The Midlands could be plunged into economic depression as a result of the crisis of overproduction in the car industry. Tens of thousands of workers may soon be unable to afford even to ride in buses. Why? Because they have produced too many cars!
When during early February the bourgeois press was reporting the threatened closure of the Longbridge car manufacturing plant, many bourgeois journalists sounded almost as if they had at last realised the truth of Marxism and had taken to producing classic Marxist texts describing the typical effects of the crises of overproduction that beset the capitalist system.
Marxism shows how the capitalist, in order to survive the battle of competition, needs to cut his workforce as well as the wages earned to the minimum, causing impoverishment of the masses of working people, while putting into operation expensive modern technology to replace labour, which is only `economic’ if much larger quantities of the relevant products are made and sold than ever before. This causes big capitalist megaliths to develop, which drive out of the market all smaller operators who cannot afford the new technology. As Marx explains in
“The battle of competition is fought by cheapening of commodities. The cheapness of commodities depends, caeteris paribus [all else being equal],
on the productiveness of labour, and this again on the scale of production. Therefore, the larger capitals beat the smaller. [W]ith the development of the capitalist mode of production there is an increase in the minimum amount of individual capital necessary to carry on a business under its normal conditions. The smaller capitals, therefore, crowd into spheres of production which Modern Industry has only sporadically or incompletely got hold of. Here competition rages in direct proportion to the number, and inverse proportion to the magnitudes, of the antagonistic capitals. It always ends in the ruin of many small capitalists, whose capitals partly pass into the hand of their conquerors, partly vanish”
Sooner or later the megaliths themselves become relative small fry if they do not keep up with the technological advances which facilitate the reduction of workers in proportion to the quantities of goods produced, and the relatively small megaliths find themselves to be uncompetitive and forced to shut up shop because they cannot keep up with the giant megaliths who are cornering the market with their cheaper (and generally superior) products. In the meantime, relative impoverishment of the working-class masses means there are fewer prospective purchasers anyway, so that generally it makes economic `sense’ to close down the technologically backward plants rather than try to update them.
This is how Marx and Engels described this phenomenon in the
written no less than 150 years ago:
“Modern bourgeois society with its relations of production, of exchange and of property, a society that has conjured up such gigantic means of production and exchange, is like the sorcerer who is no longer able to control the powers of the nether world whom he has called up by his spells. For many a decade past the history of industry and commerce is but the history of the revolt of modern productive forces against modern conditions of production, against the property relations that are the conditions for the existence of the bourgeoisie and of its rule. It is enough to mention the commercial crises that by their periodical return put the existence of the entire bourgeois society on its trial, each time more threateningly. In these crises a great part not only of the existing products but also of the previously created productive forces are periodically destroyed. In these crises there breaks out an epidemic that, in all earlier epochs, would have seemed an absurdity – the epidemic of overproduction. Society suddenly finds itself put back into a state of momentary barbarism; it appears as if a famine, a universal war of devastation had cut off the supply of every means of subsistence; industry and commerce seem to be destroyed. And why? Because there is too much civilisation, too much means of subsistence, too much industry, too much commerce. The productive forces at the disposal of society no longer tend to further the development of the conditions of bourgeois property; on the contrary, they have become too powerful for these conditions, by which they are fettered, and so soon as they overcome these fetters, they bring disorder into the whole of bourgeois society, endanger the existence of bourgeois property. The conditions of bourgeois society are too narrow to comprise the wealth crated by them. And how does the bourgeoisie get over these crises? On the one hand, by enforced destruction of a mass of productive forces; on the other, by the conquest of new markets and by the more thorough exploitation of the old ones. That is to say, by paving the way for more extensive and more destructive crises and by diminishing the means whereby crises are prevented.”
What the papers say
Longbridge is very much behind as far as technology is concerned. As
of 13 February 1999 reports:
“Lack of investment has taken its toll of productivity. Longbridge produced only 33 cars per worker in 1997 Nissan in Sunderland built 98, while Honda in Swindon and Ford in Dagenham achieved 62.”
All this made the Rover produced at Longbridge relatively expensive.
“Paul Teuten, an automotive expert with accountants Ernst and Young, said: `This is a nineteenth century factory trying to compete with factories built in the 1980s and 1990s.’ In any event the world is currently capable of producing more than twice the number of cars that people will buy this year. Rover sales dropped from 20,588 in January 1998 to 11,218 this January, far exceeding the industry’s average 22 per cent fall.” (`A 60,000-job time bomb under Blair’s third way’, by Roland Watson, Jon Ashworth and Peter Foster).
And the problem of overproduction is by no means confined to Rover cars, as the
of 10 February points out:
“Worldwide there has long been over capacity. More and more investment in new technology has reduced the workforce and increased productivity. In 1982 with far more workers the British industry produced 877,000 cars. Last year with more robots and computers, fewer workers, but far more plants, production rose to 1,748,305. The industry could have produced 2 million cars but the orders were not there. In the rest of Europe car sales are booming but Ford still had to go on a 4-day week before Christmas. In continental Europe after five years of ever-increasing sales there is still over capacity of 25 per cent.”
The solution to this overproduction suggested by
“What Rover needs is to produce cars in huge volumes, making up for the slim profit margins in the sheer scale of production” (op. cit.)
It seems that the bourgeois press have been just as forcibly impressed with the unavoidable `logic’ of the capitalist system as Marx was, while, however, being quite unable and recognise that these absurdities are why capitalism has had its day and just has to go.
The drastic fall in Rover sales has, naturally, led to huge losses for Longbridge’s owners, the Bayerische Motor Werke (BMW). According to the
of 12 February,
“the British company loses an average of 5,000 deutschmarks
on each car it produces. Some 140,000 Rover cars – one third of its total production – remain unsold and Rover’s share of the British car market has fallen from 12.8 percent in 1994 to 4.6% today.”
Current losses are estimated by
of 8 February at £360 million and, as
“To invest £3 billion in order to create a loss of £360 million is enough to get any chief executive the sack.”
Ructions in the BMW boardroom
It was the `voluntary resignation’ of Chief Executive Bernd Pischetsrieder on 5 February that brought the whole question of Longbridge’s future to media attention. Bernd Pischetsrieder was prepared to throw good money after bad (proposing to invest a further £1.35 billion to bring Rover up to date), so his `resignation’ could not but lead to fears that it was connected to his opposition to any such plans, and could only lead to Longbridge’s closure. In fact this is said to be the probable wish of the Quandt family which owns 56% of BMW and effectively controls it (nobody else has anything like such a big block of shares). The family is said to have wanted the Anglophile Pischetsrieder to be replaced by his deputy Reitzke, a man not only so ruthless that even his friends say his aftershave smells strongly of cordite, but one known to favour closure of Longbridge. In the event, however, it became clear at the 5 February board meeting that the workers’ representatives on the board, who hold 50% of the votes, were unanimously opposed to Longbridge’s closure – an admirable and exemplary act of solidarity on the part of German trade unionists that probably saved Longbridge from immediate closure. The workers’ representatives could have been overruled by use of the Chairman’s casting votes, but the Chairman, Herr Eberhardt von Kuenheim, failed to exercise his right. This failure has led to press speculation that it will not be long before he too finds himself on his bike, but his caution was probably prompted by nervousness at the possibility of the unions causing trouble to the profit-making areas of BMW’s operations in Germany.
When it became clear to Reitzke, who had been favoured to replace Pischetsrieder as Chief Executive, that he would not be able to put into effect his plans for immediate closure of Longbridge, he also resigned in disgust. This probably hot-headed decision led to the appointment of a caretaker Chief Executive in the shape of an engineer called Professor Milberg, who can be expected to do just as he’s told.
Production figures and continuing losses at Longbridge bode ill for the plant’s future, but there is just a chance that the agony can be prolonged. As
of 13 February says: “It is the extent of the catastrophe that may ultimately save Longbridge.” For it explains:
“On the table are 60,000 West Midlands jobs – including the 10,500 at Longbridge itself – along with the health of the British economy, the parliamentary hopes of scores of Labour MPs and Mr Blair’s own chances of returning to Downing Street after the next election.
“Longbridge is fraught politically, with more than a dozen marginal seats within 15 miles
“In the past it would have been easy. A car company the size of Rover would have been nationalised or, at least, the Government would have poured in money.
“But they do things differently now
“Closing Britain’s biggest car factory would trigger a huge fallout. Overnight 20,000 people in Birmingham would lose their jobs, adding £180 million in the first year to the social security bill; 40,000 jobs would go in related industries; regional unemployment would rise by more than 50% and more than £2 billion (about 5% of regional GDP) would be lost to the West Midlands economy “
In these circumstances it is hardly surprising that behind the scenes the government is making efforts to keep Longbridge open. BMW has plans to introduce a new medium-sized car to compete with the Volkswagen Golf but having the advantage of the BMW name, and it is rumoured that the government would be prepared to pay BMW £200 million to make Longbridge the production centre for this new model. To build the new assembly line will cost £700 million. Longbridge is in competition for this work with Hungary, where production would have to start from scratch, but where wages would undoubtedly be lower. The winner of this competition will be announced in all probability some time in March 1999.
If Longbridge loses, the plant will have to close – unless, that is, the working class of this country is able to put up enough of a fight to persuade the government to keep it open. If it “wins”, there will nevertheless be huge job losses, for it is clear that there is no way production at 33 cars per worker per year can be maintained. BMW must be looking to treble that output with its new assembly line. It will presumably not in view of the prevailing conditions of massive overproduction in the car industry want to treble output. It seems likely, therefore, that it will want to `lose’ a good half of its workforce if not more.
Social-democrats who cannot see beyond capitalism, as is the case with the overwhelming majority of union leaders, cannot but bow to the `logic’ of capitalism: take half a loaf – it’s better than no bread, even if you still go hungry. Sooner or later there could be a reversal of fortunes and you may even survive long enough to take advantage of it. The interests of the working class, however, are not served by such `logic’. Working-class logic dictates that in these days of super-productivity it is absurd that masses of working-class people the world over are denied the products they need; that factories close down rather than produce the necessities for those whom capitalism has tossed on the scrap-heap. As Marx points out:
“Along with the constantly diminishing number of the magnates of capital [as smaller megaliths are wiped out by larger ones]
grows the mass of misery, oppression, slavery, degradation, exploitation; but with this too grows the revolt of the working class, a class always increasing in numbers, and disciplined, united, organised by the very mechanism of the process of capitalist production itself. The monopoly of capital becomes a fetter upon the mode of production, which has sprung up and flourished along with, and under it. Centralisation of the means of production and socialisation of labour at last reach a point where they become incompatible with their capitalist integument. This integument is burst asunder. The knell of capitalist private property sounds. The expropriators are expropriated.” (p.763)
Longbridge in the long term
If Longbridge is indeed saved by the new medium-sized BMW, how long will it be before production of that car is hit by swamped markets and the superior productivity of larger companies? BMW is considered to be a likely target of a takeover bid because in the modern world it is considered too small to be viable in the long term. It makes extremely good profits at the moment on the snob value of its top-of-the-range cars, but that premium could be wiped out when the hoi polloi start driving around in their medium-range BMWs, thus dissipating the snob value attached to the name. To survive it is generally considered that BMW needs a financially powerful partner. And who is to say that such a partner would be prepared to keep Longbridge open producing medium-range cars that perhaps compete with its own products?
If the British working class fails to take account of these realities and to act accordingly, the logic of capitalism consigns them to their doom. The
Guardian, op. cit.
in a manner reminiscent of Marie Antoinette suggesting that French masses unable to afford bread should eat cake instead, says `Let them make trains and buses’. The
of 14 February sourly suggests that Longbridge could become a theme park where the public could be allowed to help assemble cars (which would afterwards be disassembled) and Japanese tourists could play at going on strike. If the working class does not take the bull by the horns and rid itself of the capitalist system, there is no end to the indignities that await it – a process encapsulated in the film
The Full Monty.
This is why every single redundancy must be resisted, and the entire working class should fight with all means at their disposal to keep Longbridge open, forcing the government if necessary to nationalise it and maintain production there. In the course of their struggle the working class cannot but discover who are their friends in their struggle for survival and who are friends only of the capitalist system and of the right of the super-rich to exploit and become even richer at the cost of the increasing misery of the masses. For the working class the mottoes must be: Down with capitalism! and It is better to die on one’s feet than live on one’s knees! There is a hard struggle ahead.