REMAKING THE MOTOR CITY- AND AMERICA
Walsh, Jeanie Wylie and Lawrence
Remaking the Motor City and America Reindustrialization: Will it be economic fine-tuning or social overhaul? BYjEANIE WYLIE AND LAWRENCE WALSH One hundred and fifty-one years ago this month,...
...There are all sorts of splits in the capitalist ruling class that play right into our hands...
...But certain differences must be taken into account...
...The contours of the disaster staring the Motor City in the face are familiar even to those least attentive to economic developments...
...When Lucas workers were threatened with plant closings, they designed, engineered, and patented about 120 socially useful products that could immediately be fabricated by the machinery and equipment already existing in their plants...
...It is purely Utopian to advance quasi-socialist notions of industrial development within the framework of free enterprise...
...The products proposed in Rational Reindustrialization—deep gas and heavy oil equipment, cogenerators and mine-mouth gasifiers—would be of primary interest to that section of the work force that is suffering least from unemployment: the skilled trades...
...M A Blueprint for Nakebelieve Although Luria and Russell make no reference to it, the program they present in Rational Reindustrialization is based on one formulated about ten years ago by the Lucas Aircraft workers in England...
...The conclusion I draw from this is that a progressive, indeed ultimately a socialist, mass political movement active at all levels of society is required to make it possible to construct a democratic planning process...
...David McCul-lough, a former auto worker and self-described "victim of Detroit's re-de-industrialization," leading off with a temperate, fraternal, but finally gutting review of Russell-Luria, talks of the paper's "laudable detail" and "apparently sound figures...
...A central feature of their plan is tax incentives in exchange for industry participation...
...This solution is still valid—and more practical than pseudo-socialist proposals...
...The machinery of the auto industry gets economy of scale by being very inflexible...
...While Rational Reindustrialization neither accomplishes the revolution nor necessarily increases worker control of the workplace, its program warrants review...
...Also, employing companies have traditionally dominated pension fund trustee boards...
...Jane Slaughter (Jane Slaughter covers the auto and steel unions for Labor Notes, a monthly newsletter for union activists...
...It even lays out its strategy in increasingly ambitious stages, the first of which is modest enough to be used to help convince people that there is a real alternative to both Reaganomics and Felix Ro-hatyn's Big Brother corporatist state...
...Detroit's well-developed rail, river-lake, and highway network, its access to fresh water, and its abundance of underused or empty factories and capital equipment lend themselves peculiarly well, they say, to energy hardware production and make it at least a decent bet...
...some are immobile victims of current policies...
...De Tocqueville brought a healthy respect for outsized things to his encounter with the American wilderness...
...The problem is that those with real zeal and ideas are isolated individuals and small groups lacking the political power and financial resources to serve as entrepreneur for extensive projects...
...Their study sometimes makes for heavy sledding...
...What this talk implies is some framework or authority which can override calls to class interests...
...And, perhaps more surprisingly, the union has not called demonstrations or endorsed militant action to keep plants open...
...All of us will have to get used to the idea of state entrepreneurship, infelicitously called "reindustrialization" or revitalization...
...Rational Reindustrialization calls for a pilot project: Workers and union officials faced with a closing plant would choose a product line, preferably something like small cogenerators which A Boost for Employee Owners Rational Reindustrialization significantly widens the possibilities, in terms of size and circumstances, of companies suitable for employee ownership...
...Rational Reindustrialization is an intriguing plan that seems to have evaluated most of the technical economic issues and concluded they would not block Detroit's revitalization...
...They have bothered themselves to peer through the trees—through the gloom and headlines in Business Week—to see in Detroit "a crucible for the center-left corporatist encounter" that could result in some new arrangement "in which social accounting, public planning, and bargained development can eventually govern growth...
...He rejoices that business, government, and labor are, in GM's view, all coming together to work for a reborn auto industry...
...But I've got this to say—even if this thing just provides 100,000 high-wage jobs, that's not all bad...
...A rough draft of the version that has attracted the most attention on the Left \sRational Reindustrialization: An Economic Development Agenda for Detroit (Widget-ripper Press, 19660 Stratford, Detroit, MI 48221...
...I would opt for efforts and money being put into (1) local and small projects— social, political, and economic—that have a short-time horizon and limited outreach, but where a large proportion of the variables crucial to success are under local group control, and (2) educational and organizational efforts at all levels that will allow some reestablishment of rationality and public control over local, state, and national political machinery...
...Such a "classless viewpoint is carried out by glossing over conflicting [class] interests with talk of 'joint,' 'common,' 'general,' and 'bargained' enterprise structures...
...Socialism in One City...
...Yet, as the unemployment rate rises in synch with the incidence of alcohol and drug abuse, spouse and child abuse, and crime, Detroit's mayor is lobbying to limit Michigan's workers' compensation bill...
...Harley Shaiken, whom Dan Luria consulted near the completion of the report, considers Rational Reindustrialization a valiant beginning, but says it lacks both technical and political focus...
...In other words, if workers were mobilized (and the authors are silent on how this might happen), why should such a movement limit itself to persuading private investors where to put their capital...
...There is not just a big market out there for firms ready to produce compressors and cogenerating machines of 1982 vintage...
...others go out of business because of them...
...The question is whether unions and "city movements" will have enough clout to shape that policy and those institutions...
...True, HRR were to win the day, capitalists would still try to screw their workers and workers would still fight back...
...Once laissez-faire Reaganism and liberalism have both demonstrated their programmatic bankruptcy, say the authors, the Federal Government will inevitably realize it must play a strong role in production...
...Within the last year, Michigan law has been liberalized to allow the taking of private property on behalf of another private entity that promised to promote the public welfare by providing jobs...
...On the horizon, though, is a radically new and huge social and economic movement, got up in the raiments of fancy new deals between capital, labor, and government...
...In the summer of 1982, Detroit is anything but that...
...Luria conceded that his plan might provide "very little political headway...
...no one can say for sure, "This way out...
...McCullough ends by saying that Russell and Luria bank heavily on their scheme's "political acceptability to existing powers...
...The bugaboo of central planning will be here the day after tomorrow...
...They propose to have local and state government, industry, unions, community organizations, and employee-owned firms organize reindustrialization districts, run on the basis of five-sided bargaining...
...Politics is not a matter of baking or eating bread...
...Designing the blueprints for a realistic national (and state) institutional structure allied to local planning initiatives will not be simple...
...The defense that a broad Left movement could ensure social control seemed weak to some in the audience, for whom the Poletown fiasco was too real a cost for reindustrialization of any kind...
...They hold out the lure of lower-than-Chrysler wages as an incentive to accept worker representatives on the board of directors...
...Every time oil prices rose, Houston's petroleum-based economy boomed and Detroit's automobile industry crashed...
...Luria told them the city had acted too hastily when it signed away hundreds of acres to General Motors, but he concluded that if Coleman Young had worked out a better deal with GM, he and Russell would have endorsed the city's actions unreservedly...
...His articles have appeared in The Nation, Dissent, Working Papers, and the Texas Observer...
...What will the reopened shops and factories make...
...Therefore, looking only at the likely directions of the economy and at Detroit's needs and assets, Luria and Russell use a grid of ten criteria to assess the potential for Detroit production of everything from buses to solar collectors to robot arms...
...Historically, the solution to the displacement caused by technological improvements in productivity has been to reduce working hours and improve working conditions...
...This exercise helps them pick winners, and leads them to recommend manufacture of deep natural gas and heavy oil equipment, residential and industrial gas-electric cogeneration units, coal and diesel-powered industrial process engines, and low- and medium-BTU coal gasifiers to install at the mine mouth...
...They have this to say about their blueprint for the creation of 100,000 new "high-wage, cyclically-insensitive jobs" in energy hardware manufacture, this about their plans for $4 billion in new public-private investment in Detroit: "In the real world of 1982, a United States without a Left or even the legacy of a social-democratic 'alternative economic program,' Rational Reindus-trialization is offered as a step toward both, as a tool with which progressives can enter the central policy debate of our time: the terms and power relations of economic progress...
...Unfortunately, it cannot, for the simple reason that business discovered "public balance sheet accounting" and "social cost benefit analysis" long before progressives did...
...Employee-owned firms in such districts would enjoy many of the advantages of their conglomerate competitors, including some economies of scale and, more important, the financial, marketing, and engineering expertise of a district planning staff...
...But Detroit Edison says it's interesting...
...That seems about right to us...
...Too often the discussion is marred by simplistic metaphors about half a loaf versus the whole loaf...
...Americans have not been here before...
...In luring the race to Detroit, Young said he hoped to give everyone "an emotional lift...
...However, they underrate the severity of these obstacles and the extent to which many-layered difficulties feed on one another and vitiate the whole...
...Would it buy the Russell-Luria dictum that "no new public or public/private sector can guarantee to provide employment at Big Two [wages...
...There is certainly no discussion of ¦handing over still-operable plants to anyone advocating radically new forms of ownership and decision-making...
...I call it mismanagement...
...That cannot be counted on, they say...
...Felix Rohatyn, the New York investment banker and financial consultant who has commanded some attention among mainstream worthies in the national Democratic Party, has a friend in Coleman Young...
...The challenge for serious leftists today is to identify reforms which, though they may fall short of socialism, allow workers to confront the dynamism of capitalist development and demonstrate that another economic structure is possible...
...labor movement is not nearly "combative" and "politically well-organized" enough to enter "joint, common, general, and bargained" arrangements in terms other than surrender from the outset...
...The future of American democracy may be there, too...
...Our city has'often led, and may again...
...These four groups could negotiate binding and renewable agreements on the nature and functioning of the zone...
...The Left is not fulfilling its function and labor leadership is incompetent...
...The full success of the radically enlarged public role that [we] envision in the rebuilding of the economy," they continue, "depends on state and national policy changes, both for financing and for the creation of legal public instruments for action...
...Luria and Russell understand the obstacles to a program that would not only be innovative but would also appear threatening to many established interests...
...a perception on the part of car-buying Americans that Detroit has long dealt in the second-rate...
...There is a wing of the capitalist class, despicable as they otherwise are, that understands that existing capital need not be abandoned...
...Since 1978, a national auto work force of 1.9 million has been pared by 600,000...
...this frame of mind makes it purely a matter of coincidence that the preferred product line is something less lethal than military hardware...
...The Luria/Russell proposal is structured from the top down, leaving workers just where they are today...
...Wilcke's association of small businesses stands in principled opposition to business-government partnerships that use public money and political power to guarantee profit...
...The abiding problem for the Left, as many have observed, is the public's assumption that only the private sector can provide jobs...
...Well, then, the future...
...What will the new Detroit, reborn from a recent life of massive economic dislocation, offer the world...
...financial sources must accept novel risks without imposing onerous constraints, and entrepreneurial mechanisms must come into being that will initiate and implement the plans...
...The women questioned whether the Left was really capable of acting for the common good, adding that top-down socialism would feel the same to the people at the bottom as the existing system does...
...But before what might be—what should be—some words on what is...
...If Detroit has a future as a manufacturing metropolis (and not as an industrial diA Believable Alternative The increasing likelihood of state interventionist politics creates an urgent responsibility as well as an opportunity for those on the Left...
...But there is little discussion in the dining room of the Detroit Economic Club about converting the city's closed factories to alternative production of any kind...
...economic history...
...would go so far as to say that the only thing wrong with RR is that it does not, because it cannot, choose between conflicting class interests...
...That above-the-fray, hang-the-details attitude has got them some brickbats, as shall be seen...
...Socialists of varying degrees of impurity...
...President F. James McDonald has told business leaders in the Motor City that "the 1980s will be an exciting decade...
...In their text, they argue more politely that, in any event, many progressives' hopes for economic renewal through "local small-scale democratic enterprises ultimately depend on the success of a more ambitious reindustrialization plan"—that is, presumably, theirs...
...Alfred J. Watkins (Alfred J. Watkins taught political science at the University of Texas for the past seven years...
...For example, will the new product line choices conserve existing capital, provide enough employment at traditional wage levels, counterbalance the cycles of existing industries, and exploit the region's comparative advantage in skills, suppliers, and location...
...New York Times reporter Judith Miller, writing in Working Papers, notes that such corporatists as Felix Rohatyn have promised that business, government, and labor "would march off toward prosperity, removing obstacles as they went...
...Tax increment financing authorities could be set up in tandem with the enterprise zones, allowing all increased property revenues to be reinvested in area development...
...The threshold question for the Left and maybe for all who are interested in the survival of our democracy seems to be this: Will labor and progressive office-holders in local, state, and Federal government be tough enough to exact from the Wall Streeters and their elected bellhops around the country a serious dispersal of economic power in the coming decade...
...2) It starts from what exists and builds from there...
...He supports the business community...
...The specific type of pragmatism involved is "technocratic, i.e., an attempt to rise above class points of view to provide ameliorants for the effects of class struggle, rather than sharpening either side in that conflict...
...That much all parties agree on...
...They wrote: " 'The workers' aren't a monolith of class conscious producers, committed to 'unconditional defense of...
...Mixed in with the college-educated progressives were several Poletown women who had come to condemn what had happened to them in the name of progress...
...From the dawn of capitalism to the rise of the Sunbelt, business has always moved to places where wages and fringe benefits were low, governments receptive to business demands, unions weak, and social services negligible...
...Small-car research and development has been lag-gardly, considering the energy-scarce age...
...There are no blazes on the trees...
...Diversification is now the word, and the push for it is almost unassailable...
...It looks as if planning of some sort will be on the agenda soon...
...I would argue that the only chance for the creation of decent jobs in the 1980s and 1990s is a labor-led movement which is politically independent of the employers, not in coalition with them...
...Those with power and resources (private banks, governments, unions) have little zeal and few ideas, and they are constrained by traditional roles and ways of doing things or by powerful ties to the private corporate system...
...Unlike New York's former default-plagued Mayor Abraham Beame...
...It puts business and government against the people," giving free enterprise a bad name, Wilcke complains...
...Current law, which allows a municipality to take title to private property for a greater public use, was cast into disrepute in the early 1970s after it was invoked to clear low-income neighborhoods under the banner of urban renewal...
...The Federal Government would have to provide substantial funding, favorable tax treatment, guaranteed markets in the projects' early years, coordination of projects in the same industry or in associated industries, and other support...
...Next on the agenda is a riverfront shopping center sponsored by the American Natural Resources Co...
...Luria and Russell favor a "national social-democratic movement" that "could influence Federal . . . policy in ways that would favor a full capital-conserving, job-creating industrial program...
...The portals of Factory Michigan are fiercely guarded by the lions of free enterprise," Luria and Russell warn us in their discussion of the legal obstacles to their scheme at the state level...
...Where some see only overwhelming problems and weeds sprouting in Woodward Avenue, others see opportunities to make over Detroit and in the process help redraw the lines of economic power in this country...
...With the blessing of the state supreme court, Coleman Young, on behalf of GM's Cadillac Division, seized 1,100 homes and 143 businesses in Poletown, displacing 3,500 people and eliminating an estimated 1,000 retail and service jobs for construction of a sprawling, highly automated plant...
...the Rational Reindustrialization scheme would require immense capitalization and an upgrading of auto workers' skills...
...We believe concrete and plausible programs for economic recovery in the manner of Rational Reindustrialization can pose such choices...
...He blusters about "President Pruneface" and Ronald Reagan's Big Business economics, but he is doing his best to steer hundreds of millions of Federal dollars and his city's destiny into the hands of the very men who have made a shambles of the auto industry...
...In the here and now of deepening stagnation and decay, in the dangerous present of foundering reaction, defeated liberalism, and marshaling corporatism, clear choices must be pressed upon the progressive forces who are the only basis for Left political work...
...Then Lucas fired the project leaders and closed some of the plants...
...It is no place for tenderfoots, for dogmatists of the Right or Left...
...Really...
...He added that "the working class is not mobilized...
...They address far-sighted, "reasonable people" with money to invest...
...The lean, chastened, wiser, near-monopolistic survivors (read: GM) will still count for much in Detroit...
...Is this proposal just an effort to make capitalism a bit more palatable (see Jane Slaughter's and Pete Kelly's evaluations...
...Perhaps even more serious is the need to keep abreast (or ahead) of technological change in markets which are not static and which are served by large companies at home and abroad that possess a technological base and fund of experience...
...But now come Jack Russell and Dan Luria with a plan for alternative production allowing for extensive public control...
...He regrets that the business editor of one of Detroit's two daily papers "either can't or won't comprehend the plan...
...An enlightened city government could encourage the trend by creating an enterprise zone where tax concessions would be offered to firms that purchased supplies from local concerns, thus strengthening the entire Detroit economy...
...The reindustrialization approach he prefers would identify a closing plant that had flexible potential, and then approach the available workers and engineers to work out a plan...
...Some bridle at the thought of public investment...
...If the labor movement is strong enough, it's not likely to look for a "coalition" with "far-sighted" investors...
...Mixed-economy gradualists...
...and Luria and Russell stress that in the worldwide market for their high-priced heavy durables there is already a five-year backlog of orders...
...Lawrence Walsh is an associate editor of The Progressive...
...Entrepreneurs looking for opportunities in the energy hardware business can move to Texas, where they will find all the tax breaks proposed in Rational Reindustrialization as well as low wages, an anti-union environment, a state constitution that sets an $80 million ceiling on state AFDC appropriations, and none of the meddlesome partnership arrangements of the Luria-Russell plan...
...Now it is a kind of man-made wilderness: The torrents of European and Asian industrial civilization threaten to roll over what was once the world's greatest machine-shop culture...
...Richard Wilcke, president o( the anti-interventionist Council for a Competitive Economy, made a special trip to Detroit to condemn GM for asking the city to subsidize its Poletown Cadillac plant...
...Whether Detroit's industrial infrastructure can really support energy hardware production was, for Shaiken, open to question...
...It has been exciting to see regular people ready to do the things to make history...
...Luria and Russell may have succeeded in opening up the debate about the function of the state in America's most dis-invested city, where the wave of plant closings and employment loss is without parallel in U.S...
...managers of quality must be found, motivated, and given adequate authority...
...The political and economic structure of the Rational Reindustrialization project is such that it can only succeed if the attack is mounted on both the local and national fronts simultaneously...
...We reject abstention from the economic policy debate just because we cannot be certain of total and unconditional victory...
...There are no people with more understanding of the capability of those plants than the workers who worked in them and the engineers who are laid off from those companies...
...But with pressure from the Left and from unions, pension money might be pried loose and made available to capitalize emerging worker-owned plants...
...Plant closings, the out-migration of the skilled and unskilled alike, and the flyblown look of much of the city make Detroit a candidate for premature industrial senility...
...Ford lost more than $1 billion last year...
...Now Detroit and the rest of industrial America have been dropped into a forest of problems, a forest far from enchanting...
...Since the likelihood that a still-unrealized people's rage will carry us from the present to a democratic socialist future is slim, our task is to find those reforms that do not distract us from the need for, and the possiblity of, major structural change, possibly even educating us in the process...
...They complain that despite its socialist language, the plan builds on traditional capitalist financial analysis and does not ensure that workers will maintain control of the unfolding projects...
...Decline is a fact of life in Great Lakes heavy industry—Detroit especially, of course—and throughout the manufacturing cities of the Northeast and Middle West...
...It forgets that free enterprise thrives on crushing competition—especially competition threatening to the system itself...
...Such a program could be started without national legislation or a change in Presidents...
...Rohatyn on Rohatyn best sums it up: "Whether [democracy] can work in a time of shrinking resources, when it has to allocate pain instead of surpluses, is something I seriously question...
...the GM New Center project, which amounts to the gentrification of a low-income neighborhood...
...Labor Can Do Better The authors of Rational Reindustrializa-tion are to be commended for their creative and practical thinking about new uses for Detroit's industrial capacity...
...In interviews, Luria and Russell dismiss the utility of efforts to decentralize Detroit's economy and produce consumer goods with a disparaging, "We all know hippies can bake bread...
...Poletown was viewed by some as a tripartite effort with the worst possible results, but they asked why one should think city leaders would act any more responsibly under Russell-Luria...
...complicated dislocations elsewhere in the domestic economy...
...The Russell-Luria program calls for such enterprise zones to be governed by a planning authority composed of elected union workers, private-sector representatives, community activists, and city officials...
...But the auto workers' narrow vote on acceptance of the recent concession contracts shows that these measures will hardly be welcomed by the workers...
...He is the author of "Corporate Control, Corporate Power," Cambridge University Press, 1981, and "The Real Terror Network," South End Press, April 1982...
...Executives at General Motors, the only Big Three company strong enough to be certain of its survival prospects, lately say they find conditions in Detroit encouraging...
...Too Long a Reach Ambitious schemes for locally controlled reindustrialization require change and cooperation at many levels of structure and in many dimensions of activity...
...James R. Crotty (James R. Crotty is chairman of the department of economics at the University of Massachusetts-A mherst...
...The energy gear they favor as a product line does, in fact, suit Detroit's existing industrial infrastructure and available labor skills...
...Some critical readers think so...
...Far-left syndicalists...
...Some of these companies, chiefly cooperatives, have been organized from scratch as worker-owned, but most are employee buy-outs of former employers, usually involving the purchase of a single-plant company or division...
...Because of its political rawness, Rational Reindustrialization would doom working-class Detroit to go-along, smoke-without-fire leftism...
...You-ng has spent $850,000 in city money to resurface the designated racecourse for a field that includes not one single American-made car...
...they are but the most prominent reasons why massive state intervention in the economy will soon come openly into play...
...In particular, Rational Reindustrialization suggests, explicitly and by implication, that democratic local reindustrialization projects will be limited to minor and probably temporary pockets of success, at best, unless a national planning structure is developed to support, facilitate, and coordinate them...
...Luria, an economist with the United Auto Workers, and Russell, a consultant to the Michigan Senate Committee on Corporations and Economic Development, note in their own behalf (in a promotional summary of their heavily quantitative sixty-three-page scheme) that "where all past [reindustrialization] proposals for Detroit have focused on mechanisms of action but left open the questions of concrete directions—steel or computer chips, autos or fast food franchises—[we] have come up with specific proposals for Detroit...
...The crux of the problem is financing...
...My own conclusion, therefore, is that Luria and Russell's proposal goes beyond our limited realistic options, and is likely to fail...
...Peculiarities surrounding the speedy birthing of the project have caused many Detroit residents to question whether government is capable of using such a tool responsibly, particularly when it comes under the pressure and enticement of a private, corporate investor...
...He is currently a free-lance writer in Washington, D.C...
...The program is "explicitly a pragmatic alternative to, hence abandonment of, an unconditional defense of jobs and wages...
...Once Reagan and the free-market absolutists who shape his economic policies are returned to California, those who today affirm the need for direct public intervention in the "supply side" of the economy will be ascendant...
...The corporate sector could reasonably be counted on to oppose such aid...
...Ralph Nader complains that what is transpiring is corporate socialism, with free-enterprise ethics for the poor...
...The manufacturers we hope to compete with hate it," Luria said...
...Although Mayor Young has been mum on the report, the authors find it encouraging that he seems not to have prejudiced the EGC against their work...
...Last fall, some members of the Detroit Alliance for a Rational Economy, which had disbanded some months before, reconvened for a discussion of the Russell-Luria plan...
...Indeed, the lions of free enterprise guard the levers of power at all levels of government...
...First, with changes in state law, pension funds could be freed for new investment...
...As plants continue to close, as more workers are forced to go on the dole, and as social disorders multiply, the unions continue to retreat...
...RR does not pretend that it can, or would, transcend the economic class struggle...
...BYjEANIE WYLIE AND LAWRENCE WALSH One hundred and fifty-one years ago this month, Alexis de Tocqueville stood at the edge of his heart's desire, the outer rim of organized American life...
...At a minimum, this will require socialism in one city...
...nosaur), it lies, in large measure, in those empty plants...
...wages,' but a divided mass of people who still perceive individual and sectoral interests as paramount...
...Meanwhile, back in Detroit, Coleman Young and the business people he fronts for are whistling in the dark...
...But will it work...
...A panorama of problems besets the giant automakers, their suppliers and cousin industries...
...If it isn't, as is currently the case, there's no incentive for the capitalists to agree to a scheme that guarantees jobs, or to put up with union or government interference in management prerogatives...
...Currently, Michigan's $20 billion in pension funds is restricted to conservative and presumably tried-and-true investments...
...Consumers Power says the same thing...
...Growth forecasts made by the Big Three—General Motors, Ford, and the ever-teetering Chrysler—are continually revised downward...
...Jack Russell told us he and Luria at first aimed mostly at "local officials, development types, and the emerging cadre of rank-and-file people [in the UAW] who would understand that our plan was in their self-interest...
...With so many unemployed autoworkers moving to Houston, Detroit's economy seems about to implode, leaving nothing but a black hole in the Michigan landscape...
...I'm not criticizing the idea of alternative production," Shaiken told The Progressive, "but it's going to require more manufacturing expertise than was evidenced by this document and it's going to require more broad participation...
...RR goes a long way toward showing the American Left how it might overcome its collective inability to organize for path-breaking economic change...
...There is scarcely an argument at all over the need for Detroit to broaden its product base...
...Dan Luria and Jack Russell drive past vacant factories and see them as startling "monuments to the limits of purely economic power...
...Most startling was his $64 million abatement for the GM Cadillac plant, which had already received more than 200 million public dollars worth of land-acquisition and clearance help...
...The analysis may be as valuable as the industrialization model itself, because it warns us that the strategy proposed for Detroit will not be feasible until the political priorities at all levels of government change dramatically...
...The EGC asked Luria and Russell to make up a list of corporate executives they would like to meet with and to draft legislation they would like to see enacted in Detroit and in Lansing...
...The thinkers, tinkerers, and bankers know that when the intellectual and moral embarrassment of Reaganomics is finally junked, the grown-ups will have at it...
...There is a massive need for [new] policy...
...3) It offers a socially attractive product line.''' Then he catalogues what he regards as the crippling defects: Rational Reindustrialization too cheerfully buys into existing marketplace mechanisms and profit-and-loss dictates...
...With another Frenchman he set out on horseback from the village of Detroit, in the Michigan Territory, through virgin coniferous woodland in search of wilderness, "a place not yet reached by the torrent of European civilization...
...A reindustrialization district, armed with a planning staff capable of doing the marketing and other research necessary to produce an economic growth plan, could make employee ownership more feasible...
...American Motors, the fourth "American" auto maker, is 46 per Jeanie Wylie is a free-lance writer living in Detroit...
...A useful and, in most respects, highly intelligent exchange of views within the Left appeared in the April and May issues of the socialist monthly Changes...
...It is an essentially private agency which selects the city's self-rescue projects and staffs another city agency through which public money for "revitaliza-tion" is passed...
...He is the coeditor of "The Rise of the Sunbelt Cities" and the author of "The Practice of Urban Economics...
...So wrote the great student of American democracy in his notebook...
...Luria and Russell have performed an important service in this whole enterprise: Progressives should read, criticize, learn from, and build on their work...
...Russell and Luria suggest that the plant might simply be handed over to the workers by the former employer for tax considerations...
...Worker management has increased dramatically in the last few years as domestic investment by multinational corporations has declined and Congress has made employee stock ownership plans (ESOPs) increasingly attractive to employers as financing and tax-avoidance mechanisms...
...economy...
...The obstacles are too numerous and interdependent, and too many key inputs depend on "outsiders" who are part of an unsympathetic establishment...
...the attraction to profit-minded executives of a vast pool of cheap labor beyond our borders...
...All, however, want to maximize profits by minimizing costs...
...Although knowledgeable critics dispute a number of the authors' claims, most say their plan merits review...
...Yet while many talk of the death of the great thing Southeastern Michigan has had going for it for sixty years, others speak of transfiguration...
...Deborah Groban Olson (Deborah Groban Olson, a practicing labor and civil rights attorney in Detroit, has spent much of the last year studying employee ownership in unionized firms...
...Luria and Russell may also underrate the challenges involved in competing in modern, technologically oriented markets...
...In Detroit, the most politically volatile tool urged by Russell and Luria is eminent domain...
...It does not assume, or critically depend upon, any particular resolution of current national debates on auto protectionism, energy policy, or corporatist capital spending...
...Luria and Russell attempt to show how a strong public role and open, publicly accountable planning are crucial if this great sea-change in Detroit's economic life is to last...
...Rath Packing is a small- to medium-sized company being purchased by its employees...
...Vermont Asbestos Group bought one asbestos mine from conglomerate GAF...
...Mayor Young has been on hand to bless the EGC's bestowal of public money on Ford's Renaissance Tower development on the Detroit River...
...It will develop policy and institutions that will target capital for industrial regeneration...
...She is an adjunct professor of labor studies at Wayne State University, currently teaching "Plant Closings and the Alternatives...
...Local control would be further enhanced by direct involvement of local government and community groups in reindustrialization district planning...
...Work for a few thousand new waiters, chambermaids, and other unskilled minimum-wage slaves is all the downtown frolic can promise...
...After passing through the grubby encampments of Flint and Pontiac, they plunged happily, but not too far, into the American forest...
...In setting up enterprise zones the city council might offer tax breaks to employers that hired Comprehensive Employment Training Act (CETA) workers and made other concessions enhancing the value of tax-loss sales and industrial revenue bonds...
...During the question-and-answer period that followed, corporatism got an angry airing...
...Would it be content with a management structure, in Rational Reindustrialization's brave new firms, that leaves labor a decidedly junior partner...
...local and non-local governments and laws must be responsive...
...Edward S. Herman (Edward S. Herman is a professor of finance at the Wharton School, University of Pennsylvania...
...De Tocqueville and his companion filed out of Detroit on what is now Woodward Avenue, past some open grazing land occupied today by the behemoth headquarters of the General Motors Corporation...
...Then comes a series of pugnacious "admissions": "We have departed from a continuing Left tradition of non-strategic uto-pianism...
...and GM's new Cadillac plant in Poletown, which sacrificed 3,500 people's homes in central Detroit for a manufacturing plant that may employ 3,000 workers...
...The U.S...
...Theirs is not a hermetically sealed, perfectionist, all-angles ethic: "[Our] political agenda fits the era in which we find ourselves...
...Anyone mapping an escape route must work without a precise compass...
...The chief executive officer of Detroit Edison chimes in with, "We've got a black mayor who has done a great job...
...They make a plausible case that the demand for certain types of energy hardware could be well served by Detroit, but they give little weight to problems of marketing and taking on already-existing competition...
...If there was a real Federal commitment to mass transit and railroads, for example, then Detroit could reasonably expect to shift some of its old capacity in that direction...
...We are not the kind of economists to claim there's a pure solution...
...Basically they said, 'It makes a lot of sense to us, although we don't like the political part of it,' " Luria explained after the meeting...
...Fifteen dollars and a lot of time on your hands will get you a prole's spot on the sidewalk to watch...
...can be produced at a forty-cylinder engine plant with only minor retooling, and strive to purchase the plant...
...Trench maps for the battle to capture Detroit's future and seize the levers of national economic planning are spinning off the presses...
...Some get rich from high interest rates...
...The broader stakes are understood as well...
...These companies turn out the same product lines they did before they came under employee ownership, and most are competing with conglomerates or at least considerably larger competitors and look as if they will live to tell about it...
...Massive Federal backing would be required for the simultaneous start-up of a large number of projects...
...That's just about the fix we are in...
...Such a planning agency could determine whether a plant which an employer sought to close might be suited to development of a new industrial process...
...Still, the Lucas project had several strong advantages over the program proposed in Rational Reindustrialization...
...The experiment attracted worldwide attention...
...The major obstacle to the creation of democratic, local reindustrialization projects, therefore, is not their economic infeasibility but the lack of sufficient political power to get the job done...
...People questioned what they took to be a Russell-Luria disenchantment with populism and decentralized industry, asking how one could expect to assert social controls in a capitalist economy...
...They can get a much more beneficial, Reagan-type free enterprise zone, and continue to wipe their feet on the likes of the United Auto Workers...
...But since Detroit and Houston are so closely linked, progress in Houston will always be an essential first step for saving Detroit...
...Second, it is detailed enough and realistic enough to make the strategy it proposes understandable and believable...
...It is true, nevertheless, that auto-making remains our premier manufacturing industry—one out of every six or seven U.S...
...Detroit Mayor Coleman Young is on to what's coming in the economic order—sort of...
...Shaiken echoes Luria when he says, "There's going to be no single solution to what's happening to the industrial base in Detroit...
...Looking around and seeing few signs of worker or citizen mobilization, Russell and Luria have sought another way to save their city...
...Initial reactions to the Luria-Russell report have been mixed...
...We foresee center-left corporatist coalitions becoming the terrain of urban politics in the frost belt as a whole...
...First, it is a technically solid model—a well-researched, carefully argued, hard-nosed analysis of a concrete, democratic, local reindustrialization strategy which other activists can adapt to their own needs...
...Workers and unions must be adaptive and moved by the spirit of the collective enterprise...
...But, as we say, it is a rough draft: Several of those invited to add to The Progressive's review of the Russell-Luria scheme note as much, some dismis-sively...
...the vocabulary presumes an unusual tolerance on the reader's part for the barrier-reef language of leftist economics, but Russell said Rational Reindustrialization'% reception by ordinary working stiffs has been "an education . . . union people have asked acute, intelligent, highly sophisticated, worldly-wise questions...
...Joint worker-management planning of investment decisions, plant closing legislation, and shopfloor efforts to restructure work all fall short of socialist revolution, but they could show that economic decisions need not be made merely by the market or by management (often with back door subsidies from the Federal Government...
...Modest successes have more social and political value than noble failures...
...Even after the workers purchase their stock and the public sector contributes its allotted share, a sizeable amount of private-sector capital will still be necessary...
...they claim, though, that well-planned reinforcement of the "linkages" among plants in the city would guarantee workers steady employment...
...As DARE members, Russell and Luria had accepted responsibility for developing an alternative economic recovery agenda based on "the needs and interests of working-class Detroit...
...Or more precisely, is socialism in one city a viable option...
...To cut through the layers of difficulties would require a great deal of power and authority—incompatible with the democratic assumptions of the authors' plan...
...The authors want investors to have their cake and the workers to have it too...
...Pete Kelly (Pete Kelly is chairman of the design staff, United Auto Workers Local 160, General Motors Technical Center, Warren, Michigan...
...They posit a program "that attempts to bridge the gap between a state and local political strategy for economic reorganization from below and an emergent national corporatism that would impose from above strict conditions on the privilege of drawing on a pool of private-public reindustrialization capital...
...Despite the citizenry's rapidly expanding dependence on the public sector, now that one-third of the auto work force has been laid off, Young has handed out millions of dollars in tax abatements to resident corporations...
...In Rational Reindustrialization, Luria and Russell figure that to stop the migration of people and capital to Houston, the best strategy is to move a piece of Houston's economy to Detroit...
...After all, Detroit is full of skilled workers, shuttered factories, and the basic infrastructure needed to transform the city from an auto center to an energy hardware metropolis...
...It seems to be Young's belief that the only way to insulate the city from total ruin is to give industry—the auto makers, especially—every possible concession...
...The consolidationist-interventionist views of Rohatyn, who sees central planning as a mechanism to reduce the power of elected officials and enforce labor austerity through concessions, are the hot ticket with the neo-liberals, so called...
...Industry, as now constituted, with its "narrower, short-term focus and its unwillingness or inability to assess the whole social balance sheet," cannot easily take advantage of the "linkages that can be salvaged, nurtured, and built by public planning, [thereby] reducing production costs with less pressure to cut workers' wages...
...Who is the ideal reader...
...You can call that fascism if you like...
...The collapsing auto industry and the private managerial ineptitude that is chiefly responsible for it telescope a national situation...
...Models of the products were actually made, and they were tested for marketability...
...At best, he says, "it would create a kind of risk-less capitalism that would impose new burdens on the working class, further reduce the power of unions, lower living standards, and introduce a new era of repression...
...cent foreign-owned...
...Would a politically conscious workers' movement be as careful as Russell and Luria to see that profits are looked after...
...South Bend Lathe, Inc., bought the South Bend Lathe Division of Amstead Industries...
...Manufacturing is a very complex process that is a lot more than metalbending...
...Within six months, Young had frozen municipal employees' wages, pushed through a city income-tax increase, and fired 100 transit workers who refused to make contract concessions...
...What's most lacking in the plan for Shaiken is an implicit faith in populism...
...For people in the other cities," they go on to say, "the ten criteria for reindustrialization choices offer a . . . framework for analysis...
...The UAW leadership, which employs Luria as a researcher and as a liaison with Thomas Murphy's EGC, has had nothing to say...
...Does Rational Reindustrialization unwittingly add up to a variation on Felix Rohatyn's topdown corporatism...
...Its taming was, by his lights, well left to the vigorous new race he found so fascinating on this side of the Atlantic...
...Earlier on, they belittled McCullough's "myopia about the preconditions of working class political empowerment . . . serviced by a set of rigid concepts of working class, capitalist class, and class interest...
...We'd be lying if we suggested that the workers could buy the system...
...managerial listless-ness and rank unwisdom—all have cost many thousands of assembly-line people their jobs and driven the likes of Chrysler to the brink...
...The American Left has been daydreaming about something like Rational Reindustrialization for years, but many, confronted with the suddenly real lineaments of the Russell-Luria scheme, have controlled their hunger for policy initiatives...
...The approach fails to credit the corporate system with its proven ability to exploit every economic opportunity...
...For Detroit, the boom is off the roads...
...Never again...
...It would work for contractual control over investment, nationalization, and direct government planning, not for incentives and tax abatements to encourage profitability...
...At a time when the Left is in disarray and in retreat from the sort of program that could rally working people to reject Reaganomics, at a time when organized labor is brokering reductions in its members' living standards, progressives need an agenda of solid economic reform, not a blueprint for a world of makebelieve...
...Left-wing economists and industrial experts like MIT's Harley Shaiken see a heaven-sent opportunity for a new, socially directed industrial culture to turn out socially useful goods...
...3.00), by Jack Russell and Dan Lu-ria, a pair of labor socialists and economists...
...But even with all these sophisticated financing provisions, the authors concede, workers would at first have to take a pay cut from their former auto industry wages...
...Too often the Left dismisses ideas that require distillation for fear that they will dilute the evolving rage of the proletariat...
...an alternative to the Detroit 'renaissance' which was based heavily on hopes for a downtown commercial redevelopment...
...Leaders of the United Auto Workers this year renegotiated contracts with auto makers who have had the audacity to ask for $5-an-hour-wage and benefit give-backs...
...I see it happening," he said recently...
...However, their political, as opposed to technical, argument, leaves much to be desired...
...Luria and Russell have taken their plan on the road, making the rounds of union locals, church and community groups, governmental bodies, university lecture halls, and public policy research centers in the East and Middle West...
...The truth is that there is no such shortcut to workers' control of investment (even the extremely modest variety in this plan), nor to the urban revitalization which is the authors' goal...
...A 2,000-copy first printing of Rational Reindustrialization sold out in May...
...They suppose creative financing will lower the cost of capital goods and "a cheaper lathe can make the same contribution to the 'business climate' as a cheaper worker compensation program...
...This approach, she adds, suits those big firms in a position to "take advantage of the corporate state, but not the small businesses that actually provide most of the new jobs and innovation in the economy...
...Because they believe private sector businesses are neither bold enough to risk the necessary venture capital nor willing to calculate the social costs and benefits of their investment decisions, Luria and Russell propose a worker-public partnership to build the new enterprises...
...I see it happening...
...There isn't much to take seriously in the attempted transition to a service economy godfathered by Coleman Young...
...not so many have the $15...
...Theirs is the most detailed plan to date for saving Detroit and making it a metal-bending dynamo once again...
...worker concessions and self-defeating compromise can be the only result of such timidity...
...It can do better...
...if progressive forces cannot generate a democratic, worker- and community-controlled planning process, we may end up with the authoritarian model proposed by theTrilateralists...
...As conditions in Detroit grew increasingly painful, Young continued to pursue a flunky's role with the Motor City's corporate elite...
...The same corporate executives whose fascination with short-term profits and large luxury cars prevented them from retooling for smaller, fuel-efficient models now dominate Detroit's Economic Growth Corporation (EGC...
...Luria and Russell are mistaken when they assume that the auto plants' metal-bending skills and machines are readily adaptable to the kind of production they propose...
...Progressive Senior Editor Sidney Lens worries that corporatism—government intervention to ensure private-sector profitability and some other traditional ends of capitalism—could yield fascism...
...The city might float industrial revenue bonds for the project, if it were persuaded that a government-worker coalition would be more successful than a government-business coalition...
...Some are laissez-faire Reaganites...
...Harley Shaiken, an automation expert at the Massachusetts Institute of Technology, warns Detroiters that there will never be jobs in abundance again, regardless of the progress the auto industry may make with public aid...
...A twenty-seven-page advertising supplement in Fortune magazine boasts that Detroit offers public grants, loan guarantees, tax-exempt bonds, local property-tax abatements, and tax credits to companies interested in locating in Detroit...
...Hyatt-Clark Industries bought a single bearing plant from General Motors...
...Everything else wrong is merely an aspect or consequence of this simple unresolved conflict...
...In short, Detroit will probably never have progressive, rational reindustrialization until the "working-class climate" in Texas and other low-wage havens improves...
...The winners will get to write the coda to Democracy in America...
...They, in turn, must be regarded as a fairly good bet to take over the national government in January 1985, perhaps with Rohatyn as Secretary of the Treasury...
...The problem reminds me of the old movement saw, "If we could get all the people in New York City to flush their toilets at the same time, we wouldn't have to...
...Detroit was once the nonpareil union town, where battles between labor organizers and management thugs were waged in the streets as a matter of course...
...Metropolitan Detroit alone lost more than 100,000 auto and auto-related jobs in the 1970s...
...Meanwhile, a tightening noose of idled multistoried factories some blocks away stands as a rebuke to the hapless "renaissance...
...But not for everything...
...The Lucas experiment was structured from the bottom up: Workers were in control...
...it closed several small plants before the buy-out...
...I believe it is not...
...There are now about 5,000 employee-owned firms in the U.S...
...Therefore, the company kept the plants open for six years, while the workers' plans faded from public consciousness...
...For most of the products proposed [in the plan], it would be a matter of only, perhaps, being able to use the building...
...Rohatyn, whose plans call for bailing out the exchequers of Frostbelt cities sunk in urban blight and recessionary woe by cutting municipal services and investing public money in the private sector, came at the city's request to prescribe a remedy for Detroit in February 1981...
...it is simply a tas'teless joke to the jobless legions in the city...
...At Lucas, appropriate workers' skills and equipment were in place, ready for use without further capital investment...
...Under a photograph of a young, white male whose face has been wrapped in a $100 bill, a caption reads, "How to pick up that healthy Michigan tan...
...The 'capitalists' aren't all in the same gunship...
...Eventually, the auto industry will shake itself out, leaving the losers to industrial history and casebooks at the Harvard Business School...
...Detroit's hidden strength," Shaiken added, "may be its highly skilled work force that can generate ideas in an organized way...
...In July 1831, it was a place for provisioning, for beginning, for taking on the green, forbidding-but-promising wilds...
...Soon, they believe, a network of these plants would define itself...
...The fight is on among the hopeful of the democratic Left and the corporatist Center-Right...
...Thomas Murphy, former chairman of General Motors and current head of the EGC, has channeled millions of dollars of Urban Development Action Grant and Community Development Block Grant money into Ford and GM development projects that have tended to benefit downtown retail, service, and commercial interests to the exclusion of Detroit's depressed neighborhoods and small businesses...
...Even if hourly earnings in the new ventures might be slightly less than in auto-making, the public role could guarantee other benefits for workers, real and psychic, such as greater job security and worker participation in boardroom and shopfloor deliberations...
...The political contest could be the best and very likely the last chance for democratic socialism—and for anti-democratic, "pragmatic" capitalism as well—to define the American reality...
...However, the EGC invited Russell and Luria to a conference last fall and quizzed them vigorously about the potential of their plan...
...Rational Reindustrialization makes three distinct contributions to the struggle to move the state interventionist trend in a democratic direction...
...The Luria-Russell suggestions of enterprise zones, corporate tax abatements and subsidies, wage-cutting, industrial revenue bonds, and the use of eminent domain to clear land for industrial development will certainly be welcomed by corporate America...
...Employee ownership may not be the long-range answer to the problems facing American workers, but in the short term it can provide more local control over companies...
...Aggressive challenges from the Japanese and European competition...
...He doubts that the Russell-Luria plan will yield 100,000 jobs under any variant of capitalism or socialism...
...The Poletown women, who felt they were victimized by a business-government-labor coalition they called "fascism," were outraged at Luria's intimation that concern for a neighborhood is "petit bourgeois...
...a second printing of the same size was going fast in June...
...What RR offers all but the laissez-faire wing is a version of planning that cuts costs without reducing working-class living standards...
...Lucas had reason to believe that if it closed the plants, the workers would go into production on their own...
...They talk of a new service economy, of a downtown renaissance of new hotels, shops, restaurants, promenades, and more freak shows like the 1980 Republican convention, this year's Su-perbowl in nearby Pontiac, and, most ludicrous of all, a Grand Prix auto race for the streets of Detroit in June...
...The perennial variables of politics— the whos, whats, by-whoms, for-whoms, whens, whys, and hows of power allocation—are hard upon us as never before...
...And they argue that Detroit's high wages, fringe benefits, and comparatively generous social services should not deter the private sector...
...The union chiefs have made next to no effort to counteract frontpage headlines that attribute Detroit's ills to the "unreasonable" wages of their rank and file...
...A favorable report might convince the old employer to stay or might give new employee owners the opportunity to develop business in a growth market sector ratherthanadyingone...
...Michigan's laws protecting workers reflect that militance...
...Their points and tone are encased in a concluding pronouncement: "We are impure, we are transitional, and we understand the period in which we find ourselves...
...Two more mechanisms could be brought into play for the support of a planned socialist city economy, the authors say...
...Luria and Russell are not clear on where entrepreneurial effort and initiatives will come from...
...Third, it gives a sophisticated evaluation of the major economic and political roadblocks to its successful implementation...
...That they have...
...Alternatively, workers could capitalize a buy-out of the plant through an Employee Stock Ownership Plan...
...Russell and Luria predict that an energy hardware enterprise would succeed and serve as a model for other workers at other plants on the ropes...
...jobs is directly or indirectly tied to the automobile—but most observers with more than a casual interest in the country's industrial fortunes agree that the auto business is now far beyond the point where a bit of fine-tuning here and there can eventually put things right again...
...We do seek the coalition, the legitimacy, and the impure and untrustworthy support of the social base of technocracy: the engineers, the corporate planners, and the bureaucratized professionals whose capacities are wasted in service to an unplanned economy...
...Most of the contestants in labor, government, business, and the academy understand this: By the 1990s, Detroit will either be a diversified manufacturing center of a new kind, and well-weaned from the automobile, or it will be a discarded city of vacant factories, boarded-up homes, and whatever passes for tumbleweed so far east...
...Neither will come as a gift from profit-seekers, who can always find a greater profit elsewhere...
...Thousands of Detroiters have the time...
...There is also a reluctance on the part of elected officials to force the private sector to make concessions when it comes hat in hand for government aid...
...Their scheme has won at least the respectful attention of the industrialists and financiers who run Detroit's EGC...
...who threw his support to his city's labor unions and forced Rohatyn (then head of the New York State Municipal Assistance Corporation) to make an emergency appeal to the legislature in Albany, Young carried as much water as possible for Rohatyn's Detroit plan...
...Since the 1973 Arab oil embargo, Detroit and Houston have been linked like two kids on a seesaw...
...Luria and Russell hope a potpourri of tax breaks and creative financing schemes will generate the requisite private investment...
...Luria and Russell, in Rational Reindustrialization, identify several of the crucial features needed to foster employee ownership in more diverse circumstances than has been possible so far...
...And that requires a labor movement which is not, in The Progressive's words, "content to be the limp tail on the Democratic Party donkey...
...We see nothing better...
...We do not believe that Detroit is somehow a special case...
...Additional funds might be raised from foundations, individual investors, and the Federal Government...
...Some critics have started to question the role government is playing in salvaging Detroit...
...The Detroit de Tocqueville knew figured as an outpost on the wilderness, a crude forward nub of the society conceived along the Eastern Seaboard the century before...
...They would, obviously, sell gas to Hitler...
...Marketing and technological prowess are required and will probably be still more important in the future...
...But who will win out...
...Strategists on the Left and in the more enlightened financial command posts are casting about for a line of durable goods that could be manufactured by exploiting what Detroit already has in place— powerful industrial capacity and a skilled metal-bending work force—and that could be competitive in the international market...
...In May, Russell and Luria climbed down McCullough's throat in a rebuttal polemically, and we think substantively as well, more accomplished...
...Rohatyn's "pragmatists...
...But] enough of futures...
...Writes McCullough: "Let's list the positive contributions of RR: 1) It argues for economic planning and gives a detailed, reasonable map of such a plan...
...some insist on more of it...
...The president of this fuel-supplying conglomerate is vice chairman of the EGC...
...This tripartite coalition of business, government, and labor has caused some alarm on both the Left and the Right...
Vol. 46 • July 1982 • No. 7
