Neither private capitalism nor state capitalism, but workers’ power: what Solid Energy and Mainzeal reveal

Spring Creek miners learn that what many on the left call “our asset” is going to take away their jobs

by Philip Ferguson

Early last month we reported on the collapse of Mainzeal, this country’s third largest construction company (see here), whilst last August and September we reported on the woes of state-owned enterprise Solid Energy and the sizeable layoffs that were underway (see here and here).

What has happened with both companies is remarkably similar: news reports record bad investments, poor management decisions, miss-estimation of future prices and price fluctuations, and a rather extravagant corporate culture.  A glance at the boards of the two companies also reveal an interlocking collection of state and private sector personnel on each.

We’ve covered Mainzeal in some depth, so let’s look more now at Solid Energy.  It’s boss as things began going down the gurgler was Don Elder, who was on a $1.34 million a year salary and who created a core of highly-paid executives as part of a typical corporate culture.  In 2000, the top salary in Solid Energy had only been $190,000.  By 2012, not only was Elder earning – well, being paid rather than earning! – seven times that amount, but there were 472 company employees on $100,000 and over.  Even as the company was sinking further and further into debt, millions was being paid out in bonuses.  (And keep in mind that this process was ongoing under the last Labour government; it didn’t suddenly burst out after National won the November 2008 elections.)

In 2007, as Solid Energy diversified into biodiesel, the company claimed that its intention was to produce 70 million litres a year; however, it peaked at just 2 million.  Yet tens of millions of dollars were pumped into biodiesel.

At their huge new headquarters in Christchurch, Solid Energy invested $100 million in renewable energy projects that never made a profit.

The company is now about $380 million in debt.

Who is paying the price for this debt?  Clearly, the workers – the people who do the actual work which made the company its earlier profits and who have no say at all in the decisions that have placed the company in its current parlous state.

Management “getting it wrong”, as was pointed out in a recent feature on the company on Campbell Live, means hundreds of job losses.  One angry miner told Campbell the bosses were “virtually criminals, the way they ran the company.”

However, as in the Mainzeal case, the bosses ran the company to maximise profit and this requires making bold investment decisions.  In an anarchic market system, some investments succeed and some fail.  Indeed, for some to succeed others have to fail.  While some bosses are more competent and some are less and some do due diligence and some don’t, the rule of the market nevertheless ensures that some companies must fail.

The way capitalism works also ensures that workers will pay the main price of company failure.  They’ll lose their jobs and suffer all the consequences which flow from job loss.

The similar woes that beset Mainzeal and Solid Energy point up how little difference there is between a privately-owned capitalist enterprise and a capitalist enterprise which is state-owned.  While there used to be important differences between private business and the old (pre-1984) state sector, because state-owned stuff in those days was not automatically subject to the law of value and the need to make maximum profit, the differences disappeared in the later 1980s as the state sector was corporatised – turned into companies charged with making the maximum profits possible.

These two companies reveal yet again that neither privately-owned nor state-owned capitalist enterprises are superior.  The key factor is that they are capitalist.  As long as they are capitalist, they have to do the same things and they breed the same problems and consequences for workers.  And as long as the public debate remains at the level of which type of capitalist enterprise is preferable, workers can only lose out.

Rather than a false debate about “our assets” versus 49% private ownership, what we need is a rejection of these terms of debate and the articulation of a workers’ alternative.  An example of this is the way the workers have taken over the Vio.me factory in Thessaloniki and are running it under workers’ control and management, showing that we simply don’t need capitalists and capitalist managers, of either the private or state variety (see below for articles on this).

However, Vio.me is only a microcosm.  As long as the rest of the economy operates along capitalist lines, Vio.me will be swimming in a poisoned river.  But what if the workers took over all the workplaces and ran them under workers’ control and management?  What if workers from all these workplaces got together and drew up a plan of production for the whole economy?  And workers did this across the globe?

That way, we could work out how much of everything we required in order to have a good life, produce it collectively and own and distribute it collectively.

Unless workers ask these questions and begin to answer them in practice, we’re stuck on the same old treadmill, forever having to choose between two crappy alternatives, both of which exploit us and both of which could well lay us off tomorrow.

For how the state-owned capitalist power companies in New Zealand operate, see here.  Our interview with a Vio.me workers’ spokesperson is here.  Background articles are here and here.  A video on the occupation is here.