Posted to lowwagecapitalism.com on August 25, 2019.

By Fred Goldstein

All signs are that an economic downturn is coming. While the capitalists are the first to moan and groan about the declines in the stock market and bond market, an economic downturn is a crisis for the working class. It means layoffs, short shifts, reduced hours, general instability and suffering for the workers and oppressed.

What is needed in the coming period is for the working class, the unions, the unorganized in various organizations and communities to overcome disunity and passivity in time to fight back and push the crisis onto the backs of the bosses. 

There is endless speculation now about whether or not Trump’s policies, particularly the trade war with China, are causing or accelerating the downturn. But to be clear, should there be a downturn, capitalist overproduction would be its cause.

Behind Trump’s trade war

What is driving the trade war and the tariffs, which are really a tax on the working class, in the U.S. as well as in China? Trump is desperate to create the jobs he promised in his election bid in 2016. He thinks his reelection depends on it. He thinks that a tariff war will force U.S. corporations back to the U.S., where they will offer new jobs. This is Trump’s fantasy. It is utterly false and based upon total ignorance.

U.S. corporations have rushed to position themselves in China over the years because China’s workers had relatively low wages, there was a vast population of peasants streaming into the cities, along with a growing educated population, and a strong  infrastructure built by the socialist government. China provided both a vast internal market and a platform for exporting commodities to third countries, including the U.S.

In short, being in China was profitable and it still is. The corporate bosses will refuse to  give up their profits just because Trump tells them to. Of course, many of them wish that they could get out of China for other reasons: Wages are rising, there is communist influence on the workers, the bosses fear of the strength of the Chinese Communist Party (CCP), and they hate to conform to rules and regulations laid down by the CCP and the Chinese government. 

Some bosses are trying to find low-wage alternatives in Vietnam, Bangladesh, Indonesia, Singapore, and other places. But shifting supply chains, finding infrastructure and breaking up production patterns is not as easy as Trump makes it sound. 

Giant corporations like Boeing, Caterpillar, Apple, GM, GE, among others, have large capital investments in China. Many of them were counting on a full-scale capitalist takeover, which would have allowed them to dominate China. But it is clear that such an overturn is not happening.

Trump’s tactics in the trade war with China also reflects the deep and growing hostility of the U.S. ruling class toward China, especially its socialist structure and its increasing political, economic and military influence in Asia and the world.

Capitalist overproduction is the problem

In their attempt to shore up the U.S. economy Trump and the ruling class are really up against capitalism itself. The capitalist economy operates according to it own laws. 

Marxism shows that consumption and production are indissolubly linked. It also shows that every downturn begins, not with a decline in consumption, but with a decline in production. Where production declines, profits decline, and capitalists rush to protect their profits by hitting  the workers with layoffs, wage cuts, cuts in hours, elimination of benefits, whatever it takes to keep profit margins from falling or to slow the fall.

Why are the imperialist countries — Germany, Britain, France, Italy, Japan, among others — either in a manufacturing decline or headed toward one? There is only one reason. There is a decline in markets for manufactured commodities. 

China, a socialist country, is not in a depression, but the rate of growth in the economy has declined from 5.7% in December 2018 to 5.5% in February 2019. But this is still a higher growth rate than anywhere in the world capitalist economies (Reuters. Business News, March 13, 2019). 

It is a law of capitalism that production expands at a rapid pace while consumption expands, if at all, at a snail’s pace. That is because the masses of workers get paid very little while profits boom.  Profits and production outstrip consumption; that is an iron law of capitalism. That is what leads to capitalist overproduction.

The enormous productivity of labor makes it such that the mass of the working class cannot buy back all that they produce. High technology in production has aggravated this situation and has made the crisis of overproduction worse. With automation, fewer workers produce more commodities and services in a shorter time. This is what accounts for the vast number of workers who are excluded from  the unemployment statistics — those who have dropped out of the official workforce altogether, who cobble together part-time jobs off the books to live and use other means to survive. 

Any talk of downturn, recession, depression, etc., should set off alarm bells among the more advanced workers. It should be a clarion call to workers’ leaders wherever they are to start organizing a fight back. 

Workers must demand to keep their income flowing by whatever means available, whether payments by the capitalists out of their profits and savings, or by the government directly, through jobs programs. An economic downturn is an emergency for workers. It should be treated as such. 

Trump is desperate to increase the number of manufacturing jobs in the U.S. to try to shore up his electoral base. But the manufacturing index has shown contraction in the U.S. for the first time since 2009. This decline in manufacturing is certain to be followed by a decline in consumption. 

The University of Michigan Consumer Confidence report, which is the capitalist’s gold standard, has shown a drop in popular economic confidence in the future. That indicates a further threat to consumption. 

Amazon and other online retailers have driven out brick-and-mortar stores and closed down malls. These devastating events, driven by high tech, may pump up the bottom line at Amazon but at the same time they spread unemployment and poverty across the country. 

The number of workers in stores and malls who are laid off far exceeds the number of workers put to work at Amazon fulfillment centers or Fedex or UPS. When a store or a mall closes, retail workers lose their jobs and so do maintenance workers, window and floor designers, fast food workers who served the customers in the malls, etc. No matter how you slice it, workers take it on the chin when online retailers drive stores and malls out of business. 

The contradictions of capitalist exploitation have raised a dire threat to the working class and the capitalist economy. Trump should be ousted because of his unspeakable racism, misogyny and bigotry, as well as his vicious anti-immigrant policies. But the real problem is capitalism itself.

Published on lowwagecapitalism.com website, July 7, 2019.

By Fred Goldstein

The Trump administration is caught between its “America First” super-imperialist, great power chauvinist politics on the one hand, and the capitalist world division of labor on the other hand. 

At every turn the contradiction between capitalist private property and world-wide socialized production becomes an obstacle to capitalism itself. In particular, the global interests of U.S. imperialism and the global economic structure of world capitalism today sharply contradict the Trump administration’s political goals.

Trump and his minions want to overturn the political and economic structure built up by the U.S. capitalist class in the past century. They want to realign the relationship of forces in a way that further subordinates the imperialist rivals and economic satellites of Washington and Wall Street. 

Trump has taken aim at Germany, France, Britain, and the entire European Union, Japan and China, as well as Canada (a minor imperialist country), Mexico, India, Turkey, Indonesia, and Thailand, among others. China is a special case which will have to be dealt with in a separate article.

Globalization and the socialization of production

The term “globalization” is a useful geographical designation of how workers produce goods and services, that is, commodities, today. It is highly descriptive since production of a single commodity takes place in sequence in different parts of the globe. However, from a Marxist point of view, the more scientific economic designation is the socialization of the productive forces on a global basis.

The capitalist class has forced the world working class into a vast, involuntary division of labor in which workers must cooperate, on pain of losing their means of survival, to produce the world’s commodities. But the economic surplus, the surplus value that arises from these global production chains of exploitation is reaped by the bosses. Even the workers who have jobs are left with barely enough to live on. 

Global chains of exploitation are a modern form of the socialization of production carried on within the framework of private property!

Thus, as Trump proceeds with his economic wrecking ball, he is up against the fundamental contradiction of capitalism — the contradiction between socialized production and private property. Friedrich Engels, a co-founder of Marxism, along with Karl Marx, explained this at the dawn of modern capitalism in his classical work “Socialism: Utopian and Scientific” (published in 1880, excerpted from his more extensive book, Anti-Duhring, published in 1878):

“This contradiction, which gives to the new mode of production its capitalistic character, contains the germ of the whole of the social antagonisms of today. The greater the mastery obtained by the new mode of production over all important fields of production and in all manufacturing countries, the more it reduced individual production to an insignificant residuum, the more clearly was brought out the incompatibility of socialized production with capitalistic appropriation.”

Tariffs: Trump’s blunt instrument

Today Trump is using tariffs as a blunt instrument to bully countries around the world to hand over their profits to U.S. capitalism. 

What are tariffs? In the imperialist era they are a tax levied on imports by a capitalist class in one country in the struggle against its rivals. The country upon which the taxes are levied suffers a decline in exports and the government of the country levying the tariffs collects the tariffs/taxes in its treasury. 

From a working class point of view, tariffs must be seen in the same light as automation. Like automation, tariffs are part of the world competition between capitalists. Tariffs, like automation, is a tool by which the capitalists fight each other in the world market. 

But this fight is carried on at the expense not just of capitalist rivals, but also at the expense of the working class. Workers in the country that has tariffs levied on it loses jobs because this country’s exports decline. Workers in the country that levies tariffs pay higher prices because the importing capitalists pass on their extra costs to the workers. 

Usually tariffs are met by counter-tariffs. So in a tariff war between the bosses, as in any war, the workers are the real casualties. 

‘Globalization’ and the complexity of socialized production

In his tariff campaign Trump is running afoul of imperialist globalization at every turn; his actions have provoked retaliation from capitalists.The threat, later withdrawn, to levy tariffs on Mexico to get political leverage in his racist struggle against immigrants is a case in point. 

Trump threatened to put a 5 percent tariff on Mexican goods and to raise the tariff another 5 percent every month up to 25 percent if the Mexican government failed to prevent immigrants from crossing the border into the United States.

According to Burgess Everett and James Arkin of Politico, at a closed-door lunch with Senate Republicans earlier this week, “White House deputy counsel Pat Philbin and Assistant Attorney General Steve Engel faced brutal push-back from the GOP, according to multiple senators, with some threatening that Trump could actually face a veto-proof majority to overturn the tariffs.” (Politico June 5, 2019)

If the Republican Trump loyalists in the Senate rebelled against their leader, it’s because the capitalist donors dug in against this. Mexico exports $345 billion to the U.S., much of it automobiles, automobile parts, agricultural products, clothing, etc. 

Other examples of the intricate and interwoven nature of global supply chains apply to Japan and Canada as well.

The Japan Automobile Manufacturers Association (JAMA) says about 8 percent of its members’ total annual sales are built in and imported from Mexico by way of U.S. railways, making them susceptible to the tariffs. JAMA represents Japanese exporters, manufacturers and importers in Canada. It represents Toyota, Honda, Nissan, Mazda, Mitsubishi and Subaru. 

Canada’s largest auto supplier, Magna International, has 32 manufacturing and assembly plants in Mexico, where it employs 29,175 people — more than in either Canada or the United States. (Automotive News, Canada, June 5, 2019)

A number of Japanese firms have their production bases in Mexico. Honda Motor Co., for instance, exported around 120,000 vehicles made in Mexico to the United States in 2018, accounting for around 80 percent of the cars it produces in Mexico, which is also home to large assembly plants owned by Toyota Motor Corp., Nissan Motor Co. and Mazda Motor Corp. (Japan Times, May 31, 2019) 

There are over 700 Japanese companies employing thousands of workers in Mexico. So Trump could also trigger a trade war with Japan because of his threatened Mexican tariffs.

The bosses experienced Trump’s threat against Mexico a threat against them. The Chamber of Commerce threatened the administration with a lawsuit. And the monopoly donors to the Republican Party told the U.S. Senate that they did not want a tariff war with Mexico and Canada.

The tariffs campaign was part of Trump’s reelection bid. Trump is desperate to get reelected and avoid prosecution by the various court jurisdictions that may bring charges against him. In his desperation, Trump ignored the complexity of the U.S. ruling class’s broader economic problem. 

Trade fight with EU and Asia

The United States is also intensifying its trade fight with the European Union over aircraft subsidies. Washington has proposed additional tariffs on EU goods worth $4 billion along with another $21 billion in tariffs it is demanding for European Airbus planes.

The tariffs, announced on July 1 by the United States Trade Representative, cover 89 products including meat, cheese, pasta, fruits, coffee and whiskey. They could be added to a list of EU Airbus exports that the U.S. Trade Representative (USTR) said in April would be subject to tariffs.

General System of Preferences (GPS) status exempts 3,500 items from U.S. tariffs. GPS status is meant for formerly oppressed and colonial countries, designated as “underdeveloped.”

In its struggle against Asia, the Trump administration has threatened to remove the (GPS) status from India, Thailand and Indonesia. Turkey has already lost its GPS status. 

U.S. dairy producers took aim at India and Indonesia, while pork producers targeted Thailand. Medical device manufacturers also filed a petition to exclude India from receiving preferential treatment from the U.S. 

All elements of the U.S. ruling class know that they have a compliant friend in the White House who will do their bidding for the most part, even if at times they have to buck him in the Senate or in the courts. They have reaped the benefits of his corporate tax cuts, deregulation campaign, and land giveaway policies for the energy, mining and timber industries.

With the trade war, the Trump administration is striking out in all directions to put economic pressure on the entire capitalist class world-wide. Its goal is to increase the domination of the U.S. imperialist monopolies.

The contradiction of socialized production vs. private appropriation

The contradiction between the socialized character of production and the private appropriation of the products of labor was emphasized by Vladimir Lenin in State and Revolution, which was written in preparation for the Russian Revolution of 1917. 

Lenin explained that imperialism was the stage of capitalism that would lead to socialism. Bourgeois economists at the time were evading the nature of imperialism by reducing it to the “interlocking” of corporations. Lenin answered:

“Skilled labor is monopolised, the best engineers are engaged; the means of transport are captured—railways in America, shipping companies in Europe and America. Capitalism in its imperialist stage leads directly to the most comprehensive socialisation of production; it, so to speak, drags the capitalists, against their will and consciousness, into some sort of a new social order, a transitional one from complete free competition to complete socialisation.

“Production becomes social, but appropriation remains private. The social means of production remain the private property of a few. The general framework of formally recognised free competition remains, and the yoke of a few monopolists on the rest of the population becomes a hundred times heavier, more burdensome and intolerable.” 

Fast forward to the 21st century. In 2005 New York Times columnist Thomas Friedman wrote about how his Dell computer was made, describing in great detail how workers spread across numerous countries in Asia contributed to its production. He summed up his findings:

“‘The total ‘supply chain’ for this computer, including suppliers of suppliers, came to about 400 companies in North America, Europe, and Asia, mostly the latter, with about thirty prime suppliers.” (The World Is Flat, Freidman, 2005, cited in Low-Wage Capitalism, Goldstein, 2008)

This author described these supply chains in Marxist terms in Low-Wage Capitalism (2008) as follows: “These so-called supply chains, which are really chains of exploitation spread throughout the globe by the giant monopolies, in partnership with finance capital are the business model for all the global capitalists. And the lesser capitalists fit themselves into this framework.” 

Capitalism is becoming an obstacle to the survival of the masses

The increasing inequality of wealth in the U.S. is something that the capitalists and financiers are deliriously happy about. That is why Donald Trump and the Republican National Committee raised  $105 million in the last quarter for his reelection bid.

That is why the capitalist media gave Trump a billion dollars worth of free media publicity in 2016 and why they continue to give the widest possible coverage to his every tweet. They care nothing about Trump’s cruelty to immigrants and their children;  his enabling and accelerating environmental and planetary destruction; his work, every day in every way, to transform the political structure of capitalism in a right-wing, authoritarian direction.   

The U.S. working class is an integral part of the world-wide socialized labor force. Through its hands pass much of the world’s wealth. However, almost none of that wealth stays in the hands of the working class; the lion’s share goes to the exploiting class. 

Sooner or later this fact is going to reach the consciousness of the masses. Sooner or later they will not be able to go on in the old way, suffering the deceptions of the bosses, their politicians in both parties, and the capitalist media. Capitalism is becoming an obstacle to the survival of the workers and oppressed. That obstacle must be removed.

In the long run, no trade war or imposition of tariffs can change the fundamental contradictions of capitalism or stave off its inevitable collapse.

Trump is opening a full-scale assault against the workers and oppressed. The anti-Russia campaign is the last thing the movement should be pursuing in its struggle against him.

By Fred Goldstein posted on May 31, 2017

Donald Trump came back from his overseas trip to Saudi Arabia, Israel and Europe resuming his plans to launch full-scale attacks on the workers and the oppressed through his budget, his health care bill and tax cuts for the rich.

That being said, he has also managed to make two major foreign policy moves that push U.S. imperialist policy further to the right.

In Saudi Arabia, he formalized and weaponized an anti-Iranian alliance with the House of Saud and the royal oil puppets in the Gulf States. The U.S. has had an alliance with the Saudis for 70 years. The reactionary monarchy has been a pillar of U.S. imperialism, the Pentagon and Big Oil, with four huge U.S. military bases in the country. This new outsourcing to the Saudis of U.S. military intervention is a further turn toward U.S. proxy war and aggression in the region.

In addition, Trump managed to do severe damage to the Washington-Berlin­-Paris alliance as expressed in NATO. He went to Brussels and chewed out the European imperialist rivals for being deadbeats — i.e., not paying their NATO bills. This is great-power chauvinism run wild.

The U.S. ruling class and the Pentagon will have to ponder this. Angela Merkel, chancellor of Germany, made a speech after Trump’s trip saying that Europe would have to rely on itself.

U.S. imperialism has relied on NATO for decades. NATO has troops in Afghanistan. It was key to the destruction of Yugoslavia. NATO was used to stop the Portuguese revolution in 1974 and the French workers’ uprising in 1968. French and British imperialism hold down the struggle in Africa using NATO.

The Pentagon needs NATO and they know it. Secretary of Defense Gen. James Mattis and Secretary of State Rex Tillerson have both pledged loyalty to the alliance.

From the point of view of the workers and the oppressed, anything that weakens imperialism is a positive development. We should not moan over Trump’s boorishness and undiplomatic insensitivity. That is a problem for the ruling class.

A further problem for big sections of the corporate ruling class is Trump’s refusal to say that he will stay with the Paris climate accords. Many of the Fortune 500 corporations, such as GM, Microsoft, DuPont, Amazon, etc., are moving toward low carbon and renewable energy as a matter of policy. Almost half of the Fortune 500 companies have adopted at least one climate or clean-energy goal, with 23 of them pledging eventually to run their businesses on 100 percent renewable energy, including Walmart, Bank of America and Google.

Whether or not these pledges are fulfilled, it represents a recognition by the bosses that climate change is a real threat to them and their profits. Even companies in Appalachian coal country are not using coal any more. (New York Times, May 26) Key sections of the ruling class are finally taking seriously the climate danger, just when Trump wants to wreck any progress in environmental protection.

These developments may intensify the contradictions in the ruling class here and feed ruling class opposition to Trump. They fear that getting rid of him could create further instability in the political system. Again, that is their problem. The job of the workers and oppressed is to take advantage of the situation and expose the capitalist system for what it is.

Fronting for military-industrial complex and big business

Back from his overseas trip, Trump faced the relentless anti-Russia campaign that anti-Trump forces in the ruling class are using to push him back or bring him down.

This is a deepening of the great “Russia” diversion in the struggle against Trump. At a time when Trump is opening a full-scale assault against the workers and oppressed, the anti-Russia campaign is the last thing that the movement should be pursuing in their struggle against Trump. The Democratic Party leadership is in the vanguard of this diversionary anti-Russia campaign.

He is planning to cut $800 million from Medicaid, which would destroy rural hospitals and nursing homes. He wants to cut back drug clinics, cancer research, environmental protection, job safety and student loan forgiveness, among many other things. His budget would wipe out Meals on Wheels, cut SNAP (food stamps) by billions of dollars and attack women’s health care around the world. And this after returning from a foreign trip where he served as a front man for big business and the Pentagon war makers.

At the very moment that his administration was planning massive tax cuts for the rich and major cutbacks for the poor, Trump was in Saudi Arabia heaping praise upon one of the most reactionary monarchies in the world. He was wined and dined and stroked by the royal princes of the feudal-capitalist patriarchal Saudi clan.

Women are the virtual property of men in Saudi Arabia. Trump made not even a mention of the status of Saudi women.

The princes rolled out the red carpet, gave him a sword to dance with, projected a 175-foot picture of him on the side of a building, drank toasts to him and had photo ops of him sitting surrounded by royalty and luxury in the palace in Riyadh.

Pentagon $110 billion sale

In return, the monarchy got $110 billion worth of weapons to wage a war of aggression against the people of Yemen and raise the military threat to Iran.

The military-industrial complex, the Pentagon death machine, was able to sell Abrams tanks, combat ships, missile defense systems, radar, and communications and cyber security technology, among other things. The Saudis are also getting a billion-dollar THAAD (Terminal High Altitude Area Defense) system like the one the Pentagon just rushed into south Korea, as well as $500 million worth of precision-guided bombs.

Much of this military package was already approved by the Obama administration last fall. Obama offered the Saudis $115 billion in military aid (Reuters, Sept. 16, 2016), but held up on sending precision-guided bombs and other weapons. Trump just went to Saudi Arabia to bask in the deal. Trump’s Pentagon-guided White House and cabinet, with three ranking generals, included the precision bombs even as the Saudis are escalating the massive killing of civilians in Yemen. The generals also added in the THAAD system.

Big business and banking alongside Trump

In addition to the military contracts, the Saudi sovereign wealth fund also signed contracts with U.S. corporations worth hundreds of millions of dollars.

Dozens of the biggest names in U.S. business went in Trump’s entourage. Jamie Dimon of JPMorgan Chase, Michael Corbat of Citigroup, James Gorman of Morgan Stanley, Andrew Liveris of Dow Chemical and Stephen Schwarzman of Blackstone were among the U.S. chief executives attending a business forum, along with General Electric vice chair John Rice. The heads of military contractors Lockheed, Boeing and Raytheon also went along.

The deals included agreements between Saudi Aramco, the state energy giant, and U.S. companies. They involve oil services groups Schlumberger, Halliburton and Weatherford International, drilling contractors Nabors Industries and Rowan Companies, and engineering and construction companies KBR, Jacobs Engineering Group and McDermott International. (New York Times, May 17)

The Saudi-U.S. CEO Forum was held on the same day that Trump met King Salman of Saudi Arabia. The Saudi chief executives attending included Amin Nasser of Saudi Aramco and Yousef Al-Benyan of Sabic, a chemicals, plastics and fertilizer group that plans to build the world’s largest ethylene plant in Texas, jointly with Secretary of State Tillerson’s former firm, ExxonMobil.

Trump cutbacks destroy jobs

Trump and Tillerson tried to justify these deals as creating jobs. Trump made a grinning triumphant remark about his deals creating “jobs, jobs, jobs.” Actually, the Trump health care plan and his budget are job destroyers. Cutbacks in Federal employment endanger tens of thousands of government workers, from the Environmental Protection Agency and National Institutes of Health to Forest Protection Service, the Labor Department, the National Endowment for the Arts and other targeted government departments. Trump wants to cut $54 billion in federal spending in order to make up for the increase of $54 billion to the Pentagon.

His health care cutbacks will not only throw 23 million people off the health care rolls but will also throw millions out of work. Health care created more jobs than any other sector in 2016, helping to drive total annual job growth to 2.2 million, according to data from the Bureau of Labor Statistics.

A report released by the Commonwealth Fund and the Milken Institute School of Public Health at George Washington University found that repealing key provisions of the Affordable Care Act, including the insurance premium tax credits and Medicaid expansion, could lead to 2.6 million people losing their jobs by 2019. By 2021, nearly 3 million jobs in health care and other sectors could be lost. (Modernhealthcare, Jan. 6)

Trump rages against China and Mexico for destroying jobs at home. He is scapegoating these countries in order to whip up workers and pander to his racist base. Trump says protectionism is the answer. Actually, the real job destroyer is technology. Far more jobs have been destroyed by automation than by offshoring. One authoritative study says that 13 percent of job losses in the U.S. come from trade while 87 percent have been lost to automation. (New York Times, Dec. 21, 2016)

Furthermore, capitalist overproduction is destroying jobs at this very moment. The auto industry has recently peaked and production is beginning to contract. Overproduction of malls and retail stores, together with online buying, have led to tens of thousands of layoffs and tens of thousands more to come.

Trump has no answer to other bubbling crises. For example, student loans have reached $1.3 trillion. In the first quarter of 2017, consumer debt rose to $12.73 trillion, exceeding its peak in the third quarter of 2008. (New York Times, May 17)

Booming auto sales have more to do with low rates and easy financing than they do with the urge to buy a new vehicle. In the last few years, car buyers have borrowed nearly $1 trillion to finance new and used autos. Much of that money was lent to borrowers who have bad credit ratings and might not be able to repay the debt. There has been a recent surge in delinquencies among subprime borrowers whose loans were packaged into bonds and sold to investors. ­(Counterpunch, March 18)

Expanding the debt of the masses is how capitalism is staying afloat. The expansion of debt is calculated to compensate for overproduction in the economy. It helps keep people buying things and thus keeps the circulation of capital going. It keeps profits rolling in, but sooner or later these various debt bubbles will burst.

How can students who have tens of thousands of dollars in debt buy much, let alone start a household? How can workers who owe the auto loan sharks money buy enough to create jobs for other workers? How can people who are up to their eyeballs in credit card debt keep the system afloat by further purchasing? There is no public tally for debt due to health care costs, but a leading cause of household debt is often the astronomical cost of medical care.

Trump has no answer for all this. It is doubtful he is even aware of it, let alone trying to deal with it. His preoccupation is with making money now and getting re-elected in 2020.

The restructuring in retail is different in form from manufacturing but the same in essence, as far as the working class is concerned.

By Fred Goldstein. Posted April 25, 2017.  

As International Workers’ Day — May Day — approaches, a major crisis is underway for retail workers in the U.S. A process of profound restructuring of the retail industry is unfolding. Driven by internet technology and its utilization by Amazon, among others, it has been made possible by the capitalist scientific-technological revolution.

In manufacturing, the struggle by big industry to increase profits drove automation and offshoring. In the retail industry, the giant monopoly Amazon has developed online shopping, which has already wiped out tens of thousands of retail jobs and is threatening hundreds of thousands more.

Online shopping has brought about a transformation in the so-called brick-and-mortar retail industry.

“This transformation is hollowing out suburban shopping malls, bankrupting long-time brands and leading to staggering job losses,” wrote the New York Times on April 15.

“More workers in general merchandise stores have been laid off since October, about 89,000 Americans. That is more than all of the people employed in the United States coal industry, which President Trump championed during the campaign as a prime example of the workers who have been left behind in the economic recovery.

“The job losses in retail could have unexpected social and political consequences, as huge numbers of low-wage retail employees become economically unhinged, just as manufacturing workers did in recent decades. About one out of every 10 Americans works in retail.” That’s around 15 million workers.

Thousands of mall-based stores are shutting down in what’s fast becoming one of the biggest waves of retail closures in decades.

More than 3,500 stores are expected to close in the next couple of months.

Department stores like JCPenney, Macy’s, Sears and Kmart are among the companies shutting down stores, along with middle-of-the-mall chains like Crocs, BCBG, Abercrombie & Fitch and Guess.

As big retailers shut down in malls, there is collateral damage among the workers in small retail stores and fast food places that draw walk-by customers who shop in the big stores. Furthermore, window designers, lighting and maintenance workers, security guards, sanitation workers and many other mall workers are or will be thrown onto the unemployment lines.

From housing bubble to retail bubble

Online shopping is not the only thing responsible for the present crisis. Marxism teaches that in all industries, capitalist competition and the thirst for profit drive the retail and real estate bosses who rent to them to destroy their rivals by capturing market share. The result is capitalist overproduction. (Overproduction does not mean that capitalists produce more than people need, only more than the stores can sell at a profit.)

“The number of malls in the U.S. grew more than twice as fast as the population between 1970 and 2015, according to Cowen Research. By one measure of consumerist plentitude [capitalist overproduction, F.G.] — shopping center “gross leasable area,” the U.S. has 40 percent more shopping space per capita than Canada, five times more than the U.K., and 10 times more than Germany.” (theatlantic.com, April 10)

“The seeds of the industry’s current turmoil date back nearly three decades, when retailers … flush with easy money, rushed to open new stores. The land grab wasn’t unlike the housing boom that was also under way at that time.

“Thousands of new doors opened and rents soared,” Richard Hayne, chief executive of Urban Outfitters Inc., told analysts last month. “This created a bubble, and like housing, that bubble has now burst.” (wsj.com, April 21)

Amazon won’t make up for jobs lost

The standard line of the apologists for capitalist restructuring is that technological advancement creates new and better-paying jobs that will make up for the job losses. This is complete hogwash.

First of all, the workers who lose their jobs are out of a job NOW. They have the skills and training for retail. The capitalist class and the capitalist government do not swoop in to the rescue and give them jobs and training in new occupations they would feel suited for.

But second of all, assuming that the laid-off workers in the thousands could apply for jobs at Amazon or other online retailers, they would be confronted by the highly automated Amazon warehouse system. This system has far fewer jobs to offer than the 90,000 who have already been laid off since last October and the many thousands more who are in danger of losing their jobs.

Amazon’s automation is infamous among the workers as a speed-up device and a job-killer.

“In 2012, Amazon bought the robotics company Kiva Systems for $775 million — and made it so Kiva’s technology could be used only in Amazon warehouses. These Kiva robots autonomously zoom around the warehouse using a series of barcodes on the floor to guide them, picking items and bringing them back to warehouse workers. These robots save these workers from the immense physical toll of walking as many as 20 miles per shift, sometimes in unbearable heat; but this also means that fewer human workers are needed. The jobs that remain will be less labor intensive, and more like those of a robot supervisor. Since Amazon bought Kiva, a host of other companies are trying to develop even more advanced warehouse robots and sell them to Amazon’s competitors.” (prospect.org, Sept. 27, 2016)

It’s not likely that 90,000 robot supervisors will be needed at Amazon!

Capitalist restructuring in another form

Retail workers have already undergone the pressure of the scientific-technological revolution and the intensified exploitation that it brings. Retail salespeople and cashiers have been subjected to time studies and forced to adhere to a time standard for making sales. Cashiers have to ring up customers in a designated time tracked by the electronic cash register. And they have been subjected to many other profit-squeezing methods.

Now thousands of them are being eliminated altogether by internet technology and online sales.

This is comparable to when auto workers’ jobs were destroyed by robotization or steel workers’ jobs were destroyed by mini-mills and electronic mills. And coal miners’ jobs were destroyed by giant mining machines.

The difference is that this automation is being instituted by an external employer, Amazon. The restructuring in retail is different in form from manufacturing but the same in essence, as far as the working class is concerned. Amazon has reduced the necessary labor time involved in the process of commercial retail sales. As such, it can sell at lower prices and increase convenience for the shopper.

While automation reduces the walking time for workers in the warehouse and the burden of shopping for the consumer, the workers who are no longer needed by capital under the profit system suffer. Instead of the internet and robots being used to ease life for the working class, they are only making things more difficult and insecure.

The masses of workers who lose their jobs will not be able to afford buying anything, either online or in a store. For the working class, the whole capitalist system is a trap the workers must break out of.

Goldstein is the author of Low-Wage Capitalism and Capitalism at a Dead End, which can be obtained from online book sellers.