Expansion Returns
A new upward trend in both profit rates and growth began in 1982. McNally argues that this was the result, among other things, of a generalized attack on organized workers that produced wage compression and a rising rate of exploitation, along with a restructuring of capital worldwide and imbalances in the global economy. In addition, there was significant destruction of capital in Europe and North America with the loss of millions of manufacturing jobs.4 In the United States alone, some six billion dollars of real private manufacturing assets were destroyed between 1980 and 1983, while business failures soared from 7,600 in 1979 to 31,300 in 1983. Between 1979 and 1983, some two and a half million manufacturing production jobs were lost.5 In this same period the rate of surplus value jumped by over 9 percent.6 It was this substantial devalorization, and along with it a sharp rise in the rate of surplus value, that produced a renewed period of capitalist expansion in the 1980s.7
This period of expansion and accumulation, however, was very different from that of the postwar years. There was, as Shaikh shows, a continuing rise in productivity following 1982, but this time real wages lagged far behind allowing for a rapid rise in the rate of exploitation.8 Far from rising as a proportion of US GDP, labor income, broadly defined, fell from 73.9 percent in 1979 to 70.4 percent in 2006.9 Whereas profit rates had fallen during the postwar boom, from 1982 until about 1997, by most measures they rose.10 While there were a number of factors that explain this return to growth, it seems clear that it was in large part due to capital’s ability to accelerate the rate of exploitation quickly and continuously, as productivity outstripped wages. Shaikh and Tonak show that the rate of surplus rose by 20 percent from 1979 through 1989. Whereas the average annual rate of surplus value had increased by a modest 0.6 percent from 1948 to 1980, from 1980 to 1989 it increased by 1.8 percent a year. Mohun calculated that this ratio increased by 40 percent from 1979 through 2000 as the value of labor power in the United States plunged.11 Far from providing “the conditions . . . most favorable to workers,” the expansion that began in 1982 was built on the relative and, in the case of the United States, the absolute decline of working-class living and working standards. Capital’s expansion was now predicated more than ever on the decline of labor’s fortunes.
The Collapse of Union Resistance in the United States
From the mid-1960s through the 1970s, much of the industrial world experienced a major labor upheaval. America witnessed its largest labor upsurge since the 1930s, mainly in response to capital’s attack on organized labor, which began in the late 1950s with what Mike Davis calls “the management offensive of 1958–63.” Spurred by falling profit rates, this was specifically an attack on work standards and shop-floor organization in the major, highly unionized industries, notably automobiles, steel, and electrical goods.12 By the mid-1960s, rank-and-file resistance to this management offensive surfaced with a wave of wildcat strikes. Strike levels often surpassed those of the huge 1945–46 strike wave, peaking at just over six thousand strikes in 1974.13 It was an era of worker self-activity in which unofficial strikes, contract rejections, and rank-and-file rebellions within major unions all challenged both the routine of American business unionism and the bureaucratic rule that supported it. Alongside the social movements of the era, and often inspired by and overlapping them, this worker upsurge thwarted the efforts of capital to recoup its falling profits rates for several years. The labor upsurge would continue for a decade and a half.14
The movement’s momentum, however, was broken first of all by two recessions, 1973–75 and 1980–82, in which the eight largest US unions, major sites of the rebellion, lost 2.2 million members.15 Also key to the loss of momentum was the dialectic of constant struggle between rank-and-file activists and leaders in most of these major unions, who, in business-union fashion, resisted the assault from the ranks on bureaucratic rule and increasingly sided with management in the restoration of workplace authority and company competitive priorities. It was a conflict that eventually exhausted both sides and left the leadership unable to mobilize the ranks to resist the employers’ offensive their unions now faced.16 As the momentum of the upsurge wore down, capital moved in with what one union leader called, with unintended irony, “one-sided class war.” And all too one-sided it was, for beginning in 1979, much of the US union leadership, with a sometimes resistant membership following, began a rapid retreat as it simply surrendered in the face of employer attacks, recession, and restructuring.
It was the United Auto Workers (UAW), long considered one of the country’s most effective unions, that led the retreat in November 1979 when its leader, Doug Fraser, of “one-sided class war” fame, agreed to major concessions at the Chrysler Corporation, even before the US Congress passed a Chrysler “bailout” that required concessions from the unions. From that time on, one union after another agreed to wage cuts and freezes as well as changes in working conditions, almost always without a fight. This essentially political choice would lay the basis for further retreat.17
The surrender of 1979 led to a dramatic collapse in almost every major form of trade union activity across the US economy. This collapse began even before the 1980–82 recession took hold, and well before Ronald Reagan fired fifteen thousand air-traffic controllers when their union, PATCO, struck in August 1981. Between 1979 and 1983, union membership in the private sector fell by 26 percent. Although largely due to the recession, this loss revealed that concessions alone could not stop employment reductions.18 New organizing, which might have helped stem the continued loss of members, declined by more than half as organizing efforts were abandoned. From 1979 to 1981, the total number of strikes dropped by almost half, while the number of strikes involving more than a thousand workers had fallen by two-thirds by 1984. Negotiated annual wage increases in major collective bargaining agreements in manufacturing dropped from 6.1 percent in 1981 to 1.5 percent in 1984, falling far behind inflation even as the annual rate of increase in the Consumer Price Index fell by more than half.19 Concessions, however, were not only about wages. A third of all concessionary agreements reached in 1982 involved changes in work rules designed to increase productivity. By 1983 changes in work organization had been conceded in auto, steel, meatpacking, tires, petroleum refining, and air and rail transport.20
The virtual collapse of union activity and resistance was at least one reason the rate of surplus value rose by over 9 percent between 1979 and 1983 alone, by far the biggest increase for any five-year period in the entire postwar era. This represented a real increase in the mass of surplus value of $520 billion over a brief period. The growth in the rate and mass of surplus value would continue throughout the 1980s, bringing an increase in real surplus value of $1.2 trillion from 1982 through 1989, a 70 percent increase. Meanwhile, fixed capital assets grew by a more modest 48 percent, allowing an increased rate of profit.21 Concessions on wages and benefits could explain some of such a significant shift in income, but major changes in both the structure of industry and the organization of work were also required to sustain the period of growth initiated in 1982.
Industry Restructures
The failure to unionize the US South after World War II opened the door to the creation of a competitive, low-wage region for American industry. Basic industry in the United States began its journey away from the highly unionized Northeast and Midwest into the largely rural South at the close of the war. Between 1947 and 1972, value added in manufacturing grew by nearly four times in the South compared to just under twice in the country as a whole. Between 1972 and 1989 this Southern growth rate slowed to 60 percent, but nevertheless remained over twice that for the nation as a whole.22 The shift to the low-wage, nonunion South played a significant role in depressing the value of labor power in the 1980s and beyond.