Consequences of large company accumulation of Capital

Max Bound, March 2009

The onset of the current set of economic and ecological crises capitalism is enmeshed in underlines the need for new approaches and new priorities in economic policy making. As large company/corporation control over the economy has increased technological innovation has been harnessed to boost short term profitability at the expense of people and our physical environment. The gap between rich and poor has grown, jobs have disappeared and the rich are taking even more. A quick look at some Tasmania history makes a useful case-study in revealing how the increase in employment opportunities and the short term well being of large numbers of, but not all, Australians particularly from the 1940’s through to the late 1960’s turned into relatively rapid and very substantial losses of job opportunities in several industries. Capitalist and particularly large company /corporation chief’s greed turned Australia from the country with an 8 hour day, 5 day week and relatively full employment into a more divided society where those in full time work are frequently over worked while under and unemployment is the lot of very large numbers of people.1

It is perhaps worth recording at this point that- in the 48 years from 1934 until 1982 apart from one three year period (1969 to 1972) Tasmania had Labor Party State Governments.

White settlement in the island that was eventually called Tasmania brought mass murder of the original owners and pillage of their land. Early on the economy functioned largely on convict, slave, labour and over a period of time a more or less self sustaining economy was built up. Along with agriculture a variety of small scale manufacturing ventures were developed 2and there were various forms of mining including, at a later stage, some on a substantial scale.

Larger scale partial manufacturing and full scale manufacturing industries began to appear a bit later. Construction of the Zinc works started in 1916 in Hobart. A substantial textile industry was built up in the Launceston area. In the later1930’s manufacture paper from trees began in Boyer near Hobart and at Burnie on Tasmania’s North West Coast. Then the post second world war period saw industrial developments in several areas of the State.

Industrial Development Takes Off--- Then came new technologies and job losses

The Tasmanian Year Book of 1967 has a table on page 292 that reveals that Tasmania’s factory workforce changed little from 1911, when it was 10,298, to 1934-35 when it was 10,555 and that by 1939-40 it had increased to 14,670 and by 1964- 65 it had grown to 32,580 persons. Information from year books and other sources I have accumulated over the decades show that there was some unevenness from 1940 to 1965 but that the growth was basically consistent over this quarter of a century.

The 1966 census registered the manufacturing work force in Tasmania as being 33,959. The 1981 census revealed this was down to 26,124 and falling. In the 2006 census the comparative figure was 21,729. These falls in employment were largely the result of the introduction of new technology in ‘good economic times’. (The 2006 figure does not reveal what is happening in the current late 2008-2009 economic climate.)

To illustrate further the long term trend, in an article on “Employment and Unemployment” published in the Labor Party Journal “Labor Forum” No 4 December 1983 I wrote. “APPM, a Victorian-based company with the larger part of its productive activities in Tasmania, increased its production by more than 40%, and reduced its workforce by 16.6 %in the 1970’s up to 1981. Since then, about as many workers again have been retrenched by APPM.” Now, nearly a decade into the 21st century there is serious speculation that the Burnie operation will close and the few hundred jobs left at Burnie and 50 or 60 K’s away at the Wesley Vale mill will all be lost.

In the same article I had quoted from the Tasmanian Parliamentary Select Committee on Employment in 1983 (the Petrusma report) it said “ New technology has had a net reduction effect on labour requirements in many industries, particularly in the lower skill levels of the labour force.” A specific example was given by the Edgell Company. “In 1965-66 the company’s Devonport plant produced 400,000 kilograms of canned and frozen peas. In that season to harvest and vine a paddock required 54 workers, the same task today, using mobile viners, require 4 workers.”

A more graphic example is the company’s factory workforce: “In 1965-66 the factory employed about 800 persons to process 400,000kg of peas. In 1982-83, 300 people process 20 million kg of green peas.” Edgells then manager at Devonport, Mr. M. N. F. Gray in his evidence to the Petrusma Report discussing the experience of “labour being replaced by mechanisation” as in these examples commented “Any company which does not comply with this trend faces cost structures which would make it uncompetitive.” The Petrusma Report also indicated the dramatic effect computers had in reducing the workforce in printing processes.

Mr Gray did not venture into any serious discussion of the social and long run economic consequences of an economic system driven by the need to produce more with less labour in order to maximise short term profit. Nor did he attempt to examine, in depth, the long term effect of the benefit from this increased wealth production not being available for society as a whole, but rather its being directed towards enriching a few whilst depriving a substantial number of the means to access to sufficient of the necessities of life to enable a reasonable standard of life.

There was another factor involved in the sharp decline in employment in textiles in particular. Employment in manufacture of textiles in Tasmania was an early victim of the movement of jobs from developed countries to undeveloped countries where military or semi-military dictator–ships kept wages very low and working conditions terrible. Part of this process was the early tariff reductions courtesy the charismatic and in some other ways positive Gough Whitlam. The Tasmanian Pocket Year Book 1965 showed employment in textiles as being 3,426 people in 1963-64. The 1978 Pocket Year Book shows a figure of 2554 employed in textiles in 1975-76. Large textile mills were ‘down-sizing’ and closing in Launceston as manufacture moved off shore. The 2006 Census shows employment in Textiles as being down to 691. All figures above exclude employment in clothing and footwear.

The real story behind the “good times”

No doubt apologists for the capitalist way will argue that there was a fairly long period in which capitalism was able to avoid the economic collapse that is now upon us. That argument has real problems.

• First in any event in the period of a relatively high standard of living for a minority of the global economy’s workforce, in the developed countries, large numbers of people in third world countries were not nearly so lucky. The destruction of age old economies in the colonial and semi-colonial countries that resulted from western invasions, (military, economic and cultural) brought extreme poverty to very large numbers of people.
• Second, After the reconstruction of the buildings and infrastructure destroyed in the second world war there was the series of wars that killed millions of people and provided big profits and many jobs,3 from the sale of armaments, for people in the developed countries. Then there was the ‘growth’ of new developments that speeded up the process of increased resource destruction, pollution and thus climate change.
• Third the now failed neo-liberal experiment, was introduced to replace Keynesian approaches that were no longer working satisfactorily. As neo-liberal practice expanded the rich got more and the workers share of the new wealth their labour had created fell substantially the ability of masses of people to buy, what they or their fellow workers in other industries had created, shrank. To counteract this serious problem credit consumerism was developed and for a few years many people thought this was working. But of course this system has collapsed with the rather serious consequences that are still unfolding.

Another important aspect of capitalist development is how, in the era of technological change, the quantity of finite, even scarce, resources used up to provide one job accelerates. To come back to the Tasmanian experience. In my graduate diploma in Urban Planning thesis (1979) I examined this aspect among others. I found that in forest based industries the advent of export of woodchips plus technological changes had meant that 5 years into wood chip export the amount of timber resource used up to provide one job had doubled. The figures on logs used up to provide one job were 172.5 cubic metres in 1971 to 351.3 cubic metres in 1976. More recent observations indicate this trend is continuing as labour saving technologies continue to be harnessed to the end of more profit less jobs.

The changes and increased centralisation of corporation power have seen, in Tasmania, a shift over recent decades from a very high percentage of control by British capital, via Collins House in Melbourne, to increased control by other foreign countries. Chinese investment is currently looming as a possible new centre of power over our economy.

At a more general level there have been many changes since the above quoted analyses were made and new information and other industries have developed but jobs in manufacturing, as shown above, continue to fall. Big differences have developed in the work force, casual and part time jobs have increased at the expense of full time and permanent employment. Those with full time jobs often work excessive hours while others in part time or casual work and on low incomes cannot get work for enough hours to make ends meet. The 40 or 35 or less hour fully paid working week is a lost dream for most.

The increase in women in the workforce is positive particularly in so far as there are professional and semi-professional jobs available. However many jobs open for women continue to be casual , part-time or seasonal and low paid with all too little employee protection. In too many instances equal pay is still more theory than the reality of the practice.

Capitalism’s Inner Dynamic

Capitalism, regardless of its various stages in its development, consistently retains as its inner dynamic a necessity for growth, private profit and accumulation of capital by a few at the expense of the many and of the physical environment. Some see these inbuilt problems of capitalism as having positive aspects. For example in his “Beyond Right and Left” David McKnight argued “Although I am critical of extreme neo-liberalism, it serves no useful purpose to ignore the usefulness and dynamism of economic markets in many circumstances. (Mc Knight David 2005, p238)

Even if we left aside the issues of equity and human decency, including the right that people should have to control their own lives in a cooperating society, there are very real problems. The dynamism, or greed, that drives capitalism and capital accumulation by a few works in direct contradiction to the ecological sustainability essential to the very possibility of a decent future for the human species. As J. K. Galbraith remarks "As earlier indicated, environmental concerns, both those which are contemporary and those affecting future generations, especially the latter, are inherently in conflict with the motivating force of the market economy...” (Galbraith J. K.”The Good Society” 1996, p84 )

A considerable number of people are currently recognising and seeking to change our present destructive course by opposing the current Rudd package which encourages the private corporations to continue polluting our atmosphere.

In terms of attempts to supersede the inequities capitalism generates the Soviet experiment failed for a variety of reasons, including wars and other outside pressures and its internal cancers of over centralisation and the ongoing problem of bureaucratic power rather than democratic procedures. China has reverted to capitalism and is now threatening to challenge the USA as the world’s major polluter. Should China get close to Australia’s per capita rate of greenhouse Gas production the effects would be horrifying. Meantime if we are to cease to be one of the World’s worst per-capita polluters, we in Australia need to recognise the need to change our present economy from one based heavily on creating Green House Gas to an example of social and ecological responsibility based on minimal green house emissions. A big ask requiring intelligent forward looking thinking and decisive actions by governments, Industry and people.

Large Company/Corporation power

At the moment we are not performing at all well. The issues of where political, economic and social power resides are proving to be of considerable importance. Rudd’s greenhouse approach judged in terms of deeds rather than mere words reveals that corporation profits rather than the people’s and our environments needs are our Government’s priority. But we also have to recognise that for societies to really change the culture of people has to also change. That means that those who control the economy, administrative and education system and media in its various forms have a powerful social influence. Thus the need is to find ways to shift public opinion despite that it is currently heavily influenced by a ruthless, powerful, short sighted and greedy few. A realisable social economic and ecologically sustainable alternative program and a political social cultural rethink are essential to achieving this shift in public opinion.

The recognition that climate change is being driven by human activities and that the choices we now have if our species is to survive has created a new political ball game. The March 9th 2009 “Four Corners” Program on Climate Change, despite its quite obvious weaknesses, provided plenty of evidence that in the greed dominated minds of the corporation spokespersons their power and bottom line is far more important than is the human future. That these self centred and intellectually limited corporation leaders and spokes persons still call the tune is tragically made evident in the Liberal Party’s strange antics and in Rudd’s Carbon Pollution Reduction Scheme (CRPS) with its encouragement to corporations to continue their polluting activities.

Change will not come easily

So how do we make a contribution to a achieving radical change? What can we learn from past experiences and how can we utilise these lessons in what is now a very different and very threatened world? At the parliamentary level the Greens and particularly their climate change spokesperson Senator Milne are making sensible and immediately achievable proposals that would improve our situation. But the Greens are of small number in our parliaments, and even the restricted above mentioned Four Corners Program provided evidence that it is the corporations rather than parliament as such that are actually deciding our course. The corporations power arising from their control of our economy and media allows them to stand over, and bend, the major political parties. Not that, these days, there is much in the way of strength in those being bent. The neo-liberal nonsense that Rudd attacks in words controls the actions and for most part the minds of the leaders of both major political parties, including Rudd himself.

The shift, it seems, has to come from below and we have to find ways to combat the power greedy and short sighted corporation chiefs currently exercise over people’s minds and our society and governments. As a writer for “New Matildar.com” website has pointed out the Labour Parties’ King O’Mally initiated the creation of the Commonwealth Bank early last century and the Labor Party privatised it before the century was out. Governments have to be pushed in a very different direction if humanity is to survive.

The issue of what changes can be made can only be resolved to the degree there are plausible and beneficial alternative approaches developed, made real issues in public debate and actually implemented by governments and people. Analysis and exposure of the weaknesses of and problems with current practice of course remain part of the process but if the process stops there we are lost. Now it is true that over time the left has initiated and fought for and won important positive reforms. But neo-liberalism in ascendency destroyed many of the gains we made. And the reforms, for the most part, did not challenge the control those with capital have over society

The issue is how can we turn the tide now that the neo-liberal chickens of capitalist development have come home to roost and we are in a series of economic, social and ecological crises?

Understanding Economics

Ironically, in a sense, an essential part of tackling these problems is the need to encourage some new left activists to overcome their aversion to economics and understanding of it as something evil of itself. What is evil is not economics but the economics of neo-liberalism and the real economics of our colonial past. In this reference to our colonial past I am referring to the fact, discussed earlier in this article, that the good conditions some us have experienced in the developed countries has always been underwritten by the plunder of less developed countries and the squandering of both human lives and our planets scarce resources.

When Dr.Peter Hay wrote “ the desire of some Humans to dominate others leads to the dominance and degradation of non-human nature as the latter is harnessed to serve the project of human-over-human domination” he put into one lengthy phrase a vital part of the essence of current human and ecological problems. (Hay Peter,” Main in Currents Western Environmental Thought “ UNSW Press 2002, p68)

The forms of the harnessing that Peter Hay writes of are many and varied they range from actual war to less concentrated forms of violence and destruction-- from massive direct destruction of natural resources in the course of supplying the needs created in our consumer society to the pollution of air and water in a whole number of the human activities essential to consumerism and capitalism itself. Included are the massive destruction of forests to provide paper for the advertising of often harmful products to the pages of crap and near crap in newspapers and magazines to divert public interest away from the real problems our capitalist societies have.

Thus the central immediate issue is changing these destructive habits we have developed and that are endemic to any form of capitalism. Now there are those, including some who believe they are -or wish to be seen as part of the left, who will decry what I have written above as a simple minded cry for an immediate end to capitalism. In reality it is a call to begin NOW the complex and difficult processes of dismantling the power of the corporations instead of trying to prop up that power with public money and resources and using public money and resources to subsidise polluting activities as our own and many other governments are currently doing. Radical alternatives are necessary to enable human survival.

Notes

1. In 1971, 25% of employed women were working part-time. This had increased to 47% by 2006. The proportion of men employed part-time also increased over this period, but from lower initial levels. In 1971, only 5% of men were employed part time compared with 18% in 2006—still lower than the level for women in 1971 ... Between 1986 and 2006, the overall picture of employment in industries in Australia changed in several respects. Manufacturing, the largest employer in 1986 (15.6%) dropped to 11.3% in 2006. This made it second in size after Retail trade. Agriculture, forestry and fishing declined as well, from 5.8% to 3.2% of all employed people. On the other hand, Property and business services, and Health and community services both increased their share of employment (from 6.6% to 11.0% and from8.4% to 11.0% respectively), to approach Manufacturing in their share of employed people. Retail trade also increased slightly, from 13.8% to 14.7%..”(ABS website)

2. The grinding of wheat for flour gave rise to the first demand for power, the original solution being water mills and windmills followed by use of the steam engine (the first steam mill commenced in 1831). (Tamanian Year Book 1967)

3. In his 1995 Massey Lectures Canadian author and public figure, John Ralston Saul, gives figures of people killed in wars between the early 1960’s and 1995 as 75 million people killed.” The figure would be very much higher now over a decade later. (Saul J.R. “The Unconscious Civilisation” Published Penguin Books 1997, p11 )