Market discipline for Europe

For some time now people on the left have been warning that EU expansion into the former Soviet empire would be used European elites to drive down working conditions and dismantle the European social compact. That effort is now starting to shift into high gear.

Siemens, one of Germany's most important corporations, has just used the threat of shifting work to Hungary to force workers at two of its factories to accept a 5-hour increase in the work week and elimination of the Christmas bonus with not increase in wages. This is part of a Europe-wide effort on the part of employers to break the limited work weeks that have been won over the last 30 years.

Since World War II, Europe's strong labor movement has won impressive gains that the much weaker unions of the United States could only dream of. 35 hour work weeks, 25-30 vacation days/year, universal healthcare, good unemployment insurance. American commentators like to ascribe this to cultural differences: Americans have a stronger work ethic, Europeans value leisure more. But unless someone can point out the millions of American workers who would turn down a month of vacation every year at the same wages, the difference is simply one of power. In the fight over who will control the wealth generated by industrial economies, the workers are weaker in the USA so they get less of the benefits.

Unfortunately, European unions became complacent and stopped short of demanding truly radical transformations: workers' control of factories, the elimination of management, ending private ownership of businesses, abolition of markets. The fundamental dynamics of a capitalist economy were not done away with, merely repressed. Now that employers can take advantage of low-wage competition in Eastern Europe and other poor countries to increase their leverage, they'll go back on the offensive.

This is part of a worldwide reassertion of power by the ownership class against workers that's been unfolding for 30 years. In the poor countries it's called "structural adjustment" and imposed by the IMF. In the USA it's seen in the shift to casual/part-time work for low benefits and pay as the cities deindustrialize. Here it's called "globalization". Western Europe is the last holdout, but the process is getting underway there too. Everywhere, welfare measures are being dismantled, businesses are privatized, regulations are eliminated, labor is increasingly exploited, elites are increasingly powerful and rich.

If all you do is reform capitalism when you're strong, it'll only be a matter of decades before the system reasserts itself and all your gains are undone.