Papers

Preliminary Notes on Technology and Class Struggle
Class Warfare

By Michael Perelman

The class war has not been going very well. The symptoms of setbacks should be obvious to everybody. The deterioration of the distribution of income is a convenient indicator of the situation.
Between 1970 and 2003, the Gross Domestic Product adjusted for inflation almost tripled, from $3.7 trillion to $11.7 trillion (President of the United States 2005, Table B 12, p. 294). Because the population also increased by about 35 percent during that same period, the rate of increase of per capita income was less. Even so, per capita income still more than doubled, but not for everybody.
Hourly wage earners have continued to fall behind. According to government statistics, hourly wages, corrected for inflation, peaked in 1972 at $8.99 measured in 1982 dollars. By 2005, hourly wages had fallen to $8.17 (President of the United States 2005, Table B 47, p. 338).
Total income figures give a similar picture. For the bottom 99 percent of taxpaying units, the average income stood at $36,008 in 1970, then peaked in 1973 at the same time as hourly wages at $38,206. This figure bottomed out in 1993 at $33,087. By 2004, average income for the bottom 99 percent recovered somewhat to $37,295, but still below where it had been three decades earlier (Piketty and Saez 2004; see also Johnston 2003, pp. 38 39; and Krugman 2002).
This estimate does not mean that everybody in the bottom 99 percent fell behind, but that the losses among the vast majority of these people were sufficient to counterbalance the gains of the more fortunate members of this group. But probably 80 percent of the population was worse off in 2004 than in 1970.
At the top, matters were quite different. The highest 10 percent increased their share of total income from about 31.51 percent in 1970 to 42.91 percent in 2004, an increase of 11.40 percentage points.
Even among the richest 10 percent of the population, the unseemly distribution of income is increasingly skewing toward the richest of the rich. During the same 1970 to 2004 period, the share of the top 1 percent rose from 7.80 percent of total income in 1970 to 16.21 percent in 2004, an increase of 8.41 percentage points, meaning that this group enjoyed almost three quarters of the 11.40 entire percentage point increase of the top 10 percent.
This skewed pattern of income reproduces itself even higher on the economic pyramid. The share of the top 0.1 percent increased from 1.94 percent of total income to 6.95 percent. This increase of 5.01 percentage points means that the top 0.1 percent of households captured almost 44 percent of the total increase of the total increase of the top 10 percent (Piketty and Saez 2006, Figure 3).
In 1970 the top 10 corporate CEOs earned about 49 times as much as the average wage earner. By 2000, the ratio had reached the astronomical level of 2173: 1. The rate of growth of executive pay has also outstripped the rate of growth of profits. For example, between the periods 1993 1995 and 2001 2003, the ratio of public companies' total compensation to their top five executives to their total earnings increased from 4.8 percent to 10.3 percent.
In short, the wealthiest stratum of the nation was able to hog the majority of the $7 trillion growth in the economy between 1970 and 2002. Despite the decline in their average well being, people in the bottom 90 percent of the population would still take up about 30 percent of the increase in the Gross Domestic Product because of the population growth of approximately 30 percent. In addition, the Gross National Product does not exactly equal the income figures of the Internal Revenue Service, but the figures are close enough to say that the top 10 percent of the population received the lion's share of all economic growth between 1970 and 2000. We can safely say that the United States has witnessed in recent decades what is probably the largest transfer of wealth and income in the history of the world far larger than what occurred during either the Russian or Chinese revolutions.
As an economist, I was trained to understand that production is a joint product of capital and labor. Each received the fruits of its own product. The theory has lots of holes in it, but at least it justified labor getting something from its extra productivity. We all know who produced this increase in wealth. Those who were responsible were not running hedge funds are flying around to golf courses in corporate jets.
Economists are busy revising their theory. Now we are told that those workers who have fallen behind bear the responsibility for their own fate. They have failed to acquire the appropriate human capital, econ speak for education and experience. Never mind the appalling conditions of schools in impoverished neighborhoods.
Of course, the people sitting on the top of the economic pyramid do not necessarily have great educational credentials. The level of education for CEOs and teachers are about the same, although their incomes are quite dissimilar.
Economists are trained to defend the indefensible aspects of the market economy. Although practicing class warfare is considered natural behavior in a market economy, communicating about class warfare is an unacceptable breach of etiquette. Economists' most common explanation for the inexcusable deterioration of the distribution of income is that many workers lack the appropriate skills to be useful in the new economy. If workers were only more proficient in working with modern technologies, they would not be in such bad financial shape.
Let me suggest that in one sense these economists may not be entirely wrong. We are gathered here because we agree with them about the importance of workers learning to develop their technological skills, but with one significant difference. Our objective is not so much to learn how to use technology to fit in but rather to fight back.
The Complex Terrain of Class Warfare
Initially focusing on the distribution of income reminds us that class warfare does not merely exist at the point of production. It involves a whole host of relationships, obviously including the judicial branch of government, but extending also into social and cultural spheres.
Cliff Conner's magnificent A People's History of Science: Miners, Midwives, and "Low Mechanicks describes the glorious history of people without any social standing making major contributions to science and technology, which, more often than not, were later claimed by upperclass people. One major theme of the book, which is of fundamental importance here, is the constant social pressure to deny ordinary people the very right to participate in the development of science and technology. How impudent for an ordinary person to think that they have something to contribute to the glorious project of improving science and technology!
David Noble tells a somewhat similar story but one that is more deeply entwined in the class struggle in his extraordinary book Forces of Production. The central thrust of the book is that the military and the corporate state developed numerically controlled machine tools to be able to replace the complex skills of machinists.
General Electric, which stood on the front lines of this struggle, was distressed to learn that rather than simply replacing the skills of machinists, the introduction of this new technology required even more skill on the part of the machinists. General Motors strategically retreated, giving the machinists more power over the production process, while setting up mechanisms to learn from the machinists in order to break their monopoly of technological information.
In a rational society, machinists, like any other worker would welcome new technology that would improve their lives. Marx, for example, we saw that the natural development of technology, apart from the imposition of the capitalist imperative, would be to improve working conditions, making workers functions less like those of the beast of burden and more like scientists overseeing a process.
The role of modern technology should not be merely to improve conditions on the shop floor, but to elevate the general quality of life for everybody everywhere. Obviously, many modern technologies have the potential to make possible a better life far better than would be otherwise possible. Whether this technology actually delivers an improved quality of life is an altogether different question.
Capital applies modern technology in order to be able to reduce costs, not to improve the quality of life. Cost reductions can offer benefits to people as consumers as Wal Mart reminds us but the ability to consume also depends upon income.
Theoretically, business should try to cut every kind of cost. We know that this cost cutting does not extend to executive salaries. In fact, cost cutting has an even narrower focus. Economic studies show that efforts to cut costs are disproportionately directed toward labor.
For example, during the energy shocks of the 1970s, people were shocked by the degree to which business paid no attention to energy costs. One of my favorite examples came from the corporate headquarters of Dow Chemical at Midland, Michigan. The company had electric heating for its sidewalk to make sure that people would not slip on the ice. Only during the energy crisis did the company realize that nobody took the trouble to turn off the sidewalk heater during the summer. Labor costs, in contrast, merited extensive scrutiny.
Three kinds of production technologies can be used to hold down labor costs. First, capital can adopt methods to reduce the effort required for a particular kind of work. Second, capital can find means of using less skilled labor to perform the job. Finally, capital can use technologies to drive the same people to work more intensively. For example, improved monitoring increases the effective working day by diminishing the opportunity for workers to take a few moments of relaxation. Such technological improvements may count as an improvement on corporate balance sheets, but do not necessarily make life any better.
Only the first type of technology, which develops means of producing the same outcome with less effort, has the potential to improve labor's condition and then so, only if the labor that the technology displaces has better opportunities elsewhere. Otherwise the technologies serve to disempower workers. Yes, labor, as I mentioned before, can potentially benefit from cost cutting, although the way the economy functions today many the potential benefits we passed on as higher corporate profits.
So while modern technology admittedly can potentially increase the productive capacity of the economy, a good deal of this improvement just comes from the intensification of work.
New technologies continuously change the terrain of struggle. Although capital no longer employs anything comparable to the crude Ford Sociological Department, which openly investigated workers' personal life, new technologies allow even deeper, yet less obvious intrusions. People innocently leave vital information about their lives on the Internet in places such as Myspace. Sophisticated data mining companies, such as Choicepoint, gather every conceivable kind of data, including credit card information, voter registration, telephone numbers, place of residence, and even relationships. At the same time, and often under the guise of the war on terror, vital information about corporations, such as safety conditions at the workplace, becomes increasingly scarce.
Success in navigating this shifting terrain of struggle will depend upon anticorporate forces becoming more nimble in learning how to turn new technologies to their advantage faster than the corporate sector can. While the corporate sector obviously has more resources at its disposal, its technological pace is relatively lumbering. In contrast, the anticorporate sector enjoys the support of more dedicated people without the disadvantages of rigid bureaucratic structures. The key will be for all anticorporate forces to learn to cooperate while still taking full advantage of the potential of individual initiative.
As an academic, I cannot pretend that I have much to offer in the way of technological knowledge. I probably have even less to offer in the form of strategic insights, especially compared with those of you on the front lines. Hopefully, I can contribute some perspectives based on my analysis of past events, which indicate a continuity in the struggle between labor and capital.
Promote Productivity
Pretend for the moment that this new technology actually works by making improving technology without driving workers harder. As we all know, a system that obsesses on profit rather than social needs prevents people from enjoying most of the potential fruits of modern technology. After all, the artificial creation of scarcity is highly beneficial to capital. For example, intellectual property rights are nothing more than using the power of the state to enforce artificial scarcity.
More generally, we live in a society where capital routinely idles both factories and people because the profit motive trumps any productive needs. In addition, many, if not most, of the people who do work for wages are consigned to performing meaningless activities or directed to produce goods that do nothing to improve peoples' lives.
Health Care
Let me take a moment to talk about health care, a subject that might seem far afield from the subject of technology and labor. But, of course, affordable health care is of vital concern for labor.
Besides vulnerability to the inequities of health care in the United States, labor bears a particular burden from the inadequate, market based healthcare system. In the United States, workers have to look to their employers for assistance with healthcare. Employers in other countries with a more public health care system are not expected to pay for their workers' health care.
Public health care reduces labor costs. The United States has even been making some noises about treating health care in other nations as an unfair subsidy, but the place to make adjustments is right here in this country.
At this point, private health care is seriously threatening the labor movement. General Motors complains that it bears an average $1500 medical cost for each of its cars an expense each of its competitors do not face. Even in the United States, Japanese transplants with a younger workforce and fewer retirees have substantial advantage over a company like General Motors. The response of General Motors is to attack labor.
So here is a vital technology health care. The United States government already pays as much for health care per capita as nations with public health care do, yet we still have to pay the cost of an inefficient and inequitable private health care system. The lesson is that to make effective use of modern technology, public control is a necessity.
Yet, we are told that the public part of health care is too expensive and something must be done to rein in costs. Despite the fact that the United States lacks a government run health care system, the government still pays for more than half of all medical expenditures. Per capita government spending on health care in the United States actually exceeds total health spending (government plus private) in every other country except Switzerland. In effect then, the people of the United States pay the cost of a national health care system without the opportunity to take advantage of its benefits (Woolhandler and Himmelstein 2001).
Finance
Think for a moment about how capitalism deploys high tech labor. Just count the people presently employed in the financial sector. The financial sector is becoming a major employer of mathematicians and physicists who are using their often publicly financed education to figure out ways to beat the market; that is, to gain profits at the expense of other investors, even those with mathematicians and physicists in their employ. Society receives no benefit from such wasteful activity. But nobody says that we can't afford Wall Street.
This financial system also includes thousands and thousands of working class people not just those working directly for Wall Street. Workers must supply Wall Street with offices, computers and telecommunications services, and paper.
Wall Street, of course, is not the employer of unproductive labor. Think about marketing, advertising, and a host of occupations that only serve the business side of life and you have the vast majority of the workforce. Eliminating such unproductive work would make the way for more leisure or the production of more goods and services to improve the quality of life.
Over and above the shameless spread of unproductive activities, capital devotes substantial resources to develop and produce technologies that intentionally degrade the usefulness of products in order to induce people to purchase more expensive, non degraded commodities. We are seeing a great deal of such activity in the area of modifying electronics hardware to restrict its capacity, often in the name of the protection of intellectual property. The creation of such modifications not only consumes valuable scientific and technological labor; they often cost more to produce.
Against Workers
Capital chillingly applies modern technology to gain advantages by holding people down. Today, the imperative of devising new forms of technology for the class war is more pressing because of the ramping up of inequality throughout the advanced capitalist world, but especially in the United States.
New technologies now give capital the ability to closely monitor workers in ways that no one could have even imagined only a few years ago. Some of these new technologies are positively Orwellian. No, they go well beyond Orwellian. For example, new genetic technology threatens to create frightening possibilities for maintaining control over workers. Some workers must wear RFID badges so that employers can more easily monitor their movements. In an even more alarming development, a few workers have even had implantable chips under their skin, presumably as a condition of their employment.
Backed up by the full powers of the judicial system, such technology gives capital an awesome strategic advantage. China has shown how governments can leverage their powers to restrict people's ability to use the internet for organizing or even distributing valuable information. At the same time, the resources that China is devoting to control access to the Web suggest just how crucial our mastery of modern technology is.
Outsourcing
Outsourcing represents one of the most obvious ways in which capital is profiting from new technology. In a sense, outsourcing seems like a radical change in the nature of the economy. For example, during the heyday of classical political economy, the famous British economist, David Ricardo, wrote:
Experience, however, shews, that the fancied or real insecurity of capital, when not under the immediate control of its owner, together with the natural disinclination which every man has to quit the country of his birth and connections, and entrust himself, with all his habits fixed, to a strange government and new laws, check the emigration of capital. These feelings, which I should be sorry to see weakened, induce most men of property to be satisfied with a low rate of profits in their own country, rather than seek a more advantageous employment for their wealth in foreign nations. [Ricardo 1817, pp. 136 37]
Seen in historical perspective, however, outsourcing does not seem nearly as novel as it might appear from Ricardo's analysis. Within a few years of Ricardo's conjecture, as the reach and power of the British Navy expanded and wealthy Britons withdrew from the hurly burly world of industry, British capital eagerly sought out financial investments in far off places, such as the Americas.
Improvements in transportation technology, coupled with the absence of sufficient opportunities for advancement at home, meant that millions of people left their native lands to seek their fortunes in North America. At first, Irish workers supplied the labor for jobs at wages that native born workers were not inclined to accept. In the South, the Irish even worked their jobs that took too much of a toll on the black bodies of the property of slave owners. After all, the death of a destitute Irish immigrant did not show up on anybody's account books.
By reducing wages for unskilled labor, the Irish earned the enmity of much of the working class. Within the Anglo Saxon world, a large, supposedly scientific literature developed "proving" that the Irish were closely related to the black race. Eventually, of course, the Irish assimilated and "became white."
The Irish were only the first of a rich stream of immigrants to help to keep wages in check. As immigrants began to flow in from more easterly parts of Europe, the rich mix of nationalities provided capital with an exceptional opportunity. For example, in 1875, Captain William Richard Jones, manager of Andrew Carnegie's massive Edgar Thomson works in Pittsburgh, explained, "We must steer clear of the West where men are accustomed to infernal high wages. We must steer clear as far as we can of Englishmen who are great sticklers for high wages, small production, and strikes. My experience has shown that Germans and Irish, Swedes and what I denominate Buckwheats (young American country boys), judiciously mixed, make the most effective and tractable force you can find" (Bridge 1903, p. 81).
This idea of judicial mixture was hardly an exaggeration. The personnel manager at Pittsburgh's Central Tube Company analyzed the "racial adaptability" of 36 different ethnic groups for 24 different kinds of work under 12 sets of conditions. Lithuanians were good at trucking barrels or cases, but mediocre at shoveling. They were suited to outdoor work, but poor performers under hot and dry conditions and undesirable at night (Montgomery 1987, p. 243).
Eventually, most of the immigrants, just like most Latinos today, learned to understand and to practice solidarity. As a result, employers had to continually search out new groups of vulnerable immigrants who would take time before they too would see themselves as part of the working class. They were especially keen to find nationalities whose language would be very different from those of their existing workers. For example, I understand that the Yemenite population of Youngstown, Ohio near my home town would have been sufficient to make Youngstown at one time the second largest town in Yemen.
Immigration, of course, has not subsided. Immigrants still fill an enormous number of jobs, especially low waged jobs. Immigration, however, gets tangled in two complications. First, immigrants make extremely inviting scapegoats for demagogues, who want to blame something other than capitalism for the problems of capitalism. Second, the force driving immigration is the lack of opportunity in the countries of origin.
Because immigration does not respond to the supply and demand conditions of U.S. labor markets, significant mismatches occur between the labor needs of employers and the inflows of immigrants. You need only look at the long lines of day workers waiting for jobs in big cities.
Outsourcing, in contrast, is far easier to target precisely. Business has the luxury of limiting outsourcing to the extent of its needs. As a result, low wage countries with masses of surplus labor can be tapped with ease at the convenience of employers in the advanced capitalist countries. Moreover, the employers can avoid accusations of exploitation by using intermediaries to directly take responsibility for directly employing the workers.
Once capital perfected the outsourcing of low wage jobs, it began to hire more skilled workers to do advanced technical work. Here too history shows a certain continuity. Just as outsourcing is now engaging skilled workers, skilled immigrants came to North America.
In a sense, outsourcing today is quite similar to the insourcing of immigrants a century ago. Then ships carried people to the workplaces of a new land, where the immigrants eventually came to learn to act in consort with their fellow workers; now the Internet carries information back to the central office, while the communication with the fellow workers must transit thousands of miles. In either case outsourcing or insourcing modern technology allowed capital to enjoy the fruits of its divide and conquer strategy.
Perhaps the main difference between those workers who were squeezed by Carnegie's ethnic manipulation and the workers threatened by outsourcing is that the contemporary workers no longer see their competitors face to face. To overcome the divide and conquer strategy, contemporary workers need to develop ties of solidarity just as earlier workers did, perhaps using the same technologies that capital uses to manage its outsourcing.
One difference complicates the creation of solidarity. Traditionally, immigrants earned lower salaries than the people around them, making them more amenable to organizing once they learned about their relative situation.
In contrast, high tech outsourced workers typically enjoy better working conditions than they would with a domestic employer. The same is probably true for some of the workers in sweatshops as well. Because companies from the core capitalist economies can pay their outsourced workers so much less than their domestic employees they can afford to pay a premium relative to the wage scale in the target countries.
So long as these workers evaluate their employment relative to other workers in their own country they will be more difficult to organize. At the same time, the barriers to communicating with the more skilled workers are lower than is the case with the unfortunate employees of the sweatshops. In fact, communicating with them might be easier than it was with the traditional immigrant workforce in the United States, where language barriers initially impeded communication. Among more cosmopolitan workers, language barriers would not present nearly as much of a problem. Here, the challenge is not so much mastering new technology, but rather learning to communicate a message of solidarity using our existing technical skills.
One factor works in our favor. A century ago, however, immigrants with skills had more opportunity to go into business for themselves. Many employees saw their working class status as a temporary situation. Some of these skilled immigrants actually go into business for themselves. Today, with the scale of business operations so much higher, relatively few skilled workers abroad have as much of a chance of successfully following that path.
Against Capital
Just as military needs shape have shaped modern technology, so to have the needs of the class war. The class content of these technologies often is not immediately apparent. For example, consider the ubiquitous cash register. Children even play with toy cash registers. The original purpose of the cash register, however, was to help store owners prevent employee theft.
Since the register kept a record of each transaction that the employee rang up, clerks were more likely to deposit customers' payments. Warren Buffett's partner, Charles Munger once proposed: "The cash register did more for human morality than the congregational church" (Munger 2003).
The registers were not fool proof, however, since employees still had the option of neglecting to ring up the sale and then pocketing the money for themselves. To make the clerk more likely to record the sale, employers turned to ninety nine cent pricing, which became common soon after the introduction of the cash register. With ninety nine cent pricing, customers would be less likely to pay the exact price. Clerks who just reached into their pocket and pulled out a penny would arouse suspicion. So, the clerk would need to open the cash register to get a coin, which could only be done by ringing up the sale (Huston and Kamdar 1996, pp. 137 38).
This tactic allowed merchants, in effect, to enlist to consumers to guard against theft. So, in contrast to the congregational church, the direction of the collection plate was reversed. Business would offer the customer a penny to monitor the potential sins of the clerk. Since the introduction of the cash register, capital has developed increasingly sophisticated technology to increase its power relative to labor.
In warfare, overwhelming technological superiority does not guarantee victory. Just consider the difficulties that the U.S. military faces in Iraq today. The United States has at its disposal the most powerful array of weaponry ever assembled in the history of the world.
Yet, the Iraqi resistance, like the Vietnamese insurgents four decades earlier, has stymied the military might of the United States. The lesson from the insurgents is that under equipped people with sufficient courage and determination can muster creative energies can succeed against seemingly impossible odds.
Class warfare, of course, is very different from military battles, but the role of ingenuity, courage, and resolution is still common to both. Unlike insurgents in military conflict, insurgents in class conflict can more easily turn the enemy's tools to their own advantage. Symbolic of such reversals, the Internet began in the Department of Defense. Within a couple decades, the Internet became the centerpiece of modern business. During the dot.com boom of the 1990s, the Internet was supposed to revolutionize business, but revolutionaries in class conflict can find a powerful tool in the Internet.
For example, the outpouring of demonstrations in response to the punitive immigration bill that the House of Representatives passed was one of the most impressive political mobilizations in the history of this country. Opponents of this legislation harnessed the power of the Hispanic media. They also took advantage of emerging technologies, such as Myspace, to organize almost spontaneously. Around the world, text messages help mobilize protestors.
Organize Workers
More generally, modern communications technologies, such as the Internet and wireless technologies, the same sort of technologies that capital utilizes to make profits, also provide extraordinary opportunities for labor. In this sense, modern technologies differ somewhat from earlier technologies.
For example, the telegraph probably represented one of the greatest forward leaps in technology. Just compare the relative speeds of a transcontinental messages transmitted by the telegraph and the pony express. Yet workers were unlikely to be able to make much use of the early telegraph. Their only access to the technology was through transactions with the telegraph company. In fact, the industry that used the telegraph most intensively was finance, which used the telegraph to submit orders for the stock exchange.
Of course, the left has much to gain not just by learning to use new technology, but also by learning to create it. Here I am thinking about the example of open source software, but I'm sure that many other opportunities exist.
Open source software not only undermines corporate control of vital technology, but I also suspect that it provides a laboratory in which we can learn non hierarchical forms of production that is, an entirely different model of organization and the corporate form.

References

Bridge, James Howard. 1903. The History of the Carnegie Steel Company: The Inside History of the Carnegie Steel Company: A Romance of Millions (NY: Arno Press, 1972).

Conner, Clifford D. 2005. A People's History of Science: Miners, Midwives, and "Low Mechanicks (NY: Nation Books).

Munger, Charles T. 2003. "Academic Economics: Strengths and Faults After Considering Interdisciplinary Needs" Herb Kay Undergraduate Lecture University of California, Santa Barbara Economics Department (October 3). <http://www.tilsonfunds.com/MungerUCSBspeech.pdf>

Noble, David. 1984. Forces of Production: A Social History of Automation (NY: Oxford University Press).

Ricardo, David. 1817. "Principles of Political Economy, Vol. 1 of Piero Sraffa and Maurice Dobb, eds. "The Works and Correspondence of David Ricardo, 11 vols. (Cambridge: Cambridge University Press, 1951 73).

Huston, John and Nipoli Kamdar. 1996. "$9.99: Can "Just Below" Pricing Be Reconciled with Rationality?" Eastern Economic Journal, Vol. 22, No. 2 (Spring): pp. 137 45.

Montgomery, David. 1987. The Fall of the House of Labor: The Workplace, the State, and American Labor Activism, 1865 1925 (Cambridge: Cambridge University Press).

President of the United States. 2005. Economic Report of the President (Washington, D.C.: U.S. Government Printing Office).

Woolhandler, Steffie and David U. Himmelstein. 2001. "Paying For National Health Insurance And Not Getting It." Health Affairs, Vol. 21, No. 4 (July/August): pp. 88 98.

Michael Perelman <michael@ecst.csuchico.edu>


 

 

 

 

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