Citizen Action Monitor

Crisis in American democracy: Part 6 – Labor’s struggles to build power in an “Investors’ Democracy”

No 338 Posted by fw, November 14, 2011

“On the one side you get that social democratic outcome. On the other side, look again and you can see plenty of business guys backing The New Deal. Moreover, when you look closely it’s not socialism. Nobody is trying to take over American industry. In fact, they’re sort of spending tons of money trying to resuscitate the banking system and the reconstruction  finance corporation and give it back to private bankers. Labor got a lot stronger in The New Deal but it was still relatively weak by world standards of advanced industrial countries.”  —Tom Ferguson

Part 5 of this 11-part series examined historical evidence to show that America has, from its beginning, been an “Investors’ Democracy”. In this post, Part 6, Ferguson looks at labor’s struggle to build power and political influence, during the 20th century, in an “Investors’ Democracy”.

Continuing with the format for this series, a complete 77-minute video of Shockley’s documentary film is embedded below followed by my time-indexed transcript comprising Part 4, including subheadings, and any external links and text highlighting. The time indexing facilitates switching from the text to its related place in the video. Of course, readers have the option of watching the complete 77-minute video at one sitting.

Golden Rule: The Investment Theory of Politics a documentary film by Jonathan Shockley

TRANSCRIPT

25:08 — <Text on screen> — Back to Fundamentals: How do parties form?

Tom Ferguson – [Note to reader – Ferguson’s “little excursion” drifts off topic here before he catches himself and gets back on track]. A little quick excursion though some polysci literature. There is a point at which property imbalances become overwhelming and they drown out everything else. And so tensions in upper income groups absolutely play a basic role in allowing anybody else to get a say – sometimes. I often tell my students the French Revolution started effectively over the repudiation of the debt by the regime, which is true. I mean there were a lot of other things going on — a bread riot plus a default by the state.

Generally speaking, political parties form around different business blocks

In a multiparty system, where the rules – if you have a big farmer’s block, that’ll typically organize its own party. Then the business guys may in fact split. There may be one party’s closer to finance, say, than to the rest of industry. Often you get a free trade party and a protectionist party. Those are both industrial parties sometimes, with the banks typically in with the free traders, though not always. And if you’ve got free traders versus protectionists then they’re very likely to be two different parties. You can have conflict going on inside one party but, boy, is that often historically very difficult to manage.

26:31 <On screen text> Businesses with fewer workers: New 20th Century Political Force

Tom Ferguson – The 19th century economy – just about across the board – almost everything is hugely labor-intensive.

26:45 Margaret Thatcher – A great technological revolution. We can and are producing a lot more with fewer people employed in certain manufacturing industries.

26:52 <On screen: clip from Charlie Chaplin’s hilarious silent-movie classic, Modern Times, with Charlie tightening bolts on a rapidly moving assembly line. On-screen text: “Hurry up or I’ll replace you with a machine!”

27:21 Tom Ferguson – You know this is a 20th century development. It’s the science-based industries, especially when you go from coal to oil. And oil refining, chemicals, the electric-industry develops

27:37 <On-screen film clip> Narrator – We know, too, that oil is power for our factories. The machine age, which has given us a matchless standard of living, would never have been possible without oil. Practically every metallic machine in the world would grind to a stop if it were not for petroleum lubricants. Yes, these are the more generally known miracles from oil. But let’s look at some less familiar changes oil has brought in your daily life.

Owners of labor-intensive industries hate unions because they drive up costs

28:04 Tom Ferguson – The heart of the capital-intensive story basically boils to this – Imagine that you have all these businesses sitting in one group and labor starts to organize. Now whose costs rise sharply, fast? And the answer is it’s the labor-intensive guys. If your wage bill is a big chunk of your value added, and they start to unionize, you probably flip out. And so what that says is – in practical terms for usually older American industries – steel, textiles, eventually the auto industry – these all use enormous masses of labor. They don’t want to be unionized. This is not simply a question of we don’t like unions. This is going to cost us like immediately. It also shows in their stock prices. That was a very late realization for me and lots of other people.

28:57 Greg Shatwell, Retired Auto Worker & UAW Member — The health care for retirees is dependent on General Motors’ stock. This means that the interest, my interest in health care is in conflict with the interest of an active worker. It may be in my best interest to close plants in the US, to cut wages in the US, so that I can get my health care. Damn it, I don’t want it that way. I do not want it that way.

29:30 <On screen text> Capital intensive business: Fewer workers, Fewer problems

Tom Ferguson – The real issue here boils down to – Have you any possibility of making accommodation in sort of electoral terms between business blocks and parts of the workforce?

29:48 <Video clip of a film, including (subtitled) dialog among the characters> —

  • Worker leaning on car door talking to driver – “Too bad. The men have always wanted to take a look at the president. He should come out here to settle the strike.”
  • Driver – “Well, if that’s possible . . .”
  • Worker – “It’s possible: Just negotiate.”
The stronger labor became the less likely they were able to find common ground with Democrats

29:58 Tom Ferguson – As long as labor’s power’s relatively weak, it’s quite possible that the more capital intensive businesses will sit in the same [political] party with them. Labor can get strong enough to drive them all out of the party. That actually happens. Much of European political history is exactly in that space. That just gives you a very simple line of thought here where you just – [on-screen graph supplements TF’s explanation as follows] you can run on one axis the rising power of labor and that just sets – then you just put the industry on the left axis going up. Effectively, what you’re actually sort of showing — there is the point at which it becomes impossible for an industry to support any democrats.

30:39 <On screen text> — The New Deal

Although labor got stronger under The New Deal it remained relatively weak by world standards

Tom FergusonLet’s just mark down on a chart who’s mostly for Roosevelt. It’s mostly capital-intensive industries. Above all, it was the oil industry. In 1936 that’s where a great amount of Roosevelt money came from. On the one hand, The New Deal’s the one case in American life where you get something like a European style social democratic outcome. You actually get social security, unemployment compensation, the Wagner Act that sets up the National Labor Relations bargaining framework, a minimum wage – [laughs] when did that stop happening in the U.S.? I mean, all the things that they spent 50 years eroding, that was, you know, pretty much a few years all at once.

31:23 Tom Ferguson – On the one side you get that social democratic outcome. On the other side, look again and you can see plenty of business guys backing The New Deal. Moreover, when you look closely it’s not socialism. Nobody is trying to take over American industry. In fact, they’re sort of spending tons of money trying to resuscitate the banking system and the reconstruction  finance corporation and give it back to private bankers. Labor got a lot stronger in The New Deal but it was still relatively weak by world standards of advanced industrial countries.

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This entry was posted on November 14, 2011 by in creative protest, evidence based counterpower, political action and tagged , , , .
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