From: wlarkin@hounix.org (Ward Larkin)
Subject: NAFTA: Labor & Economic Integration ( 1 of 4 )
Organization: Houston UNIX Users Group (HOUNIX), Houston, TX
Date: Wed, 07 Oct 1992 14:25:09 GMT

      U.S. LABOUR AND NORTH AMERICAN ECONOMIC INTEGRATION:
                 TOWARD A CONSTRUCTIVE CRITIQUE

                    Stephen Fielding Diamond
              Email:  SFDYLAW@YaleVM.YCC.Yale.Edu

Part 1 of 4


With congressional approval of the Bush Administration's request
for "fast-track" negotiating authority for a free trade agreement
between the United States and Mexico in the spring of 1991, the
U.S. labour movement suffered one of its most important recent
political defeats. Labour was unable to hold on to some of its
staunchest congressional allies. Democratic Congressman Richard
Gephardt, for example, backed fast-track despite the
protectionist industrial policy that lay at the heart of his
presidential campaign in 1988. Thus, what AFL-CIO Secretary
Treasurer Tom Donahue declared would be labour's "top priority"
for the 1991 legislative calendar signalled, instead, the very
low priority that trade unionism holds in U.S. political life. A
fresh perspective is desperately needed by labour if it is to
understand this defeat and move beyond it. This paper will first
examine the context in which U.S. labour now finds itself.
Labour's response to the North American Free Trade Agreement
(NAFTA) is examined critically and an alternative approach is
considered.


The Strategic Context

The Salinas and Bush announcements of negotiations toward NAFTA
should be understood as one of the final building blocks of a
decade-long process of reintegrating the Mexican economy into the
world economy, and, more specifically, into the U.S.-dominated
regional economy. The process began in the early 1980s, with the
collapse of Mexico's ability to repay its external debt. Since
then, Mexico has taken, or has had forced upon it, a series of
steps resulting in greater financial and economic integration
with the United States and international institutions (United
States International Trade Commission, 1990).
     A primary concern for U.S. business is the growing pressure
of worldwide competition from the European community and the
Japanese-led East Asian bloc. These regions emerged in the 1980s
and 1990s as home to the most productive economies in the world.
They combine a relatively cheaper labour force (shifting to new
pools of cheap labour as home-country wages rose) with the best
technology available, establishing flexible and innovative human
resource policies and supplier networks to dominate critical
areas of growth. Their success is the ultimate example of the
emphasis Fajnzylber (1990) has so correctly placed on added
intellectual value in a modern economy, including the innovative
relationships between the state and industry, the organization of
supplier networks, and the just-in-time and continuous-
improvement systems of production.
     This is a structure that presents formidable challenges to
the U.S. economy. Where U.S. management once found the detailed
job descriptions of individual workers in an assembly plant a
critical basis of productivity, control, and stability, employers
now do battle with trade unions that in turn find themselves,
somewhat paradoxically, defending the old Taylorist regime
(Piore, 1989). The opportunity to move production where new
relationships can be established on a much lower wage scale and
in a less regulated environment is understandably tempting.
Mexico, then, appears as a natural target for U.S. manufacturers.
Just as the conditions leading to NAFTA are really not new,
neither are the conditions that have stimulated the response of
labour, in particular U.S. labour, to the negotiations. Over the
last two decades, the trade union movements of most of the
advanced industrial economies have been facing a complete
restructuring of the international division of labour (Kolko,
1988; Ross & Trachte, 1990). There are four areas of major change
under way. First, with the end of "Fordism," there has been an
ongoing crisis in the membership of trade unions in the advanced
capitalist democracies; second, there is a growing rift between
the trade unions of those countries and the political parties
they have traditionally supported or, even, controlled; third,
there has arisen a very particular kind of trade union activity
in newly industrializing countries such as South Korea and
Brazil; and fourth, there has been a dramatic end to the statist
era--signalled most loudly by the collapse of the Soviet bloc
regimes and the lack of a coherent response by the labour
movement to that change.


The End of Fordism

U.S. labour is at its lowest level of membership density since
the 1920s. This is not simply the result of aggressive
antiunionism by employers, which is a fact of U.S. industrial
life from the beginning of modern trade unionism. Rather, the
decline in membership must be seen as part of a general
structural change in the economy. As early as 1961, labour
economist Lloyd Ulman noted the deeply rooted slowing of union
growth in unorganized plants or firms. Steady growth in wages in
the centrally organized sectors of the economy, fuelled in part
by Vietnam-era inflation, and new union membership in public
employment and the service sector enabled the labour movement to
defer discussion of the problem. But with the victory of Ronald
Reagan in 1980 and his defeat of the Air Traffic Controllers
Union, it finally hit home that the House of Labour was resting
on a crumbling foundation.
     A recent study found that "collective bargaining has yielded
much smaller compensation packages in the last few years than
previously"; moreover, in the 1980s compensation gains for
unionized labour averaged below those for unorganized workers
(Griffin, McKammon & Botsko, n.d.). To argue blithely that
this is a cyclical process ignores the technological shift
occurring in the new global workplace. Manufacturing jobs can and
do "return" to the United States but, in doing so, they have been
fundamentally transformed. A recent Commerce Department study
found that manufacturing now represents an increasing proportion
of the gross national product--the apparent reversal of a long-
term decline--but only after "a wrenching contraction in payrolls
and plants," as the number of jobs in that sector dropped from 21
million to 19 million over the last decade (Nasar, 1991). Such a
setting alters in a basic way the premise of continued expansion
on which the modern collective bargaining system was built
(Kochan, Katz, & McKersie, 1986; Piore and Sabel 1984;).
     The decline of labour is a general trend in the advanced
industrial economies. The Griffin study found that "more than
three-fourths of the eighteen largest, politically stable
capitalist democracies experienced sustained declines or
stagnation in union density in the late 1970s or early 1980s"
(Griffin et. al, n.d.). Only the sharpness of the conflict
varied, in proportion to the relative strength of labour in the
previous period.
     Organized labour narrowed its horizon in the fifties and
sixties, often sacrificing organization, militancy, and internal
democracy, in return for a strong dues base in what appeared to
be the secure commanding heights of the U.S., Canadian, and
European economies. But the era of the social contract, of
Fordism and corporatism, has come to an end. The stability and
predictability of an earlier era have left much of labour unable
to comprehend the nature of the changes that are taking place.


A New Political Era

Both a reflection and a cause of labour's structural weakness is
the growing rift between trade unions and politics. In the United
States, alone among the industrial economies, labour failed to
move to political independence, relying instead on a seat at the
table in the quadrennial smoke-filled rooms of the Democratic
party. By the late 1970s, labour was no longer seen as
representing a broad view of social justice in U.S. life, a
movement that had fought for free public education, affordable
health care, social security, the minimum wage, and the end of
child labour, but as just one among many "special interest"
groups.
     A similar development has been under way in Europe, where
tensions between trade unions and labour or socialist parties
have heightened. Neil Kinnock and Francois Mitterand, for
example, have made their ability to control labour a cornerstone
of their appeal to the general electorate. This development
merges with the technocratic vision that has long had a home in
mainstream social democracy. The labour movement, in falling back
on the narrower terrain of disputes over wages, hours, and
working conditions, has lost a forum for debate and argument
about the wider social consequences of economic change (Martin,
1988).
-- 
-- Ward Larkin
   wlarkin@hounix.org
Newsgroups: sci.econ,misc.invest