The Marxist-Leninist Daily

Lowering workers' claims for wages, benefits and pensions will not solve any problem for the economy as a whole or for monopolies such as U.S. Steel or Essar Steel Algoma. The demand for concessions under the rubric of making companies more competitive is a sham and will have the overall effect of worsening Canada's economy. The same is true for governments that pressure public sector workers to accept wage freezes and concessions on benefits and pensions under the hoax of "battling debt and deficits."

The executive managers of U.S. Steel and Essar say that concessions are necessary to keep the mills competitive. That is utter nonsense. It simply reveals their class prejudice. To bolster their bias, they trot out the worn-out saw that workers are a cost of production and that concessions reduce the costs of production allowing them to make more profit of enterprise and possibly even offer lower prices for steel. They should be honest and simply say concessions have nothing to do with costs or prices; they simply want to transfer added-value from Canadian workers to owners of capital mostly located outside the country. The monopolies want to pay larger dividends to shareholders, service their humungous debt and give bigger bonuses to executive managers.

Concessions transfer claims on production from the working class to owners of capital. This is true for individual monopolies and for the economy as a whole. The aggregate social product produced nationally is a sum of production from all the enterprises. Claims on that social product are divided into two main social categories: the working class and owners of capital. Changing the proportion of how much each of the main social forces claim (workers and owners of capital) does not change the value of the social product produced at a particular enterprise, for example a steel mill or in the country as a whole; it only changes the proportion in which the added-value is divided. The socialized economy is weakened to the degree social product is taken away from the working class and put into the coffers of the rich.

Value is determined by average work-time necessary to produce something, such as a ton of steel. How the added-value contained within the steel produced by workers is divided up amongst workers, owners of capital and government does not have anything directly to do with the value of the social product and its market price.

The fiction that concessions are solutions to whatever ails the steel industry or a particular enterprise is worse than nonsense; it is a destructive anti-worker lie that has as its aim to force down the living standards of active and retired workers. Concessions do not reduce companies' costs; they simply transfer wealth from workers to owners of capital, which does not cut costs but does weaken the economy especially in those communities directly affected, as the working class has less income to purchase goods from local businesses.

A similar situation prevails for public sector workers. The more concessions dragged from public sector workers, the weaker the economy as a whole becomes. How could it be otherwise when the working class constitutes the overwhelming majority of the people?

The working class, including the middle strata, and owners of small business should unite in firm opposition to concessions in the private and public sectors. Concessions are not solutions to any economic problem including public debt and deficits; concessions make the situation worse.

Corruption and Decay within Canada's Ruling Elite

I have been following the Magna International saga in the bourgeois press quite closely. I found the article in TML quite helpful in putting everything in perspective when it states "Frank and Belinda Stronach represent both a natural and hereditary aristocracy that is striving to reintroduce all the rights and privileges of medieval rule. The financial oligarch reject all modern definitions, in particular the rights of the people and their empowerment to decide all economic and political affairs including the use of social property, such as Magna International Inc. in Canada, and distribution of social product."

The workers at Stelco had a similar experience. The old Stelco filed for bankruptcy protection (CCAA) in January 29, 2004. One of the aims in doing this was to try to force the workers and pensioners to give concessions to the owners of the old Stelco. After 27 months of bankruptcy fraud, a new Stelco emerged under the control of three vulture capitalists (Tricap, Appaloosa, and Sunrise) and Rodney Mott, a speculator with some steel industry background from the U.S. These vultures seized control of the new shares of the new Stelco for less than $150 million. They also received a $150 million loan at 1% interest from the provincial government, thus effectively ensuring that they did not have to risk their own money. Eighteen months later these vultures sold all their shares to U.S. Steel for $1.1 billion cash, realizing a 700% return on their investment in 18 months.

These vultures ripped more than $1 billion in value out of Stelco and moved on to their next big score. (Tricap is part of a $100 billion empire, Brookfield Asset Management.) The workers at U.S. Steel Canada Hamilton Works work in a plant that badly needs a hot strip mill and new investment to modernize the plant, all of which could have been accomplished with the $1 billion. However, the workers do not control the economy and are thus reduced to suffering the consequences of the actions and demands of the vultures who are just concerned with making their big scores. While these big scores are devastating the peoples all over the world, the workers are being told that their demands for pensions, health benefits, etc. are outrageous.

It is very clear that the times are calling on the workers to organize an effective opposition to all this nation wrecking going on.

Massive Layoffs at Olymel

On Friday July 16 the monopoly Olymel implemented its latest round of anti-worker restructuring at its Iberville plant, near Saint-Jean-sur-Richelieu, on the South Shore of Montreal. In April Olymel announced the permanent layoff of 183 workers at the Iberville plant as of July 16. The plant processes poultry and pork and has nearly 300 workers. Following these layoffs, only 100 people are part of the process of production. The monopoly attempts to justify its decision by saying it is in a competitive sector and that this restructuring will allow them to "save" $2 million a year. The production at the Iberville plant will be transferred to Olymel's plant in Brampton, Ontario, and also the Berthierville and Sainte-Rosalie au Québec plants in Quebec. TML met with several workers from this plant to hear what they have to say.

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TML: Today is a difficult day, it is the last day for 183 of you. What are your thoughts?

Worker 1: Sometimes I get the feeling that it's those who remain with the company that will have cause to complain [general laughter]. Seriously, it is not easy, we feel powerless and humiliated. What's more, we don't understand. Last year at this time, the company was hiring lots of people, they had renovated and invested in new machinery. Today the plant is practically closed.

Worker 2: We don't understand why [they restructured], because we were forced to take concessions in our last collective agreement in 2005. Olymel threatened to close the doors if we gave our executives a strike mandate. Many were scared at that time and voted for what the company offered us. All that for nothing. They put the plant on life support, we are on borrowed time.

Worker 2: Olymel says it saves $2 million with this layoff. How can you save $2 million by disappearing 183 productive jobs? The plant will produce less, so there will be less revenue created, the plant will generate less money. What's more, if we produce less revenue, the expenses and real costs of production remain the same. We have to pay city and government taxes, we have to pay for power, the building, the infrastructure, maintenance for the equipment etc. How can we do this if we diminish production? It doesn't make sense.

Worker 3: What else doesn't make sense is that the government is doing nothing, they're letting us languish and they do nothing, not even lift a finger.

St-Hyacinthe, October 24, 2009: Striking workers at Olymel's plant in St-Hyacinthe. Placards read "Since 2005 I've given my 20% [concession]"; "What has Olymel done with its subsidies?"; "Olymel: 1,700 jobs lost."

TML: A Parti Québécois MNA spoke about his to a journalist from Radio Canada. What was her position?

Worker 4: She wants the Charest government to intervene to find a solution to the layoffs. She told the journalist that a Quebec government corporation, the Société général de financement, invested in Olymel to create jobs in the regions. She is outraged now that the money is going to jobs in Ontario. She says she wants to initiate a revitalization committee and that everyone wants to create a revitalization committee.

Worker 1: She only wants to make political headway, no one believes her. She's the one who called the journalists to come today. Everyone believes that the only thing she wants today is our vote come the next election. I am the only union representative; she wanted me to join her in shaking hands with the workers in front of the journalists. I refused. Those people can make it look like we said something we didn't. At the time of the struggle of the Olymel workers in Vallée Jonction [in 2007], Radio Canada was against the workers, on side with [Olymel's negotiator and former premier] Lucien Bouchard and the government and the company, now they want to come here as though they pity us. It's disgusting and very humiliating at the same time. I'm not involved in politics, but if at some point I am, it won't be with those folks; I don't trust them. My instinct tells me to stay away from them.

Worker 3: You're right, but the problem is that we are totally powerless; we have the impression that we can do nothing. Their stories of a revitalization committee are empty words that serve to create illusions. One only has to look at the case of [the heavy equipment plant of] Komastu in Candiac [on the South Shore of Montreal] where the PQ deputy failed to create a revitalization committee, or again, with the case of the Shell refinery [in Montreal that is being sold off by the company]. It's clear now that Shell fooled everyone. The problem is that companies like Olymel and Shell can do what they want and they have the law on their side. We have nothing.

TML: So what is needed is laws that defend the workers and politicians who are interested in defending them as well.

Worker 5: The politicians aren't interested in making those kinds of laws for fear of losing their position. What's needed is that we be the ones to make the laws [general laughter].

TML: You mean having the workers themselves in the National Assembly and making laws?

Workers Are Not a Cost of Production --
A Simplified Example

Owners of capital and their gurus like to overwhelm workers with the "complexity" of the capitalist economy. Workers should respond by thinking about the economy in its simplest form and from there proceed to the more complex. Let us dissect the capital-centred assertion that workers are a cost of production and reduce it down to a simple form, say one self-employed worker.

Most everyone knows a self-employed worker or at least someone who does work on the side apart from their day job. The self-employed worker may have some necessary tools and a truck, and certain skills such as plumbing, carpentry, masonry, electrical etc.

A worker, called Kelly for our example, takes a job to renovate a bathroom. Kelly estimates the value of the completed work at $5,000, which includes her work-time, a new bathtub, sink, drywall, plumbing supplies and paint. The finished commodity is the renovated bathroom estimated at $5,000.

Upon completion of the work, Kelly breaks down the value as follows, which resembles her original estimate:

Bathtub: $1,500
Sink and counter: $1,000
Drywall and paint: $100
Plumbing supplies: $400
Kelly's work-time: $2,000
Total: $5,000

Costs of production in the form of purchased supplies: (bathtub, sink, supplies etc.) = $3,000

Costs of production are called transferred-value, which is value transferred from previous production. The homeowner pays the electrical and water bills directly, which form part of the transferred-value or costs of production but do not go through Kelly's estimate and bill of payment.

The value of Kelly's work time for which she has charged the homeowner $2,000 consists of transferred-value and value she has added from her work time. The value of Kelly's work consists of both added-value from her actual work time and transferred-value from costs of production she consumed in the course of renovating the bathroom. These are costs of production directly related to the activation of Kelly's work time rather than from supplies connected with the renovated bathroom.

Gas for truck: $200
Depreciation (value transferred from tools and truck in the course of renovations): $50
Prorated cost of work clothes and other necessities related to this project: $10
Transferred-value = $260

Added-value is equal to the average work-time contributed by workers at a certain level of production. Average work time is estimated at a basic unskilled level and increases incrementally as the work time becomes more skilled up to professional levels of highly educated engineers etc. Kelly has an assortment of skills making her work time equal to, let us estimate, 1.5 X the basic level. This means the actual hours she put into the job would be multiplied by 1.5 to give the average work time necessary to renovate the bathroom. (Note: This estimate of the value of work time occurs spontaneously but could be worked out scientifically with the active participation of the working class. A conscious estimation would give the value of work time and its variations according to skill and other factors a level of consistency and surety that would be positive for the economy and workers. The value of work time is not only related to skill level but more fundamentally to the level of the productive forces in the country especially in the production of social product considered necessary for life itself. Also, note that the value of work time is not equivalent to wages. Wages are but one claim on the value of work under capitalism. Profit, interest, rent and taxes are other claims on the added-value produced by work time.)

Kelly cannot keep the entire added-value of $1,740 as other social forces have claims on it, although unlike working for wages or a salary, profit of enterprise does not have a claim, as Kelly is self-employed.

Total added-value: $1,740
Claim by owners of debt = $100
Claim by government = $540
Claim by Kelly = $1,100

The claim by owners of debt is for interest and fees on money borrowed for her truck and tools, mortgage for the property where the truck is parked and her tools are stored. This claim by owners of debt is calculated or prorated according to the work time used in renovating the bathroom. Of course, Kelly has to pay the full interest and fees for the amount she borrowed for the truck, tools and house but only the portion directly attributable to the work time renovating the bathroom can be considered a claim on that particular added-value.

Claim by governments include income taxes, if not working under the table, but certainly fees such as truck licence, goods and services taxes and sales taxes now HST in Ontario, BC and Nova Scotia, property taxes etc. Income tax on this added-value would be added to the government's total claim on her income for the year; other government claims on this particular added-value would be calculated on a prorated basis according to the work time involved in renovating the bathroom.

All three claimants have legitimate claims on the added-value. In the example, there is no claim for profit from an owner of enterprise as Kelly is self-employed.

The amounts claimed by the three claimants could vary but this would not change the total added-value worth $1,750 within the example nor the value of the renovated bathroom. None of the claimants represents a cost of production, as all are claimants on the added-value produced by Kelly. The costs of production are the amounts transferred from previous production by the working class at a different stage in the production process.

Total value of the new social product = $5,000
Transferred-value, which includes all costs of production except incidentals at the house such as electricity = $3,260
Added-value produced by Kelly = $1,740

Three social forces lay claim to this added-value (Kelly, owners of debt and government). Owners of enterprise do not have a claim, as Kelly was self-employed on this job and not a wage worker.

The simplified example reveals that the worker's claim on the social product (renovated bathroom) or more specifically the value that she added is not a cost of production. The example further shows that a change in the amounts claimed by the three main claimants would not change the value of the finished product nor its market price. If the government or owners of debt claim more, then Kelly would have to claim less. Adding another claimant such as an owner of enterprise would reduce Kelly's claim on the added-value she produced by the amount the owner of enterprise normally expects. Other claimants on added-value, not in the example but who generally make a claim, are owners of land who claim ground rent on the added-value produced by the working class.

All these claims on added-value by those social forces not directly involved in work reduce the claim by the actual producers, the working class. The main issue under discussion at this point is that the claim of workers on the social product they produce is not a cost of production but a legitimate claim on the added-value they create. In a modern socialized country, the working class should have first claim on the added-value it produces and on the added-value made available for the provision of services. Of similar importance is the claim of governments to ensure the well-being of all, especially social programs and public services, infrastructure and to meet the general interests of society. The claims of owners of capital in the form of profit of enterprise, interest and rent are obsolete remnants of the old mode of petty production and are not in harmony with modern socialized mass industrial production. Those obsolete claims of owners of capital should be restricted and gradually eliminated.

Other Issues to Consider

The first is the fact that modern production is a collective affair involving not one worker such as Kelly but thousands within a socialized economy. If Kelly were to go into partnership with another worker, they would have to work out that relationship. As more workers join the partnership, the relations of production become more complex and assume a new quality as an enterprise requiring a division of labour such as actual producers, accountants, managers, designers, researchers etc. This complex collective of workers would require new relations of production that would include relations with other enterprises and most importantly, a new state based on those new relations of production, a new state with institutions that are not capital-centred but human-centred.

Another complexity comes from the increasing amounts of borrowed money necessary as the workers' enterprise quantifies and begins to use more machinery and buildings. If the moneylenders are constituted as they are today as for-profit lenders charging interest, then this becomes an ever larger claim on the added-value and an unnecessary or parasitic burden on the actual producers. New public forms of financial institutions that are not for-profit would have to be invented if we are to imagine this example in a more complex way and bring it into being.

Also, the division of the added-value in the simplified example amongst Kelly, the moneylenders and governments is not as benign as the example indicates. This is also true with regard to the monopolies such as U.S. Steel and Essar. The division of added-value even within the very simple example reflects real expectations and a standard of living in Canada that has been established through decades of class struggle between the working class and owners of capital. A switching of amounts amongst the moneylenders, governments and Kelly would not change the intrinsic value of Kelly's work time in renovating the bathroom but if say, the claims of the moneylenders or governments became too large, Kelly may just say "forget it" and not take the renovation job. This is the grain of truth that exists in the monopolies' claims that concessions are necessary for them to continue producing in Canada. U.S. Steel, Essar and other global monopolies may also say "forget it" if they do not receive concessions and a certain claim on added-value. Monopolies now have the expectation that the struggle of the working class has weakened to the point that a new lower standard of living can be imposed on active and retired steelworkers such as eliminating both indexing of wages and pensions to increases in the cost of living and stopping defined-benefit pension plans for new hires. The current expectations of U.S. Steel and Essar are fuelled by the anti-social offensive of governments for the past twenty years, the unilateral breaking of the post-WWII social contract between labour and capital and the recent apparent incapacity or unwillingness of not a few leaders of the working class movement to wage a consistent struggle in defence of the rights of all and to restrict monopoly right. These factors have fuelled a subjective anticipation in the minds of owners of global monopolies that Canadian workers are in retreat and will agree to a lower standard of living. Owners of capital and their governments are confident that a qualitative change in the division of the claims on added-value is underway in Canada, the United States and Japan. This relates to the general level or rate of exploitation or rate of return owners of capital expect on their invested capital.

In the simplified example given, if the claims of governments and the moneylenders were very high, the only way Kelly could do the work at the same claim on added-value would be to adjust the price of production to the new reality and raise the amount the buyer of the renovated bathroom would have to pay. If the customer refused to pay the new higher price Kelly could walk away from the deal or accept a lower claim on the added-value she produces. For workers to have the power to decide on these matters when it affects themselves is one thing but for monopolies to have this power when the ramifications are so immense is a different quality. To have the power to decide matters such as the appropriate level of claims on added-value and whether to "walk away" from production or not is of great importance to the working class. The issue of "who decides" highlights the necessity of building a self-reliant economy outside the control of the global monopolies, where Canadian workers exercise control over the economy's direction and can restrict the monopolies and prevent them from doing serious damage such as shutting production and demanding concessions such as U.S. Steel has done in Hamilton and Nanticoke and Vale has done at its mining and metallurgical operations.

The monopolies and governments are trying to force a lowering of the general standard of living. This means concretely a reduction of workers' claims for wages, benefits and pensions. Owners of capital want to force through a general reduction in the standard of living. They threaten to walk away if they cannot have a higher claim on added-value. Their threat and that of Kelly to "forget it" are two different qualities. The decision of Kelly as the actual producer affects only herself and peripherally the customer. The decisions of monopolies have tremendous repercussions for thousands of Canadians and businesses, even entire communities and the economy as a whole. This is another reason why the actual producers must have the power to decide such matters as claims on added-value, market prices and the ability to say "forget it" or not. To have the power to decide these matters such as claims on added-value and to produce or not are part of exercising the right to be. They are important reasons why a self-reliant economy is necessary where Canadian workers exercise control over its direction and can restrict the monopolies and prevent them from doing serious damage such as shutting down production or demanding concessions.

Concessions are already having a bad effect on the socialized economy making economic crises more serious and longer lasting, tumbling one after another as a permanent feature of monopoly capitalism. Concessions are not solutions. This retrogression can be stopped through organized class struggle of the working class. Each section of the working class must take a stand in defence of their own Canadian standard of living and unite with other sectors in defence of the rights of all.

Workers are not a cost of production on the added-value they produce nor are concessions solutions to economic problems; they make the situation worse. But knowing this and stopping the monopolies on their reckless path are two different matters. It has become clear to an increasing number of workers that our knowledge strengthens us in our determination to defend the rights of all and restrict monopoly right but the actual doing of the deed of restricting the monopolies requires new forms of organization, social consciousness and unity and determination to carry out resistance in a conscious planned way. At this time in history, workers have to gain control and decision-making over their own locals and national organizations and struggle to gain control and decision making over the economic and political affairs of the country through democratic renewal and lead the transformation of Canada towards a diverse pro-social self-reliant economy and radical transformation of the relations of production.

Resist the Pressure for Concessions!

Resist the Pressure for Concessions!

Corruption and Decay within Canada's Ruling Elite

Massive Layoffs at Olymel

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Workers Are Not a Cost of Production --
A Simplified Example

Other Issues to Consider

Resist the Pressure for Concessions!

Resist the Pressure for Concessions!

Corruption and Decay within Canada's Ruling Elite

Massive Layoffs at Olymel

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Workers Are Not a Cost of Production -- A Simplified Example

Other Issues to Consider

Workers Are Not a Cost of Production --
A Simplified Example