End of a Legend

END OF A LEGEND

By Robert Kurz

[This article published in Neuen Deutschland 10/28/2005 is translated from the German on the World Wide Web, http://www.exit-online.org/htmly/druck.php.]



General Motors, founded in 1908 and the largest auto manufacturer of the world up to today, was one of the legends of the Fordist age and of global automobile manufacturing. Now GM is seen as the greatest concrete economic ruin of the world. Delphi, the supplier subsidiary, had a billion dollar bankruptcy; auto production lost over four billion dollars in 2005 alone. The gigantic corporation is at the edge of insolvency. This flagship of the core industrial structure in the US and worldwide perishes. This has a symbolic character for the real situation of the world economy. After a long incubation period, the liquidation of global over-capacities in this key sector became ripe. The crises of Fiat in Italy, Mitsubishi in Japan and VW and Daimler-Benz in Germany continue in the central US market. GM lost the discount battle after the debacle of the Chrysler Corporation. The credit-worthiness of the firm was downgraded to junk status.

The disaster of the largest auto company is a moment of a gradual downward economic movement. The explosion of energy prices that is structural and not conditioned by the business cycle is part of this downward movement. The car is again the luxury good of a minority even if the streets are now clogged. The age of high mass consumption is ending. For the purpose of “revitalization,” GM united with the UAW union to cut health care costs in the billions. Drastic wage cuts for the former “worker aristocracy” as in Europe cannot be forestalled. Soon the workers in the auto industry will not be able to afford their own products. The administrative rescue attempts go along with plant closures on a large scale. This will trigger more chain-reactions for suppliers, services and regional retail trade. The consumer boom of the US, the last world power supporting the world economy, threatens to be gradually strangled in this development.

The notorious “jobless growth” faces a test when the ripe real estate bubble simultaneously bursts that up to now fed an irregular economic consumption. Mass consumption without which the surplus value cannot be realized is and remains the necessary end of the value creation chain. The crisis of value creation occurs, not only the social crisis that now breaks through the surface in the US. From a concrete economic perspective, the cheap services could not balance the melting away of industrial surplus value production. The breakdown of over-capacities in the auto industry now also spreads to the financial super-structure of “fictional capital.”

As with other corporations, the financial subsidiary GMAC was the only “revenue pearl” for GM. This pearl must now be sold off cheap to financial investors. This may relieve the balance in the short-term. In the long-term, the corporation will lose its central source of revenue in the speculative process of uncoupled financial capital. If GM is not simply bankrupted, the sale of the financing section will only have the appearance of exploitation. The corporation will dissolve. The individual parts of the business will mutate into a sales fair on the “business market” of a purely circulative financial investment. When the real economic basis breaks away from this shady mumbo-jumbo, the whole work of art of the new financial capital will also not hold any more.