Exploitation of workers by the workers

“It often happens that ideas lag behind reality; this is because human knowledge is subjected to restrictions due to many social conditions. We are opposed to diehards in our revolutionary ranks, whose ideas fail to advance with changing objective circumstances and have manifested itself historically as right opportunism. These people do not see that the struggle of opposites has already pushed the objective process forward, while their knowledge has stopped at an old stage. Their ideas are divorced from social practice; they cannot march ahead to guide the chariot of society; they simply trail behind, grumbling that it goes too fast and trying to drag it back or turn it in the opposite direction.” – Mao Tse Tung

In the second half of the 19th century, Marx and Engels posited that proletarian revolution would arise in countries at the highest stages of capitalist development – England, Germany, and the United States. According to their understanding, capitalism is in crisis when its technological abilities and productivity are brought to such a level that they can no longer be reconciled with outdated capitalist social relations in which everything has to be paid for and everything must extract profit. When technology reaches a stage of development where poverty, hunger and disease become problems that the existing technology can easily solve, the socialist revolution will arise. The echoes of these views can be seen in aspects of Lenin’s work, since he also thought that the October Revolution was a transitional step that must lead to the final socialist revolution, which would arise in Germany and secure a global proletarian revolution. Lenin later revised this view, relying on his experiences from 1905 to 1917, broadly explaining the world’s first socialist seizure of power, the Russian revolution, through the theory that the dictatorship of the proletariat would first find purchase at the “weakest links” of imperialism, yet correctly noticing the influence of imperialist super-profits in fostering the social-chauvinism of the Western left. Today, we see the consequences of this view in the programs of numerous so-called “revolutionary” organizations that still hold great hopes in the moribund “revolutionary” movements in the West, whether this hope is embodied in Bernie Sanders or Jeremy Corbin and the social-democratic fractions of Britain’s Labour Party.

To place hope for revolution in the imperialist West, however, is a rather obsolete view within the Marxist tradition. Since the second half of the 20th century, theorists such as Arghiri Emmanuel, Samir Amin, Andre Gunder Frank, Che Guevara and others, by elaborating Lenin’s theorization of a “labour aristocracy” and studying changes in national and global conditions of economic evolution, argued that under the conditions of global capitalism, revolutionary forces must be sought on the global level. These authors argued that revolutionary advances must start at the periphery of the world capitalist system, that is, in colonies or former colonies, as only those layers of society that have an actual material interest in bringing down the existing system will contend for revolution. The Western working class, its wages and conditions of life subsidized by imperial loot, has not only had a lack of material and subjective interests in breaking down the existing system. Because of its favourable position within the world division of labour and income, this fraction of the world’s working class has instead maintained interests in the preservation of the capitalist order.¹ It is now evident that the initial Marxian theory of socialist revolution first grasping state power in the West has proven false, despite that in these countries, productive capacities have long been such that the elimination of poverty – even globally – is a quite realistic possibility.

As mentioned, Arghiri, Amin and others have developed sophisticated economic models in order to explain why workers in the imperialist nations actually have an interest in preserving capitalism. During the 1960s and 1970s, while there was still a strong union movement in the West, strikes were almost everyday occurrence, and the events of May 1968 convinced public opinion of the possibility of socialist revolution in the Western nations. It was then that, with cursory dismissals, that Arghiri’s and Amin’s theories we claimed to be totally meaningless. Yet even then, just as today, it was clear to the careful observer that alongside surface-level discontent and short-lived insurgencies, workers in the West were not interested in systemic changes. Further, these upsurges in struggle were focused on the distribution of the imperial pies – their hunger was not for proletarian revolution and internationalism, but to secure as big a piece of the pie as possible for themselves.

In our current moment, however, confirmation for those theories which emphasize that revolution will ignite on the periphery is well-secured. While referring to concrete historical experiences of the 20th century, we will also deal here with the current state of the economic conditions of labour in the West. At first glance, we observe increasing working class support to political figures such as Donald Tramp and Marine Le Pen, who are promoting open hatred for immigrants and non-Europeans by advocating for a close to national borders and the forging of a new deal between labour and capital by which Western workers are promised a return to a lost Golden Age of prosperity. The appeals of the left do not resonate with the same intensity. While most commentators see the breakthrough of such reactionary national populist policies as a consequence of irrational racism or an expression of defiance against the liberal establishment, a consistent Marxist interpretation warns that these right-wing currents express the actual economic interests of the Western white working class.

To prove the accuracy of this claim, one needs to look a deeper into economic indicators which clearly show that the Western working class has become a kind of collective capitalist with an increasing share in the world capitalist system. When we use the term “collective capitalist,” we are not introducing a new concept, as today virtually all major companies are shareholding companies with numerous owners. What we are arguing is that, beginning in the 1970s, Western workers have not only received a portion of profits from their privileged position in the global division of labour and income, but have even become active participants in the ownership structures of Western corporations.

The acquisition of part of the ownership of imperialist corporations by Western workers undertook several forms, and what is common to all of them is that they reflect the class compromise between Western labour and capital, and the former’s alliance with the enslavement and exploitation of the peoples of neo-colonial states. In Germany, this class alliance has reached its most advanced form. It can be seen in the fact that a number of the directorates of German corporations elect half of their members from the ranks of workers with the other half coming from shareholders.² In addition, in many companies the workers themselves also hold an important part of the shares, and even receive them as employment benefits.

What is particularly interesting about the participation of labour interests in capital is the way in which these interests have been united in the period of the so-called social-democratic consensus.³ Alexander Hicks, as well as numerous other authors, has argued that social democracy in the second half of the 20th century, coupled to the interests of large-scale capital, led to the creation and consolidation of a form of government known as corporatism, which served as the theoretical basis for fascist movements in the first half of the 20th century.⁴ The leading corporatist or fascist idea was that class and all other disagreements in capitalism would be resolved by allowing participation of groups in society seen as integral to decide on the direction in which society would develop – that is, class collaboration. Workers, capitalists, bankers, craftsmen and others were to work together to make these decisions. For the corporatist, it is essential that social unity is always maintained and that compromises are made. Corporatism as the leading ideology in the West is accepted by large capital, the social-democratic parties, and the major unions.

The most significant example for this rise of corporatism is again Germany. Very little is said about how since the 1980s, an unprecedented wave of economic integration of labour and capital in Germany began, with the same program taking place in many of the core countries. By the end of the 1990s, pension funds became the most important investors on stock exchanges in the United States, and after the unification of Germany, the same process was seen.⁵ Laws have been passed that allow pension funds to invest significant capital (which has been collected for decades from the payment of pensions to workers) on the stock exchange in the shares of large corporations.⁶ The argument was that a quick inflow of money into corporations would enable large profits and stock market growth, and that funds would increase their capital through dividends or payments that all shareholders receive when a company records profits.

After the fall of the Berlin Wall and the unification of Germany, the infusion of capital from pension funds has created a sufficient amount of money in German corporations to carry out the privatization of the industrial giants from the former DDR and not destroy them – as they were destroyed in Serbia and many other post-Soviet nations – as it was politically important to undergo a smooth transition to capitalism in Germany in order to forestall social unrest. Soon afterwards, the same capital was used in the privatization of industrial companies throughout Eastern Europe after the fall of the Soviet Union. German firms were most likely to pick up all the strategically important companies in a short period of time. For example, Wolkswagen bought the Czech Škoda and integrated it into its automobile conglomerate, where it still operates successfully today.

The best example of this economic trend, however, is the German telecommunications giant Deutsche Telekom, which is partly owned by the state (holding 32% of shares), and a large part of the remaining shares then held by various pension funds.⁷ This company, whose ownership structure represents the embodiment of corporatism, is owned by the German state, German big capital and German pension funds. In addition, it is part of the world’s telecommunications cartel and has a significant share in the ownership of British Telecom and major US telecommunications companies., Operations of Deutsche Telekom are of great importance to Serbia and other countries created by the breakup of the communist republics. Deutsche Telekom has purchased near the entirety or a significant part of the telecommunications giants in Slovakia, Hungary, Albania, Montenegro, Croatia, Romania and Greece. The Greek OTE (Greek Telecommunications Organization), which is largely owned by Deutsche Telekom, held 20% of Serbia Telekom shares by 2012, and then sold the company back to the Serbian state for 380 million euros in preparation for the complete privatization of Serbia Telekom. It was said at the time that Serbia Telekom could reach the price of approximately one billion euros, and Bloomberg wrote that Deutsche Telekom was the main contender for the purchase.⁸ A simple calculation shows that the state of Serbia bought 20% of its shares of Serbia Telekom for 38% of the sum for which it planned to sell the company. For now, this malversation has not been realized, but we are aware that the sale of Serbia Telekom is one of the most important obligations of the Government of Serbia towards European, primarily German, capital.

We see that Deutsche Telekom owns the most important telecommunication companies across a large section of Europe, as does Wolkswagen, which bought Audi, Seat, Porsche, Bentley, Bugatti and other smaller companies in addition to Škoda. It is clear that this is a matter of forming unprecedented monopolies in the region’s key and most profitable industries. This entire project was made possible by the infusion of additional capital by pension funds. In Germany, pension funds now account for over 200 billion euros in stock market investments.⁹ By comparison, this is four times more than the total economic production of Serbia, which amounts to less than 50 billion euros. Even just one pension fund, BVK, which has a portfolio of 55 billion in shares of various corporations, is more powerful than the entire Serbian economy.¹⁰

German pension funds are now in the hands of the most qualified investors, and capital is so diversely distributed in shares of various companies that the losses of individual companies cannot significantly damage it. In other words, as the stock market grows, the capital accumulation of these funds grows, and thus the interests of workers whose pensions are found in these funds are structurally linked to the interests of capital. The higher the accumulation of capital, the higher wages can these workers expect. When all this is added to savings, which is an inevitable item of almost every traditionally generous German household, and which was made possible by the extremely high salaries of past decades, the question of the real interest of German workers for any changes other than those favouring capital is starkly raised.

When the German state, German capital and the German banks sit parasitically on the back of the European (and world) periphery, and German workers reap tremendous benefit from this parasitism, there is no concrete possibility of revolution in that country – such a possibility does not exist! Germany is only taken here as an example of a dominant European economy, and its role here is largely played out by the United States at the global level. In structural terms, it is clear that one cannot speak of an international solidarity of the working class emerging evenly from all regions of the world. The class struggle has completely shifted to the level of global conflict between the core and the periphery.

Predrag Kovačević

1.  https://rnp-f.org/2016/06/22/teorija-nejednake-razmene-i-konkretan-odgovor-na-imperijalizam/  ↩

2.  https://www.jura.uni-frankfurt.de/43029805/paper70.pdf  ↩

3.  Hicks, A. (1988). Social democratic corporatism and economic growth. The Journal of Politics, 50(3), 677-704.  ↩

4. Ibid  ↩

5.  Schertler, A. (2003). Dynamic efficiency and path dependencies in venture capital markets (Vol. 327). Springer Science & Business Media.  ↩

6.  http://www.oecd.org/finance/private-pensions/42565755.pdf  ↩

7.  https://www.telekom.com/en/investor-relations/company/shareholder-structure  ↩

8.  https://www.bloomberg.com/news/articles/2015-08-10/deutsche-telekom-eyes-telekom-srbija-serb-politician-says  ↩

9.  https://www.statista.com/statistics/419830/germany-pension-funds-investments/  ↩

10.  http://citywire.co.uk/wealth-manager/news/germanys-biggest-pension-fund-hunts-for-new-investments/a536093?section=global  ↩