January 2013        

Capitalist automation and social dislocation

A general tendency of the capitalist economy is that the competitive pressure on firms to make profits, and maintain profitability, forces them to find new technologies that save on the total cost of production. Investment under capitalism takes place for profit only, not to raise output or productivity as such.
     If profit cannot be sufficiently raised through (a) more labour hours, that is, getting in more workers or making existing workers work longer hours (or both), or (b) intensifying the efforts of existing workers through speed-up and efficiency drives, then the productivity of labour can be increased only by better technology.
     Workers with better machines tend to produce more surplus value than those who have less effective machines, or no machines. So, in Marxist terms, the “organic composition of capital” (the amount of machinery and plant relative to the number of workers) tends to rise over time.
     A report in Business Week for November illustrates these trajectories in the heartlands of capitalist development, the United States and China. (It is not unreasonable to describe significant sections of the Chinese economy as capitalist.) For example, in Great Wall Motors, a manufacturer of trucks and SUVs, Swiss-made robots almost alone construct the body and frames of the vehicles. Approximately $161 million has been invested in recent years in mechanising four plants with 1,200 robots.
     The average price of a factory-floor robot is $50,000, before installation. But, as the general manager of Great Wall reported in Business Week, “with automation, we can reduce our head count and save money . . . Within three years, this cost will be completely paid for in savings from reduced worker wages.” After the robots were added, the number of welders at Great Wall Motors fell from 1,300 to about 400.
     China’s car industry has led the automation wave, particularly at its joint ventures with General Motors, Honda, and Volkswagen; consumer electronics, food and beverage processing and the plastics and textile industries are all following suit. One factor driving the switch to robots is the problem of labour shortages, which are common and are driving up wages, which are now in the region of 20 per cent annually in recent years. (China is not necessarily the hotbed of cheap labour it once was.)
     An increase in labour costs puts pressure on firms, so they change their production processes to lower their costs of production. For the textile industry, facing ever-narrower margins, automation may be the only alternative to shutting down or moving. While some factories move to Cambodia or Viet Nam, with their lower wages, some seek to secure extra surplus value from their workers through upgrades in technology. One Chinese textile manufacturer in Dongguan, after spending $1.9 million for twenty-nine stitching machines, reduced the work force from 140 to six. Average wages of $450 a month had previously been rising by 20 per cent a year. Unlike workers, the factory owner reported, “machines can run 24 hours a day, with very little downtime.”
     It is not just labour shortages but workers’ militancy that has sped up the automation trend. Labour unrest at Foxconn Technology Group, the iPad and iPhone contractor, which employs more than 1.4 million people in China, has forced shut-downs at its facilities in Taiyuan and Zhengzhou. Those demonstrations followed the spate of suicides at its Shenzhen factory in 2010.
     Last year the company announced the ambitious goal of adding a million robots to its Chinese factories within three years. Foxconn will have at least 30,000 robots in China by the end of the year. In car factories, microprocessor plants, and fulfilment warehouses, a single robot can now handle tasks that once took hundreds of person-hours to complete.
     All this, of course, flows from the anarchy of capitalist production and the competition between individual capitals. And, in turn, the resultant drive for automation results in social dislocation. As time goes on, companies become more productive or more efficient, through intensifying the exploitation of labour power while at the same time reducing the number of workers required. The widening of the “reserve army of unemployed” drives down wages and disciplines the existing labour force.
     Furthermore, such technological innovations tend to cheapen labour through de-skilling. Technology in the work-place has frequently been used to undermine and undercut skilled labour. Ford’s assembly lines in Detroit, for example, were introduced at the beginning of the twentieth century partly to help lessen the company’s reliance on militant and autonomous craft workers organised in the IWW. Through the breakdown and fragmentation of previously skilled jobs into routine, easily learnt tasks, high-wage craftsmen with years of training were displaced by cheap, unskilled immigrant labour.
     Even today’s mainstream economists concede that the high unemployment rates in the United States and Europe are at least partly attributable to the rise of machines. “There’s no question that in some high-profile industries, technology is displacing workers of all, or almost all, kinds,” wrote Paul Krugman in the New York Times on 9 December, and he added that “many of the jobs being displaced are high-skill and high-wage.”
     Under capitalist social relations of production the potential social benefits of technology are negated and are directed into ends that serve only the private interests of profit-chasing capitalists. Only under a system of socially planned production, where the social product is owned, controlled and distributed by those who produce it, can the real benefits of technological advance for society be truly realised.

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