“It is not just a question of encouraging investment but also of encouraging disinvestment”, declared Viscount Etienne Davignon, European Commissioner in charge of steel, at a press conference in Brussels on 25 February. And a document he sent to the Common Market Council of Ministers for their 3 March discussion on the steel crisis speaks of “disinvestment incentives”.
Let’s be clear what lies behind this bureaucratic terminology: steel enterprises are to be paid to dismantle steel plants. After the paying of farmers not to grow food, or to kill their cattle, or to grub up their orchards, industrial capitalists are now to be paid to smash up their machines and factories!
This time it is not “excess” food that is to be destroyed, but “excess” capacity to produce a key industrial product. Actually, this sort of thing is not new to capitalism; it happens from time to time. The same thing happened in the Lancashire textile industry in the 1960s (and may happen again), and is an apt illustration of how capitalism is geared to profit-making rather than to serving human needs.
Davignon’s document estimates that in the Common Market
capacity utilisation fell from about 80% in 1974 to about 55% in 1980. On this basis there may now be some 40 million tons of excess capacity for crude steel production. On present plans in 1983 even under the most favourable assumptions regarding demand there would still be more than 25 million tons of surplus steel capacity, for which there is no market at present cost levels.
There you have it! “No market at present cost levels”; in other words, no profitable market. This is true but, in relation to human needs, there is no “excess capacity” at all. Just think of all the railways, tractors and other machines which need to be produced to help eliminate poverty, ignorance and hunger throughout the world. But of course this is not taken into account because production is geared to producing wealth to be sold on a market with a view to profit.
And this is how it has to be under capitalism. On this system’s value, the Davignon Plan to eliminate steel-producing capacity is ruthlessly logical. Why keep steel works open when the steel that would be produced cannot be sold at a profit? So close them down and throw the workers on the streets, paying them a handout to keep them going for perhaps a few years:
The prospect is for a very difficult employment situation in the industry. The number of jobs in the steel industry, which was increasing up to 1974, has been falling from 792 thousand in 1975 to 605 thousand in December 1980. Although it is difficult to predict future employment, because it depends on the actual decline in capacity and on the increase in productivity, it is clear that the industry will continue to face heavy job losses.
The closures and redundancies will go on until the “excess” capacity is eliminated. There is nothing, within capitalism, that can be done to prevent them. To pretend otherwise would be to raise false hopes. “No profit, no production” is the economic law of capitalism which those who take on the responsibility for running capitalist enterprises (including nationalised, state capitalist ones like the BSC) are obliged to apply whether they like it or not.