From
David Harvey's A
Brief History of Neoliberalism
Part
7 - The organized attack on regulations and unions
Reagan’s
election in 1980 was only the first step in the long process of
consolidating the political shift necessary to support Volcker’s
turn to monetarism and the prioritization of the fight against
inflation. Reagan’s policies, Edsall noted at the time, centred on
‘an across the board drive to reduce the scope and content of
federal regulation of industry, the environment, the workplace,
health care, and the relationship between buyer and seller’.
Budget cuts and deregulation and ‘the appointment of anti-
regulatory, industry-oriented agency personnel’ to key
positions were the main means.
The
National Labour Relations Board, established to regulate
capital–labour relations in the workplace in the 1930s, was
converted by Reagan’s appointments into a vehicle for attacking and
regulating the rights of labour at the very moment when business was
being deregulated. It took less than six months in 1983 to reverse
nearly 40 per cent of the decisions made during the 1970s that had
been, in the view of business, too favourable to labour.
Reagan
construed all regulation (except of labour) as bad. The Office of
Management and Budget was mandated to do thorough cost-benefit
analyses of all regulatory proposals (past and present). If it could
not be shown that the benefits of regulation clearly exceeded the
costs then the regulations should be scrapped.
To top
it all, elaborate revisions of the tax code –– mainly concerning
depreciation on investments –– allowed many corporations to get
away without paying any taxes at all, while the reduction of the top
tax rate for individuals from 78 to 28 per cent obviously reflected
the intent to restore class power. Worst of all, public assets were
freely passed over into the private domain.
Many of
the key breakthroughs in pharmaceutical
research, for example, had been funded by the National Institute of
Health in collaboration with the drug companies. But in 1978 the
companies were allowed to take all the benefits of patent rights
without returning anything to the state, assuring the industry of
high and highly subsidized profits ever after.
But all
of this required that labour and labour organization be brought to
heel to conform to the new social order. If New York pioneered this
by disciplining powerful municipal unions in 1975– 7, Reagan
followed at the national level by bringing down the air traffic
controllers in 1981 and making it clear to the trade unions that they
were unwelcome as participants in the inner councils of government.
The uneasy social compact that had ruled between corporate and
union power during the 1960s was over.
With
unemployment surging to 10 per cent in the mid-1980s, the moment was
propitious to attack all forms of organized labour and to cut back on
its privileges as well as its power. Transfer of industrial activity
from the unionized north-east and midwest to the non-unionized and
‘right-to-work’ states of the south, if not beyond to Mexico and
South-East Asia, became standard practice (subsidized by favourable
taxation for new investment and aided by the shift in emphasis from
production to finance as the centrepiece of capitalist class power).
Deindustrialization
of formerly unionized core industrial regions (the so-called ‘rust
belt’) disempowered labour. Corporations could threaten plant
closures, and risk –– and usually win –– strikes when
necessary (for example in the coal industry).
But
here too it was not merely the use of the big stick that mattered,
for there were a number of carrots that could be offered to labourers
as individuals to break with collective action. The unions’
rigid rules and bureaucratic structures made them vulnerable to
attack. The lack of flexibility was often as much a disadvantage for
individual labourers as it was for capital. The virtuous claims for
flexible specialization in labour processes and for flexitime
arrangements could become part of the neoliberal rhetoric that could
be persuasive to individual labourers, particularly those who had
been excluded from the monopoly benefits that strong unionization
sometimes conferred.
Greater
freedom and liberty of action in the labour market could be touted as
a virtue for capital and labour alike, and here, too, it was not hard
to integrate neoliberal values into the ‘common sense’ of much of
the workforce. How this active potentiality was converted into a
highly exploitative system of flexible accumulation (all the benefits
accruing from increasing flexibility in labour allocations in both
space and time go to capital) is key to explaining why real wages,
except for a brief period during the 1990s, stagnated or fell and
benefits diminished.
Neoliberal
theory conveniently holds that unemployment is always voluntary.
Labour, the argument goes, has a ‘reserve price’ below which it
prefers not to work. Unemployment arises because the reserve price of
labour is too high. Since that reserve price is partly set by welfare
payments (and stories of ‘welfare queens’ driving Cadillacs
abounded) then it stands to reason that the neoliberal reform carried
out by Clinton of ‘welfare as we know it’ must be a crucial step
towards the reduction of unemployment.
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