"Negro and White Unite and Fight": A Social History of Industrial Unionism in Meatpacking, 1930-1990
Roger Horowitz
University of Illinois Press, 1997
373 pages $17.95
Review by Joe Allen
UPTON SINCLAIR’S 1906 novel The Jungle exposed the horrible working conditions that plagued the lives of packinghouse workers in turn-of-the-century America. Almost a century later, according to historian Roger Horowitz, "packinghouse workers in the United States have tragically returned to the jungle."
The retreat of industrial unionism in meatpacking over the last 20 years has had a devastating impact on the lives of workers in the industry and in the communities that depend on it. Once considered symbols of postwar blue-collar prosperity, these meatpacking communities are now boarded-up towns. Well-paid union workers have been replaced with a new impoverished, underpaid immigrant workforce. At the same time, the new giants of the industry–Excell (a division of Con Agra), Cargill and IBP–prosper in ways that their robber-baron forebearers could only dream of.
Horowitz’s excellent history of the United Packinghouse Workers of America (UPWA), "Negro and White Unite and Fight": A Social History of Industrial Unionism in Meatpacking, 1930-1990, comes out at a time when many people see the urgent need to rebuild an industrial union of meatpacking workers.
The UPWA was one of the most militant, interracial and left-wing unions of the Congress of Industrial Organizations (CIO) era and retained much of its militancy in the postwar period. Horowitz gives us a real understanding of both the battles fought to create an industrial union in the meatpacking industry and the union’s tragic decline.
Meatpacking was historically one of the most difficult industries to organize. At the turn of the century, four firms dominated the industry: Armour, Swift, Cudahy and Wilson. They pioneered mass production methods, breaking down into minute detail every aspect of slaughtering cattle and hogs. Yet despite the virtual monopoly of the Big Four over the industry, profit margins were small. Meatpacking was labor-intensive work and management was obsessed with the need to control labor costs. So management produced the notorious "drive system" which used fear and intimidation to raise worker productivity.
Failed organizing attempts
With the exception of a short period during the First World War, when the American Federation of Labor (AFL)-affiliated Stockyard Labor Council unionized packinghouse workers, most early attempts to build the union failed. Workers waged militant struggles in 1904, 1920 and 1921, but these fights were defeated by the employers’ union-busting tactics and racism within the AFL.
The employers recruited an ethnically and racially diverse workforce in order to prevent unionization. Many of the packinghouses were literally "Towers of Babel" where one group of workers could not communicate with another. The employers consciously used the historic racism toward Black workers within the predominately white AFL-affiliated Amalgamated Meat Cutters and Butcher Workmen’s union to divide the workforce. This was particularly true in 1921. As the president of a Chicago meatpacking company explained, "We took the Negroes on as strikebreakers in 1921 and have kept them ever since in order to be prepared for any kind of outbreak."
The meatpacking giants pioneered the American bosses’ short-lived experiment with "welfare capitalism" in the aftermath of the failed strikes of the 1920s. Management combined the open shop with a limited amount of seniority rights for older, skilled workers and company-sponsored recreational and social programs.
The Great Depression of 1929 shattered the thin veneer of welfare capitalism. The return of wage cuts, speedups and brutal working conditions all undermined the employers’ paternalistic policies. After the passage of the National Recovery Act (NRA), union activists began to reemerge in the packinghouses. Communists, socialists and former syndicalists made the crucial difference in organizing the industry at this time.
In Austin, Minnesota, Frank Ellis, a former member of the Industrial Workers of the World (IWW), was key in organizing the Hormel Company in 1933. Veterans of the Socialist Party in Kansas City were at the center of the organizing of the huge stockyards there. Chicago, with its 20,000 packinghouse workers, was key to organizing the heart of the industry, and it was here that the Communist Party (CP) played the decisive role.
According to Horowitz, "As one of the few interracial organizations in Chicago, the CP helped bridge the divisions among packinghouse workers and also initiated the process of unionization." The CP, lead by Herb March, trained a cadre of Black, Mexican and Polish members who organized the packinghouse workers in Chicago. Many were veterans of the CP’s unemployed struggles and Scottsboro Boys campaign who brought their organizing experience into the plants.
In 1937, the CIO created the Packinghouse Workers Organizing Committee (PWOC) as a rival to the AFL’s Amalgamated Meat Cutters to centralize the struggle against the Big Four meatpackers. The chief target for the PWOC in Chicago was Armour–the largest meatpacker in the city. The PWOC won by developing a militant shop-floor strategy rooted in an extensive shop steward network that could put pressure on the companies where workers had the most power. After a two-year battle, Armour capitulated to the PWOC in 1939. Swift and Wilson fell soon afterward.
Unionizing the Chicago meatpackers was part of a national strategy to bring all of the meatpackers under national contracts. Out of these struggles, the PWOC created its unique "chain system" of plant-based local unions which ensured regular contact between workers of the same company so they could respond to any assault from the companies.
A generation of militants
The C P recruited a whole generation of militants out of the packinghouse workers’ struggles. According to Horowitz, "[O]nly Chicago’s Communists were able to build a durable organization and retain their influence well into the 1950s. Their immediate membership, and the larger circles of packinghouse workers influenced by Communist notions of class struggle and inter-racial unity, lent a distinctive character to the Chicago UPWA [PWOC became the UPWA in 1943], which in turn would profoundly affect the international union."
Despite the McCarthyite witch hunts of the 1950s, the "UPWA retained the insurgent spirit of the 1930s workers’ movement in the changed circumstances of postwar America. The union remained, by and large, democratic...and contributed to the development of the civil rights movement." Martin Luther King spoke at their conventions and they poured money into the Civil Rights struggle in the South.
Beginning in the 1950s, the industry went through huge changes that would produce a profound crisis for the UPWA over the next two decades. Competitors challenged the domination of the Big Four by employing new technology and building nonunion plants in rural areas closer to livestock. Slowly the great urban meatpacking centers like Chicago began to decline and brought the UPWA down with them.
In response, the UPWA merged with its old rival, the AMC, in the 1960s. But this move only temporarily halted the slide in membership. In 1979, the UPWA merged with the Retail Clerks International Union to form the United Food and Commercial Workers Union (UFCW). This merger, meant to save the union, ended up conceding most of what the UPWA had built in the 1930s and 1940s. As Horowitz explains,
Within the UFCW, the packinghouses were a dwindling minority in large, multi-unit locals covering entire states and headed by local union leaders who came from completely different trades. Coordinated national bargaining had disappeared. Regional directors controlled negotiations with packing firms, and only for the plants in their districts. Contacts among unionized workers in different plants of the same firm were irregular and minimal. The industrial unionism established by the UPWA in the 1940s was no more.
From 1979 onward, the packinghouse workers came under siege. A torrent of concessions, union busting and the erosion of national contracts destroyed what a generation of militants had built to push back the jungle. P-9’s heroic attempt to hold the line in Austin, Minnesota, inspired many, but ultimately could not withstand the sabotage engineered by their own UFCW president, William Wynn, who put the local in receivership rather than back its fight against concessions.
Horowitz isn’t sure what the solution is to the sharp decline of industrial unionism among packinghouse workers today. But he has many good suggestions, including the establishment of master agreements, democratically functioning chains, plant-based local unions and a commitment to equality for all members. Horowitz understands that "cooperation based on common grievances and concerns as workers…will offer the best hope for packinghouse workers to unite and improve their lot in the twenty-first century." Yet, he goes on to say that there is no way to "predict" how this kind of unionism can be rebuilt today.
But Horowitz’s own history provides the answer. Conditions will force workers to organize and fight back. New militants will emerge from the experience of struggle. And a key ingredient in the fights of the past–organized socialists rooted in the struggle–will once again be crucial in shaping a fighting movement. Horowitz’ book provides an excellent look at an important chapter in working-class history. It should be read by all.
By right of discovery
The Occupation of Alcatraz Island: Indian Self Determination & the Rise of Indian Activism
Troy R. Johnson
University of Illinois Press, 1996
273 pages $17.95
Review by Paul D’Amato
ON NOVEMBER 20, 1969, 89 American Indians occupied Alcatraz Island, a craggy rock located in the middle of the San Francisco Bay that once was the site of a notorious federal prison. Most were college students from Indian tribes from around the country who had relocated to the Bay Area and Los Angeles. They called themselves "Indians of All Tribes."
Several days before the occupation, the new organization had met to plan the occupation at a makeshift Indian Center in San Francisco (the old San Francisco American Indian Center had recently burned down), and they came up with a proclamation that carried a serious but bitingly funny message:
To the Great White Father and All his People:
We, the native Americans, reclaim the land known as Alcatraz Island in the name of all American Indians by right of discovery. We wish to be fair and honorable in our dealings with the Caucasian inhabitants of this land, and hereby offer the following treaty: We will purchase said Alcatraz Island for 24 dollars ($24) in glass beads and red cloth, an precedent set by the white man’s purchase of a similar island about 300 years ago. We know that $24 dollars in trade goods for these sixteen acres is more than was paid when Manhattan Island was sold, but we offer that land values have risen over the years. Our offer of $1.24 per acre is greater than the 47¢ per acre the white men are now paying the California Indians for their land.
Then the proclamation took another bitterly sarcastic turn:
We feel that this so-called Alcatraz Island is more than suitable as an Indian reservation, as determined by the white man’s own standards. By this we mean that this place resembles most Indian reservations, in that:
1. -It is isolated from modern facilities, and without adequate means of transportation.
2. -It has no fresh running water.
3. -The sanitation facilities are inadequate.
4. -There are no oil or mineral rights.
5. -There is no industry and so unemployment is very great.
6. -There are no health care facilities.
7. -The soil is rocky and unproductive and the land does not support game.
8. -There are no educational facilities.
9. -The population has always been held as prisoners and kept dependent on others.
This brilliantly sums up the history of the conquest and oppression of American Indians. Troy Johnson’s The Occupation of Alcatraz gives us a well-written and sympathetic blow-by-blow account of the occupation, as well as a section where he lets various participants talk about their experiences.
A wave of land takovers
The 19-month occupation involved hundreds of activists. And though it failed to win Indian control of Alcatraz, it sparked off a wave of more than 70 property takovers by Indians nationwide that lasted into the mid-1970s. There had been previous Indian struggles, but most had been local and tribal in nature. The Alcatraz occupation launched a pan-Indian "Red Power" movement that sought to unite all Indians to fight for treaty rights; land, water and fishing rights; and the right to more government monies under Indian control. The American Indian Movement (AIM)–the most famous of the radical Indian organizations–was one of the most important offshoots of the Alcatraz occupation.
The movement was fueled by two trends. One was the U.S. government’s policy of "termination" in the 1950s, in which Indian tribal reservations were officially terminated by the U.S. government, conveniently freeing up the land for exploitation by the government and various business interests. (This policy, by the way, was carried out by the same man who presided over the Second World War internment of Japanese Americans in concentration camps.) Thousands of Indians were forced to look for work in cities across the country like San Francisco, Milwaukee and Los Angeles. There they faced poverty, job discrimination and police harassment. In Minneapolis, for example, Indians were 10 percent of the city’s population, but 70 percent of the city’s jail inmates!
The new urban environment put Indian students and workers into a situation in which they could more easily see themselves as Indians, rather than Apache, Lakota or Cherokee. Young urban Indians–especially young college students–became radicalized by the anti-Vietnam War movement and the civil rights and Black Power movements.
The occupation got widespread support–including financial–from students, unions and even celebrities. Significant is this diary entry from one of the occupiers, Stella Leach, a Colville/Sioux:
…it is surprising how much support that we are getting from more of the working class man. Of course, now all of the unions have come in to back us, and the map up there, a map of all the unions that are participating now, fund raising for us, and if they do that all over the United States and in Canada, and Alaska, and clear down to Mexico City; it’s the longshoremen in Mexico City, the national local there. People are supporting us all over now.
Unfortunately, Johnson gives us no further account of working-class support for the occupation, or what form it took.
Many of the participants in the occupation were Indians from poor and working-class backgrounds–like San Francisco State student Richard Oakes, the first "spokesperson" of the occupation, a Mohawk who had worked for 10 years as a "high steel" worker on skyscrapers and bridges across the country. Joseph Morris, a Blackfoot Indian and member of the Longshoremen’s Union, organized the logistics of getting supplies stored at Pier 40 and transferred to the Island.
Indian self-determination
Though many participants were workers, and though unions gave support to the occupation, the movement’s politics were more influenced by student radicalism than by class politics–the need for Indian self-determination, and for the development of some kind of Indian national or cultural identity.
The difficulty of sustaining an occupation on a rocky island without proper living space or fresh water and food led to infighting and conflicts between activists on the island–a problem compounded by the laxness of the operation, which allowed serious activists as well as drug-dealers onto the island. In the end, the occupation fizzled, as the government stalled and waited for the occupation’s size to dwindle to a handful of people. Only then did police and federal agents move in and put an end to it. But Alcatraz sparked a new movement, and so could be marked as a great success even if it failed in making Alcatraz Indian land.
The only problem with Johnson’s book is his strange reverence for Richard Nixon. "I hope," he remarks, "that this book begins the process of recognition and pays the proper respect for Nixon’s contribution to American Indian People." Johnson cites in defense of Nixon his return, for example, of the sacred Taos Blue Lake area in New Mexico to the Pueblo Indians. Johnson here is softened in his attitude to Nixon by the fact that Nixon apparently personally held Indians in high regard. (Though the same can’t be said for his attitude to Blacks or Jews!)
Setting aside for a moment Nixon’s role in devastating Vietnam, the Nixon Administration’s final offer to the Alcatraz Indian activists was a gross insult. Nixon’s negotiators proposed that Alcatraz become an Indian theme park, staffed by Indians under the auspices of the park service–a plan that had in fact already been proposed by the park service before the occupation. Under no circumstances was Nixon about to give Alcatraz to a bunch of Indian activists– it might set a dangerous precedent.
This aside, Johnson’s book is well worth reading for bringing to light an often overlooked but important chapter in the struggles of the 1960s.
Eavesdropping on the faculty party
Lukács After Communism: Interviews with Contemporary Intellectuals
Eva L. Corredor, editor
Duke University Press, 1997
210 pages; $15.95
Review by Lance Selfa
IN WRITING History and Class Consciousness in 1923, George Lukács produced one of the most important works of classical Marxist philosophy in the 20th century. He wrote this work in the wake of the revolutionary wave that shook Europe during and after the First World War. As people’s commissar for education in the short-lived Hungarian Soviet Republic of 1919, Lukács was certainly no armchair philosopher. "The actuality of the revolution"–and the very practical questions that it presented–animated the best of Lukács’s writing. "Historical materialism is the theory of the proletarian revolution," he wrote in his 1924 study, Lenin.
Lukács left a large body of work on Marxist philosophy, literary criticism and cultural studies. Even Lukács’ philosophical enemies had to acknowledge the brilliance of his best writing. Unfortunately, Lukács After Communism–composed of interviews with such well-known left-wing intellectuals as Frederic Jameson, Cornel West, Etienne Balibar, Terry Eagleton and Michael Löwy discussing Lukács’ ideas–doesn’t do much justice to Lukács.
Clearly, editor Eva L. Corredor, a professor of French and German at the U.S. Naval Academy (of all places!), thinks that Lukács and classical Marxism don’t have much to say in the wake of the 1989-91 Eastern European revolution. "In the 1990s traditional hierarchies and class structures seem to have given way to more complex and less clearly differentiated social divisions," she writes in the introduction. She continues,
The historical, revolutionary role attributed by Lukács to proletarian class consciousness appears to have shifted to groups whose antagonistic strategies have been nourished by racial, gender, ethnic, political, and religious inequities.
…At the same time we have to recognize that the fixation on or forceful implementation of any one theory, including Lukács’s own, could mislead and in changed historical or social circumstances pose threats to the freedom and happiness of the individual and of entire nations.
For the most part, the intellectuals Corredor interviews share these views.
Michael Löwy, a leading orthodox Trotskyist, agrees that feminism and ecology have much to teach Marxism. He even concedes that "anarchists have understood the dangers of the State better than Marx." He concludes that Marxism needs to be open to "external contributions" from intellectual movements like Romanticism.
French Stalinist philosopher Etienne Balibar says that Lukács’ vision of world revolution in the post-First World War era flows from "a very romantic view of history." Marxism, he says, has shown "a complete inability" to explain major events like the rise of Nazism and fascism. Of course, you wouldn’t expect a Stalinist to have paid much attention to Trotsky’s brilliant revolutionary Marxist analysis of fascism in the 1930s.
In addition to reflecting all of the pessimism and confusion of most left intellectual circles, the interviews also demonstrate widespread ignorance of classical Marxism. Moreover, they tell the reader very little about Lukács and his theories.
This is Lukács After Communism’s biggest fault. Most of the interviews refer to academic papers, writers, graduate seminars and conferences that have meaning only to a narrow circle of academic specialists. At times, you get the sense that you’re eavesdropping on conversations at a university faculty party where everyone is trying to impress everyone else with the number of books they’ve read and the names they can drop.
Every now and again, Corredor runs up against someone who doesn’t share her fascination for the latest intellectual trends. These parts of the book come as breaths of fresh air in a stuffy room.
Consider the following excerpt from Corredor’s interview with British literary critic Terry Eagleton:
Corredor: "The concept of the proletariat today is really passé."
Eagleton: "Not for me. Globally speaking the proletariat has increased."
Corredor then changes the subject.
Later in the Eagleton interview, Corredor just can’t seem to get her mind around Eagleton’s contention that the Stalinist regimes in Eastern Europe had nothing to do with socialism–and that Marxism could explain their collapse.
The interviews turn up some interesting nuggets. But the nuggets emerge after so much blather about "reflexivity," "historicism" and multi-syllable words with the prefix "post-" attached to them that it hardly seems worth the effort.
Readers who really want to learn something about Lukács and genuine Marxist philosophy should pick up a copy of History and Class Consciousness. It’s challenging reading. But you can get more out of reading just 10 pages from History and Class Consciousness than from slogging through all of Lukács After Communism.
Inside the pressure cooker
The State of Working America 1996-1997
Lawrence Mishel, Jared Bernstein and John Schmitt
Economic Policy Institute , M.E. Sharpe, 1997
467 pages $24.95
Review by Lee Sustar
AFTER MONTHS of media hype about the "miracle economy"–the Chicago Tribune last May declared it a "workers’ paradise"–the United Parcel Service (UPS) strike stunned the employers by winning 55 percent popular support. The State of Working America does much to explain why. By using an enormous range of statistics to debunk the employers’ propaganda and point fingers at the causes of the decline in workers’ living standards, Mishel, Bernstein and Schmitt show why millions of workers readily identified with the International Brotherhood of Teamsters’ battle against corporate greed.
As researchers at the Economic Policy Institute (EPI), the unofficial think tank of John Sweeney’s AFL-CIO, the authors take pains to be objective without pretending to be neutral, arguing that "the changes in the economy have been ‘all pain, no gain’…the factors causing the pain of greater dislocation, economic vulnerability, and falling wages do not seem to be making a better economy or generating a ‘payoff’ that could potentially be redistributed to help the losers."
This argument, well summarized in an introductory section, is backed by vast statistical studies broken down to highlight the dynamics of change. A good deal of the material will be slow going for those unfamiliar with statistical methods, and the details obscure some important insights. Nevertheless, the book is an indispensable resource for understanding the conditions of workers since the employers’ offensive began after 1973.
The authors demolish the stereotype of the U.S. worker as a white, blue-collar male who maintains a high standard of living at the expense of women, Blacks and other minorities. While this was never true, such views are ludicrous today. So while Black workers continue to suffer much higher rates of unemployment and on average lower wages than white workers, wages and conditions have declined for all workers.
Biggest wage decreases
For example, while the gap between women’s and men’s earnings narrowed by 10.3 percent from 1979 to 1989, to reach 73.1 percent, this had more to do with the decline in men’s wages than an increase in women’s. If men’s earnings hadn’t declined, the gap would have only narrowed by 3.6 percent. In fact, male blue-collar workers suffered the biggest wage decreases over the last 25 years, losing 16.8 percent in hourly wages from 1973 to 1995. The proportion of white men living in poverty has increased from 10.7 percent in 1973 to 18.7 percent over the same period. Meanwhile, female blue-collar workers’ wages were basically flat; female white-collar workers have not seen significant pay increases since the 1970s.
Such statistics are seldom mentioned when the government reports gains in the median family income. It took until 1995–the fourth year of economic recovery–for this measure to start rising since the early 1990s recession. Since the publication of The State of Working America, the government reported a second consecutive increase in median family income for 1996–1.2 percent. According to the authors, the decline in husbands’ earnings has been offset almost entirely by wives’ increase in hours and earnings. But the long-term trend is toward decline. Where median family income grew 2.6 percent from 1967 to 73, it dropped 0.6 percent from 1989-95. Even the increases in the last two years leave the figure at $35,492, still below the inflation-adjusted pre-recession peak of $36,575 in 1989.
The fall in wages and income has been steady for all but the highest-paid skilled white-collar workers over two decades. But they have been punctuated by mass layoffs which have suddenly and drastically cut living standards for millions. From 1981 to 1993, 15 percent of men and 10 percent of women experienced at least one involuntary job loss–and, for the first time in history, this rate continued well into the economic recovery of the 1990s. Full-time workers laid off from 1991 to 1993 saw their wages drop 14.8 percent. Anywhere from 25 to 40 percent of them still had no health insurance in their new jobs up to three years later. These trends have strangled the "American dream" of steadily improving living standards for workers over 35 today. Young workers will never have a chance at the dream: a new family in 1997 has income that, in real terms, is $6,148 per year less than its counterpart in 1967.
The employers have trotted out a series of explanations for these trends. And the authors knock them down one by one. They take on, for example, the idea that an increase in benefits is compensating for the decline in real wages. The employers have forced workers to bear much of the increase in health insurance costs. The same is true of the allegedly "overstated" inflation rates. Even the economists who want to magically raise income by revising inflation downward cannot erase the trend towards greater inequality that will continue to show up in the statistics.
For all of their success at disproving false explanations of workers’ declining living standards, the authors are far less effective in assigning responsibility for the attacks on workers. "Employer militancy" gets blamed, quite rightly. But so too does globalization, on the grounds that manufacturing jobs have been lost to imports. Yet the overwhelming evidence of The State of Working America is that of a general decline in wages and living standards across the working class, led by low-wage service-sector jobs which are far less subject to replacement from foreign competition. Not surprisingly, the statistical evidence marshaled to explain globalization is thin compared to the extensive evidence presented on other issues.
Failure to criticize Clinton
The book’s biggest weakness is its failure to criticize the Clinton administration. After crediting the 1993 tax increase for the rich and the Earned Income Tax Credit for helping to reduce inequality, the authors don’t discuss welfare repeal which is devastating the lives of the most vulnerable in society. This omission is all the more noticeable, given that the authors show in detail how the last 25 years have made those who were already poor far worse off. Ironically, the "market" poverty rate in the U.S.–before taxes and government benefit programs–is actually among the lowest of the rich European countries–25.9 percent in 1995, compared to 25.4 percent for France. But once government social spending is factored in, the U.S. poverty rate is by far the highest–21.5 percent, compared to 6.5 percent for France. By eliminating welfare, Clinton has ensured that U.S. poverty rates will remain the highest in the industrialized world. The authors’ failure to criticize him may be due to the EPI’s ties to the Democratic Party–former Labor Secretary Robert Reich was an EPI founder.
Crucially, the authors highlight the best hope for workers to reverse the employers’ attacks: the "union differential." They found that wages are on average 25 percent higher for union workers, and overall compensation (wages and benefits) 37.8 percent higher. The advantage is clearest among blue-collar workers: unionized manual workers earn 50 percent more in wages than their nonunion counterparts, have 148.9 percent more in insurance and 322.6 percent more in pensions. Thus even with the long-term decline in unionized workers’ wages, organized labor is still far better off than the 85 percent of workers who are not in unions.
And, as the UPS strike showed, organized labor has the muscle to defend its gains and fight for more–if it uses that muscle. The State of Working America shows just how much has been stolen from workers over the last 25 years and is a valuable tool for those who want to take it back.
Taking stock of their greed
Wall Street: How It Works and For Who
Doug Henwood
Verso, 1997
374 pages $25
Review by Anthony Arnove
WHILE MUCH of the left has retreated into either celebrating the market (if Mother Jones magazine can any longer be considered left–it recently featured a cover story on how capitalism can save the environment) or accepting that there is no alternative to it, Doug Henwood’s book opens with this statement about the world of greed and inequality in which we live: "If I thought that this cultural pathology would persist forever, I wouldn’t have written this book."
Henwood, editor of the valuable newsletter Left Business Observer, has made a career of taking on bad thinking about economics and making economic trends and information accessible to those who want to do something about the one-sided class war that has taken place in the U.S. and internationally during the past 20 years. So it is a welcome event that Henwood has undertaken a full-length study of financial markets. He focuses on the Wall Street that experienced a 554-point free fall (or, as the newspapers described it, "correction") only months after the book hit the stores–underlining his skepticism about the stock market’s "new Golden Age."
Henwood starts from the view that the market is "comprehensible with a little effort, and even transformable with a little more." He then demystifies the basic "instruments" (such as stocks, bonds and derivatives) and "players" (mutual funds, government agencies, banks, etc.) that make the market run. Though often less clear than in his shorter pieces in Left Business Observer, Wall Street underlines the basic point: "One thing that markets do very well…is concentrate wealth." The richest 0.5 of 1 percent in the U. S., he shows, "claims a larger share of the national wealth than the bottom 90 percent."
Who owns the stocks?
Henwood also shreds the claim that the market benefits ordinary workers through revenues in their pension funds or through their ownership of stocks and bonds. "Only a minority 40 percent and falling of workers are in pension plans," writes Henwood. In 1992, "the richest 1 percent of households–about 2 million adults–owned 39 percent of the stock owned by individuals and 42 percent of the bonds…[and] the top 10 percent owned well over 80 percent of both."
In a section that is tougher going, Henwood also offers a challenge to the dominant post-Keynesian models of the capitalist market, puncturing the theories of various apologists for capitalism.
Henwood quotes a statement from Britain’s Economist magazine that sums up the contradiction between the rosy theories of capitalism with their promises of prosperity for all and the grim reality of rapidly growing income inequality, declining living standards for workers and the devastating social costs of the world market: "The choice for practitioners and theorists is whether to believe the evidence without the theory, or stick with a theory that, despite the data, is built on impeccable logic." Not surprisingly, as Henwood shows, they stuck with the theory.
Henwood doesn’t just target defenders of the system and the usual suspects, such as the International Monetary Fund, the World Bank and multinational corporations. Much of his final chapter, "What Is (Not) to Be Done," tackles fashionable reformist compromises with the market, such as "socially responsible investing" or freeing credit to allow higher growth (a popular idea with liberals associated with the Economic Policy Institute and Robert Kuttner’s American Prospect magazine).
There is a problem with "the desire to accomplish some social goals along with making a return on one’s money," Henwood argues. "Investment profits originate ultimately, no matter how you dress them up, in the uncompensated labor of workers, and they depend on a social order in which some people have money to spare and others don’t."
Henwood also shows how "the soulful capitalism crowd"–like Working Assets and Ben & Jerry’s, don’t live up to their PR.
Property is theft
On the idea of making the pie grow faster so that more workers will share in it, Henwood quotes Marx: "The notion of [easy money]…is only a hypocritical, philistine and anxiety-ridden form of saying: property is theft. Instead of workers taking the capitalists’ capital, the capitalists are supposed to be compelled to give it them." Henwood adds, "Or in the case of the American populist, compelled to lend it on easy terms."
For all of his criticisms of reformist approaches to the market, though, Henwood has little in the end to actually say in response to the question raised by the ironic title of his last chapter. He touches only in passing on the crucial fight to restore the welfare state ("a bit boring, perhaps, but essential to any more radical projects"), certainly one of the most immediate tasks that faces workers and the poor today.
After criticizing a model of social investment and arguing that markets always represent social control, Henwood offers what he calls "a few kind things about the Japanese and Germanic models of corporate finance." Henwood suggests, "The Japanese structure, with its cross holding and monitoring mechanisms, seems like a promising model for a more socialized mode of ownership of larger firms."
Surely Henwood knows that the Japanese and German economies aren’t exactly models of prosperity today. Japan has experienced nonexistent or anemic growth for most of the 1990s, while unemployment in Germany is at the highest level since Hitler came to power in 1933. In both countries–as well as across Europe, where "more socialized models of ownership" are being privatized by conservatives and social democrats alike–workers face a coordinated class attack.
Wall Street shows why capitalism doesn’t work for the vast majority. To change the system, though, we need to have a vision of a society run democratically by workers, not "more socialized modes of ownership of larger firms."
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