The Great U-Turn: Corporate Restructuring and the Polarizing of America. - book reviews

Michael Dawson is a graduate student arid teaching assistant in the Sociology Department of the University of Oregon where he is a union activist.

The Great U-Turn: Corporate Restructuing and the Polarizing of America, by Bennet Harrison and Barry Bluestone. New York: Basic Books, 1988. 242 pp. $19.95.

This book tells the tale of U.S. capitalism's "Great U-Turn." The story begins In the enchanted realm of the Golden Age (from the Employment Act of 1946 to the late 1960s), which Harrison and Bluestone describe rather glowingly:

With the government more or less committted to a fiscal and monetary policy aimed at balancing employment and inflation, business was . . . prepared to negotiate a new social contract with labor. The major goals were to forestall the risk of chronic overproduction and to maintain wartime rates of profit. The key ingredient in the system-at least for the most profitable of the manufacturing industries-was . . . tile tying of wage increases to advances in productivity so that profits would be guaranteed and yet workers would have sufficient purchasing power to keep the economy on an even keel. Relations between capital and labor became increasingly bureaucratized and "orderly". . . . [T]he "fordist" system of econimic regulation . . . [was]now institutionalized as a substitute for more direct forms of planning. (pp. 84-85). In this area, according to the authors, capitalism's inherent tendency was toward the fulfillment of "the nation's long-standing commitment to a rising and more equally shared standard of living" (p. 25). Apparently, workers could expect that if they participated as good and patient economic citizens, the system's rising tide would lift all boats.

However, in the late 1960s, so the story goes, a lethal combination of forces intruded upon the Golden Age, leading to a "U-turn" in the trajectory of capitalism in the United States. These forces included "the sudden emergence of hightened international economic competition--a competition to which U.S. business leaders were initially blind" (p.8). Adding to the problem was a working class with increasingly affluent aspirations:

Larger tax contributions from business and expanded wage-and-benefit packages for hitherto excluded groups added to the cost of doing business and reduced short-term progits....[T]hese demands reached a crescendo during the late 1960s....With the supply of labor....tight, wages had to be bid up, and the bargaining power of labor as a whole improved. Broader unemployment insurance, as well as larger payments, alos appreciably reduced...."the cost of job loss," further contributing to the willingness of workers to stand up to their bosses. (pp. 10-11)

In short, a combination of pesky foreign competitors, blind managers, and bullheaded workers together delivered the blow that knocked the system off its rails: They combined to squeeze profits, which Harrison and Bluestone treat as the mainspring of all employment and social progress.

This unfortunate squeese on profits, Harrison and Bluestone make believe, placed capitalists and theair minion in an unfamiliar and uncomfortable position: "Corporate managers were forced to don their combat garb and develop new economic weaponry" (p.22). Put on the defensive in this way, capital soon switched to the offensive. Cost cutting, and especially cutting the cost of labor, became the new order of the day. lDirect assaults on wages and benefits, "corporate restructuring," and government hostility to working people replaced equality, order, and benevolent state managemaent as the central tendencies of U.S. capitalism. A "Great U-Turn:" occurreed as capitalists failed out of "the social contract that labor, management, and government had slowly but surely constructed in the course of nearly fifty years of union strugglc, collective bargaining, and government regulation" (p. 51). The moral of the story is that we are now living without a social contract, as we continue to travel away from the rational arrangemeants of the Golden Age into the nightmare land of laissez-faire capitalism.

Putting aside the obvious shortcomings of this dramatic portrayal for later treatment, it is important to recognize that this book is as strong in empirical detail as it is weak in theory and historical perspective. Indeed, Harrison and Bluestone's genuine commitment to the welfare of workers leads them to develop all insightful exposi

tion of the fate of the U.S. working class under real-life U.S. monopoly capitalism.

For instance, their description of the wave of capital's supplyside assaults on the working class is based on a examination of yearround full-time workers (YRFT, about 60 percent of the labor force), thus providing us with a clear assessment of what is happening to that portion of the working class that remains fully integrated within the system. lAfter falling or remaining steady from the early 1960s through the mid-1970s, the proportion of all YRFT workers employed in lowwages jobs (under $11,103 in 1986 dollars) has sharply escalated to 17.2 percent. lAs a result, U.S. households with incomes between $20,000 and $50,000, which in 1973 included 53 percent of the population, by 1984 accounted for only 47.9 percent, with well over 80 percent of the decline being explained by those who fell below the $20,000 level (p. 132). Consequently, the gap between capitaland labor is wider than at any time in over 40 years.

Harrison and Bluestone describe how this intensified class polarization has developed as U.S. capitalists have pursued both domestic and international "restructuring" strategies designed to "zap labor." At one level, these strategies have produced a direct general assault on the working class, which can be thought of as being composed of four specific categories of attacks: (1) the extortion of wage, benefit, and work environment concessions; (2) the institution of two-tiered wage structures; (3) the increased use of part-time and contingent employment; and (4) the "avoidance" of unions (a euphemism for what is commonly known as union busting). Harrison and Bluestone demonstrate that these strategies have been both widespread and highly effective in dirving down wages. They have also created increased fragmentattion and division among workers by sowing desperation and competition in workers' ranks.

At another level, Harrison and Blues tone show how labor has suffered from capital's drive toward globalization, "hostile" and "friendly" takeovers, and booming financial speculation. These trends have produced an apparent "hollowing out" of U.S. corporations. That is as the system continues to shift away from domestic productive investment, the traditional production-based economy erodes, leaving in its place what the authors term the "new urban service economy." In this environment, Harrison and Bluestone point out:

The upper tier of the labor market includes the managers, lawyers, accountants, bankers, business consultants, and other and other technically trained people whose daily lives lie at the heart of the control and co-ordination of the global corporation and the corporate services that are closely linked to them. . . . At the bottom of the labor market is the other, less fortunate pool of urban residents whose collective function is to provide services to the workers in the upper tier. (pp. 69-70)

The authors state that "the reality of the new service economy entails a great many low-paying jobs and a much smaller layer of high-paying ones" (p. 72). This reality means that the majority of employed workers face a continuing downward spiral of degraded work and social marginalization.

Meanwhile, we are reminded, massive amounts of capital continue to flow into financial speculation. By 1985, trade in commodity futures "was growing at ten times the rate of industrial production" (p. 54). Furthermore, what little productive investment remains is of a type which either decreases the demand for labor or does not significantly affect it. "Between 1979 and 1984," Harrison and Bluestone point out, "93 percent of all business [non-financial] investments were either for computerized office equipment or the replacement of autos and trucks in company transportation fleets" (p. 144).

There is no doubt that by assembling a great deal of such detailed information, Harrison and Bluestone have performed an enormous service for all those whose interest lies in building opposition to current social trends. And yet, if we return to our wider overview of this book, we see that the authors' command of data does not prevent them from running aground on the shoals of history and theory.

In terms of history, Harrison and Bluestone's treatment of the years from 1946 to the late 1960s is misleading. They see the period as reflecting "the overall long-tcrm trend toward equality" (p. 51) which supposedly characterized social contract-bound capitalism. They deny what they portray as "the conventional wisdom . . . that business departed en masse from Roosevelt's [full-employment] agenda when it discovered that the unique international position of the United States after 1945 offered seemingly limitless opportunities for profitable growth, without any sort of government planning." Instead, they argue that the goal of maximum feasible employment as embodied in the Employment Act of 1946 served the purpose of holding capital to its end social contract" (p. 84).

The problem with this interpretation of history is that a meaningfu"social contract" has never existed in U.S. capitalism (if one doubts this, contrast the applicability of this concept to, say, Swedish capitalism). The actual behavior of U.S. capitalism from 1946-1970 can be accounted for satisfactorily on the assumption that capital has an interest in throwing labor a few extra crumbs during periods of prosperity-an interest which evaporates in time of crisis. However, the extra crumbs do not in any way imply that "Fordism" reigns supreme.

More problematic still is the implication that the working class might somehow be rescued from its present plight by a return to social-contract capitalism of the sort that supposedly prevailed between the end of the Second World War and the 1960s. Indeed, Harrison and Bluestone appear to see the main problem facing the working class as the struggle to persuade powerful liberal elites that the most rational approach to their tasks as the overseers of capitalism is to swing the pendulum "back toward a better balance between unfettered free enterprise and democratic planning" (p.20). They ask only: "[I]s there room for a progressive restructuring of the economy, aimed toward achieving stable economic growth, more equitably shared?" (p. 17). They believe that there is. To achieve this "better balance" they offer five proposals: (1) a corporatist industrial policy; (2) the facilitation of renewed trade-union struggle for a larger piece of the economic pie; (3) enhanced workplace democracy; (4) limited restoration of both the social infrastructure and welfare; and (5) managed international trade.

From a left perspective, it may seem strange that authors as knowledgeable as Harrison and Bluestone should believe that a weak and for the most part quite conventional set of proposals of this kind might possibly resolve labor's crisis. But it should come as no surprise, for this book ultimately suffers from a more serious shortcoming than bad history. This is the authors' flawed approach to capitalism itself.

Throughout this book, crisis and its components are seen from the perspective of capital (in terms of productivity arid competitiveness) while the interests of the working class are equated with those of the capitalist class. "Companies," the authors write, "might have responded [to crisis] by going 'back to basics': improving product quality, investing in new technology, and fashioning more constructive relationships with their workers" (p. viii). Thus, the central social problem of capitalism is seen as a return to the "basics" of cooperation, harmony, and reasonable investment based on the common social good. Of course, basics" have never defined capitalism, which by its very nature is rooted in class domination and investment solely for profit.

By building their myth of the "Great U-Turn" on a mistaken idea of what capitalism is all about, Harrison and Bluestone proceed as if there were no need to address either the gulf between profitmaking and the production of useful goods which characterizes monopoly capitalism, or the root problem of capital's control over society's means of subsistence. And this explains why the diagnosis of the problem facing workers and the solutions are so obviously insufficient in this book.

Of course it is important not to overlook the usefulness of this work for the Left. In its more limited aim of demonstrating what is happening to the working class in the current period of crisis, it is quite effective. Its detailed empirical depiction of the results of intensifying exploitation provide labor with some unique and indispensable information.

Nevertheless, The Great U-Turn falls in its larger aim of charting a path to a better era for labor. Because its authors misunderstand the nature of capitalism, they ask us to believe that this path lies in the direction of a return to a mythical "Fordist" social contract. In reality, however, labor will be able to articulate the anti-capitalist strategies needed to break with the dependence, degradation, and inhumanity in which it is now entrapped only by acknowledging the irreconcilable nature of its conflict with capital.

There must be something rotten in the very core of a social system which increases its wealth without diminishing its misery, and increases in crime even more rapidly than in numbers.

--Karl Marx, New York Daily Tribune, September 16, 1859

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