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Atlas Finally Shrugged

Us against them in the me decade

Rising unemployment was a very desirable way of reducing the strength of the working classes…. What was engineered—in Marxist terms—was a crisis in capitalism which re-created a reserve army of labor, and has allowed the capitalists to make high profits ever since.

—Alan Budd, chief economic adviser to Margaret Thatcher, 1992

The late Sixties and early Seventies were a tough time for the owners of American industry. The postwar recovery had peaked. Europe and Japan had rebuilt their industries and transformed themselves from hungry markets for American goods and capital into aggressive economic rivals. Newly industrializing countries, too, were joining the game. After more than two decades of virtually uninterrupted growth there was just too much stuff circulating the planet. Too many cars, too many shoes, too many refrigerators and not enough people with money to absorb the abundance. Anyone who could afford such things pretty much already had them by the mid-Sixties and that spelled disaster. It was a classic formula: Too much success glutted markets and shrank profits.

To complicate matters, mass rebellion, particularly of the socialist and Third World nationalist sort, was breaking out around the globe. As the United States continued to lose badly in Vietnam (and not for lack of lethal effort), the American political establishment—liberals and conservatives alike—lost credibility. The civil rights movement and peaceful antiwar rallies on campus had given way to massive urban riots and homegrown “terrorism.” By the war’s end even American GIs were a liability, on occasion casting their antiwar vote via hand grenades. In 1970 alone the military, which preferred to suppress news of dissent, gave an official “fragging count” of 363.

And where was labor in this political maelstrom? Where was the mainstream American working class, that supposed host of somnambulant Archie Bunkers? They sent their boys to die in Nam, grieved quietly by themselves, and, as the official image informs us, donned their hardhats for the occasional prowar, flag-waving Nixon rally, right? Actually, the real saga of labor during those troubled years is one of disobedience, chaos, “counter-planning,” malingering, and huge, militant wildcat strikes. It was in response to this crisis—a crisis of excess democracy and excess working-class power—and the vicissitudes of overproduction that the great right-wing backlash of the last three decades was born. To understand what happened next it is crucial to understand that for the first time since the Depression the American business class felt its back pressed against the wall.

The Sleeping Giant Stirs

Labor’s “new mood” first made headlines in 1968, the year political revolt broke out around the world. The United Farm Workers were gaining national attention and winning contracts. Walter Reuther, president of the behemoth United Auto Workers, was taking an increasingly progressive stance against racism, the war in Vietnam, and the AFL-CIO’s pampered, pussyfooting leaders. In May 1968 AFL-CIO President George Meany suspended the UAW from the federation. A little more than a month later Reuther withdrew his 1.5 million members and with the Teamsters, the country’s largest union, formed the Alliance for Labor Action. All the while, the UAW was bringing home the bacon, having just beaten Ford in a two-month strike.

Around the same time public-sector workers—who by and large did not have the right to strike—began to agitate. In February 1968, New York sanitation workers, ignoring the law and threats of jail, walked out and left the city’s refuse to mount in frozen, rat-infested heaps for nine days. Mayor John V. Lindsay called the strike “blackmail” and refused to give in to workers’ demands, until the more sober Governor Nelson Rockefeller overruled him, capitulated, and boosted wages for the garbagemen. But their strike had become a spectacle of national proportions. Soon followed word of the American Federation of Teachers’ drive to collect a million-dollar “militancy fund” as teachers staged small but widespread illegal strikes in Maryland, Florida, and New Mexico. A fretful U.S. News & World Report noted “a new, aggressive mood among public employees.”

The youth brought with them all the fury and iconoclasm of their generation—they were militant, pro-union, and ready to fight.

Strikes hobbled American industry in the first four months of 1968 to an extent they hadn’t since 1950, and in most disputes labor emerged victorious. By late June federal mediators were involved in 353 strikes, which had idled 219,000 workers in trades ranging from construction to journalism. In Detroit, for example, workers shut down both the city’s papers for seven and a half months, while the building trades brought the construction industry to its knees for most of the summer. Labor was only beginning to feel its strength.

Nineteen sixty-nine brought the first of several truly titanic showdowns. In October General Electric faced off against a coalition of twelve unions. Since the Forties GE had been known as one of the most antiunion corporations in America. Its take-it-or-leave-it approach to contract negotiation and its ruthless cost-cutting went by the moniker “Boulwarism” in honor of the company’s notorious personnel manager, Lemuel Boulware. The company’s heavy hand was of no avail in the strike of 1969-70, when workers shut hundreds of GE plants from Burlington, Vermont to Oakland, California. With 133,000 strikers coast to coast walking pickets, production at the nation’s fourth largest employer ground to a halt.


The stakes were high for both sides. “If we’re beaten like we were in 1960,” said one shop steward with the International Union of Electrical Workers, “that’s the end of the union at GE.” Likewise, the strike sent ripples of fear through GE’s managerial ranks and American boardrooms generally. Across the trenches, corporate officers saw their worst nightmare coming to life: Not only did the twelve-union alliance opposing GE bring together some of the most formidable personalities and organizations in labor’s camp, it united once-bickering factions of the labor movement. There was, of course, the AFL-CIO’s very mainstream president, George Meany; the maverick and leftish Walter Reuther; Paul Jennings of the IUE; and the quite radical James Matles of the United Electrical, Radio and Machine Workers. The UAW even kicked in more than a million dollars and a few veteran strategists and negotiators to aid the smaller electrical unions on their sectors of the front. Among the rank and file another frightening unity was forming: Along with the white, crew-cut old-school workers were legions of long-haired, pot-smoking youths, men and women, black and white, who unlike their elders did not recall the Depression and didn’t fear the threats of GE’s labor experts. The youth brought with them all the fury and iconoclasm of their generation—they were militant, pro-union, and ready to fight.

As Christmas 1969 came and went, the strike’s economic impact reverberated through other industries. Eleven weeks of impasse at GE left Lear Jet holding a half-dozen executive jets in Wichita, Kansas with empty nacelles awaiting GE engines. Tecumseh’s compressor-fabricating operations had no electric motors, forcing the company to lay off three hundred workers. Meanwhile, retailers began to feel the pinch as a boycott of GE consumer electronics and appliances gained momentum. Direct losses to GE were tallied at $100 million in missed profits.

On the picket lines the mood remained strangely calm. Even in the company’s Northeastern strongholds the press reported that strikers were settling in for the long haul with little of the anxiety seen during big strikes of years past. Why? To the horror of businessmen the answer soon arrived with all the sting of a shiv from Brutus. Strikers were not only receiving strike funds but tens of thousands of them were also drawing welfare checks! The government was subsidizing labor’s side of the battle. “It’s a mind-boggling situation,” declared Thomas Litwiler, a GE executive in Pittsfield, Massachusetts. “The strikers are living reasonably well on welfare, and nobody knows what to do or what it really means any more,” By the end of the victorious 122-day action, GE strikers had collected an estimated $25 million dollars in welfare. From the point of view of the employer class this was a disaster.

Welfare-subsidized class war, troubling enough in itself for the honchos at GE, was also a depressing barometer of larger problems. Working-class power was being institutionalized within the state, and the state in turn was being transformed. It seemed like the nation was creeping toward what conservatives liked to call collectivism.

Consider the fact that between 1964 and 1979 the federal government enacted sixty-two health and safety laws meant to protect workers and consumers, and thirty-two other laws to protect the environment and to regulate energy use. Many of these state interventions, it should be noted, were inaugurated during the Nixon administration. Between 1970 and 1973 Nixon presided over the creation of the Environmental Protection Agency, the Occupational Safety and Health Administration, the Consumer Safety Administration, and the Mine Enforcement and Safety Administration. The Brookings Institution estimated that by 1983 pollution controls alone had cost American business between $13 billion and $38 billion, and that measures to protect health and human safety cost between $7 billion and $17 billion.

Showdown 1970: Labor’s Tet Offensive

Labor’s victory over GE presaged turbulent times to come. According to government statistics, contracts covering some five million workers would come up for negotiation in 1970, and unions were preparing to make significant wage demands. Employers braced for combat, and by the end of the year more than sixty-six million days of labor time would be lost to job actions, the highest toll due to strikes since the great postwar labor offensive of 1946.

As the storms of 1970 approached, the National Association of Manufacturers and the U.S. Chamber of Commerce sought to enlist the Nixon administration’s help to impose labor discipline. But before long the federal government was embroiled in a labor-relations shitstorm of its own: On March 18 more than a thousand angry letter carriers in New York City dropped their bags and grabbed placards. Twenty-five thousand drivers and clerks honored the pickets, and within hours postal operations in New York City ground to a halt.

The action was illegal: Just for walking out each striker faced a possible felony charge carrying a minimum prison sentence of a year and a day along with a $1,000 fine. A federal court immediately imposed an injunction ordering postal employees to return to work, while James Rademacher, head of the national postal union, issued bellicose back-to-work orders of his own and made solemn promises to the postmaster general that the mail would move—rain, shine, or picket sign.


It didn’t matter. Within two days the New York wildcat strike had spread across the country. Along with banners the strikers now carried effigies of “Rat-macher,” In all, more than 200,000 of the nation’s 740,000 postal workers were out in more than two hundred towns and cities. Hundreds of thousands of drivers and clerks halted before even the flimsiest of the letter carriers’ picket lines. By March 21 the U.S. mails had completely stalled. “We’re very dose to paralysis,” a postal official complained. “What is still functioning is hardly worthy of calling a postal system.”

As local after local joined the strike, panic set in among opinion-makers and business leaders, and the press predicted a national “disaster.” Nixon went on television to plead with the nation that nothing less was at stake than “the survival of a government based upon law.” To restore order and move the mails he called out the armed forces. But even these scabs in olive drab displayed a voguish lack of discipline: Of the twenty-six thousand National Guard, Army, and Air Force reservists ordered to report for duty, only sixteen thousand showed up—and, according to Newsweek, many of those “got mixed reviews as postal workers,” preferring to grab empty mail bags and “disappear for the day.” Others fraternized openly with the strikers.

The worst-case scenario was unfolding. Time, in a perceptive assessment of the situation, warned that “the government’s authority was placed in question and the wellbeing of business, institutions, and individuals in jeopardy.” The price of order, it seemed, would have to be surrender to wildcat postmen who were demanding amnesty and a 40 percent raise in pay.

The worst-case scenario was unfolding.

After a week without mail, negotiations had begun and the strikers returned to work, but they remained defiant. “It’s got to be good and it’s got to be quick,” one letter carrier said of the talks in Washington, D.C. “Otherwise, we’ll stay out till we get the money.” In material terms the postal strike was a modest success: All government workers won an immediate 6 percent pay raise, and postal workers carried off an additional 8 percent on top of that. Politically, though, the impact of the strike was enormous, increasing the momentum that resulted from the ass-whooping administered to GE months earlier. The postal strike whetted working folks’ appetite for struggle: No longer did workers need to cower before the bosses or Uncle Sam. “We’ve learned from the postal workers that if practically everybody strikes, then nobody is going to get hurt,” one government worker told the Washington Star. “They can’t fire everyone.”

Almost immediately state and municipal workers started striking for better wages and more control on the job. Teachers, garbagemen, gravediggers, hospital workers, cops, and city office workers walked off the job in huge illegal strikes. Even the skies grew calm: Air traffic controllers, recently organized into the two-year-old Professional Air Traffic Controllers Organization (PATCO), called a rolling sick-out and threatened an illegal strike. Just as the postal strike was winding down PATCO’s chief, attorney F. Lee Bailey, announced that the issue was safety, and that unless the union’s demands were met the controllers would “shut down the air traffic system.” PATCO won its pay increase and other concessions without having to go that far.


Due to strikes in the construction trades, many cities suffered industry-wide work halts for weeks at time. In Kansas City commercial construction projects were halted for more than three months. “There are very widespread strikes in construction,” commented a perturbed Secretary of Labor George Shultz. “Settlements are coming in. They are at extremely high levels. They’re higher than last year, which was an extraordinary year…. This is a formula for disaster.”

In what would become a trademark phrase of the era, William W. Winpisinger, Machinists president and chief negotiator for the angry railroad unions, described his rank and file as “running right on the edge of being out of control.” Far from making threats, he was pleading with employers to help him maintain power. It was a common theme. Everywhere one looked workers were spoiling for a fight. By the early Seventies labor leaders had to learn to fight on two fronts: After squeezing concessions from employers it was not uncommon for even generous contracts to be rejected by the pugnacious rank and file. By 1971 it was estimated that 15 percent of all contracts were being rejected, up from around 8 percent in 1964. At the UAW Reuther even took to staging small strikes just to placate his action-hungry and increasingly youthful rank and file.

But one contract rejected by angry Teamsters trumped all others. The trouble began on April Fools’ Day 1970, after what was described as “the most orderly” series of contract negotiations in Teamster history. The independent union’s new president, Frank Fitzsimmons, had won his truckers a $1.10 per-hour wage increase, but the rank and file wanted sick pay and wouldn’t take the contract. Immediately drivers walked in sixteen cities, including the key hubs of Los Angeles, San Francisco, Cleveland, Atlanta, Chicago, Detroit, Buffalo and Milwaukee. In the Midwest, the strategic chokepoint of the strike, renegade locals set up mobile pickets and blockades. Trucks moving east found most key crossing points on the Mississippi occupied by huge squads of wildcat Teamsters. Only trucks carrying food, medicine, and beer were allowed to move. Trucks that tried to smuggle other products underneath loads of soup or behind racks of beef wound up with smashed windshields, slashed tires, and sabotaged engines. As freight movement ground to a halt across the country, layoffs in other industries began to mount. Within a week an estimated half-million workers were directly or indirectly idled by the Teamsters’ wildcat. Greyhound, the airlines, and inland river barges all increased their freight volume exponentially, but it did little to fill the breach. As stranded merchandise piled up in poorly guarded heaps, manufacturers and wholesalers reported expensive waves of theft.

Fitzsimmons, the employers, and the courts closed rank against the outlaw strikers. In state after state injunctions rained down from hostile courts, employers swore no compromise and union leaders did all they could to force the drivers back on the road. The governor of Ohio called out the 145th Infantry, the same National Guard Unit that had just gunned down students at Kent State and put down several urban riots, to escort small convoys of scab-driven trucks. None of it worked. After twelve weeks, trucking firms in Chicago capitulated to the wildcatters’ demands. With that the employer unity crumbled, and the Teamsters won their right to sick pay.

The governor of Oregon described the strike as a “nightmare.”

Meanwhile, in coal country wildcat strikes were becoming epidemic. As Fortune magazine put it, management faced “a work force that is no longer under union discipline.” Among the miners’ grievances were the industry’s abysmal health and safety standards. In 1969 miners in West Virginia had begun what was called the Black Lung Wildcat. Within days nearly all of the state’s forty-four thousand miners had dropped their tools. After twenty-three days in which no coal came up from the shafts, the state legislature passed a law compensating three thousand victims of coal dust pneumoconiosis. But it wasn’t enough. For the next two years wildcat strikes continued in the mines. Nineteen thousand Pennsylvania miners walked in 1970, protesting lack of enforcement of new safety rules; fifteen thousand miners staged another wildcat in West Virginia to demand hospital benefits for disabled miners and their widows. Under union bylaws the rank and file had long been denied the right to vote on their own contracts. By 1972, after years of internecine strife and bloodshed, insurgent miners had overthrown union despot Tony Boyle and democratized the United Mine Workers. They also won significant wage increases from the mine owners.

In 1972, after five years of boycott and strikes, the United Farm Workers had finally brought the last of the table grape growers to heel and signed contracts with all of them. The next year brought more strikes nationwide: Five hundred thousand walked out at Bell Telephone; commercial fishermen in New Bedford, Massachusetts, the fourth largest fishing port in the nation, refused to work; the railroads were hassled by sporadic and ongoing labor action; even workers at Disneyland planned a strike. As fifteen thousand striking longshoremen paralyzed the West Coast all summer and into autumn, the governor of Oregon described the strike as a “nightmare.” Forest products piled up, mills prepared to close, and wheat was dumped on the ground for lack of storage or transportation facilities. After ninety-eight days Nixon forced the West Coast longshoremen back to work with a Taft-Hartley injunction, but by that point they had been joined by forty thousand comrades on the Gulf and the East Coast. Eventually the combination of spreading rail strikes and the longshoremen’s bicoastal lockdown forced thousands of layoffs in other industries.

The Informal Fight

Besides staging wildcat strikes, restive workers increasingly resorted to informal rebellion on the shop floor. Ford Motor Co. claimed that absenteeism in its plants doubled and sometimes even tripled during the Sixties and early Seventies. In one factory workers wrote messages to management on their machinery, such as, “Treat me with respect and I will give you top quality with less effort.” As Michael Perelman points out in The Pathology of the U.S. Economy, the countercultural zeitgeist’s new emphasis on creativity and freedom—combined with the cultural chaos and cynicism generated by the war, riots, and police repression—began to express itself on the shop floor as mass insubordination. Sabotage, slowdowns, and wildcats became the industrial equivalent of “fragging” officers in Vietnam (where many of the young malcontents no doubt first learned to disobey). In The Reckoning, David Halberstam describes the plight of a Ford manager in a plant plagued with absenteeism and sabotage. Among the plant’s employees was a young man who consistently skipped work on Friday or Monday. When the manager finally demanded to know why he worked a four-day week the young man replied, “Because I can’t make a living working three days a week.” He spoke for a generation; working-class power translated into an informal economy-wide slowdown, which meant a measured decline in productivity.


An article in Radical America from the Seventies gave an almost utopian account of a year on the insurgent shop floors of Detroit. The so-called “counterplanning” by workers included pooling break time and covering work stations so that instead of short breaks workers could have longer, extended rests. Sabotage was rampant, conducted as revenge against tyrannical foremen or in a methodical and organized fashion so as to ensure ample downtime. When the weather got hot, work occasionally took a back seat to water fights and horseplay. In his 1972 book Strike! Jeremy Brecher noted that much of this shop floor resistance was aimed at gaining control over the production process. Toward that end, UAW locals made thirty-nine thousand demands on GM in 1970 alone, for such things as greater control over shift schedules and work assignments, more vacation time, better wash-up facilities, legal advice, subsidized auto repair, and in-plant child care.

The Scales of Class Power, Tipped

There are many ways to measure working-class power. One is what economist Juliet Schor calls “the cost of job loss”—that is, the amount of income, measured in terms of potentially missed wages, that the average worker loses between jobs. When the cost of job loss is high (e.g., when unemployment benefits are reduced, or when welfare benefits slashed or restricted), workers will be less likely to risk being fired for militant labor activity—and so their power is reduced. Another indicator is the ratio of quits to layoffs and quits to job openings. When more employees quit than are laid off or fired, one can conclude that employers have lost a degree of control over the work force. That is exactly what happened during the late Sixties and early Seventies: The ratio of quits to layoffs reached two to one, almost twice what it was in the late Fifties. The share of the work force involved in some strike activity between 1967 and 1973 reached 40 percent—even though in the same period the unemployment rate crept from 4 to 8 percent.

What terrified businessmen in the early Seventies was not just that the price of labor was going up, but that it was going up regardless of unemployment rates. As the American economy cooled and slid into recession in 1973, the unemployment rate pitched upward, and yet wages and prices did not fall in response. This combination of stagnant growth and rising inflation became known as “stagflation.”

The historically consistent inverse relationship between wage levels and unemployment is known among economists as the “Phillips Curve.” For the first time in American history the two components of this economic “law” were out of whack. This led in part to a precipitous decline in the general rate of profit. In The Great U-Turn, Bennett Harrison and Barry Bluestone explain, “From a peak of nearly 10 percent in 1965, the average net after-tax profit rate of domestic non-financial corporations plunged to less than 6 percent during the second half of the Seventies—a decline of more than a third.” The nadir was 1974, when the general rate of profit reached a low of around 4.5 percent. Throughout the rest of the Seventies inflation and unemployment persisted, labor unrest continued, and profits stagnated. Workers were claiming an unprecedented share of the wealth they produced. It was an unmitigated disaster for those who owned, and they would soon take terrible revenge.

The profit crisis was not fully resolved until 1979, when President Jimmy Carter gave in to the monetarist consensus among economists and appointed Paul Volcker as chairman of the Federal Reserve Board. Now it was capital’s turn to “shut it down.” Within months of taking office Volcker dramatically boosted interest rates, thus cutting borrowing and buying power, and chilling economic activity in general. Reagan accelerated this monetarist squeeze when he took office: Interest rates actually reached 16.4 percent in 1981. As a direct result, the United States plunged into its most severe recession since the Thirties. The plan was simple: Punish uppity American workers with a “cold bath” recession and they would learn to work harder for less. “The standard of living of the average American has to decline.” Volcker told the New York Times in 1979. “I don’t think you can escape that.”

The war on labor, it was hoped—added to Reagan’s proposals to cut taxes for the rich, to gut welfare, and to deregulate health, safety, and environmental standards—would boost corporate profits back to comfortable levels. But getting to yes would take time. In 1981, as the recession was reaching new depths, many in Congress began to lose their nerve and called for relief. Volcker again explained the utility of his artificial economic disaster: “in an economy like ours with wages and salaries accounting for two-thirds of all costs, sustaining progress [in price reduction] will need to be reflected in moderation of growth of nominal wages. The general indexes of worker compensation still show relatively little improvement, and prices of many services with high labor content continue to show high rates of increase.” The recession—though hard on many businesses, particularly small firms—had not yet achieved its purpose: wages were still rising.


Not until 1982, when Continental Illinois Bank began to collapse under the weight of its bad loans, did Volcker relent and open the Fed’s spigots. By then the deep recession had worked its magic: Ten million people were unemployed by 1982, and the press was running stories on the “new poor.” Wage reductions became the norm in contract negotiations. Weekly take-home pay fell more than 8 percent between 1979 and 1982 and failed to recover for the next five years. But the most amazing measure of the recession’s political success was this simple fact: Before the 1980-82 recession, wage freezes and pay cuts in unionized industries had been almost nonexistent. In 1980 not a single union contract negotiation had ended in a pay freeze or cut. By 1982, however, 44 percent of new contracts conceded wage freezes or outright cuts. Wages had been rising more or less consistently since the end of the Second World War, but now the tide had turned.

But macroeconomic medicine went only so far. Reagan began stacking the National Labor Relations Board, the federal body which arbitrates labor disputes, with anti-union activists. The courts, too, were salted with union-hating judges. To really put labor back in its place the Reagan administration chose a direct confrontation. When PATCO struck in 1981, Reagan instantly fired all eleven thousand striking controllers, never mind the fact that they had endorsed him during the election. This massacre sent a clear signal: The war was on and the government would back business to the hilt.

The Reagan administration also sanctioned the use of contingent labor; it even set an example in 1985 by allowing the government to hire temp workers at below union wages. Then in 1986 the Reagan administration legalized home work, a practice many trade unions argued would lead to exploitation and child labor and would undermine established minimum levels of health and safety. That is exactly what happened. According to Harley Shaiken, the doyen of labor studies, the U.S. Labor Department reported twenty thousand child-labor-law violations in 1988, up from thirteen thousand in 1986. There was a 500 percent increase in the number of New York City sweatshops employing children. The number of minors illegally employed in sweatshops increased 128 percent nationwide in the second half of the Eighties.

So it is today. It is easy for us mortals to forget this legacy of the Sixties and Seventies, but others never will. For capital those years brought a glimpse, however abstract, of its own mortality. It was the nightmare that has spurred the rightwing backlash ever since, as the fear of falling rides the collective psyche of the business class like some tenacious and leering incubus. To keep the horror at bay, the leaders of the rich deploy their policy amulets and political mojos: ruthless austerity for those who toil; constant racist demagoguery; paranoid and irrelevant moralizing; and always more cops, more laws, more prison, and more discipline for working people.