Conversation with Mike Gannon and Marvin Harris

disappear. Yeah, yes, yeah. From Gainesville, Florida. Mm, hello. I'm Mike Cannon, and this is conversation. All across America. The men and women of the nation's workforce are experiencing a deep sense of economic insecurity. In many places, they're very jobs are being pulled out from under them.

It is happening as the largest, most powerful corporations in the nation shut down older plants in the industrial Heartland and moved to new sites in the South and overseas. It is happening as small businesses confront bankruptcy, closed down themselves or are bought up, milk dry and then shut down later by larger firms.

And it's happening as more and more corporations become multinational and conglomerate in nature. Left behind in this process are shuttered factories, displaced workers and a newly emerging group of ghost towns. The process is called de industrialization, and many see it as the greatest single threat to the stability and well being of the nation's working families.

How the most successful industrial society in the world came upon such hard times, and at least one initiative that might be taken to reverse the process will be the subjects of this conversation. When I return in a moment Live Live presents conversation from the University of Florida, a discussion of social, political, scientific and religious issues of the day.

Your host is Dr Michael Vegan in professor of history and ethics and assistant dean of the College of Liberal Arts and Sciences at the University of Florida. My guest on this conversation is Marvin Harris, graduate research professor of anthropology in the College of Liberal Arts and Sciences of the University of Florida.

Marvin, welcome back to conversation. Thanks for having me here again, Mike. Well, Marvin, when I think of the industrial might of America, I have a picture of the sprawling General Electric plant in Lynn, Massachusetts, or the smokestack industry, which is Ford Motor Company on River Rouge in Detroit.

Or the even more smoky US Steel works at Gary, Indiana, and then all of the other great smokestack industries across the land. Tens and tens of thousands of number, I suppose. And now so many of those plants not the larger ones but smaller ones are shutting down, laying off, being bought up, milk dry as cash cows.

I understand that, and we call this de industrialization. Why is this process happening? It's not, I suppose, because of inflation or because of high interest rates or because of the high deficit of the federal government, is because of something else. A structural problem is that I think that's the What's happening is that we're moving into an entirely new phase of our industrial system, and it's the most important thing happening to us, and we have to begin to think about alternatives to what lies ahead.

If we continue down the same road we're on right now. I think a way to begin to understand the changes that are occurring is to go back a little into the history of, uh, industrial societies can start with the 19th century and the great era of relatively small entrepreneurial firms competing with each other.

As that process of competition proceeded during the 19th century, we got a form of concentration of firms and corporations, which was a horizontal form of concentration. In other words, various railroad companies competed with other railroad companies, and they consolidated, uh, they vanquished were gobbled up by the victors, and the firms grew larger and larger.

Uh, during the early part of the 20th century, up until World War Two another form of concentration of industrial corporations occurred, and that was a form of vertical integration in which take the Ford River Rouge plant. That's a perfect example of vertical integration in concentration. It wasn't a matter of gobbling up competitors who were producing automobiles, although that was going on as well.

But it was a matter of creating huge economies of scale in which the Ford Motor Company own the minds from which the ore was, uh was mind and it put the or on its own or boats and ship them across the Great Lakes. And then it smelted the ore right there.

And then it's, uh it created the all of the basic metals that were needed for the automobile. And then it continued that process of integration right down through the sales offices and the insurance companies and the, uh, finance corporations. So that was a vertical form of concentration.

Ford had total control over the entire process from start to from start to finish. Uh, and it was in relationship to that vertical form of, uh, concentration of corporate power that the United States began to experience after World War Two. This epic of great prosperity plants were enormously efficient compared to those of the rest of the world, and they were vertically integrated.

After World War Two, starting in the sixties, a new form of concentration of, uh of corporate power began to emerge. And that has to do with the conglomerates. Conglomerates are very interesting, a novel form of corporate organization. Not to say that they didn't exist in incipient form earlier, but they have come into prominence just uh, since the 19 sixties.

And the distinguishing feature of the conglomerate is that instead of a horizontal form of concentration in which competitors are beaten out who are in the same industry, and instead of a vertical form of integration in which you have these huge economies of scale, you have instead corporations which thrive by buying and selling firms, which produced totally unrelated products.

For example, is one huge corporation, which produces a well known cleaning substance for clothing. It produces poison for killing ants. It produces spaghetti sauce. Uh, it produces milk, chocolate, and so it is a diversified industry. Is that correct? Term is diversified Now. The temptation for these, uh, conglomerates is twofold.

Um, like all of the other concentrated corporations there attempted to move capital wherever labor is cheapest and also and this is the novel thing there attempted to buy and sell whole uh, clients and combinations of plants, whole new industries, in fact, to incorporate them into their organization and then to divest themselves of these plants, depending upon where the profitability is greatest.

And up to now, there's up to fairly. Recently, the profitability was greatest in the United States because we had the best trained labor force and our machinery was second to none. Uh, something new has happened, however, and, uh, here I would follow the analysis that Barry Bluestone and Bennett Harrison have suggested in their book The Deindustrialization of America.

They speak about a new mobility of capital, which has, as its basis a new technological factor to new technological factors. As a matter of fact, one the extraordinary advances that have been made in communications, uh, to the extraordinary advances that have been made in transportation by using satellite channels by availing themselves of the latest innovations in computerized communications, it is now possible for the offices of the multinational conglomerates, uh, to remain in contact with each other to coordinate the activities of plants spread throughout the entire world.

And furthermore, because of the new transportation advantages, it's possible to ship parts by jumbo jet from one continent to another, completely overcoming what had previously been the main obstacle to the utilization of cheap labour in various parts of the world outside of the United States. So that would mean that the executive of a conglomerate could control every spindle and loom in a mill in South Korea as easily as he could control it in North Carolina.

Exact. Sitting in a desk, possibly in New York City and sitting in New York City can know what's going on in Singapore, in Korea, in Sao Paulo, Brazil, in Madrid. And all of these operations can be coordinated. So the capital that we have amassed, we have distributed worldwide to finance, uh, well high technology plants, robot ties, plants, the latest in equipment in other countries rather than in our own Well, the high tech still is our province.

We what we have transmitted to the rest of the world is really the, uh, the kind of technology which preceded immediately preceded the high tech phase. I see, and we're relying on cheaper labor to run that well. We're hoping many of our industrial managers and our politicians are hoping that we can use high tech to high tech industries, uh, to replace the so called smokestack industries.

By the way, I should qualify that that smokes the notion of smokestacks, although it's true that the steel mills, uh, and the automobile factories are the most dramatic examples of the shutdowns that are taking place and have given rise to the greatest amount of anxiety. Uh, it's also a fact that there are many other industries which are not such a great smokestack industries.

I mean, for example, we've lost our competitiveness in, uh, such things as optics, uh, in cameras, uh, in telescopes and binoculars. We've lost our competitive edge. That's not a smokestack industry. We've lost our watchmakers, uh, watch manufacturers. Uh, we've we've lost a whole series of machine tool industries, which we were the world's leaders.

Coming after World War two, we've lost. We've lost the ability to make the machines that make the machines we'll have. We lost, uh, those industries, Marvin, because other societies can manufacture the product better. For example, the Japanese produce marketable commodities that are of a very high quality.

Do they make the intrusion they do into our economy because of higher quality or because of cheaper labor or both? Well, the problem is that the higher quality is can always be produced but at greater cost. Uh, it really comes down to the cost of labor.

You can get your higher quality if you pay enough for it. And the fact of the matter is that the Japanese are able to get their high quality by paying considerably less than we are capable of paying our traditional blue collar labor force. Uh a uh So it's not just the smokestack industries that are threatened and what bothers me about the prospect, and I'm certainly not alone in this one could pick up the today's copy of The Wall Street Journal and read a column in The Wall Street Journal, which is very clearly stated that there's a very little prospect that when the economy picks up again and gets out of what appears to be just one of another series of recessions that have occurred after World War Two, that in this case after this recession, there's very little prospect that most of those jobs, uh, will ever be regained.

So everyone now is pinning, uh, their hopes on the rise of the high tech industries. Now, what What bothers me is what is to prevent in the next decade or or 15 years. What is to prevent the same process which has led to the deindustrialization of the steel, the auto, the machine industries?

The watch industry is the electronics consumer electronics industry has been completely devastated. We don't make our television sets. We don't make our video tape recorders. Uh, this is all going on overseas. What is to prevent that same process from being repeated again with high tech industry with high tech industries?

If, in fact, the multinational conglomerates are free to, uh, move capital wherever they see fit without regard for the loss of jobs that, uh is left behind as a consequence, or they're shutting down whole plants, employing tens of thousands of people. In some instances, Uh, well, what I meant that from occurring again.

Now it seems to me there is speaking out as an anthropologist. Seems to me there's a hidden assumption, which is exactly the same assumption has gotten us into such a terrible fix. At the moment, the hidden assumption is that somehow or other, we're going to be able to keep that high tech knowledge for ourselves and that it cannot will not be duplicated by the Koreans or the Taiwanese or the Brazilians or the Nigerians, whereas a matter as a matter of fact, the bitter experience of the last 30 years or so is that all of these, uh, what were then high tech industries?

All those are reproducible, uh, in other countries, widely distributed information and skills. Of course, we helped by our corporations, helped by selling, uh, many of the patents to the basic industrial processes. Even the Japanese are using many of our preparations simply, uh, instead of trying to penetrate the Japanese market with our own, uh, domestic domestically produced products, they went ahead and sold the patent rights, uh, for the Japanese to the chief of the Japanese to use on the assumption that they would never be able to use it as efficiently.

Yeah, as we have been able to do it seems to me the same kind of thinking rise behind our notion that we're going to take up the slack created by the departure of such a large portion of our basic industries overseas. Bye bye. Relying on these high tech, uh, computer, uh, technology, especially, there's there's some very bad problems associated because that technology itself can be robot ties and computerized very effectively.

Marvin, you asked, What's to prevent it? Um, how about investment in our basic industries? If the multinational conglomerates took the capital that now they're sending abroad and invested it here in the United States in, um, basic industries such as we've talked about in the beginning the high tech industries which are now developing?

Would that not be a way of ensuring the economic health of our society and the livelihood of hundreds of thousands or millions of workers? Well, that's exactly that's been the assumption all along. It's part of the supply side theory that if we got our corporations to invest, uh, then our industrial problems would be more or less solved.

So the idea is to make it is to create capital for them to invest. But there's absolutely no guarantee that when the capital is available is going to be invested in domestic industries. We have absolutely no control over that. Our system, our system does not provide for telling corporations where they are to invest their capital.

And interesting enough, despite all of the power which the labor unions in the United States accumulated after World War Two. Uh, the contracts which were negotiated by the labor unions and the corporations uh, never gave Labour any power, any say whatsoever over whether or not a plant could be shut down.

Uh, that was left up to as a prerogative of management. And so, uh, as long as the that arrangement continued to result in a considerable improvement in the standard of living of the average unionized blue collar, a working person, everything was fine. But now we're faced with the grim prospect that the standard of living of our working people, uh is.

And I include many professionals in that in a categorization, uh Now they're confronted the prospect of a declining standard of living rather than a rising standard living. Uh, it may very well be time to rethink the issue of whether or not we wish to permit, uh, the corporations of, uh, the multinational conglomerate corporations from moving that capital anywhere they see fit.

So you're assuming, uh, as I understand you, that the multinational corporations and conglomerates have no special sense of responsibility to United States society and its labor force. They have an interest only in themselves their own prosperity and future profits. Is that your argument? Yeah, it's not that, uh, even if they're based in this career an argument, because, all right, it's a conversation.

Yeah. Okay, right. Okay. It's an assumption. It's something that I feel we all have to explore and think about. And so, because of that vast power and lack of interest in the health and welfare of the American labor force, we have a situation that is becoming perilous for the average working man and woman and who are powerless to do anything about it.

Right now. The the cooperations Let's take Let's take a particular case, which is the one that, as you know, I'm interested in doing some preliminary research on That's the We're done, uh, division of the National Steel Corporation, which was located in Weirton, West Virginia. There we see a very unusual event in second place.

The the conglomerate National Steel Cooperation has decided to shut down the words and division. Uh, and it employed. Up until recently, 11,500 workers the entire city of Weirton, West Virginia and a good portion of Steubenville, Ohio, are dependent upon, uh, the income from from that from the wages of that, uh, that steel mill.

Now the the National Steel Corporation, unlike many other steel corporations, has offered the employees the option of buying out the company rather than simply shutting it down. Now, there are some very special reasons why the National Steel Corporation is taking this route. But in all the other cases which have occurred in Ohio and Pennsylvania recently, uh, the steel companies have simply shut down the plants.

Uh, and they and their, uh, their sorry about the effects. No doubt they are. They are deeply grieved, like Youngstown in the Mahoning Valley. Ohio Valley is an absolute, uh, devastated, devastated area at this point. Uh, and the Youngstown, uh, situation is very grim indeed. And, uh, in those instances, although the motivations of the management might have been just the same in terms of their concern for the devastation they were leaving behind, uh, nonetheless, uh, the economics of the situation overwhelms any alternatives.

And, uh, in the case of several of the Youngstown Mills, the corporations refused to permit the workers for moving ahead towards employee ownership. They obstructed that. Why? Well, first of all, they wanted to continue in the steel manufacturing business, and they didn't want additional competition from a mill that they had been shutting down.

I didn't want to give up their customer list, and they didn't want to give up their customer lists. So there were a series of, uh, generally, although the motivation, maybe they're the economics and the other conditions are not appropriate for anything other than the corporation following, uh, the pursuit of the highest profitability.

Then it can obtain, uh, for the capital that's at its disposal. And it's a very important point to make Here is that when we talk about profits as a motivation, I I am. I am very much committed to the importance of some principle of profit making as a stimulus for productivity.

I'm committed to that on the basis of the experience, which has now been a mass throughout the Western world and non Western world. In attempts to, uh, let industry simply function on a four use, uh, basis. Uh, if it's if industry is left to function simply on on a for use basis.

Inevitably, all sorts of bureaucracy is ations. Inefficiencies develop in the production process and get falling productivity. And you get the welfare, uh, state socialism, or state capitalism, which have proved to be enormously inefficient. So I'm for profit making. But there are degrees to profit making. In the case of these steel mills, Um, uh, the parent organizations, the headquarters of the conglomerates, have said, Oh, they're making profit, but they're not making enough profit.

In other words, is a profitable organizations. But they're not making the 16% that's targeted as being, uh, the reasonable type of return that one can expect that such. That's why the shutdowns. That's why the runaways and Marvin in a couple of minutes that we have remaining.

Let's talk a little bit more about Weirton, West Virginia. Do you see that as likely that the employees there will be able to buy out the steel mill and keep the firm alive? Well, it's it's a very complicated process. Even the notion of buying out is would require quite a while to explicate just what that involves.

The weird thing is extremely interesting, because, uh, this is a conglomerate spinning off an undesired plants huge facility, and it can be profitable, not as profitable perhaps as the conglomerate would want, but it can be made profitable. Supposing that we get out of the recession that we're in?

Uh, now I see this as a model possible model. As for many other, uh, spin offs that are taking place by conglomerates, we actually have legislated, uh, the mechanisms for employee ownership. This is a the employee ownership, uh, employee stock option. Ownership plans called s Apps are legislated their part.

Since the 19 early 19 seventies, we've had this legislation on the books. Why? Because everyone agrees, right and left from Reagan to anywhere else. You want to go on the left spectrum? Everybody agrees, uh, that it's great to have people own their own business. In fact, the mastermind of the whole notion of the stops, uh, the man by name of Louis Kelso, who wrote a book called The Capitalism Manifesto in which he said the solution to all of our long range problems is to make everyone a capitalist, which is to make everyone a part owner of, uh, the industries to which, uh, he and she contribute, uh, labor.

I understand it's your expectation to go to Weirton, West Virginia, soon to observe what is happening. They're the accounts that I read in the newspaper. Tell a very poignant story indeed. Yes, it is. I've been there several times. You have already? Yes. Uh, it is a very distressing situation, but that's it is simply a and it's one story of many, isn't it?

It's one of many. It's one of many, and I don't see how we can continue to accumulate that kind of story and go on our merry way. I think something new has to be done. I don't see it in the horizon in terms of the platforms of either the Republican or Democratic parties at the moment, although the Democrats have embraced the stimulation of the stops and other forms of employee ownership in their preliminary discussions for 1984.

Well, Marvin, along with you, I I and I'm sure many who have listened to you this evening will be following that story and others. The story, which is called the deindustrialization of America and uh, perhaps it will be some other story. One hopes that it is which will reinvigorate the American economy and provide jobs for all.

Thank you for being with me on conversation. Thanks. Mm mm. Mhm.