FacebookTwitterRedditEmail

A Catch and Trade Policy for Labor Costs

The headline sounded so detached: “Murder of China steel exec shows privatisation risks.”  At stake in the killing of the steel exec was fear of a massive job cut.  30,000 workers at the state-owned Tonghua Steel plant calculated that a takeover by a corporation from Beijing would result in the loss of 25,000 jobs.

The workers were likely justified in their calculations of job cuts.  From the point of view of American experience it just seems like common sense to worry that a capital enterprise is going to eventually fire half or more of its workers.  Why would privatization behave any differently in China than it does here?

There are exceptions of course.  Jim Cramer recently introduced his television audience to the CEO of USA steel producer Nucor who has cut capacity in half without laying-off any workers.  At Nucor workers have been kept on payroll, but hours have been drastically cut.  Nucor is a remarkable exception to the rule of private capital.

Shifting our point of view to Chinese workers, we can read statements by Communist Party officials exhorting the people to imitate methods of efficiency that are studied by every B-School MBA: mergers, capacity cuts, new “efficiencies” of technology.  Now that the Communist Party has primed the pump of capital development, there are certain objective laws that must be obeyed.

I don’t recall reading where a Communist Party official called for layoffs outright, but anyone who has studied Capital Volume One can figure out what results from mergers, downsizing, and technology upgrades.  Marx snidely called the beneficiaries “free workers” which is exactly what the workers of Tonghua steel decided not to be.

In the USA we have some rules about layoffs and shutdowns which require some employers to give proper notice in the form of time or money.  Despite these rules, a half million workers per month are being “set free.”  In many cases the employers express genuine regret as they appeal to objective laws of sustainable business plans.

On both sides of the Pacific, capital is undergoing development in ways that workers well understand.  The Tonghua steel workers simply did the math.

What appears to be missing on both sides of the Pacific is some sort of regulation of the labor market such that jobs lost at one site are correlated in real time to jobs created at another.  Or to put the question more carefully, when capital development in one place subtracts a labor cost, what coordinates the addition of an equal labor cost somewhere else?

We are hearing so much these days about the heroic expansion of monetary and sovereign balance sheets.  Where is the heroic balance sheet for labor costs, whether in America or the People’s Republic?

Taking a cue from the logic of cap and trade, such a balance sheet for labor might be called catch and trade.  Get a license to carry capital only if you take out an obligation to return a portion of labor costs.  This is only fair, since capital is no good to anyone without the jobs that will be needed to employ it.  You just promise to pay for those jobs so long as your capital permit shall last.  If your business plan later calls for capital development to eliminate jobs, then you either keep paying the labor costs you agreed to earlier or you trade that labor cost off to some other capital carrier.

This system would not necessarily transfer the worker, but it would seek to keep the total labor costs of the capital-carrying marketplace at a level that would enable workers to enter a robust labor market at any time.

As it stands in conception so far, a catch and trade system would be indifferent to whether an employer is private or not.  What difference does it make to a worker whether the capital that he brings to life is financed by private or sovereign credit?

In the crisis we face today, it is still an open question whether capital will be better managed by capitalists or communists.  At the Tonghua Steel plant, the question was not academic.  25,000 precious jobs were at stake.  The Chinese steel workers were saying something important for all of us.  They were saying that employment should be taken much more seriously by the folks who would carry capital around these days.  They saw a jobless recovery in their future and they said hell no.

The same general logic applies to credit and debt.  Our current crisis of labor and capital in the USA was produced by a wealth implosion that followed from certain objective laws of credit.  Individuals and corporations helped to overheat the credit structure from below, happily assisted by financiers whose business it should have been to more responsibly coordinate the total credit picture.

In many cases, the debt load is still sustainable and credit scores are good.  But many other individuals and corporations got caught “under water.”  I don’t think of all the victims as a foolish class.  There was a zeit-geist which had so many people thinking that they were part of a system that could keep going. What was more difficult to see, although it was pointed out plenty of times, was how the sum of our actions added up to a toxic level of credit and debt.

The helpful thing about cap-and-trade logic is that it recognizes some system-wide quantity that is a matter of public concern and provides some real-time market pressure on that basis.  A cap on system-wide credit might have helped to keep development sustainable.

From China the daily news brings us a headline that expresses the collective fear of labor markets around the globe.  Joblessness is not the road to recovery.  How else can we say it loud and clear?

GREG MOSES is editor of the Texas Civil Rights Review and author of Revolution of Conscience: Martin Luther King, Jr. and the Philosophy of Nonviolence. He is a contributor to Red State Rebels: Tales of Grassroots Resistance in the Heartland, published by AK Press. He can be reached at: gmosesx@gmail.com

 

 

 

 

 

 

 

 

More articles by:

Greg Moses writes about peace and Texas, but not always at the same time. He is author of Revolution of Conscience: Martin Luther King Jr. and the Philosophy of Nonviolence. As editor of the Texas Civil Rights Review he has written about racism faced by Black agriculturalists in Texas. He can be reached at gmosesx@gmail.com

bernie-the-sandernistas-cover-344x550
July 16, 2019
Conn Hallinan
The World Needs a Water Treaty
Kenneth Surin
Britain Grovels: the Betrayal of the British Ambassador
Christopher Ketcham
This Land Was Your Land
Gary Leupp
What Right Has Britain to Seize an Iranian Tanker Off Spain?
Evaggelos Vallianatos
Democratic Virtues in Electing a President
Thomas Knapp
Free Speech Just isn’t That Complicated
Binoy Kampmark
The Resigning Ambassador
Howard Lisnoff
Everybody Must Get Stoned
Nicky Reid
Nukes For Peace?
Matt Johnson
The United States of Overreaction
Cesar Chelala
Children’s Trafficking and Exploitation is a Persistent, Dreary Phenomenon
Martin Billheimer
Sylvan Shock Theater
July 15, 2019
David Altheide
The Fear Party
Roger Harris
UN High Commissioner on Human Rights Bachelet’s Gift to the US: Justifying Regime Change in Venezuela
John Feffer
Pyongyang on the Potomac
Vincent Kelley
Jeffrey Epstein and the Collapse of Europe
Robert Fisk
Trump’s Hissy-Fit Over Darroch Will Blow a Chill Wind Across Britain’s Embassies in the Middle East
Binoy Kampmark
Juggling with the Authoritarians: Donald Trump’s Diplomatic Fake Book
Dean Baker
The June Jobs Report and the State of the Economy
Michael Hudson – Bonnie Faulkner
De-Dollarizing the American Financial Empire
Kathy Kelly
Remnants of War
B. Nimri Aziz
The Power of Our Human Voice: From Marconi to Woods Hole
Elliot Sperber
Christianity Demands a Corpse 
Weekend Edition
July 12, 2019
Friday - Sunday
Paul Street
Skull of Death: Mass Media, Inauthentic Opposition, and Eco-Existential Reality in a Pre-Fascist Age of Appeasement
T.J. Coles
“Strategic Extremism”: How Republicans and Establishment Democrats Use Identity Politics to Divide and Rule
Rob Urie
Toward an Eco-Socialist Revolution
Gregory Elich
How Real is the Trump Administration’s New Flexibility with North Korea?
Jason Hirthler
The Journalists Do The Shouting
Jeffrey St. Clair
Roaming Charges: Pâté Politics in the Time of Trump and Pelosi
Andrew Levine
The Electoral Circus as the End of Its Initial Phase Looms
David Swanson
Earth Over the Brink
Ron Jacobs
Presidential Papers
Robert Hunziker
The Flawed Food Dependency
Dave Lindorff
Defeating the Trump Administration’s Racist, Republican-Rescuing Census Corruption
Martha Rosenberg
Pathologizing Kids, Pharma Style
Kathleen Wallace
Too Horrible to Understand, Too Horrible to Ignore
Ralph Nader
An Unsurpassable Sterling Record of Stamina!
Paul Tritschler
Restricted View: the British Legacy of Eugenics
John Feffer
Trump’s Bluster Diplomacy
Thomas Knapp
Did Jeffrey Epstein “Belong to Intelligence?”
Nicholas Buccola
Colin Kaepernick, Ted Cruz, Frederick Douglass and the Meaning of Patriotism
P. Sainath
It’s Raining Sand in Rayalaseema
Charles Davis
Donald Trump’s Fake Isolationism
Michael Lukas
Delisting Wolves and the Impending Wolf Slaughter
Evaggelos Vallianatos
Shaking Off Capitalism for Ecological Civilization
FacebookTwitterRedditEmail