The Best Kind of Crisis to Have
One of the finest explanations of the long-term dynamics of capitalism was generated by an obscure industrial relations theorist at the University of Illinois in the mid-1960’s. His name was Adolph Sturmthal. His grand theory appeared in a chapter in a minor reader on international industrial relations. No one read the book when it came out. It didn’t help that Sturmthal’s writing was awful, and that he set up the chapter as a debate about Selig Perlman, a conservative author about whom nobody cares. The theory disappeared nearly immediately. The book sits gathering dust with other musty volumes on library shelves - perpetually unchecked out - begging for de-accession.
Forty years later, Beverly Silver, a brilliant World-Systems theorist at Johns Hopkins, came up with a parallel theory that was a better version of Sturmthal. Her theory was more developed. She produced massive statistical evidence to prove her point. Sturmthal had not been on her reading list, but she figured it all out anyway.
I refer to the phenomenon discussed by both Sturmthal and Silver as Sturmthalian Crises. Silver will be famous for the next century. Sturmthal needs all the help he can get. Sturmthalian crises are a fact of life in long-term capitalist development. They are the best kind of crisis a society can have.
Sturmthalian crises are a violent transition from an era of poverty, labor weakness, and inequality to prosperity, labor strength and greater social equity. Yes, the V-word in the last sentence belongs there. It is a violent transition process.
Both Sturmthal and Silver argue that in the early days of industrialization, poverty tends to be widespread and labor tends to be highly exploited. When a society is not economically developed, there simply are not very many jobs. Workers are desperate for any job they can get. As a result, employers have all the bargaining power. They can pay low wages. They can demand long hours. They can have factories with sweatshop conditions. Since society has tons and tons of unemployed workers, and not very many job openings, an employer can replace any dissatisfied worker at a moment’s notice.
“Hey Buddy, if you don’t like the pay, or you don’t like the temperature, you can take a walk. There are a million job applicants out there who would love this job.” Technically, this giant mass of unemployed people who undercut the bargaining power of workers is referred to as a reserve army of labor.
What happens during successful industrialization is that the reserve army of labor dries up. Economic growth creates jobs. Formerly unemployed workers take those jobs. While few economies are so strong that they have no unemployment at all, unemployment and underemployment drop to relatively low levels. The economy begins to experience labor scarcity.
Once labor is scarce, workers have bargaining power. They can not be easily fired, because replacement workers are hard to obtain. They now have a meaningful strike threat, because if workers go out en masse, they are nearly impossible to replace. Unions form. Strikes win rather than lose. Labor parties get formed. Market wage rates go up. Minimum wage laws are enacted. Worker protection programs get established such as worker’s compensation, or old age security. Workers’ standards of living go up. Social inequality becomes reduced.
Two notes here.
One: This is not exactly a peaceful process. Employers are used to unilateral control over their workers -- and they do not like organized resistance. The struggles are big. These are fundamental battles over who is going to be controlling the labor process. Both workers and managers go all out. Workers seize factories, or block roads or have mass demonstrations. Governments arrest union leaders or shoot into crowds. Managers hire thugs to break the union. In the United States, these struggles took the form of CIO sitdown strikes. They occurred in the 1930’s in automobiles, rubber, steel, mining and the docks. In other countries, they have taken the form of general strikes where the whole country goes out on strike. In Sweden, the entire labor force went out on strike in 1909. France had explosive strike waves throughout the nineteenth century, culminating in near-general strikes in 1919 and 1926, and bona-fide general strikes in 1933 and 1936. South Korea had one of the largest strike waves in history in 1989 – a social uprising that led to the collapse of the government, huge wage increases and significant labor reform.
Two: These struggles are often political as well as economic. Sturmthal argues that in the era of unmitigated employer power, the government is usually loyal to management. Thus, in most cases, the employers can count on the support of the government in strike actions. This includes having police arrest the strikers and judges convict them. In some democratic settings, the workers can find sympathetic governments. In the United States, where workers had the vote, there were places where government authorities were sympathetic to unions. Judges often ruled in favor of workers in nineteenth century Massachusetts. In the 1930’s FDR came out famously in favor of unions, and produced the pro-labor legislation of the New Deal.
Sturmthal argues that most early industrial economies are not democratic. Workers face a fundamental alliance between employers and the state. This leads to workers’ movements being dual movements both for union rights and democracy. The result is a politicized labor movement. This leads to left wing parties, and more aggressive pursuit of government benefits than we see in the United States. This is one reason (although not the only reason) why we don’t have nationalized health care in the United States.
Sturmthal’s story ends in the happy, happy days of the 1960’s. Unions have won and are powerful in both the United States and Western Europe. Wages are high. Employment is secure. Pro-union labor parties govern many countries in Europe. Workers have more benefits and protections in Europe than they do in the United States, but workers in both settings are prosperous and comfortable.
But the story did not end there. Beverly Silver picks up the next stage of the narrative. Employers do not just sit passively and accept high labor costs. They move production to cheaper locations. In the United States, companies moved jobs from union states in the North to non-union states in the South. Then employers in both Europe and the United States outsourced production to the Global South, moving jobs to Mexico, to Brazil, to Korea, to China.
In theory, this should end the labor story as production is now located in underdeveloped economies with large reserve armies of labor. Wages are low. Worker bargaining power is low. Productivity is high. Social inequality is high.
However, economic development has the same effect in the Global South that it has in the Global North. The movement of production overseas energizes their economies. Jobs become available. The reserve army of labor starts to be absorbed. Workers become more powerful. Soon, unionization and strikes begin in the Global South.
Silver demonstrated this with a rigorous count of all the newspaper-reported strikes in the world. If you don’t like reading statistical tables, you can consider the aforementioned nationwide labor uprising of South Korea in 1989, the rising tide of labor militancy in the People’s Republic of China, the persistent unionization of auto factories in Mexico, or the social movement unionization in Brazil, which led to the end of the military government in the 1980’s and the election of union leader Luiz Lula da Silva as President of Brazil in 2003.
A Sturmthalian crisis is the set of social movements and confrontations that accompany the transition of labor movements from weakness and passivity to strength and victory. The process is tumultuous but very little permanent damage is done. Europe underwent major traumas in World War I and World War II. Few people even remember the General Strikes of the 1910s-30s, even though they were relatively big incidents at the time.
The consequences however were highly beneficial. Wages went up. Social benefits went up. Standards of living went up. What followed was not decades of economic ruin based on excessive labor costs – but a thirty-year period of the greatest prosperity Europe and America ever had, the 1940s through 1970’s. Conditions were good for business; conditions were good for the population as a whole. South Korea had its General Strike in 1989. It is, as of 2019, one of the most prosperous countries in Asia with one of the highest standards of living.
So, a Sturmthalian crisis is a good crisis to have. It is one of the few crises that ends up with high rates of economic growth and low rates of societal poverty.
It is not, however, a crisis that leftists can just create by wishing. It occurs at a social moment when economic growth has transformed a nation with labor surplus into a nation with labor scarcity. Once employers start outsourcing production, the economic basis of unionism deteriorates. Skilled union strategists may be able to somewhat slow down the rate of union decline. But eventually, union power will dwindle to that small subset of occupations which employers cannot outsource overseas – jobs in health, education, transportation and other services. This is not enough to create a robust coalition that can keep labor parties in national political power.
Sturmthalian crises represent unique historical moments. They occur just before the apex of historical union power. Someday we may see a Western society with a union revival, just as someday we may observe a two-hump camel. However, most societies have been one-hump camels with only one historical transformation of the working class from weakness to strength.
Prosperity is often linked to Kondratieff cycles, cycles of long-term boom and bust in the global economy based on the ascendance of particular new technologies. One can speculate about a future Kondratieff wave which leads to dynamic long-term growth in the Global North and fundamental enduring labor scarcity again. That wave would have to give the Global North a technology that could not be outsourced to the rest of the world.
If that happened, you might see Sturmthalian Crisis Two. In the absence of that, look back in happy remembrance of the Sturmthalian Crisis we have already had.
For More Information
The original Sturmthal theory appeared in pages 165-181 of Arthur Ross’s edited collection Industrial Relations and Economic Development. The chapter was entitled “Economic Development and the Labor Movement”.
Beverly Silver’s book, which I recommend very highly, is entitled Forces of Labor: Workers Movements and Globalization Since 1870.
Reading about Sturmthalian crises is always fun, because there are always great big strikes and great big social protests and great big political conflicts. There are a million good histories of the CIO struggles in the United States in the 1930’s. You can take your pick of these. A dry but authoritative account of the Swedish working class’s rise to power can be found in Walter Korpi’s Working Class in Welfare Capitalism: Work, Unions and Politics in Sweden. For sheer juiciness, I like reading about the great Korean struggles in 1989. George Ogle’s South Korea: Dissent Within the Economic Miracle and Hagen Koo’s Korean Workers are good choices. There is now so much literature on Sturmthalian problems in China you can buy a whole handbook on the subject, Teresa Wright’s Handbook of Protest and Resistance in China. Naturally, the handbook has a ton of other references.
On Kondratieff cycles, see the essay on this website “Rethinking Long Cycles in Development”.
Sturmthal, Adolph. 1966. "Economic Development and the Labor Movement." Pp. 165-181 in ”Industrial Relations and Economic Development. Edited by A. Ross. London, Macmillan.