by JakeS
Tue Dec 11th, 2007 at 12:07:10 AM EST
- Or "Workers of the World, Unite!, take two"
In a recent diary, NBBooks coined/presented the challenge of 'breaking the power of the Economic Royalists.' I'd like to take him up on that challenge.
From what I gather from reading here and elsewhere, there are three principal prongs to the power of the Economic Royalists:
- The rich, it is argued, cannot be taxed directly, because the rich can move abroad.
- Capital, it is argued, cannot be taxed (and thus the rich cannot be taxed indirectly either), because capital can move abroad with even greater ease than people.
- Wages, we are told, must be kept low, because rising wages make countries less competitive (the underlying assumption being that rising wages translate into rising end cost of the product, rather than to lower profits - because the capital can move to where the profit is highest.
The attempts to reduce these three advantages that the capitalists hold over the proletariat - to use an oldish turn of phrase - have to a great extent focused on reducing the mobility of people, capital and goods, respectively. People being largely immobile (even the rich, making the first of the three neo-lib arguments a little less than convincing), the main progressive focus has been on restricting the global movement of capital - by attempting to put a crimp on scams like transfer pricing, restricting the movement of goods - by attempting boycotts of goods produced under sufficiently horrendous working conditions, or both - by old-fashioned protectionism.
But such efforts have been largely unsuccessful. I think this is due to the fact that the efforts have been aimed at raising artificial legal barriers to an increased flow of goods and capital that is to a large extent the result of technological developments and improvements in the global infrastructure. Below the fold I shall argue that these conditions are, in fact, a more or less overt return to the bad old days of the 19th century. I shall also argue that those who wish to oppose them would be wise to look to the ways in which similar conditions were successfully opposed during that era.
Looking at each of the three points of leverage claimed by modern global capital, we find them reflected in the political and technological developments of the 19th century:
- The rich were largely untaxed. Back in the bad old days, this was because the rich controlled the political process. Which might still apply today, for that matter. There wasn't, if I recall my history classes correctly, any real structural reason why the rich weren't taxed. But a lot of the supply-side BS we hear today was first said during the industrial revolution (and almost word-for-word to boot).
- Capital was largely untaxed, for many of the same reasons that the rich were untaxed. Political reasons, mainly. This is a difference between the industrial revolution and today, as capital can now move with much greater ease, thus evading taxation by fleeing to tax havens. This is a point of difference to be kept in mind during further analysis and hopefully addressed later.
- Wages were kept low by the fact that goods and capital moved with greater ease than workers. If one factory increased wages, it would either have to increase the prices of its end product, thus being squeezed in the competition with other factories due to the easy movement of goods, or accept lower profit margins, thus getting squeezed in the competition for capital with which to expand the operation. Sound familiar?
The first and last of these three issues are very similar if, in the last point, we substitute 'country' for 'factory.' So how were these advantages that capital held over labour dealt with in the 19th century?
In large part by labour organizing. By organizing in labour unions and therefrom-derived political blocs, labour could force political change, either through the democratic process or through force of arms. Even in the most despotic regime imaginable, a majority group of the population has political clout if it is sufficiently organized, sufficiently disciplined and sufficiently pissed off.
- Progressive income tax increased the taxation of the rich. This was and is a purely political decision; all the structural arguments against this move were and are bovine manure.
- Taxation on capital and capital gains was a political decision then. Today this is complicated by the ability of capital to easily cross the borders of legislative jurisdiction.
- Wages could be increased by collective bargaining. The greater mobility of capital relative to labour does not matter one whit if labour is united in its demands.
A historical detour - the nature and power of strikes
Strikes, a potent weapon in the arsenal of organized labour, rest on the ability and willingness of labourers in one sector, company or - in modern times - country to support striking labourers in another sector/company/country. Labourers can rarely stash enough money to comfortably cover their own paychecks for more than a few weeks - a month on the outside. The labour unions of yestercentury realized this, and thus was born the "strike screw:"[1]
The idea is that the labourers of companies A, B, C and D unionize in the same labour union. The employees in company A then go on strike, while the employees in companies B, C and D continue to go to work as normal, but each pay roughly a quarter of their wages to the striking employees of company A (assuming, of course, that all companies have the same number of employees).
If a sufficiently large number of labourers are organizing in this fashion, and spread across a sufficiently large number of companies, this strategy ensures that the strikebound company will endure horrendous losses, while the individual labourer will endure only marginal losses, which can be recouped through higher post-strike wages. Further, since other labourers essentially sponsor the strikers when their pay is cut and/or they are fired as a result of the strike the strike can go on for as long as is required. When company A finally relents, the workers of company B go on strike, and the process is repeated with all applicable companies - that part is called the turning of the screw. [2]
What this strategy essentially does is use the mobility of capital against the capitalists! The advantage of using this approach in the modern context of free-flowing capital should be obvious: It outright negates the principal advantage that capitalists enjoy as a result of the increasing global mobility of capital.
End of historical detour
What I think must happen if we are to avert a painful return to the 19th century way of doing business (or, in the cases of developing countries, shorten the transition from the 19th century way of doing business to the post-19th century way) is to organize labour across national boundaries. We already have multi-national corporations. It's time for multi-national labour unions.
And by multi-national labour unions, I do not think merely of the already-existing umbrella organizations. I think about fully integrated bodies that are capable of carrying out simultaneous strikes against an entire multi-national corporation everywhere on the globe. Or capable of globally blocking production in an entire industry at a time. Or, for that matter, paralyze entire countries for arbitrary lengths of time and in a coordinated fashion.
Truly globally organized labour could thus take care of the third prong of the Economic Royalists' class warfare by presenting a unified front against the common class enemy.
Apart from strikes, the other powerful tool historically available to organized labour was, as mentioned, political organization and solidarity. In a modern context, political solidarity means engineering a trans-national equivalent of political parties, crafted in such a fashion as to prevent short-sighted selling-out of global labour interests in order to gain local advantage.
Such political solidarity should, for instance, result in Irish labour parties fighting tooth and nail against the lowered corporate tax rates that have been used in recent decades to boost the Irish economy, because even though it might benefit Ireland it will surely hurt global labour interests - and in the end, it will hurt local labour interests, because other countries can and will retaliate using precisely the same short-sighted policies.
Further, international political solidarity would work to eliminate the last advantage on the list: The ability of capital to evade taxation by moving to tax havens. A multi-national company can alternately bribe and pressure a small country to provide a flag of convenience for it, by virtue of having a yearly turnover several times the minor country's government budget and being able to do Bad Things to the country, such as aggressively speculating in the local currency, or buying out and liquidating local industry. So far the multinational companies have been the only ones with that ability, but there is no reason that multinational labour unions would not have the same capabilities.
And combined with international political organization international labour could put tremendous pressure on a flag of convenience country to be a bit less convenient. Sovereign governments have a plethora of exceedingly nasty ways to make their displeasure with other sovereign governments known - from denying their citizens visas, through protectionism and diplomatic isolation and all the way to outright embargo. And that's even without touching the more - ah - traditional kinds of gunboat diplomacy.
- Jake
[1] Strejkeskruen in Danish - my dictionary does not list that word, so I had to improvise a translation. An etymological curiosity is that the Danish word for 'blackleg' is 'skruebrækker' - lit. 'one who breaks the screw.'
[2] The employers can, of course, retaliate by organizing themselves and employing collective lockouts, but once they take that step, they have de facto accepted collective bargaining, which is ultimately to the advantage of the employed.
