THE STONE OF SISYPHUS

Opel Crisis: The Planned Mass Layoffs are Consequences of Over-Production and Portend the Danger of a Severe Deflation

By Elmar Altvater

[This article originally published in the Berlin Freitag 44, October 22, 2004 is translated from the German on the World Wide Web, www.freitag.de/2004/44/04440101.php.]


Whoever saw Schroeder’s clever Clement on television stammering urging the workers of Opel-Bochum to forget it could have thought that the late liberal ex-economics minister Rexrodt was speaking before the cameras. The economy takes place in the economy. In other words, the government can do nothing against management’s threat of mass dismissals. Politics is helpless.

The government has actually made the labor market reforms like a calculation without the landlord. Hartz I to III with personal service agencies, personal companies, mini-jobs and the social incisions with Hartz IV do not create the promised jobs. Clement rolls the stone of Sisyphus up the mountain of unemployment but falls again and again with the torrents of the newly dismissed – 10,000 at Opel, 5,500 at Karstadt-Quelle, 1,000 at Schlecker and tens of thousands at Siemens, VW and Daimler-Chrysler. Germany as a corporation fires people in masses. Hartz IV threatens the stricken with material poverty and undignified one-euro-jobs.

For a long time the red-green government blamed the unemployed for their fate. Whoever loses a job is responsible. Excessively high wages were demanded, work was refused or both occurred at the same time. The crisis of the labor market was charged to the unemployed with this argument – populistically oversimplified by Schroeder with the remark that there is no “right to laziness”. Every active jobs policy was refused during red-green. However the labor market – like every other market – has two sides: supply and demand. Only reducing the price of the supply (“lowering labor costs”) without helping along the demand is at best half the battle. The daily dismissals show that the private sector in the future will not offer the jobs needed on the macro-economic plane. The government must act when entrepreneurial rationality leads to undesired results. Who else can act? The government must renew the jobs program.

The stability- and growth pact in Euroland forces us under the Maastricht criteria. However these criteria only aim at stability, not growth. Thus a policy of permanent cheapening of the labor supply is realized entirely on the demand side. Prices fall, competition becomes more intense and costs must be reduced again. The deflation spiral rotates. The great crisis occurs when rents can no longer be paid and credits cannot be secured. This spiral that cannot be stopped with power is more than a mistake committed by the government.
Mistakes of management are discovered since those threatened by dismissal can no longer be made responsible for their fate without the loss of all credibility. That there are many “washouts in pin-stripe suits” can be read on book covers. But did the top managers of Daimler-Chrysler, Opel, VW, Karstadt and Siemens all follow misguided strategies? Wouldn’t their seemingly more successful rivals – BMW and Renault in the auto-branch or Metro in retail trade – have failed if the managers of Opel and Karstadt had acted more skillfully?

The simple assumption that there wouldn’t have been any mass layoffs without management mistakes is naïve. The capitalist world economy is in an over-production crisis. In view of continually declining mass purchasing power, there are two many cars, too much luxury clothing and too much ready-to-wear clothing. Masses of goods fill warehouses. The over-production obvious everywhere leads to over-capacities forcing down profits – a classical situation of over-accumulation of capital. This will intensify in that the profits of corporations are compared in the financial centers of a globalized economy. Corporations not bringing an internationally demanded profit – the shareholder value – are punished.

The error of management is of a fundamental nature. Business management rationality is emphasized although the mammoth auto-, electrical- and retail trade corporations have macro-economic relevance. However business management rationality is narrow-minded. If Opel-Boccum closes, Bochum dies. If Karstadt shuts down in Herne, the downtown will become more desolate. If the EU commission cancels the VW law that protected against takeovers by some “investors”, the regional bond of VW becomes a hindrance to free capital transactions. Businesses with their jobs and goods are part of social life uniting work and life in a concrete region. This is a principle worth defending against the business management rationality of ruthless profit. This is not new. It only needs to be recalled again and again against the neoliberal repression zeal according to which a business is above all a profit-making capital investment.

With nonchalance, Clement makes hollow appeals to management to correct its mistakes. However the workers pay for the error correction first of all with wage cuts and job losses, unemployment benefits II and one-euro-jobs. The voters must correct the grievous mistakes of the Schroeder government –including the black-yellow opposition –Hopefully it isn’t too late.