Tag Archives: General Motors

The Marxist Logic of the UAW

This piece at Daily Kos took me back: stock-for-services swaps aren’t just unAmerican, but actually Marxist:

Daily Kos: What the UAW Made
Indeed, it was Reuther’s UAW that established the détente between organized labor and capitalists that engendered — or at least facilitated — the unprecedented post-war gains in both productivity and household income. By settling the 1950 Big Three contract, which became known as the “Treaty of Detroit,” the UAW exacted gains for its members that allowed them to move firmly into a new middle class, with retirement and health security as the cornerstones of the new prosperity. In exchange, big business obtained a sense of relief, as the Treaty of Detroit represented a new, thoroughly American unionist approach to collective bargaining that eschewed the Marxist demand for ownership of the means of production. The right wing extremists who would begin their takeover of the Republican Party twenty years later excoriated the deal as creeping socialism, and Communists pilloried Reuther and the UAW as capitalist lackeys and sellouts. But as the radicals fumed, the nation prospered, and the hardworking men and women of the UAW — and subsequently, the rest of blue-collar America, both union and non-union — reaped the benefits of a mature labor peace that saw workers get their piece of the capitalist pie.

My initial reaction on reading this was to title a post, “UAW: Actually stupid.” By that logic, I thought, much of the venture capital industry is in the hands of rapacious Marxists who provide services in exchange for stock (that is, ownership of the means of production).

Then I realized why the UAW avoided attempting to align the interests of the workers and the company, why the United Auto Workers would avoid compensation schemes that would put an increasing number of shares in workers’ (or even the Union’s) hands:

They were waiting for the Bush bailout.

If the UAW had negotiated contracts in the 1950s, 1960s, and 1970s that had enabled it to slowly take a pivotal capital stake in the company, the UAW would eventually face a point where the interest of workers and shareholders were entangled. This would be great for workers, because from work rules to health care benefits, whether a service was provided to an employee by the United Auto Workers or General Motors would be only an academic distinction.

The problem with this is that as employees would be receiving benefits from the company at both ends (as stockholders and employees), trade-offs would have to be faced. The UAW would be responsible for its own future.

Instead, the UAW decided to take an adversarial view against the Detroit 3. The UAW attempted to bleed the owners of the company dry through crazy contracts and even crazier strikes. Because the UAW did not own GM, it did not have to worry about the pain this caused stockholders. Even better, the UAW assumed that if GM went bankrupt, now investors would be found to wipe out the old ones. In 2008, this new investor was George Bush. In 2009, it may be Barack Obama.

The UAW strategy over the past two or three generations have assumed that if ever things got really bad, the taxpayer would subsidize their contracts. Under George Bush, their assumption has proved right.

Let’s hope that in 2009, Barack Obama proves them wrong.