Was Marx Right? The Bailout and the Auto Industry
There are two reasons we need to bail out the auto industry. The first, quite simply, is to buy time. Let’s say we agree that the American auto industry is doomed, and that a $25 billion bailout does nothing more than delay the inevitable by three years. That is a perfect and entirely persuasive argument in favor of a bailout. Right now, the ripple effects of the loss of a million or two million or three million jobs (no one is quite sure of the number) would be a nuclear bomb detonated in the middle of a national recovery plan. It’s not just the consequences for unemployment and health care and pension guarantees and consumer credit, it’s the complete devastation of the landscape in which the efforts of the new Obama administration will have to take place. If $25 billion buys us three years for a recovery plan to take effect, that’s a bargain. And there are other reasons to buy time. It is almost impossible to overstate the short-sightedness and pigheadedness of the management teams at the Big Three automakers. In the past few years GM executives have repeatedly derided the idea of a business model based on building fuel efficient cars and have pinned much of their hopes on selling luxury vehicles in China. But there are, finally, signs of improvement, including the development of the Chevy Volt. And there are a whole series of changes in the terms of employment under UAW contracts that are described below. But these things will take time to have their positive effects.
That’s the first reason we need a bailout: it might turn out to be enough to save the industry, and even if it doesn’t it buys us time that we desperately need. But there is a second reason for a bailout that has to do with nothing less than the question of the current economic age: was Marx right?
Was Marx right? The usual answer is “no” with respect to his predictions in the Communist Manifesto. In some ways, to be sure, his arguments seem quite prescient, as in his warnings that capitalism’s ever-expanding desire for markets that would lead to the creation of a globalized economy, his predictions that sovereign political systems would come to serve primarily as managing entities for multinational wealth, and his emphasis on the equation of market liberalism with free trade. On the other hand, the standard wisdom is that he was wrong about the consequences of these developments. In particular, it simply was not true that industrial capitalism resulted in ever-downward pressure on the living standards of workers, that the cycle of crises of capitalism continued to get worse and worse (after the global depression of the early 1930s), and above all that the middle economic classes disappeared as industrialization and corporate capitalism expanded. In the U.S. as in all western democracies, some combination of government intervention in the market and/or organization of labor produced counter-pressures that ensured that the immense wealth being created was shared. As a result, contrary to Marx’s prediction of society devolving into two opposing classes, these western nations’ economies were marked by the appearance of strong and stable working middle classes, a category Marx did not envision at all.
