Auto Figures and Value: What's in your wallet? The definitive Marxist Understanding of Value
Melvin P Detroit: The figures - production units and profit estimates are slowly coming in and by the months end should tell the story of the USNA based auto industry. Cut-rate loans and discounts kept consumers in showrooms during the first month of the year, but auto sales still fell 5.2 percent compared to December. The current rate of sales based on the January figure is annualized to amount to 15.8 million units for 2002. Altogether approximately 17.2 vehicles were sold in year 2001, the second biggest year in auto history. Combined, US automakers' sales fell 11.8 percent compared to last January, with General Motors Corp. and Ford Motor Co. each falling 12.7 percent and DaimlerChrysler AG's Chrysler Group falling 8.9 percent. All three said poor fleet sales to rental companies contributed to their January blahs. Foreign-based automakers raked in more market share as their sales grew 6.2 percent, thanks largely to expanding lineups of popular products. Toyota Motor Corp. recorded a 7.1-percent sales jump, including an 11.7-percent gain in light truck sales. The various spokespersons and economist for the industry tend to be pretty straightforward in their assessment of market conditions. General Motors "Keep America Rolling" zero-percent war launched after September 11th, may be over, but cash-back offers continue to bring automakers more sales with smaller profits. "Most if not all of it is illusory," George Pipas, Ford's sales chief, said of how robust sales are masking sickly profits. Less than a month ago Ford economist announced that we have entered an era of "profitless prosperity." "Profitless prosperity" is the exact words stated during the world broadcast of "the state of Ford," while those inclined towards the doctrine of Marx use the term "increasingly valueless production." GM car sales fell 34.2 percent, including a 55-percent decline at the lame-duck Oldsmobile division. GM has announced that the brand will be discontinued. Trucks were GM's January saviors, up 10.4 percent, including a 50-percent rise for its hot midsize sport-utilities. Ford sales also fell 12.7 percent, excluding import units Jaguar, Land Rover and Volvo. The world's No. 2 automaker unveiled a turnaround plan Jan. 11 that will close up to seven North American plants and cut 35,000 jobs worldwide, about 10 percent of Ford's work force. Ford car sales were down 22.2 percent, trucks down 7.6 percent. The Lincoln Mercury division was off 25 percent. But Jaguar's new X-Type helped the luxury brand post an 87.5-percent sales gain, while Land Rover more than doubled its January sales thanks to the new Freelander sport-utility vehicle. Sales at the Chrysler Group were down 8.9 percent, with cars falling 8.1 percent and trucks 9.3 percent. Jeep sales were down 10 percent despite its all-new Liberty. The Sebring sedan and convertible posted big gains, but the PT Cruiser suffered a 36-percent sales drop. Much of what made 2001 the second banner year for auto hides the internal dynamics of the wheeling and dealing of accountants Detroiter's are accustomed to: nowhere outside Detroit are there frank discussion of the rate of repossessed vehicles, say Ford faced last year - 18,000 per month. Folks, that's 18,000 per month. This expansion of credit to un-credit worthy folks, the lower sections of the working class resulted in the December 14 firing of Donald Winkler, head of Ford Credit and former scam artist from Capital One. The Chrysler Group - a polite way of forgetting its purchase by Daimler-Benz and isolating its singular performance, has the distinction of leading the crash in auto since it lost its number two spot to Ford back in the 1950s - and it was no different during our current contraction in the market. The collapse of stock market valuation in March 2000 signaled the coming of the consequence autoworkers have faced for four generations - layoffs, cutbacks, give backs and get the heck back. The Chrysler Groups third quarter losses for year 2000 were 512 million while running at a rate of annual production of 3.1 million vehicles. Fifteen months ago the Chrysler Group announced its intentions to shed - fire, 25,000 workers world wide only to be followed by Ford and General Motors announcing a year later, roughly 30,000 folks to be fired respectively. The projections of the impact of the contraction in the free market - world wide, is whispered to be between 125,000 and 180,000, directing affecting as many as 900,000 peoples immediate employment. The ratio is roughly four impacted for every one autoworker put in the streets. Within the US market foreign automakers continue to do well. South Korea's Hyundai Motor Co. Ltd. posted its 12th consecutive month of record U.S. sales with a 22-percent gain. Nissan Motor Co. Ltd. sales jumped 9.6 percent in January, while Honda Motor Co. Ltd. reported a 1.5-percent decline from the previous record January. Volkswagen AG gained 6 percent in sales, and its Audi unit enjoyed a record January with 6,322 sales. Daimler Chrysler's luxury Mercedes-Benz unit registered a 19-percent gain in January sales. Here within the auto industry the law of value and restrictions within market exchange operates with a unique simplicity. Value is the amount of socially necessary labor in the production of commodities. During periods of expansion - booming profits constitutes expansion because the amount of auto producers has contracted in the absolute and relative sense, modern technology and equipment are accumulated and the workforce is expanded to keep pace with sales. During period of contraction the sum total of the accumulated technology is implemented shrinking the workforce as measured by the amount of people that constitute the value-producing portion of the production process. Further, the portion of the total social capital spent on machinery and technology increases as the amount of capital spent on the value-producing sector of the workforce decreases. Plus a contraction in the market also means that 120,000 now produce a greater amount of vehicles than the 150,000 five years ago. Here we so-called Americano's have a wonderful sense of the tragic. It's a recession when your neighbor is laid off and a depression when you are laid off; it is overcapacity when your neighbor is laid off and overproduction when you are laid off; a personal squabble when your neighbors husband is laid off a divorce when you are laid off. One can argue that the Board of directors and auto designers create value, but the average autoworkers with five years seniority and more will simply smile and patiently explain that there is a difference between creating value and profit and that they create the value and everyone else hustles to create profits. The Madison Avenue advertisers do not create value although they are indispensable for creating profits and easing the pain of separating you from your wallet. Speaking of wallets, Donald Winkler's down fall is centered on his insistence of asking the wrong people the infamous question of the Capital One Credit Corp commercial: "what's in your wallet?" The lowers strata of the working class showed what was actually in their wallet - nothing! Here is a barrier that every capitalist and worker - and the local pickpocket, would love to surmount. Here is an expression of the barrier in the market that absolutely defines and expresses the polarization between use-value and exchange value. It is true that an expansion of credit will extend the depth of the market or rather extend the production cycle and speed the circulation of commodities, but it is in the nature of gambling and auto to not know if you have won or lost until you get home and count the money. One can of course have a wonderful time gambling and making autos, but sooner or later the wife and kids or rather husband is going to ask about the bacon. When Winkler hit the ground running in Detroit it was "Happy Days," "thumbs up," extended and continuous production cycles and hearty slaps on the backs. A letter arrived in the mail in early April 2001 - "Think Ford First," promising an auto loan to great great grand father Leroy - "with just your good signature," and he passed back in 1973. I figured I would get the grandson a Ford Navigator so that when he turns 18 in 2025 he would already have a vehicle (family planning). When the money was counted at the end of the year, there was nothing in Donald Winkler's or rather Ford Financial wallet and they recorded the first third quarter lose in the history of the world; 18,000 vehicles a month were being repossessed and Ford Security escorted him out of the building. This is no pun. He was escorted to his work station, told to pack his family photos and escorted out of the building to the cheers of Ford financial division. Detroit may lack a certain intellectual integrity, but we have a hell of a sense of humor. Down here no one laughs on his way to the bank but cry and we laugh all the way to work. This will become clear shortly. Here we are dealing with a peculiar consciousness where men and women cheer you on the way in and cheer the ouster of failure and "forgive" the company from laying them off to achieve profitability. What held this consciousness in place - up until tomorrow, are the mobility of the American peoples, the achievement of partial stability and the movement of sections into the lowest strata of the working class. When partial stability of profits is achieved the workers who never return to the industry have no organized voice and are no longer union members with access to organization. Protest and disagreement has until yet to create a political vehicle of expression. Auto is of course extremely capital intensive with a monumental amounts of money poured into equipment, technology and administrative activity necessary to coordinate a vast network of producers. Market contractions - the inability to realize a profit from what you produce and not simply consumption, hits very hard. The white-collar workers as distinct from those directly engaging the production of vehicles taking the first step into the street. Twenty years ago in the US market, roughly 17 of every 100 workers employed in the industry were white-collar, while today 36 of every 100 are white-collar. A narrower and narrower group of human being actually builds cars. Twenty years ago the market annually absorbed 10 - 12 million vehicles and today the market absorbs 17 million. The whisper number for the end of next of the decade (2019) is a ratio of 65-70 white-collar workers for every one hundred employed in the industry and the union and non-unionized workers have been acting accordingly. White-collar workers in small number are unionizing and joining the Autoworkers union. The trajectory since the dawn of capital (actually since the biblical Adam was told to take his women, clothes, automobile and get the heck out of Eden and go back to Detroit) has been and remains fewer workers producing a greater volume of commodities than a previously existing amount of living labor. Hence less value in production, no matter how much money the wise guys and girls of Madison Ave. get out of ones pocket or rather wallet. What will become slowly and painfully clear to a new generation is that capital has used up all of its quantitative expansion and with the new technology ushers in another phase of qualitative decline. (A point of departure is necessary. Actually, what happened in Eden was that Adam sought access to the tree of knowing and immortality and when God denied him immortality he asked for his union representative. God said "my son there is no such thing as a union and simply because you are a first world man is no reason to act like an imperialist brat." After dinner that night - yes they ate apples with Adam eating the traditional last bite, "ugh you don't want that last piece do you baby?" An election was held and to break the tie vote Adam became the union rep. When he explained his rights to God, he was invited outside of the Eden with instructions on how to get to Detroit. Engel's conveniently leaves this out of his Origin of the Family, which further proves his false conception of value and dialectics). Now the "whisper numbers" refer to earlier, is the discussions that take place between the union leadership and the corporate leadership, who are remarkably straightforward in describing market conditions, financial markets, sales projections, health and safety figures, cost and the mechanics that allows a market to jump from a depth of 12 million to 17 million without a genuine expansion of the market. "Deep" is not "wide" and depth is not expansion, but this has been our little secret in Detroit. See Adman got "deep" and God told him to get "wide." Unbelievable as it may sound it is very often less costly to sell vehicles at a loss rather than not make them. Selling vehicles at a loss is less expensive than not making any vehicles at all. All the union leaders, corporate leaders and seasoned workers understand the principle of why it is less costly to sell a product at a lost rather than not make it. This is why we laugh on the way to work and cry going to the bank. (Allow me to give a reference because this is going to be very hard to believe: "Behind The Wheel At Chrysler - The Iacocca Legacy" by Doron P. Levin, Harcourt, Brace and Company publisher, 1995. Library of Congress number: ISBN 0-15-111703-9) Shutting down and starting an automobile plant up is not like turning on the television or CD player. After a production facility is shut down for one week, it takes at least two days for the totality of equipment to come on line, achieve its specifications and tensions. There are times it takes two weeks to be up and running. Heck, shutting down for the weekend means a skeleton crew must come in before Mondays production begins and fire up all the equipment - hydraulics, coolants, electrical flow, etc. Dead labor in the form of machinery can't make anything - especially value, until activated by living labor, calibrated and kicked in the pants two or three times. After a facility is shut down for 30 days you have a serious problem and someone is going to get fired, along with his or her staff and subordinates. Then of course there is the used car game that is played with the auto renting companies where the industry sell the vehicles to the renting company who sells them back to the company 90 days later, putting pressure on the dealers who must restrain prices to compete with the cars sold by the company, bought back by the company and put on the open market for resale as new cars for a couple to several thousands dollars less. "Depth of the market" is difference from "expansion of the market" which capital has absolutely achieved. Amazing as it seems, one can produce and sell 3.2 million cars and not make a profit if production is not rationalized, a "balanced" ratio between white and blue collar workers in not achieved, cost are not contained and expansion is limited to depth. I was there when it happened and everyone held his or her breath, laughed on the way to work, tiptoed around the issue and tried to get just one more check. Rather than shut down facilities the tendency is to close them because it cost too much for them not to run production. The constant capital portion (fixed cost) of the total social capital is called "dead labor" for more reasons than one - dead weight. Marx called this capital in the form of "dead labor" a vampire like substance bleeding living labor and the domination of the dead over the living. Once the self-activating equipment that reproduces the activity of the worker without him or her present in large numbers, comes on line in the next two decades, all the debates over value and living labor will come to an end. The real question that faces the workers Friday is not "theories of socialism" and trying to slice a piece of pie into equal shares, but distribution based on needs and the art of laughing on the way to work. There is of course the question of what is called the company owned parts manufacturing facilities that are capital intensive, but that is a story for later. Are we in an authentic crisis of overproduction? Does the market - or rather, what in someone's wallet constrict the gigantic productive forces and tend to separate (polarize) the unity of use-value and exchange value like the guy with the size 15 shoe, that was dating my wife and separated us, when I was laughing on the way to work - and later crying on the way to the bank? Is there validity in visualizing the trajectory of the law of the amount of socially necessary labor that goes into the production of commodities? It there in fact a law of the tendency for the rate of surplus value extraction to fall and with it exchange-value? Is labor-power subject to this law of value? Does periodic crisis give way to partial stability of profits that lead too more intensified crisis? Does the outbreak of the crisis take place on the basis of polarization as opposed to simply collapse or rather, does collapse mean increasing polarization expressed in "what's in your wallet?" Ask Donald Winkler. Melvin P
