The crisis in the German automotive industry appears to be reaching a moment of de-escalation (of class struggle, unfortunately), albeit a temporary one. On Friday, December 21, the German company Volkswagen reached an agreement described by the press as “historic” with representatives of the IG Metall union.
However, the only truly historic aspect of this agreement seems to be the defeat of workers’ mobilization and the defeatism of the unions.
The 70 hours of negotiations between union leaders and company representatives resulted in a consensus that includes the gradual elimination of 35,000 jobs and the reduction of production capacities. This was met with applause from European capitalists and their “analysts.” One reason for this applause is, of course, the successful avoidance of mass strikes, which company executives and shareholders had feared.
This event tells the story of workers’ political incapacitation through the lack of an internationalist class party and the delegation of their interests to union bureaucrats. The story also highlights the convergence of interests between these bureaucrats and capitalists in critical moments, as well as the predictable consequences of global capitalist development in the absence of transnational working-class opposition with a leadership conscious of these realities.
What Is Happening with Volkswagen?
- For several months, the German company has faced a series of structural problems and challenges in positioning itself within the global economy. Over the past year, its stock value has dropped by 23%, an indicator of its decreasing attractiveness to financial capital—an issue that has further exacerbated the crisis.
- The causes of these problems primarily stem from the conditions of competition among capitalists within this industry, as well as the competition among workers forced to sell their labor power to these capitalists. Added to this are challenges brought by the energy transition and fluctuations in demand caused by it.
- Volkswagen has bet on subsidies for electric vehicle purchases in several European states, investing in research along these lines. However, as the crisis has compelled states to halt such subsidies, this has led to a drastic reduction in demand—down by 43.9%, according to ACEA data cited by Digi24.
This left little room for innovation in reducing the carbon emissions of new fuel-powered models, an area where competitors are performing better. If Volkswagen fails to meet its emissions target for 2025, this could translate into fines of €95 per gram of CO2. - Competition from Chinese capitalists presents serious challenges for Volkswagen. They benefit from access to significantly cheaper labor, which is easier to control through harsh penalties against strikes and protests—a strategy frequently employed by Chinese capital, which has subordinated the state and the Communist Party of China (CPC) to its interests. Chinese capital, now in its imperialist expansion phase, also has access to cheap raw materials sourced from the African continent—some, like cobalt, essential for the modern auto industry. Already, Motor1, as cited by Digi24, reports that VW has lost ground in the Chinese market to local competitor BYD. Profits made by Chinese capitalists are reinvested in expanding production capacities, including plans to open new factories in Europe and beyond.
- Meanwhile, Western capitalists are liquidating their own production capacities due to profitability issues. This is also the case for VW: according to the press, it faces overcapacity, needing to shut down two factories because its German facilities collectively produce 500,000 more cars than the company can sell at a profit. Underutilized factories, of course, mean losses from rent, maintenance, employee salaries, and so on.
- Due to global disparities in capitalist development and the relations between the core and the periphery of the capitalist system, local labor in Germany comes at the considerable price of €62 per hour. As in countless other cases, this leads local capitalists to often outsource production to countries with lower labor costs while simultaneously favoring capitalists who already exploit that cheaper labor in the international market. For VW, reducing the profit margin by lowering prices seems to have been an unsustainable solution.
These problems do not arise “naturally” but are caused by capitalist production relations and their inherent contradictions. In the case of VW factories in Germany, there exists perfectly usable production capacity and a sufficiently large and well-trained workforce to use it to its full potential. However, since production is conducted for the capitalist’s profit rather than based on needs, the capitalist is forced to shut down factories and lay off workers when production is no longer profitable.
Closed factories will therefore deteriorate, be demolished, or repurposed for other profit-generating activities in different sectors of capital. However, there is no guarantee that any productive activity will take place there again. One contemporary reality is that former industrial platforms are often only valued as sources of rent.
In this way, capitalists stagnate—or even disable—the development of significant productive forces. While, in its early days, capitalism’s relations played a beneficial role in the development of these forces, now, we see that capitalist relations have become nothing less than shackles to their growth. From this, we arrive at the inevitable conclusion: workers must unshackle the productive forces from these relations.
That does not mean to say that the aim of the workers movement should be to demand the mere continuation and constant expansion of production under capitalism. In general, the world doesn’t need more and more cars. It needs massive investments in public transport as a priority. Workers should aim at re-tooling factories to serve human needs in an environmentally friendly way, so there are no losses in terms of productive forces.
What Unions Have Gained and What They Could Have Achieved
Analyst Schmidt, cited by Hotnews.ro, states that the “Christmas miracle” achieved by union leaders in negotiations was “probably the best thing they could realistically hope for.” We partially agree: it is the best outcome workers can expect from concessions made to the capitalist class, in the absence of militant leadership. But fortunately, the potential history presents us with is not confined to analyst Schmidt’s political imaginary, which is limited by the framework of current production relations as though they are set in stone.
Thus, through the path of concessions with capitalists, workers have achieved, at best, a delay in measures that would have pushed them into other sectors or directly into the reserve army of the unemployed. VW has agreed to suspend immediate layoffs, replacing them with a “gradual elimination of jobs.” The company has also promised that, as the pace of restructuring slows down (which means reducing production capacity and personnel), it will offer support for retraining through financial packages and investments in skill development. After all, caring for the retraining of the workforce being laid off could be seen as an act of care for the rest of the capitalists—a form of class solidarity!
The expansion of conditions for early retirement, which the company has promised, may be the most significant gain from the viewpoint of individual workers. This is complemented by the modest defensive victory of avoiding a 10% wage cut. However, we cannot even qualify these measures as a decisive victory in improving immediate living conditions; rather, they are the minimum necessary to prevent more aggressive forms of mobilization against the company.
The reason these measures were granted is also the reason why union leaders are content to fight for such trivialities: the desire to keep the workforce in a state of non-combat. For the company, this means avoiding general strikes or insubordination that would reduce profits and scare away financial capital. For the union bureaucracies, this serves a fundamental role in legitimizing themselves as the only force capable of achieving something tangible for employees. Through such “victories,” union bureaucracy ensures the continuation of its (advantageous, we must say) position as the mediator between labor and capital, without doing anything useful to advance the class struggle, preferring to meekly follow in its wake.
It is, therefore, necessary to specify what Volkswagen employees could have achieved in the short term. But before this, we must be aware of the limitations of union struggle.
The economic struggle of workers organized in a union can secure, at the level of the company or even the industry, victories in the balance of power between labor and capital. It can win higher wages, better working conditions, or reduced working hours. For the capitalist, this represents an increase in labor costs. Union organization can also mobilize workers around precise demands that can be codified legally, which may, in turn, temporarily favor workers over capitalists. Last but not least, it provides a certain unity and discipline in action that is inaccessible to unorganized workers, which are essential prerequisites for the working class to capture political power as a whole.
However, at the same time, union struggle in itself cannot change capitalist production relations. It cannot dispossess the capitalist of the factory and bring it under the control of those who work in it. It cannot change the teleology of production, from production for profit to production for the needs of society as a whole. And certainly, outside of increasing costs associated with local labor, the nationalist or regionalist organization of large European unions cannot change the relationship between the core and the periphery of the capitalist system, as long as it does not evolve in the direction of including peripheral workers in the same structure and the same struggle (for example, in the form of transnational strikes against the same capitalist entity). Under these conditions, it may indeed achieve a number of short-term improvements in the living conditions of central workers (in the best case!), but in the long term, this will lead capitalists to expand in search of cheaper labor.
For this reason, among others, economic struggle within unions cannot resolve the structural issues outlined above. The struggle against global capital requires a transnational working-class struggle. This is why organized workers must find their political voice in an internationalist class party—a matter that union bureaucracy undoubtedly fears. And for this reason, advanced workers’ consciousness must be militantly spread within the unions to raise this awareness among their colleagues.
But this does not exclude the need for more combative measures in the short term, at the level of the factory or the industry. These could take the form of a unified general strike of all employees. In fact, the fear with which VW management looked at this possibility serves as proof of the real power workers have along this path. Somehow, we can imagine that the union leadership was able to convince the rank-and-file, through conciliatory means, that employees and employers shared a collective interest in the company’s profitability, thus opening the way for compromise.
One of the fundamental mistakes, reflecting the internal conflicts of union bureaucracies, was the fragmentation of the previous strike by 100,000 workers into two separate strikes. Such fragmentation makes it easier for union leadership to control the strike and opens multiple avenues through which capitalists can break or defuse the strike. It is essential for militant workers to make efforts to maintain unity and to remind everyone that loyalty must first be to the cause, rather than to leadership decisions.
When capitalist management seeks to close operational production facilities and lay off workers capable of using them, one form of counter-mobilization could be the occupation of the factory: employees continue to show up for work, take control of the physical space, and maintain production, defying the capitalist’s decision. Administration would fall under a democratic workers’ committee, which would determine both the conditions of production and the management of finances, including wage levels and reinvestment of profits.
Such a mobilization is not entirely new. Workers at the Zanon factory in Argentina set an example of this over 20 years ago during the country’s economic crisis. They refused to accept layoffs, occupied the factory, and renamed it Fabrica Sin Patrones (FaSinPat, or “The Factory Without Bosses”). For years, they continued to produce ceramics for local needs under the management of democratic general assemblies, offering a model for workers’ tactics worldwide. Of course, such a model cannot be a definitive solution, as it cannot withstand long-term competition from capitalists, but the initiative should be seen as a form of protest. Beyond achieving small immediate victories, it demonstrates workers’ power and their ability to manage production—skills they will need when striving to seize political power. A more modest example, albeit without continued production, occurred when workers at Republic Windows and Doors in Chicago occupied their factory during the 2008 crisis to prevent its closure without compensation. As a result, the factory’s closure was delayed, workers secured their payouts, and the factory was sold to a new company that preserved some jobs.
However, we cannot expect the corrupt union bureaucracy to propose such initiatives on its own. The acceptance of Volkswagen’s destructive restructuring by a major union in such a state of non-combativeness is symptomatic of the serious illness afflicting bureaucratic leadership: cowardice in the face of capital, coupled with a localism or nationalism so problematic that it is unsurprising some unions serve as a support base for the far right. Some European unions have even taken a more reactionary stance: seeking to protect the European worker not from capitalists but from competition posed by other workers. This explains their appetite for protectionist measures or even their desire to limit immigration from impoverished, racialized workers in the periphery of the capitalist system.
For these reasons, it is essential for socialist forces to develop their own analysis and project at the international level if their proposals are to have any prescriptive relevance. It is also essential to foster international working-class struggle and militant activity within existing unions—or to consolidate new unions where necessary. Union militancy cannot, however, be separated from an objective, materialist analysis of the global movements of capital and the historical necessity of the working class seizing the means of production and political power across the world.
