Hard Times Hard Bargains: The Politics of the Canadian Autoworkers during Fiscal and Political...

8/22/2019 Hard Times Hard Bargains: The Politics of the Canadian Autoworkers during Fiscal and Political Crises

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Hard Times, Hard Bargains: The Politics of the CanadianAutoworkers during Fiscal and Political Crises

Hugo Chesshire & Tim Fowler

Introduction

The current crisis of capitalism that began in 2007 has brought the logics of neoliberalism

into question. While those on the left eagerly used the crisis to illustrate the flaws inherent both

in neoliberal doctrine and in its implementation, criticism of these economic and political

arrangements was also to be found in the mainstream [1]. Kevin Rudd, the former Australian

Prime Minister, argued that the neoliberal experiment had failed, and that it was time to move

on [2]. In the same breath, Rudd also called upon the state to save capitalism from itself [3].

Rudds comments were typical of comments made by political and economic leaders in many

industrialized nations: the prevailing theme of their remarks was that while this particular form

of neoliberalism had failed, the neoliberal capitalist archetype remained basically sound and

could yet be successfully implemented, perhaps with minor adjustments from the state. In an

irony not lost to many on the left, some of the most ardent self-professed supporters oflaissez-

faire were calling for state intervention, supposedly to save the market from itself.

Part of the solution to the crisis of capitalism was the revival of the state as a dominant

political and economic actor. In Canada, the federal government introduced the Economic

Action Plan to create jobs by increased spending in an attempt to stimulate the economy back

into growth. The Canadian state also exercised its coercive power by clamping down on those

who allegedly bore partial blame for the crisis, the Canadian labour movement. The Canadian

state acted to secure the long-term profitability of capital, and therefore acted to restrict trade

union activity. The federal government initially sought to suspend the right-to-strike for public

sector unions, but backed down after considerable backlash from the public and from opposition


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parties [4].

The Canadian governments initial abortive assault on organized labour was restricted to

public sector unions. The Canadian state used the current crisis of capitalism, just as it has used

capitalist crises in the past, as a justification for restricting trade union freedoms and activity.

This most recent crisis, however, saw the Canadian state intervene directly in private sector

collective bargaining, in an unapologetically pro-capital stance. This occurred during the most

recent round of negotiations between the Canadian Autoworkers union (CAW) and the Canadian

arms of the American Big Three automakers, General Motors (GM), Ford, and Chrysler. The

Canadian stateparticularly the Federal and Ontario governmentsput immense pressure on the

CAW to accept massive concessions as a state-imposed condition for public financial assistance

to the Big Three. This paper uses this particular round of negotiations between the auto

manufacturers and the CAW as the central case study, showing how the capitalist crisis re-

entrenched the neoliberal capitalistic state. The paper is divided into four main sections. The

first looks at neoliberalism in theory, particularly in relation to trade unions and state theory.

The second provides limited historical examples of the Canadian state using capitalist crises to

restrict trade union freedoms. The third provides the details of our central case study, and the

fourth concludes by looking at the nature of the neoliberal capitalistic state and how it has

changedor notduring the current economic depression.

I: Neoliberalism and Trade Unions

Neoliberalism is a political and economic theory which holds that the keystone of human

prosperity is the unleashing of individual entrepreneurial activity and the self-enablement that

will stem from strong property rights, and the creation of free markets underlaissez-faire free-

trade policies [5]. Neoliberalism also describes these policies themselves, designed to create an


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environment in which capital accumulation can proceed unhindered, irrespective of national,

cultural or ethnic boundaries and such limits as have been conspicuous in other political

economic theories, to bring about human prosperity through private entrepreneurial activity

without the hindrance of the supposedly dead hand of the state [6]. The particular policy of

greatest concern here is the neoliberal belief that a key component must be the dramatic

curtailing or outright abrogation of collective bargaining rights, and the destruction of trade

unions. Labour relations are viewed as a market like any other, and the labour market must be

allowed to clear and its participants left free to negotiate individually without the coercive

influences of unions. Unlike more collectivist philosophies, power imbalances in this market are

conceived either irrelevant or non-existent.

Therefore neoliberalism must, and does, mount a concerted assault on trade unions.

Neoliberal policies seek to redefine labour-capital relations in terms vastly more favourable to

capital [7]. This redefinition tends to produce legislation that weakens trade union freedoms; for

example, making it easier to decertify unions and more difficult to organize them. Neoliberal

trade union legislation also undermines union rights, security and recognition, and it rewrites the

rules governing union financing in a manner detrimental to unions. The outlawing of strikes in

certain companies, institutions, industries or entire sectors, back-to-work legislation, and the

ever-more inclusive definition of essential workers are also part of the neoliberal agenda [8].

Unions and union rights are seen as a barrier to the desirably unfettered operation of the free

market and an impediment to capital accumulation; using coercive measures to restrict union

freedoms serves the greater neoliberal agenda: building the supremacy of capital.

It is through this restricting of trade union freedoms that neoliberal policies help secure a

freer market, with greater private property rights and, most importantly, greater capitalist


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accumulation. Unions under neoliberalism suffer from weak political representation and

declining economic power. Deprived of this political and economic clout, trade unions have

suffered a reduced capacity to bargain and organize which, in turn, allows for further capitalist

accumulation. Restricting trade union rights has become a major policy aspect of neoliberal

governments.

Leo Panitch, borrowing from James OConnor, has defined the three roles of the

capitalistic state: accumulation, legitimization and coercion [9]. The state must try to maintain

or create the conditions in which profitable capital accumulation is possible. However, the state

also must try to maintain or create the conditions for social harmony. A capitalist state that

openly uses its coercive forces to help one class accumulate capital at the expense of other

classes loses its legitimacy [10]. The capitalistic state, then, must balance accumulation and

legitimization to allow for the capitalist class to accumulate as much profit as possible without

endangering its own legitimacy, and it must use its coercive function sparingly. The states

coercive function is the use of the states monopoly over the legitimate use of force to maintain

or impose social order.

The quintessential neoliberal state is a Randian night-watchman which serves solely to

enforce the law and private property rights, and which commodifies or will allow to be

commodified such public goods whose provision has been the purview of the state in most

developed countries since World War II, such as healthcare, welfare and social assistance,

transportation, and the provision of utilities and infrastructure such as electrical power, potable

water, sewers, roads and so forth. The interpretation of what the basis for law ought to be under

this state is also unique to neoliberal theory.

Ideally, neoliberal law would solely concern itself with private property rights. Such legal


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theory as has been espoused by neoliberal thinkers holds that the basic principle of law is the

Lockean concept of self-ownership, and that any other desirable laws will logically derive from

the combination of strong private property rights and the principle of self-ownership. Not only

torts but criminal acts can be proscribed under a purely property-based system of rights if self-

ownership is assumed.

From this stems the crucial point that, if ones body is ones property as in the Lockean

interpretation, then what one takes from nature and subsequently mixes ones labour with

becomes ones property. Therefore, neoliberal theory must acknowledge the supremacy of

private property rights not just over the body, but also over property acquired through the mixing

of labour with nature, and through mutually consensual exchanges of legitimately acquired or

provided goods and services, which constitutes the definition of trade. Neoliberals also

subscribe to the Lockean idea that the boundless accumulation of money is legitimate, although

not necessarily for the same reasons as Locke, who held that the primary problem with boundless

accumulation is spoilage of excess goods, but that money does not spoil and thus avoids the

problem of waste. Locke thus did not agree that boundless accumulationper se was legitimate

or socially productive. The neoliberal view is since that with which one has mixed ones labour

is ones property, this can therefore include the means of production; if one owns the means of

production, one also has a legitimate claim over the products, and such workers as one may hire

to operate the means of production have none, since they do not have a legal basis to claim any

ownership of the means of production. This is in notable contrast to Marxian interpretations, for

example, which ground the right to access goods and services in contributed labour rather than in

a traceable lineage of ownership.

Neoliberal concepts of ownership and the crucial importance of property rights underpin


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the pathological hostility of neoliberalism to organized labour. The difference between the labour

movement, which often bases itself upon collectivist if not Marxian theory, and neoliberals, is

that the latter do not acknowledge the validity of labour itself providing a basis for a claim on

anything. Trade unions are thus inherently offensive to neoliberal sensibilities, for in the

neoliberal opinion, at heart unions represent an attempt to obtain goods and services which the

claimants have no right to. The idea of a proletarian ownership of the means of production is

tantamount to theft. It should be noted that Lockean theory itself is not inherently opposed to

workers collectives, or the collective ownership of the means of production, so long as this was

done consistently with Lockean concepts of legitimate acquisition. The difference with

neoliberalism is that it holds that the current arrangement of ownership in society is inherently

legitimate and must be defended.

Neoliberalism thus entirely avoids the problem raised by Robert Nozick: in assessing the

fairness of a given property distribution, it is necessary to establish how that distribution came to

be, and whether that itself was fair. Nozick proposes that this is a problem with redistributionist

theory, in that in order to propose redistribution one has to know for certain that the current

distribution is wrong, which is difficultif not impossibleto prove [11]. However, this can also

be turned against non-redistributionist theory, for in supposing that the current distribution is fair

we assume, if we accept the neoliberal interpretation of Locke in that ownership derived from

preceding legitimate ownership is therefore also legitimate, that there was no unfairness in

previous acquisitions. Thorstein Veblen commented extensively on the predatory, highly

unscrupulous, deceptive and arguably frequently downright immoral behaviour of the robber

barons of 19th century capitalism, and distributions of wealth in the 20th and 21st centuries owe

much to the activities of the 19th century Rockefellers, Rothschilds, Morgans and Vanderbilts,


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which might make the current distribution wrong.

Neoliberalism generally does not acknowledge this problem, and where it does, it excuses

it on the grounds that the cure would be worse than the disease. Redistribution, even in the

redress of previous wrongs, sets a dangerous precedent for state interference in the operations of

the free market, which can only lead to economic inefficiency and the consequent interruption of

capital accumulation. Neoliberalism thus justifies current distributions either as having derived

from a legitimate legal and ethical system of individualism and private property rights, or as

being necessary to promote greater social good, i.e. wealth creation.

We propose that the neoliberal capitalist state uses its coercive ability primarily to create

and maintain private property rights, for this will lead to profitable capitalist accumulation. The

legitimation function then operates under the logics of neoliberalism. Precedent and tradition

force the grudging provision of a basic welfare state, but neoliberalism seeks to erode this

welfare state as quickly as public opinion will allow. The state supports the rights of capital with

much greater enthusiasm, and legitimates the profitable accumulation of capital in the public

mind by normalizing trickle down economics and bootstrapism as ways by which the little

people maysupposedlybenefit from neoliberal economics.

The state also seeks to de-legitimize trade unions by portraying them as inefficiencies in

the market, and portraying union members as overpaid, underproductive, and, in the case of

public sector unions, a drain on the tax base. The neoliberal capitalistic state creates and

maintains the conditions for profitable capitalist accumulation, supports the supremacy of private

property rights, legitimates capitalist accumulation by providing as skeletal a liberal social

welfare state as it can get away with, and delegitimizes trade unions and union rights. The

coercive function of the capitalist state is employed to keep the working class, and domestic


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trade unions, in line.

Capitalism is a system prone to crises. As crises of overaccumulation and profitability

occur, capital and the state react to ensure further profitability. This often requires structural

changes to the nature of the capitalist state: the state modifies its form and the functions of the

state apparatuses to ensure profitable accumulation [12]. The Canadian state has often reacted to

crises of capitalism by attempting to blame labour and thus prescribing a punishment of labour as

a suitable solution to the crises of capitalism. In particular this has been the case in the wage and

price controls of the 1970s, the restrictions on union rights in the 1990s (see below for both) and

the various provincial governments attacks on public sector unions in response to the most

recent capitalist crisis [13]. Of particular interest was the Canadian states assault on the

Canadian Autoworkers union (CAW) during their round of bargaining with the Big Three auto

producers (consisting of General Motors (GM), Chrysler, and Ford) in 2007 - 2009. This round

of bargaining saw the Canadian state directly intervene in private sector bargaining in order to

extract concessions from the union while in order to facilitate profitable accumulation for the

auto producers.

II: Examples of state retrenchment of Neoliberalism: Wage & Price controls and The Social

Contractact.

Using the crises inherent in the capitalist system as a reason to assault trade union rights

and freedoms is nothing new to the Canadian state [14]. In the past, the Canadian state has

restricted union rights and intervened in collective bargaining to impose austerity measures on

unions. Public sector unions have virtually always been the targets for a Canadian state seeking

to impose neoliberal restructuring, but private sector unions have also certainly tasted the whip

of neoliberal reform. We now turn to a brief overview of two case studies in which the Canadian


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state restricted union activity in order to produce a freer market, as well as to encourage

recovery from economic crisis [15]: the Federal wage controls introduced by the Trudeau

governments of the 1970s and 1980s, and the Social Contract Act in early-1990s Ontario.

During the mid-to-late 1970s and early 1980s, the Federal government, led by Trudeaus

Liberals, instituted a series of wage controls designed to fight inflation. The Anti-Inflation

Program of 1975 to 1978 was created to examine newly negotiated collective agreements and to

roll back any wage increases that exceeded government guidelines. The more significant goal of

the program was to maintain conditions for profitable capital accumulation, necessarily at the

expense of public sector trade unions. While the plan was initially meant to be for wage and

price controls, it soon devolved into wage controls alone, which have been a demonstrably

ineffective anti-inflation tool. In the 1980s, the wage control plan was expanded into the 6 and

5 programme, so-named for its aim of limiting public sector wage increases to 6% in 1982, and

5% in 1983.

6 and 5 was also created to limit inflation during a crisis of capitalism. The federal

government temporarily removed the right-to-strike from public sector workers, and unilaterally

extended collective agreements for two years. Wage increases faced a statutory limit to 6% and

5%, and unions who negotiated beyond this limit had those wage increases rolled back. This

was initially instituted by the federal government in the hope that provincial governments would

follow suit, which they soon did, subjecting their employees to similar wage-restraining

measures. The anti-inflationary programmes of the 1970s and 1980s saw the Canadian state

restrict union rights in order to fight inflation, which, in turn, would restore and maintain high

levels of profitability for capital.

The recession at the start of the 1990s was one of the worst suffered by the industrialized


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world up until that time, and some went as far as to label it the worst economic downturn since

the Great Depression [16]. The NDP government of Ontario introduced The Social Contract Act

in response, which was designed to fight inflation and introduce austerity measures. While many

other pieces of legislation have been passed restricting trade union rights and introducing

austerity measures, the Act has become a symbol of neoliberal hostility towards unions for

scholars on the Canadian left. This is certainly and in no small measure due to the fact that the

Act was introduced by the NDP, an ostensibly social-democratic party with a pro-labour

platform. The Act was designed to slash $2 billion from the government payroll through cuts in

public sector wages.

In order to implement the Act, the Ontario NDP opened up previously negotiated

collective agreements between public sector unionsstill in effectand the Ontario government,

and unilaterally enacted a 5% wage cut in the form of 12 days of annual unpaid leave for a three

year period. The Act was imposed by fiat on the public sector unions of Ontario. The unions

targeted by the Act refused to negotiate wage concessions with the government, and instead

proposed an alternate deficit-fighting plan, which the Ontario government flatly rejected [17].

The Act was rammed through on 7th July, 1993, slashing the wages of over 900,000 public

sector workers in Ontario, who took the blame and paid the price for an economic recession they

did not cause.

Panitch and Swartz note that the Social Contract Act and the 6 and 5 program were

similar in that they only targeted public sector workers [18]. These articles of legislation are

indicative of a much broader trend of the Canadian state, which scapegoats the working class and

organized labour during times of economic and financial crisis in order to ensure continued

capitalist profitability. Much of the assault on trade union freedoms, especially during times of


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crisis, is targeted at public sector unions. Government intervention in private sector collective

negotiations is virtually unprecedented. Outside of the Industrial Disputes Investigation Act,

adopted by the Laurier government in 1907 and struck down by the Judicial Committee of the

Privy Council (JCPC) in 1925, and numerous interventions during both World Wars under the

auspices of the War Measures Act, there is no history of direct government intervention in

private sector collective bargaining.

However, future scholars will not be able to say this, as there is now another important

cluster of interference by the Canadian state in private-sector bargaining beside the

aforementioned cases. In the 2007-2009 round of collective bargaining between the CAW and

the Big Three automakers, the government intervened decisively and at length into the

negotiations between private sector firms and their unions. Moreover, this is particularly

remarkable since this occurred after the advent of the Keynesian compromise and the consensus

on the desirability of labour peace, which was not the case for any of the prior examples, which

took place under the aegis of the generally extreme political and social hostility to labour of the

late 19th and early 20th centuries, or the exceptionalism generated by the war effort and the

overarching need to defeat fascism at all costs (the validity of which argument we shall not

discuss here). Since none of these were true in 2007-2009, this round of CAW negotiations is

exceptional in its own right, and merits closer study.

III: Case Study: The 2007 - 2009 CAW Bargaining Round

The Big Three automakers have been struggling for some time against German, Japanese

and Korean competition, in addition to which the pressures of the economic downturn of 2007-

2008 proved too much. In 2007, Chrysler was sold at a fire-sale price to a private equity firm;

Ford closed half their plants in an attempt to beat insolvency; and General Motors filed a loss of


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$39-billion on an already negative net worth. The credit crunch had cost half a million American

families their homes, sales were greatly depressed, those of the larger, more profitable vehicles

even more so as fuel prices rose and political concerns with climate change mounted. New US

fuel economy rules passed in December 2007 would also take a heavy toll on the Big Three,

even in Canada [19]. By March 2008, Canadian Big Three sales were down almost 7% while

import-brand sales were up almost the same amount [20].

At the end of January 2009, Chrysler, Ford and General Motors all demanded the re-

negotiation of the three-year contracts they had signed less than a year ago [21]. General Motors

first demanded $150-million in concessions [22]. The CAW reached a tentative agreement with

GM on March 9th, 2009. The current three-year agreement would be extended to four, wages

and cost-of-living allowances would be frozen for nearly the entire term, and a week of vacation

would be lost along with a $1,700 annual bonus. Additionally, workers and retirees under 65

would now pay an annual healthcare premium of $360retirees over 65 would pay $180along

with more employee contributions towards benefits such as dental coverage, frozen monthly

pensions, and frozen cost-of-living protection for over 30,000 retirees and surviving spouses.

These cuts amounted to a saving in labour costs of $7.25 per worker-hour [23]. On the condition

that GM receive government assistance, and maintain 17% of its North American production in

Canada, union negotiators unanimously urged the workforce to ratify the deal, which 87% did,

three days later [24]. GM reopened the contract on the 11th of May to try and match the greater

concessions that the CAW had made to Chrysler. Again, the CAW insisted that it could not

possibly meet their demands, but after the Chrysler deal this claim rang hollow. A tentative

agreement was reached on May 23rd, which 86% of voting members ratified [25].

On March 12th, the first GM agreement was rejected as a basis for negotiation by


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Chrysler President Tom LaSorda [26]. Chrysler demanded that labour costs be brought in line

with US-based Toyota plants and manufacturers based overseas and announced that it would

shut up shop in Canada unless it received a $3-billion government loan, a favourable resolution

to a $1-billion tax dispute, and a cut in labour costs amounting to $19 per worker-hour [27]. At

the same time, Chrysler brazenly announced that 20 million dollars in retention bonuses were

being paid to 50 executives [28].

The CAW began talks with Chrysler on March 23rd, but management remained

intransigent, and on March 28th over 200 local union leaders voted unanimously to reject their

demands [29]. On the 31st, Chrysler was in such bad shape that it could not even meet its

Canadian payroll. The government extended a $250-million advance on a $1-billion bridge loan

to allow the company to pay its workers, but Chrysler had yet to qualify for an additional $4-

billion in long-term aid. General Motors was offered another $3-billion in the short-term.

Chrysler and the union exchanged communiques with employees, in which management

threatened the closure of Canadian operations with the loss of all jobs unless concessions were

made, and the CAW blamed impending bankruptcy on flagging auto sales, stockholder

brinkmanship and government failures, but excused the workforce [30]. On April 25th, the

CAW finally caved in and agreed to demands for $19-per-worker-hour cuts and slashes in

employee benefits [31]. The deal was ratified by 87% of the workforce on April 27th [32].

Ford manufacturing chief Joe Hinrichs announced that he, too, felt the original GM

agreement was completely inadequate for his firm's needs and therefore, Ford would also reject a

pattern bargain and seek further concessions [33]. Ford and the CAW returned to bargain on

September 8th. Ford, now with the disadvantage of being the only Big Three automaker not to

enter bankruptcy protection or take a government bailout, would not even promise to maintain its


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current employment level in Canada. They pushed for greater concessions, and the CAW

struggled to obtain guarantees for job security [34]. It might have been hoped that the relative

financial security of the firm would work in the union's favour. However, on October 31st, a

tentative agreement was reached in which most of the concessions made to GM and Chrysler

were repeated, and the CAW failed to secure the jobs it was trying to save. Two days later, it

was overwhelmingly ratified, with losses of benefits, cuts in pay for new workers, frozen wages

and cost-of-living allowances, and the loss of about 1,500 CAW jobs.

The Canadian state, as has been shown above, has consistently intervened in public sector

collective bargaining to limit trade union action. Direct state intervention in private sector

collective bargaining by the Canadian state is much more rare [35]. The Canadian state directly

intervened in the negotiations between the Big Three and the CAW even though the state was not

a party to the negotiations. Before the negotiations had begun the automakers had appealed to

the Canadian and Ontario governments for bailout money to allow the companies to remain

solvent and to continue production. GM had asked for a $3 billion loan, Chrysler a $8.25 billion

loan, while Ford had asked for a line of credit, and was not seeking a loan from the government.

Conservative federal Industry minister Tony Clement made it very clear that public funds

would not be used to maintain the standards of living for Canadian autoworkers, and made the

loans contingent on the auto manufacturers extracting concessions from the CAW [36]. Clement

had specified that GM would be required to negotiate $150 million in concessions from the

CAW and had made demands that Chrysler extract concessions, of an unspecified amount [37].

On 21 April 2009 the Canadian government took the unusual step of intervening in free private

sector bargaining and ordered Chrysler and the CAW to return to the bargaining table. The

government then went one step further and demanded that the CAW accept all the concessions


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that Chrysler was demanding, or Chrysler would not receive government bailout money. Thus,

the pressure on the CAW was twofold: the union was under pressure from both capital and the

state to accept concessions.

The Canadian states involvement in the collective bargaining between the CAW and the

Big Three is indicative of the general orientation of the neoliberal capitalistic state. The

intervention was clearly on the side of capital, and was intended to help secure the ongoing

profitability of the auto manufacturers. Moreover, the state investment into the Big Three, in the

form of loans and bailouts, rendered them not a disinterested party but a stakeholder in the

futureand future profitabilityof those companies. Since increased profitability can be obtained

through lower wages and employee benefits, the state qua equity-holder has a vested interest in

seeing capital come off the better in negotiations. It is particularly alarming that the state

continues to act as an arbitrator when it has a stake in the outcome. It can no longer be said that

the state is a disinterested party.

The crisis of the auto industry was blamed squarely on the CAW and its members: the

bloated wages of the autoworkers were routinely blamed for the instability of the Big Three.

Of course, wages and benefits contribute only 7% of operating budget of the auto manufacturers.

The pressures from the Canadian state on the autoworkers also served to delegitimate trade

unions in the eyes of the Canadian public, adding additional public pressure on the CAW to

accept concessions at the bargaining table [38].

To all three automakers, the CAW initially conceded frozen wages, suspended cost-of-living

allowances and the loss of a week of special holidays. New workers would receive full pay after

three years rather than two. Base wages and pensions remained intact across the board.

Concessions to Ford and Chrysler are valued at $19-per-worker-hour, approximately 25%, and


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$22-per-hour at GM after the second round of bargaining.

At GM an annual $1,700 bonus would be channelled into retiree healthcare benefits

instead of being awarded to current workers, to help make up for a pension shortfall estimated in

2007 as over 6 billion dollars. Workers and retirees under 65 would pay a $360-a-year premium

for health care for the first time, and contribute more for benefits such as dental services. More

than 30,000 retirees and surviving spouses have had monthly pensions and cost-of-living

protection frozen. Workers older than 65 would have to pay a $180 annual premium for health

care, and contribute more for long-term care and other benefits. The first round of GM

concessions were ratified by 87% of the workforce after a strong recommendation from the

bargaining team, and the second, deeper round made after greater concessions were given to

Chrysler was ratified by 86%.

A very similar package was ratified at Chrysler. Beyond the GM concessions made in the

first round of bargaining, Chrysler workers agreed to lose semi-private hospital coverage, tuition

programs, some bonuses, and savings on vehicle purchases, to pay higher drug dispensing costs,

and to receive less financial protection during layoffs. The union also agreed to reduce relief

time in plants and to allow more flexibility in the use of part-time workers. The third shift at

Chryslers Windsor plant was cut, and Windsor workers were forced to take eight weeks layoff

over the summer of 2009. 550 Windsor employees were pushed into early retirement. 90% of

Windsor workers ratified the deal, as compared to 87% across the company.

The CAW was unable to prevent the closure of Fords St. Thomas assembly plant, with

an attendant loss of 1,500 CAW jobs, expected by 2011. Workers earning $34 an hour and

retirees either lost benefits, or paid more for them. New Ford workers now start at 70% of the

current top pay rate, with gradual increases to 100% after five years, must contribute $1 an hour


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to help fund a pension plan, and now get lesser benefits during layoffs. Wages and cost-of-living

allowances were frozen until 2012. This deal was ratified by 86% of the workforce.

Rick Laporte, CAW Local 444 President, remarked that the 2009 concessions have

probably set collective bargaining back between 15 and 20 years [39]. This does not seem to be

an exaggeration. Although the bargaining teams encouraged the workers to accept the

concessions, it should not be said that the union as a whole approved of the cuts; the leadership

bitterly criticized every round of cuts although it never countenanced any response other than

complaints in press interviews. Every bargaining team chose to encourage ratification rather than

industrial action.

The CAW was founded on the mantra of no concessions. [40] The union had long

argued that concession bargaining was not the way forward, that concessions were unacceptable,

and had originally broken with their parent union, the United Autoworkers, over the latters

concessionary stance. The 2007 - 2009 round of collective negotiations saw the CAW agree to

massive concessions under the assumption that it would keep Canadian auto manufacturing

alive, with the attendant preservation of some, if not all, CAW jobs. Where once this union had

fought hard against concessions and neoliberalism, it has now accepted the triumph of

neoliberalism as a fait accompli and seeks only to survive in some recognizable form within a

neoliberal framework. The CAW has also indulged in high-profile raiding, been suspended and

banned from the Canadian Labour Congress, and has expanded outside its core sectors to the

point that less than half of its members currently work in the auto industry. The CAW has

accepted the logics of neoliberalism, and believes it must bow to pressures for wage restraint at

the bargaining table, more competitiveness, and increased labour flexibility. The outcome of the

most recent round of collective bargaining was a predictable outcome of the CAW shift towards


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neoliberalism.

This does not mean that the CAW has willingly and consciously made the transition to

neoliberalism, nor do we intend to suggest that the shift within the union to neoliberalism

occurred exclusively during the 2008 - 2009 round of collective negotiations. The CAW is on the

losing side of a class war, as is the working class as a whole. To quote Warren Buffet, theres

class warfare, all right, but its my class, the rich class, thats making war, and were winning.

[41] The auto manufacturers used the crisis of the capitalist system as an excuse to extract

concessions from the CAW, and were supported in this endeavour by the Canadian state. The

Big Three themselves may have done so self-interestedly, but undoubtedly the state genuinely

subscribes to the belief that neoliberalismor whatever one is left with when the state invades the

operations of the supposedly inviolable free marketis the only game in town, and that

neoliberal structural adjustments and pro-capital interference are economically necessary and

socially desirable.

IV: Conclusions: Capitalist Crisis & the retrenchment of the Neoliberal State

The latest crisis of capitalism has seen the retrenchment of neoliberalism as the dominant

political and economic framework of the developed world. The general opinion of industrialized

states seems to be that capitalism failed not because of neoliberalism, but because of insufficient

neoliberalism. The solution to this economic crisis, in notable contrast to the Great Depression

the last economic crisis of a similar magnitudehas been to implement further neoliberal policies

in pursuit of economic recovery. For example, insolvent banks and financial service firms

received massive cash infusions from the state. This illustrates a peculiarity of neoliberalism

itself: in its subscription to Randian ideals of state non-interference in markets, it only goes so far

as to say that the state should never hinder the operations of the market, or more accurately, the


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state should not hinder the operations of the established major players in the market. State

interference in order to benefit these players, in the case of bailouts, export subsidies, tax credits,

and now, in private-sector collective bargaining, is perfectly acceptable. This particular facet of

neoliberalism defines it as a separate ideology from pure Austrian-school economics, for

example.

At first blush, the actions of the Canadian state in the case study of the 2009 round of

bargaining appear to make little sense. There are many things upon which the serious crisis the

Big Three automakers found themselves could be blamed: failure to adequately compete with

Korean manufacturers on price, failure to compete with the Japanese on engineering, losing the

luxury market to the Germans and to the upscale Japanese marques, over-reliance on financial

instruments (e.g. leasing) for revenue streams during a financial bubble, investment into ill-

advised product lines such as the Hummer, overly large and ponderous dealer networks, the

continued production of and investment into uneconomical cars, pickup trucks and SUVs despite

steadily rising energy costs, and not least, a dire world economic crisis. With Canadian Big

Three factory employees being among the most productive in North America, and total labour

costs which, according to CAW President Ken Lewenza, amount to about 7% of an assembly

plants production costs, it would make little sense to blame unions for this crisis [42].

Yet this is precisely what the government did. Before extending much-needed funds, the

government insisted that unions must take huge cuts, but did not demand the punishment of

executives or management at the firms. The costs of these neoliberal policies have been borne by

the working poor, who have become not merely victims of this latest economic depression, but

victims of the proffered solutions as well.

The neoliberal capitalistic state maintains the basic functions of the capitalistic state:


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accumulation, legitimization, and coercion. The accumulation function remains unchanged: the

state creates and maintains the conditions for profitable capitalist accumulation. In practice this

has meant that during crises of profitability, the state bails out corporations by providing

sweetheart loans, grants, or tax shelters. The accumulation function has also been interpreted to

mean that the state should assist capital in minimizing the damage caused by those forces which

might undermine capital accumulation. In this case the outstanding example is labour unions,

which seek to obtain some of the spoils of accumulation for their members, and which therefore

form an unfortunate obstacle to capital. The state must perform the accumulation function

insomuch as it does not significantly undermine of the legitimation function.

The neoliberal state provides a as basic a liberal social welfare state as it must, which

most strongly resembles a Schumpeterian rather than a Keynesian model [43]. There are also

limits to what the state can do to attack the obstacles of capital accumulation, for instance, the

passing of a law outlawing trade unions and jailing union leaders might well provoke a crisis of

legitimacy (although less so, sadly, than might have been the case forty years ago). However,

where the state cannot abruptly tear down the welfare state and the other obstacles of

accumulation, it can seek to erode them and chip away at their foundations over time. Thus, an

internal contradiction of the neoliberal state is revealed: the state despises the means of its own

legitimation and seeks to do away with the foundations of its claim to power.

Since the state cannot easily destroy labour unions, it falls to the state to delegitimize

trade unions and union rights. In the case study, this function is served by the very act of blaming

and attacking unions itself, which does much to denigrate unions in the public eye. However, it

should be noted that this has been made possible after over three decades of neoliberalism in

which unions have been ever-more assaulted and marginalized. A review of the press articles


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concerning the 2009 CAW negotiations reveals a surprisingly prevalent man-on-the-street view

of unions as greedy, obsolete, or worseor at least, those are the stories the media chooses to

print.

The coercive function of the state is employed to maintain profitable capitalist

accumulation. This has translated into minimizing labour resistance to neoliberal restructuring.

The runaway success of this policy can be seen in the internalization of neoliberalism within

unions themselves, particularly the CAW as examined here. The breaks with the Canadian

Labour Congress and other unions are indicative ofthe CAWs belief that it must compete in a

union market, and acquire new members not just from organizing the unorganized, but through

raiding, thus destroying labour solidarity to prosper individually. Such behaviour then becomes

part of the feedback cycle for the public image of the labour movement. Most remarkable is the

docility of the CAW when faced with such enormous attacks. It might be supposed that the

attempted rollback of 15-20 years of labour gains would be met with labour unrest, industrial

action, perhaps even a general strike. The latter has been made unlikely by the erosion of union

solidarity, but despite all the verbal protests in the media from union leaders, there was no

attempt at industrial action to prevent the concessions. This problem is not a divergence of labour

leader attitudes from the rank-and-file, moreover, as can be seen in the overwhelming

ratifications of each successive deal.

This, then, is the best proof of the success of neoliberal ideology, for it seems to have

penetrated even the bastions of organized labour. At best, the labour movement in Canada is

fighting a rearguard action against the league of capital and the state, which have subscribed to

an ideology that necessarily excludes unions.

Biographical NoteHugo Chesshire is completing his BA in political science and labour studies at Brock University.


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He is interested in concepts of citizenship, especially industrial citizenship, and of the elasticityof political power.

Tim Fowler is a PhD candidate in Political Science at Carleton University. For his dissertationhe is researching how deindustrialization has affected the politics of the Canadian Autoworkers.

He is a member of the Working Class Studies Association and the Critical Social ResearchCollaborative.

Notes1. The academic literature on the current crisis, and on the crisis of capitalism, is quite broadindeed. For example, see Greg Albo, Sam Gindin, & Leo Pantich,In and Out of Crisis: TheGlobal Financial Meltdown and Left Alternatives, (Oakland: PM Press,2010); John BellamyFoster & Fred Magdoff, The Great Financial Crisis: Causes and Consequences, (New York:Monthly Review Press, 2009); Fred Magdoff & Michael D. Yates, The ABCs of The EconomicCrisis: What Working People Need to Know, (New York: Monthly Review Press, 2009); Istvn

Mszros, The Structural Crisis of Capitalism, (New York: Monthly Review Press, 2010);Murray E. G. Smith, Global Capitalism in Crisis: Karl Marx & the Decay of the Profit System,(Halifax: Fernwood Publishing, 2010)2. Paul Kelly, Rudd sees death of neo-liberalism, The Australian, 31 Jan 2009. Accessedonline at http://www.theaustralian.com.au/news/opinion/rudd-sees-death-of-neo-liberalism/story-e6frg74x-1111118716462 on 01 Aug 2010.3. Ibid.4. CBC News, Federal government still projecting surplusesbut no guarantees, 27 Nov2009. Accessed online athttp://www.cbc.ca/money/story/2008/11/27/econoupdat.htmlon 01Aug 2010.

5. David Harvey,A Brief History of Neoliberalism, (Oxford: Oxford University Pres, 2005), 26. Ibid, 77. Stephen McBride,Paradigm Shift: Globalization and the Canadian State, 2

ndEdition,

(Halifax: Fernwood Publishing, 2005), 258. Gary Teeple, Globalization and the Decline of Social Reform: Into the Twenty-First Century,(Aurora: Garamond Press, 2000), 1189. Leo Panitch, The role and nature of the Canadian state in Leo Panitch, ed., The CanadianState: Political Economy and Political Power, (Toronto: University of Toronto Press, 1977), 8;James OConnor, The Fiscal Crisis of the State, (New York: St. Martins Press, 1973).10. Panitch, The role and nature11. Hugo on Nozick12. Greg Albo, Sam Gindin & Leo Pantich,In and Out of Crisis: The Global FinancialMeltdown and Left Alternatives, (Oakland: PM Press, 2010), 3913. Author, Forthcoming14. Perhaps the premier book on the subject is Leo Panitch & Donald Swartz,From Consent ToCoercion: The Assault on Trade Union Freedoms, 3

rdEdition, (Aurora: Garamond Press, 2003)

15. This is not to suggest that these are the only cases of the Canadian state clamping down onunions when capitalism is experiencing crisis. These case studies were chosen as they exemplify
http://www.cbc.ca/money/story/2008/11/27/econoupdat.htmlhttp://www.cbc.ca/money/story/2008/11/27/econoupdat.htmlhttp://www.cbc.ca/money/story/2008/11/27/econoupdat.htmlhttp://www.cbc.ca/money/story/2008/11/27/econoupdat.html


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the logics and tactics used by the Canadian state to facilitate capitalist accumulation during timesof crises, and also show the cyclical nature of crises in capitalism and the solutions to thesecrises.16. Panitch & Swartz,From Consent to Coercion, 163 - 16517. Ibid, 175

18. Ibid 17419. Chris Vander Dolen, "Big Three suffer year of setbacks; Five reasons 2007 will makehistory books" [Final Edition]. Calgary Herald. Calgary, Alta.: Jan 3, 2008. pg. F.320. Chris Vander Doelen, "U.S. automakers lose ground in Canada; Big Three sales down 6.9per cent in March".Edmonton Journal. Edmonton, Alta.: Apr 2, 2008. pg. E.921. Tony Van Alphen, CAW reopening contracts; Union ready to talk 'concessions' withautomakers; says it can't ignore their 'precarious financial state'. Toronto Star. Toronto, Ont.:Jan 30, 2009. pg. B.122. Nicolas Van Praet, GM seeks $150M in concessions; CAW struggles with demands. TheWindsor Star. Windsor, Ont.: Feb 3, 2009. pg. A.123. Tony Van Alphen, Auto union to freeze pay in landmark deal with GM; Concessions by

CAW will enable ailing firm to qualify for loans from Ottawa, province. Toronto Star. Toronto,Ont.: Mar 9, 2009. pg. A.124. Tony Van Alphen, GM workers overwhelmingly accept wage freeze; Union says rank-and-file concessions will slash labour costs and help GM qualify for aid funds. Toronto Star.Toronto, Ont.: Mar 12, 2009. pg. B.325. Tony Van Alphen, "GM workers vote yes; Employees sign on to more cuts and obligationsin a landslide vote that helps keep company alive". Toronto Star. Toronto, Ont.: May 26, 2009.pg. B.126. David Akin, Chrysler threatens pullout; Firm wants loan, cuts. The Windsor Star. Windsor,Ont.: Mar 12, 2009. pg. A.127. Tony Van Alphen, "CAW, Chrysler talks hit gridlock; Sides 'not in the same ballpark' asthey try to agree on labour cost cuts to qualify for government funds", Toronto Star. Toronto,Ont.: Mar 18, 2009. pg. B.128. Dave Hall, "Bonuses 'unconscionable'; CAW president says Chrysler payments should notbe allowed", The Windsor Star. Windsor, Ont.: Mar 20, 2009. pg. D.529. Tony Van Alphen, "Chrysler, CAW opt for brinkmanship; As deadline nears, two sidesexpress different views on talks' progress", Toronto Star. Toronto, Ont.: Mar 28, 2009. pg. B.330. Tony Van Alphen, "Chrysler puts ultimatum in writing; Having taken $750 million ofpromised aid with no deal yet, company makes an urgent plea to workers", Toronto Star.31. Tony Van Alphen, "Chrysler and CAW agree on cost cuts; Struggling automaker meets goalof slashing expenses by $19 an hour", Toronto Star. Toronto, Ont.: Apr 25, 2009. pg. B.132. Sarah Sacheli, Don Lajoie, CAW ratifies Chrysler pact; 90% say yes locally, The WindsorStar. Windsor, Ont.: Apr 27, 2009. pg. A.133. Keith Naughton, Bill Koenig, "We can't compete using CAW deal, Ford says; Canadianfactories won't save enough under terms struck with GM", The Ottawa Citizen. Ottawa, Ont.:Mar 14, 2009. pg. D.334. Tony Van Alphen, "Ford, union to resume talks on cost cutting; Automaker pushes for wageconcessions", Toronto Star. Toronto, Ont.: Oct 9, 2009. pg. B.435. See Appendix II, Legislative Orders Suspending the Right to Strike 1950 - 2002 andAppendix III, Legislation Amending Trade Union Rights: 1982 - 2002 in Panitch & Swartz,


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From Consent to Coercion.36. Nicolas Van Praet, Chrysler must commit to build in Ontario: CAW; Before concessions,National Post, 3 Mar 2009, FP237. Nicolas Van Praet, GM seeks $150M in concessions; CAW struggles with demands, TheWindsor Star, 3Feb 2009; Greg Keenan, Shawn McCarthy & Karen Howlett, CAW, Chrysler

ordered to resume negotiating, The Globe and Mail, 21 Apr 2009, B138. A content analysis of the letters to the editor published in major dailies in Canada dealingwith the CAW - Big 3 negotiations would show an incredible anti-union sentiment.39. Rick Laporte, CAW Local 444 President, quoted in CAW ratifies Chrysler pact; 90% sayyes locally, Sarah Sacheli, Don Lajoie. The Windsor Star. Windsor, Ont.: Apr 27, 2009. pg. A.140. David Robertson & Bill Murningham, Union Resistance and Union Renewal in the CAWin Pradeep Kumar & Christopher Schenk, eds.Paths to Union Renewal: Canadian Experiences,(Peterborough: Broadview Press, 2006), 17541. Warren Buffett, quoted in Ben Stein, In Class Warfare, Guess Which Class Is Winning inNew York Times, 26 November 2006. Accessed online athttp://www.nytimes.com/2006/11/26/business/yourmoney/26every.html on 30 July 2010.

42. Tony Van Alphen, CAW says it wont budge merger or no merger, Fiat CEOs ultimatumfor more Chrysler Canada cuts leaves union president perplexed, incredulous Toronto Star,April 16, 2009.43. See Bob Jessop, the Future of the Capitalist State, (Cambridge: Polity Press, 2002),especially chapters 2 and 7.

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