Ford, and Chrysler—dominated the US auto market, but their decision to stick to producing mainly large cars even after the gas-price increases of the 1970s and their failure to adopt new production techniques caught up with them. They began losing market share, particularly to smaller, higher-quality Japanese cars. During the recession of the early 1980s, the Big Three and the United Auto Workers complained to Washington about this. The Reagan administration got Japan to limit the number of vehicles it exported annually to the United States. Except for a short period, this did not decrease the competition with US auto companies. Instead, it facilitated the establishment of “transplants”: foreign-owned auto factories in the United States.
Over the past thirty years, these transplants have installed their production and distribution methods; won generous tax credits to build factories, primarily in low-wage Southern states; and staved off unionization by paying wages comparable to unionized facilities—but without the benefits. Their management-by-stress model taught the Big Three that the Ford model of a smoothly running assembly line was overstaffed. “Just in time” delivery was another innovation, reducing the costs of warehousing and, even more important, reducing excessive inventory and the capital tied up in it.
Toyota became the model—so much so that when Washington bailed out General Motors and Chrysler in 2009, the Obama administration stipulated that their labor costs should not be more than the average in the transplants. While Ford and GM represented the model of production during the first three-quarters of the twentieth century, the revolution in communication and transportation systems has established a new global model.
Today, the entire global supply chain, from manufacturer to retailer, uses standardized bar codes, scanning devices, computerized inventory management, and automated distribution centers. Big-box retailers like Walmart, which offer easy one-stop shopping, have detailed knowledge of what they have in stock and which items are selling. Selling products for less than their smaller competitors, they are now in the driver’s seat. The size of their orders lets them dictate every aspect of the product, from its labor cost to its quality and delivery date. Corporations like Walmart, Apple, and Nike are so lean that they do not even own their own factories. This is the face of early twenty-first-century capitalism.
Although popular culture might focus on an individual capitalist as “greedy,” the reality is that if a capitalist enterprise does not increase its profitability, it will be overtaken by other corporations. Walmart has expanded from Southern rural areas to urban centers and into countries as different as Britain, Mexico, and China. Its labor costs are only 15 percent of its total sales, roughly half the usual amount for department stores. And in Walmart’s drive to expand its profits, it also demands that its suppliers reduce the cost per unit or improve product quality each year.
This model of lean production and retailing has been emulated across a range of industries, from transportation and communication to health care and even the US Postal Service. Before World War I, Ford advertised jobs at $5 a day to encourage workers to stay on. Today, companies like Walmart and Amazon depend on part-time and temporary workers. Their annual turnover is about 40 percent. As one Amazon temp remarked, “We are disposable.”
Whatever the form of capitalist production, workers must sell their labor power. Thus we are forced to submit to the owner’s dictates about the work process, hours of employment, job assignment, and company rules. Because we have no control over our work, workers are constantly alienated by our on-the-job experiences. “He does not count the labor itself as a part of his life; it is rather a sacrifice of his life,” Marx wrote in Wage-Labor and Capital. “It is a commodity that he has auctioned off to another.”
Workers confront alienation and exploitation in differing ways. Some wall off their work life from what they see as their “real” life. Others find great satisfaction in “stealing” time or materials from the boss. A few numb themselves with drugs or alcohol. The corporate media teach us to judge other workers as “lazy” and therefore undeserving. Once this mainly applied to looking down on lower-paid workers or the unemployed—particularly when they had darker skin—but today it applies to better-paid workers, who are seen as living off the fat of the land at the expense of the lower-paid worker. These feelings keep us divided and alone in our alienation. But even when we cannot articulate how we feel, workers desire an end to the exploitation and alienation we experience.
US Capitalism’s Evolution
Capitalists need a state that will defend their private property interests, mediate conflict through legislation or repression, levy taxes in order to finance its programs, and negotiate relations with other countries to gain advantages for the enterprises of the home team. But not all capitalists have the same perspective. No single corporation or cartel owns the government outright. Its policies are shaped by competition among different factions of capitalists. They are also shaped by being forced to intervene in conflicts between workers and capitalists.
Governments can ease class conflict by regulating working conditions, by raising the minimum wage, and through policies and programs that transfer money to working, unemployed, and retired people. They can also take sides against workers by reducing benefits such as unemployment compensation, passing laws that inhibit unionization, or failing to raise the minimum wage. Today’s federal minimum, $7.25 an hour, buys much less than the $2.90 minimum did in 1979.
When I was a child in the 1940s and 1950s, more than one-third of US workers belonged to unions. Union organizing and strikes won wages and benefits that got their members a portion of an industry’s productivity gains. However, they failed to overturn the Taft-Hartley Act of 1947, which narrowed union rights and did not successfully campaign to unionize the still segregated South.
Starting in the early 1950s, corporations moved their operations out of the industrialized cities. Instead of union jobs raising the wages, benefits, and working conditions of nonunion workers, the opposite occurred. By 2010, only 6.9 percent of the private-sector workforce was protected by union contracts, compared with 36.2 percent in the public sector. (That is the biggest reason for the vicious attacks on public workers today.)
Since the recession at the end of the 1970s, US capital has been able to change economic and political life to the disadvantage of working people. At first, the unions agreed to concessions under the assumption that they were temporary. But corporations continued to demand more givebacks under the pretext that the battle for market share required them. As early as 1978, UAW President Douglas Fraser labeled this as “a one-sided class war.” Yet more than thirty years later, the union leadership still supports another round of retreats. They say—and many workers agree—“at least we still have jobs.”
In the twenty-first century, capitalism has become increasingly mobile. Instead of making long-term investments in plants and machinery, it overbuilds facilities and then pits one workforce against each other. It can also outsource production to subcontractors to take advantage of lower wages, weaker worker-safety and environmental rules, tax breaks, and more lucrative regional markets or market niches.
But what does it mean for a corporation to close down a facility? It is not just about the loss of jobs for individual workers and their families. It is a loss for the community as well. As a Detroiter, I can testify to what that looks like.
Detroit as a Model
Detroit has been an important national industrial area since the Civil War. Known for its ironwork, it was once the “stove capital of the world.” In the twentieth century, it became the Motor City, the world leader in producing autos and trucks, and the Big Three ranked among the United States’ biggest and most solidly profitable businesses. But beginning in the 1950s, its largest factories began closing down, moving to the suburbs, or leaving the area. Although there are still steel plants, auto-parts suppliers, and assembly plants within the city, their workforce is relatively small. And since these are the better-paid jobs, many of those workers live in nearby suburbs. Deteriorating factories and polluted land dominate the city. The population is disproportionately poor, black, elderly, disabled, and unemployed.
With a declining tax base, the city could not maintain its services. Various mayors responded by dolling up the downtown and letting the neighborhoods fend for themselves. In the last decade alone, a quarter of Detroit’s population left the city. Since 2005, banks have foreclosed on 67,000 properties. In the Motor City, a third of the residents don’t have cars, but the partially privatized bus system is near collapse. In January 2012, a report issued by a coalition of community groups found mold or filth in one-third of the city’s grocery stores; 38 percent sold food past its sell-by date. The worst violators were concentrated in poorer African American neighborhoods with a higher proportion of children. As a consequence, many Detroiters trek to the suburbs to shop.
Despite these serious problems, the city continues to be a vibrant musical and artistic center. We have more than 1,600 community gardens, and fruit and vegetable markets are springing up. Newspapers suggest the unemployment rate is between 30 and 50 percent, so it’s clear that Detroit needs sustainable jobs. Yet there is no plan at the local, state, or national level to turn this situation around. Instead, fueled by the media and politicians, public opinion views Detroit as a black-majority city that needs to learn how to live within its means.
To teach this lesson, the state disenfranchised Detroit by leaning on local elected officials until they agreed to let a financial board oversee the city’s financial downsizing. It dictated the terms under which city employees would work and ordained the selling of city-owned assets as well as combining, shrinking, outsourcing, or privatizing government departments that run public services. Only police and firefighting are deemed core services.
By March 2013 Governor Rick Snyder appointed bankruptcy lawyer Kevyn Orr as the city’s emergency manager. Orr announced that his job was to take the city through an “Olympics of restructuring.” He explained that all the city’s resources could go up for sale in order to cover the city’s $15-18 billion debt—including the animals in the zoo, the artwork at the Detroit Institute of Arts (DIA), Belle Isle and the city-owned but regionally operated Water Department.
In an interview with the Wall Street Journal, Kevyn Orr summarized the history of Detroit’s problems: “Detroit has been the center of more change in the twentieth century than I dare say virtually any other city, but that wealth allowed us to have a covenant [that if] you had an eighth-grade education, you’ll get thirty years of a good job and a pension and great health care, but you don’t have to worry about what’s going to come.”
He was quoted as saying “for a long time the city was dumb, lazy, happy, and rich.” Surprised that people would find these comments offensive, Orr tried to backpedal. But Orr believes what he said—that the working people who came to Detroit to find jobs and a better life were dumb to believe that they had the right to a good job. We were dumb to believe that after we won the battle to turn Detroit from an open-shop city with low wages into a union town, capital would allow that situation to continue. We were dumb to believe capital would remain—don’t we know that capital is always reinventing itself, moving on to new markets, new opportunities?
Much has been written about the possible sale of the DIA’s artwork, but the restructuring plan as it is emerging is focused on attacking the benefits of the city’s 30,000 current and retired workers. More than 8,000 police officers and firefighters draw pensions averaging $30,000 a year (they do not draw Social Security); almost 12,000 city workers receive an average pension of less than $20,000. They also receive city-paid health care, although they now have co-pays and deductibles. Currently there are also 10,000 city employees entitled to benefits. They have already taken a 20 percent pay cut and must pay 30 percent of their health insurance coverage.
Although the Michigan constitution protects pension benefits, Orr, by filing for bankruptcy, plans to treat retirees as “unsecured creditors,” whose pensions might be worth ten cents on the dollar. Retiree health coverage would be cut altogether.
The city’s two separate pension funds oversee $7 billion in investments. If they are found to be less than 80 percent fully funded, Orr can dismiss the pension board and allow the state treasurer to appoint a sole trustee. The actuarial levels are in dispute, with Orr’s consultants claiming they are vastly underfunded. However Detroit’s pension system is in better shape than those of many other cities, and superior to the state system. Clearly having control over these funds opens up investment opportunities for capital.
While Orr stopped paying city contributions to the pension fund, he committed the city to spending a minimum of $22 million to hire restructuring consultants. Between the time Orr was hired and he started working, Jones Day—his former law partners—were awarded a $3.35 million contract to develop a restructuring plan.
What won’t be investigated by the Orr team is the role the banks played in destabilizing the city through manipulating credit ratings, encouraging city officials to borrow at variable rather than fixed rates, and foreclosing on homes, devastating large swaths of the 140-square-mile city.
Many talk of Detroit’s coming gentrification, but that will be limited to the downtown area. Even as Orr sues to take the city into bankruptcy, more than $300 million in state funding will be made available to build a hockey stadium near the baseball and football arenas.
Detroit, however, is a city of neighborhoods. These have been starved of resources, including the shuttering of more than one hundred public schools. Except for a brief period, the Detroit public schools have been taken over by the state, in one form or another, since 1999.
The results include a ballooning school debt, more school closings, more teacher layoffs, increased class sizes, constant turmoil, and the growth of charter schools with nonunion staff. Only about one-third of Detroit’s 150,000 school-age children are still enrolled in the city’s public schools.
The latest innovation will remove fifteen of the “worst-performing schools” and place them under an Education Achievement Authority. When negotiations over the 2012 teachers’ contract deadlocked, the schools’ emergency manager, former GM executive Roy Roberts, simply imposed one. Detroit public schools are now on their third emergency manager. We are now saddled with a huge debt the state has run up. In fact, to start up the EAA, the authority secretly borrowed several million dollars from the Detroit public schools and lied on their application for grants. Had the Detroit school board functioned this way, criminal charges would have been brought against them.
Detroiters believe that the determining factor in the state’s intervention was that it is a majority-black city. The smaller Michigan cities and towns where emergency managers have been imposed—Flint, Pontiac, Benton Harbor, Hamtramck, and Ecorse—have also been deserted by corporations; their remaining residents are also poor or people of color. (Michigan voters repealed the emergency-manager law with a union-backed ballot initiative in November 2012, but the state legislature passed a new one during a lame-duck session in December, and Governor Rick Snyder named a new “emergency financial manager” for Detroit in March 2013.) But while the jobs were disappearing and the need for social services increased, state and federal governments significantly reduced aid to local governments.
Working Hand in Hand
Capitalism works for the 1 percent, but it’s a disaster for the rest of us. We are told there is no money for jobs, wage increases, public services, or social programs, yet there is money for the corporations and the things they see as essential:
• State and federal governments have cut corporate taxes as well as taxes on the 1 percent. According to the Congressional Research Service, the Bush tax cuts of 2001 and 2003 alone cost an estimated $3.5 trillion.
• The wars in Iraq, Afghanistan, and Pakistan have cost between $3.7 and $4.4 trillion. Justified as wars on “terrorism,” they are instead a major investment by US corporate interests in gaining control over areas that produce oil and natural gas.
• Since 9/11, US spending on “homeland security” has more than tripled. According to John Mueller and Mark Stewart’s 2011 book, Terror, Security and Money: Balancing the Risks, Benefits and Costs of Homeland Security, it has consumed $1.1 trillion in direct and indirect costs.
• By 2010, the cost of the bank bailouts had reached $12.8 trillion in loans and guarantees, one Bloomberg News reporter estimated.
These costs surpass the $20 trillion the US government will owe by 2019. Why should we accept this debt as legitimate? Why should this debt put our future in a straitjacket?
Instead, we need to reverse the inequality that hampers our society. We also need work—meaningful work—that benefits our society. It’s clear that these options will not come out of Washington or our state capitals, so we need to take matters into our own hands.
In 2011, Detroit Mayor Dave Bing set up a number of meetings across the city to talk about our city’s future. A few thousand people attended, eager to get involved—only to discover canned presentations with a hidden agenda. People were angry and disgusted.
However, the experience reinforced my view that people want to participate in planning. We don’t need another blue-ribbon panel, but rather a people’s audit. We could organize people’s assemblies to look at our city budgets or investigate the national one, with working committees to research various aspects of the finances, particularly the debt owed to large banks and investors. Did borrowing this money enable the government to expand a needed service, or did it go to waste or corruption? Did bank officials demand to be first in line for repayment? What portion of the debt is the interest on previous debts? Were there extra charges because the city or state’s credit rating was downgraded? And did government officials make deals that caused additional bank charges? In Detroit, the city’s investments in hedging derivatives will end up costing more than a billion dollars.
These committees would also look at the sources of revenue. Detroit’s revenue has been declining for sixty years, yet state politicians pronounce the need for austerity as if the problem was a recent spending spree. In reality, many interrelated factors have caused this problem: corporations abandoning factories, thereby lowering the amount of taxes collected and leaving behind toxic waste dumps; cuts in corporate tax rates; corruption; a high rate of evictions and foreclosures that in turn reduced the amount of personal property taxes collected; less revenue returned by the state; and less federal money allocated to cities and corruption.
Once we in the community empower ourselves through understanding how the system currently works, we will demand change. Some residents would undoubtedly want to meet with officials and present demands to renegotiate various debts. Others will organize and join marches, teach-ins, and occupations at banks and corporations. Getting evictions suspended would be a first step toward restabilizing the community.
Instead of fixating on electing an individual to be their representative, we would come together to deliberate as our own governmental body—because we are the ones who need to be in charge. These local committees and assemblies would organically help develop regional and national networks, meetings, and coordinated actions.
Unlike current government processes, a people’s audit would be transparent. In examining expenses and assets, people will need to evaluate the social obligations we have as a community. For example, if education is a fundamental obligation, how do we create quality schools? In such an open and democratic process, hiring the least expensive and most overworked teachers won’t be the goal. Ridding schools of art, music, learning a variety of skills, or physical education in favor of more testing would be viewed as just plain nuts.
How can we create useful jobs? Does a corporation have the right to shut its doors, lay off the workforce, remove equipment, and flee the community? Some cities have attempted to stop corporate closures by arguing in court that the company received tax breaks but failed to fulfill its promises. These cases have been unsuccessful, so more activist avenues will have to be pursued.
One interesting model to consider is the handful of successful plant occupations that have taken place in Ontario, Canada, over the last few years. While they were limited to securing plant-closing agreements, they asserted that workers have a stake in the facility. But if you consider the stake that the surrounding community has and not just the immediate workforce, giving corporate property rights privileges over the substantial claims of this community makes this a limited victory.
Armed with this concept of plant occupations, workers and the community in cities and towns throughout the Midwest could take over plants slated for closing or even those that had already been shut. In some cases, they might continue production—but it would also be a unique opportunity to manufacture alternative-energy products. The axle factory where I worked until my retirement had almost 2,000 employees. Today it stands empty, one more idle plant in a city of empty plants. Yet an axle plant could be easily retooled to produce wind turbines.
We cannot afford one more plant closing or one more foreclosure. We can no longer afford an economic system that pollutes our land, air, and water; endangers our food supply; and reduces biodiversity. At every turn, this system is at odds with our survival.
The Occupy movement shed light on a new perspective. While the big occupations of 2011 are gone, we have vibrant eviction defense committees in a number of cities. In Detroit, we have held mass vigils to prevent the sheriff from carrying out evictions, while we try to shame and pressure the banks and the Federal National Mortgage Administration (Fannie Mae) into working out mortgage modifications. We have gone door to door in neighborhoods and held open meetings on the front lawns of people threatened with eviction. These direct actions are necessary to force the banks to reconsider their demand to foreclose, to publicize our actions, and to build a compelling alternative.
We have grown up in a capitalist society, so we find it hard to imagine a different reality. The truth is that this one is at a dead end. A people’s audit, beginning at a local level, can start us on the road to considering other possibilities. It isn’t a revolution, but without developing the basic tools to solve problems together, we will remain paralyzed, waiting for someone to come along and save us.
Our organizations and practices must be transparent and democratic: it is only through transparent and democratic practice that we will learn to analyze, innovate, evaluate, and work together. These skills, combined with direct action, will give us the confidence to displace the powerful, profit-driven system that threatens our future.