In early June, it came to light that last October, Walt Disney World Orlando eliminated the jobs of 250 data systems employees. The move made national news not because so many workers became jobless, but because Disney offered a severance bonus to employees who remained with the firm long enough to train the young immigrant workers who would assume their tasks.
The heartlessness of this move left workers and consumers reeling. A former Disney employee told a reporter for the New York Times, “It was so humiliating to train someone else to take over your job. I still can’t grasp it.” Outrage spread across news and social media, fueled by dismay that a company so closely associated with wholesome family entertainment would betray its workers in this way.
Many observers lamented loopholes in the H-1B visa program used to secure the replacement workers’ entry to the US, and endorsed reforms that would reduce impacts on American workers. Relatively few seem to grasp that Disney’s moves are rooted not in policy loopholes or corporate malfeasance, but instead are part and parcel of capitalism. Outsourcing, layoffs and swiftly severed ties – this is what capitalism looks like. As Karl Marx pointed out in his Manifesto of the Communist Party, workers, who under capitalism “must sell themselves piecemeal, are a commodity, like every other article of commerce, and are consequently exposed to all the vicissitudes of competition, to all the fluctuations of the market.” The “increasing improvement” of production methods “ever more rapidly developing, makes their livelihood more and more precarious.” Manual workers confronted this reality decades ago, as plants in the United States closed and production moved overseas to take advantage of lower-cost labor. Increasingly, professional workers are also feeling the pain of displacement. And there is only more to come.
The reasons are explored in depth in the writings of Karl Marx and more contemporary scholars working in the Marxist tradition. As Marx pointed out, employers are deeply constrained by the need to survive their competition with one another. In the early days of capitalism, businesses competed for market shares. In the modern (or post-modern era), joint stock ownership, managed mutual funds, and mass participation in the stock market associated with 401k accounts now require them to compete for investor dollars as well.
Investment decisions often hinge on quarterly reports, generating unprecedented pressure to improve the bottom line. Because labor is the single most controllable cost, it is often targeted for cutbacks. Once a firm discovers a method to eliminate employees, it can use the savings to undercut competitors and boost market shares, but only for only a short time. Eventually, competitors copy their strategy, prices fall to reflect lower production costs, and the process repeats. The result is a never-ending race-to-the-bottom that, over time, erodes profitability and economic stability.
Technological innovation is a common method by which employers eliminate workers. But because many kinds of work cannot be mechanized or automated, many firms have adopted alternatives – reducing labor costs by moving production – and, when necessary, people – from place to place. Beginning in the 1980s, outsourcing reshaped the United States’ industrial and economic landscape. Plants closed, people lost their livelihoods, and the public expressed dismay at the realization that products licensed or sold by all-American brands such as Nike were manufactured in sweatshop conditions overseas. Today, many executives who would prefer to “responsibly” produce their goods find that, in order to compete, they must rely on overseas subcontractors, despite linkages to exploitation, abuse and human trafficking.
Firms that have difficulty moving production overseas have found that they can attract lower-cost workers to the United States. Use of the H-1B program targeting immigrant workers with advanced science and computing skills has attracted attention in recent months, but employers have also had success recruiting immigrants into lower-skill jobs via social networks. Recruitment of immigrant workers to fill newly de-skilled jobs in meat processing, for example, prompted the emergence of new immigrant destinations in states such as Iowa, Kansas and North Carolina. Because these firms relocated to rural communities in part to escape the higher-wage, unionized labor upon which they once depended, some worry they may eventually flee these new immigrant destinations in pursuit of even cheaper labor. This seems even more likely now that the U.S. Department of Agriculture has announced it will allow poultry producers to export chickens to China for processing and to import Chinese-processed chickens for sale in the United States.
In sum, the 250 workers who lost their jobs in Orlando were not betrayed by policy loopholes or even by Disney. They are instead subject to the forces of capitalism, which have no affinities, no loyalties, and left unchecked, will ultimately betray us all. Proponents argue that capitalism enables competition that generates a high quality product for a low price, but overlook that intense competition, coupled with the incessant need for profit, is inextricably linked to exploitation and insecurity for workers in the United States and abroad. The prevailing view of capitalism as the key to freedom, security and prosperity thus masks the inherent nature of capitalism, which for working people everywhere increasingly tips toward vulnerability, struggle and economic peril. Some might suspect that wealthy individuals are immune, but as Marianne Cooper’s recent book, Cut Adrift, has shown, even they are feeling the pinch – fearing, if not for themselves, then for their children.
Instead of grappling with these realities, people often look to principles of capitalism to strengthen our institutions and solve economic and social problems. Even now, our elected representatives are looking to the Trans-Pacific Partnership – an agreement that, will arguably increase American joblessness – to lift our economic fortunes. Such measures will only increase American workers’ exposure to capitalism, and yet isolationism offers no protection. As Marx explained long ago, the problems with capitalism lie within. And it is only by grappling with its realities can we know what future we are embracing along with it.