From Socialist Voice, June 2010

Monopoly capitalism at work


Recently Pfizer Ireland announced that it would be sacking up to six thousand workers globally, equivalent to 18 per cent of its work force, including 785 in Ireland. The bulk of the other workers would come from the United States, Germany, and Britain (the higher-cost production areas). This massive cut comes as a result of the company’s purchase of its competitor Wyeth in a merger costing $67 billion.
     The shock that this announcement has had on the workers and their families is in the context of Pfizer continuing to be a highly profitable company. In the last three months of 2009 alone, Pfizer recorded a net profit of $767 million. The CEO, Jeffrey Kindler, received pay of $13.7 million in 2009 (down 7½ per cent from 2008).
     This announcement very aptly demonstrates that it is not just companies making a loss that require a reduction in labour costs through pay cuts or redundancies but also companies making substantial profits. The nature of the system drives this apparent madness.
     The structures of monopoly capitalism are such that the strong must continue to increase their profit and their percentage of their market to ensure that they do not become the next victim of the crisis. Naturally, this leads to an ever-increasing monopolised economy.
     When mergers and acquisitions occur (one way of increasing market share), particularly during a structural crisis like the present one, the new company will often find itself facing the potential capacity to overproduce its product or service, a situation that will leave the company open to losing its leading position in its field. As the vice-president of Pfizer Ireland, Paul Duffy, stated, “it is a difficult operating environment globally, and there is excess capacity globally.”
     To avoid overproduction, the company must either increase its market capacity (the size of the market and its capability to consume its product) or reduce its production capacity.
     This is exactly the situation that has unfolded for Pfizer following its purchase of Wyeth. Despite recording huge profits, and despite increasing its share of the market, Pfizer, to avoid over-production, must cut its labour force. And so the apparent irrationality of a highly profitable company needing to sack thousands of workers is suddenly explainable in the context of the system: monopoly capitalism.
     It is not just a company “taking advantage of the recession,” as social democrats and apologists for the system will suggest, but it is in fact the very rational act of a company working within the irrational system of monopoly capitalism. This understanding of monopoly capitalism, as distinct from previous capitalist eras, is the key if real lessons are to be learnt and the forces driving economic and political decisions exposed.
     Sadly, this analysis will be scant comfort to those six thousand workers and their families; and therefore a co-ordinated international union campaign will be required in the coming months to try to save the maximum possible number of jobs.
     People can intervene in the economic system and begin to shape it towards different ends. It does not have to be this way.
[NL]

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