Twenty years ago, US consulting firm McKinsey&Company published a report, The global capital market. One of many exaltations of neoliberal globalisation penned in the aftermath of the collapse of the eastern bloc, it enthusiastically predicted that capital markets “will be larger and more powerful than ever before and will be well beyond the control of any single national government”.

In the context of Australian manufacturing’s recent troubles, the words seem prophetic.

After the 18 February announcement of the closure of Alcoa’s Point Henry aluminium smelter in Geelong, Victorian Premier Dennis Napthine said on radio 3AW, “I was told that there was nothing further the state government could do, that these are world issues that are beyond the capacity of state governments.”

Global oversupply, the high Australian dollar, rising electricity prices and economies of scale were all working against the operation. It was a similar script with Ford last year. Bob Graziano, chief executive of Australian operations, said in May: “The business case simply did not stack up.” Holden and Toyota have now followed suit. Despite $30 billion in government aid to the industry over the last 15 years, the companies aren’t making the profits they think they could make somewhere else.

The Liberals use any hint of economic trouble as an ideological shillelagh to beat down workers who have managed to claw a little bit back from what the bosses have already taken. Tony Abbott, treasurer Joe Hockey and industry minister Ian MacFarlane are arguing that exorbitant wages are at least partly to blame. They are backed up by the Australian Industry Group and dog economists like Henry Ergas in the Australian.

The argument always gets a hearing because it makes at least some sense. If Australian workers get $30 per hour while Chinese or Indonesian workers get less than $5, then of course some companies will take advantage of the cheaper labour. We have little control over that. The only thing workers in Australia seem to have control over is the capacity to “be reasonable” and “make sacrifices” in order to attract and hold a slice of that global investment pie.

But the consequences of buying into the game of making concessions in the hope of keeping the capitalists satisfied are considerable. Nowhere is this more evident than in the car industry.

Bringing it home

US auto giant General Motors set up operations in South Korea in 2002 to better access cheaper production prices and Asian markets. But today at General Motors’ Lake Orion plant in Michigan, small car production has returned from Korea. US wages have been sacrificed to bring back the jobs.

There are three tiers of workers at the factory. Nine hundred senior United Auto Workers members make about $30 per hour. Another 500 union members get about $16 an hour. Adjusted for inflation, that’s “equal to the famed $5 a day Henry Ford started paying his workers in 1914”, says Justin Hyde, editor of Motoramic, the Yahoo autos blog.

“And at the bottom scale”, he continues, “are 200-odd workers technically employed by an outside supplier but who work in the plant moving parts to the assembly line [for] $9 an hour with no health care”.

As the “old guard” unionists retire, new hires begin on the lower rate(s). It’s not just wages being sacrificed. Sean Crawford, a UAW member at the plant, explained the situation to a US socialist conference last year:

“Every worker has to produce about 30 percent more, which means you don’t have time to scratch your nose, take a drink or even check on the safety protocol that might end up saving your life. We run with as few people as possible on the shop floor … and the stuff is running at breakneck speed. It’s a dehumanising job. You think, ‘If I do this anymore, I will go fucking insane.’ But then you just keep doing it. And it’s like your life is like a continual stream of insanity … You’re a fucking robot.”

Losing out

Auto capitalists, like their cousins in steel and aluminium manufacture, jostle for market share and drive down production costs in a world of cheap labour and industrial overcapacity. Over time, jobs move from one country to another.

Often the threat of possible offshoring is a bluff from a management determined to squeeze more from the workforce. But there are enough real life examples to give veracity to the warnings.

South Korea is now caught in the middle. Despite total hourly compensation costs for South Korean auto workers being only two-thirds those of US workers, despite high levels of productivity and despite companies such as Hyundai maintaining, like GM in the US, a two-tier wage system, more and more “Korean work” is now done elsewhere.

In the global system, “cheap” is always relative. Hyundai bosses move operations to China, India and the Czech Republic – and yes, to the US, where non-union southern states such as Alabama offer juicy corporate tax incentives, and where the Michigan “tier 1” union workers don’t exist.

GM is planning to move more of its production out of South Korea – to Spain, where, like the US, economic crisis has ravaged the economy and the working class. The one consolation might be that when Holden closes its domestic operations in 2017, GM in South Korea is likely to get the export contracts for the Australian market. It won’t alter the broader dynamic, though.

The Korean unions are, like everywhere else, being blamed for the job losses. They are destroying the industry with excessive wages, the bosses say. We hear the same thing from capitalists around the world. From the Gurgaon industrial belt outside of Delhi, where there was a huge rebellion at the Maruti Suzuki Manesar factory in 2011, to Detroit. From the assembly plants on Jakarta’s fringe, rocked by general strikes for minimum wage rises in the last two years, to Melbourne. Everywhere bosses cry that workers are their own worst enemies: short sighted, selfish, stupid and unable to appreciate the new realities of a globalised trade-exposed world.

Workers will never win by adapting to capitalist logic – unless we count as victory poverty wages and Dickensian conditions. Each concession in country A demands another, because another is made in country B, which increases the pressure everywhere. It’s nothing but a race to the bottom to make a few people ever richer.

What to do?

How absurd it is that people are being thrown out of work in Australia, a country like every other, with thousands of projects outstanding. It’s not as though any of the factors of production – land, labour and resources – have disappeared. In fact, with productivity rising, more things can be created in less time than ever before.

We need factories that serve us, rather than us being slaves to corporations that produce for a market that even they can’t control. The whole purpose of manufacturing should be to provide good jobs and good products to workers. End of story.

We’re told that it’s not possible to operate in that way. But short of “full communism”, there are still things we could do. The $30 billion that governments have given to the car companies over 15 years is surely grounds for a claim of public ownership of the plants that are now being shut. And the $4 billion per year in handouts to the mining industry would provide a decent basis for paying for wages and equipment.

The factories could then produce things that will serve the needs of the majority – goods to refurbish the electricity grid and telecommunications infrastructure, expand the rail networks and reduce our dependence on fossil fuels, to name only a few. That makes much more sense than the calamitous operations of global capitalism.