Thousands face layoffs in imperialism’s “Crown Jewel” high tech sector

By Chris Fry

“Silicon Valley” today defines not so much a geographical region of California as instead the technological development industry of U.S. imperialism. For the last forty years or more, this collection of corporations, with its workforce of highly educated and trained staffs of research workers, along with a network of similar international companies, have transformed the world’s production and distribution systems.

During the Covid pandemic, these workers, augmented by a tremendous hiring spree, were engaged in developing all kinds of automated systems to replace the suddenly missing workforce that the public health emergency created. But now that this emergency has subsided, these relatively well-paid research workers have suddenly become a burden to their business owners and to capitalism in general. So now they are being dumped into the unemployed pool, even while Big Business is still searching for low-pay workers to ruthlessly exploit, at least until the oncoming Federal Reserve’s recession kicks in.

A November 12 article reports that:

The second half of 2022 has been characterized by a series of tech layoffs as firms from small operations to multinational giants have laid off a significant number of employees. In fact, layoff tracking website reports that more than 100,000 tech workers have been fired in 2022. And that number is likely to grow.

Most of the billionaire owners of these companies, like Zuckerberg and Bezos, have issued “apologetic” statements expressing sympathy to these workers, small comfort to those that have suddenly lost their livelihood. But there is one notable exception to this show of “crocodile tears.”

Twitter and the Kingdom of Musk

Elon Musk, whose announced plans for dealing with the climate change catastrophe is to establish a colony on Mars, with a workforce of indentured servants paying their way from the ravaged Earth by fulfilling every need and answering every whim of their master, King Elon, early in November acquired the social broadcast site Twitter. He immediately laid off half the workforce, some 3,700 people. Not satisfied with that:

[T]he billionaire offered Twitter employees an ultimatum: either stay on and work long hours in a more “hardcore” version of Twitter or leave with severance pay. A [more] significant number of workers in technical roles opted to leave than expected, compared to those in sales, partnerships, and similar roles.

Musk has already opened up Twitter to Trump and a slew of other racist, fascists and anti-LGBTQ+ bigots. But he is now being forced to try to enlist some of his former workers to keep his business going.

Workers become appendages of machines

While Karl Marx was writing his seminal work, Das Kapital (Capital) in England in the 1850s, he made copious notes which were collected and published in a separate work called Grundrisse (Notes). There is a section of Grundrisse that came to be known as “The Fragment on Machines.” In it, written nearly 170 years ago, Marx foresaw powered production devices controlled by “intellectual” systems, which today we would call “computers” or “artificial intelligence” (Marx called them “automatons”):

But, once adopted into the production process of capital, the means of labour passes through different metamorphoses, whose culmination is the machine, or rather, an automatic system of machinery (system of machinery: the automatic one is merely its most complete, most adequate form, and alone transforms machinery into a system), set in motion by an automaton, a moving power that moves itself; this automaton consisting of numerous mechanical and intellectual organs, so that the workers themselves are cast merely as its conscious linkages.

Of course, that process to create such systems has taken many decades and continues today.

In that same section, Marx carefully studies a 40-page pamphlet written anonymously in 1821, later discovered to be by Charles Wentworth Dilke, titled “The Source and Remedy of the National Difficulties, Deduced from Principles of Political Economy, in a Letter to Lord John Russell.”  At the time, Russell was a young member of parliament who would later become Prime Minister of England.

Dilke, a civil servant in the Naval Department, was a brilliant man who had studied the classical bourgeois economists, including Adam Smith and David Ricardo.  But unlike those economists, Dilke noted the devastating impact the burgeoning industrial revolution was having on the increasing masses of workers. He noted the decline of the health and “free time” of the English proletariat from that of the peasants in the early 1600s and even as recorded back to the twelfth century.

Marx would expand on this point, describing in Capital this decline in the living standard of the working class and the expansion of the use of child and women labor for long hours in the English factories. Instead of utilizing human strength and skill to control production, workers had become appendages of the machines:

The worker’s activity, reduced to a mere abstraction of activity, is determined and regulated on all sides by the movement of the machinery, and not the opposite. The science which compels the inanimate limbs of the machinery, by their construction, to act purposefully, as an automaton, does not exist in the worker’s consciousness, but rather acts upon him through the machine as an alien power, as the power of the machine itself.

Marx and Dilke went further, both describing the contradiction created by capitalism’s use of automation to intensify the exploitation of labor versus the possibility to use it to vastly improve the lives of the masses. Marx quotes Dilke in his notes:

On the one side, then, it calls to life all the powers of science and of nature, as of social combination and of social intercourse, in order to make the creation of wealth independent (relatively) of the labour time employed on it. On the other side, it wants to use labour time as the measuring rod for the giant social forces thereby created, and to confine them within the limits required to maintain the already created value as value. Forces of production and social relations – two different sides of the development of the social individual – appear to capital as mere means, and are merely means for it to produce on its limited foundation. In fact, however, they are the material conditions to blow this foundation sky-high. ‘Truly wealthy a nation when the working day is 6 rather than 12 hours. Wealth is not command over surplus labour time’ (real wealth), ‘but rather, disposable time outside that needed in direct production, for every individual and the whole society.’ (The Source and Remedy etc. 1821, p. 6.)

One can only note how this notion was championed by the working class in the U.S. in the heroic struggle for the eight-hour day and many other struggles.

Enslaved workers victims of capitalist industrial development

In the groundbreaking and much maligned by racists book, The 1619 Project, there is an essay titled “Capitalism” by Princeton Professor Matthew Desmond. Desmond explains how the original cotton plantations were hindered by the fact that much more cotton could be harvested from the fields than could be processed, because intense labor was involved in removing the seeds from the raw cotton.

That all changed with the invention of the cotton gin machine, which ended that bottleneck. So the enslavers developed “modern” techniques to maximize their profits:

Like today’s titans of industry [Amazon’s Jeff Bezos and Elon Musk come to mind-cf], planters understood that their profits climbed when they extracted maximum effort out of each worker. So they paid close attention to inputs and outputs by developing precise systems of record keeping. Plantation entrepreneurs developed spreadsheets, like Thomas Affleck’s “Plantation Record and Account Book” … Affleck’s book was a one-stop-shop accounting manual, complete with rows and columns that tracked per-worker productivity…

Perhaps most remarkable, they also developed ways to calculate depreciation, a breakthrough in modern management procedures, by assessing the market value of enslaved workers over their life spans … In her book “The Price for Their Pound of Flesh”, the historian Daina Ramey Berry shows that enslaved workers even had monetary value in death, their bodies sold as cadavers to medical schools and physicians.

Overseers recorded each enslaved worker’s yield. Accounting took place not only after nightfall, when cotton baskets were weighed, but throughout the workday…

Detailed data analysis also allowed planters to anticipate rebellion. Tools were accounted for on a regular basis, to make sure that a large number of axes or other potential weapons didn’t suddenly go missing.

Pages 178 – 179

This all predates Amazon’s camera surveillance of warehouse and delivery workers, but the intent by today’s ruling class is the same.

High tech layoffs are only the beginning

The massive layoffs in high tech are the prelude to the coming Federal Reserve-induced recession, not just in the U.S. but around the world.  Although right-wing pundits join with Fed Chairman Jerome Powell to blame inflation on the workers receiving higher pay, a Nov. 22 Axios report tells a different story:

If you (or someone you love) are not a metalworker in the German state of Baden-Württemberg, you could be forgiven for ignoring a new labor deal struck last week.

But it is a story with surprising significance for the European economy — and one that resonates in the debate about U.S. wages and inflation.

Driving the news: The IG Metall union, whose 3.9 million members perform crucial work for Germany’s auto industry, agreed to a 5.2% pay raise in 2023 and 3.3% in 2024.

Yet that is markedly less than the 11.6% rise in German consumer prices notched over the last year.

Why it matters: While worker pay is rising faster than it did in the 2010s on both sides of the Atlantic, there are few signs that workers are achieving pay gains in excess of inflation.

That is bad for standards of living — inflation really is making people worse off. But it’s good news if you, like central bankers, fear an upward spiral of wages and prices.

The big picture: For all the discussion of how the tight labor market has increased workers’ leverage, that is not translating into pay increases that keep up with inflation.

Real compensation per worker was down in 31 of 32 major world economies in Q3 2022, compared with Q3 2021, according to the latest OECD data.

In Europe, it is high-stakes labor negotiations like those involving the German metalworkers that drive wage trends. In America, unions are less prevalent, so it is millions of individual negotiations between workers and employers that drive wages.

By the numbers: U.S. wage data points to workers succeeding at attaining a one-time surge in pay in 2021 and the early months of 2022, but also suggests wage growth is receding to closer-to-normal rates.

Average hourly earnings among private sector workers rose at a 3.9% annual rate in the three months ended in October. That’s down from a recent high of 6.3% in late 2021 and 5.9% as recently as the three months ended in July.

What they’re saying: “Real wages on average are falling, not rising,” said Mary Daly, president of the Federal Reserve Bank of San Francisco, when speaking with reporters yesterday.

We don’t have one of the fundamental ingredients of a wage-price spiral, which is wages rise with inflation and it’s a vicious cycle upward. We don’t see that.”

She added that in her Fed district, which encompasses much of the Western U.S., she was hearing widely of 4.5% to 5% wage increases last year, whereas that is looking like 3.5% to 4% for the coming year.

The bottom line: Rising nominal wages look more like an effect of high inflation rather than a major cause. That implies that the Fed, ECB and other major central banks could, conceivably, bring down inflation without crushing the labor market.

But “crushing the labor market” is what is precisely on Big Business’ and Finance Capital’s agenda – stamping out union drives, breaking strikes, intimidating individual workers and more. Monopolies have gained so much power that they have been able to soak the workers and oppressed with sky-high inflation, reaping huge profits. But at the same time, as this chart from YChart shows, inventories of unsold products are at unprecedented levels:

So rather than lowering prices, the billionaire class is preparing to drive millions out of work and into poverty. That is their solution to their overproduction. And their minions in government, who could impose targeted price controls on these corporations, do nothing, and leave the problem up to the banks headed by the Federal Reserve.

Revolution is the solution

Dilke and Marx both pointed out that the amazing technical developments under capitalism greatly increased what they called “disposable time”, that is time each day, each week, each year beyond what labor time is necessary to provide each person with a prosperous standard of living. And it was understood by Marx and all the revolutionaries who came after that the “source” of the problem is the private ownership of property, where business owners can appropriate, or steal that “disposable” labor time, convert it into surplus value, and amass huge profits.

So the solution is apparent – to convert private ownership into public ownership, and to utilize scientific planning to unleash the development power of the worldwide high tech workforce to benefit all the workers and oppressed around the world, so that we can lead a prosperous life, so that we can fulfill Charles Dilke’s dream expressed some 200 years ago:

The next consequence therefore would be, that where men heretofore laboured twelve hours they would now labour six, and this is national wealth, this is national prosperity. After all their idle sophistry, there is, thank God! no means of adding to the wealth of a nation but by adding to the facilities of living: so that wealth is liberty– liberty to seek recreation–liberty to enjoy life–liberty to improve the mind: it is disposable time, and nothing more. Whenever a society shall have arrived at this point, whether the individuals that compose it, shall, for these six hours, bask in the sun, or sleep in the shade, or idle, or play, or invest their labour in things with which it perishes, which last is a necessary consequence if they will labour at all, ought to be in the election of every man individually.

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