A Plan for Factories in the Country Run, on Part-time Jobs

UNDERLYING MOST of the other ills in American society today is the disillusionment with middle-class life. For the first time along this country industrialized, a significant minority of people in the United States, particularly among the young, is disenchanted with the prospect of new cars and suburban houses, coupled with full-time office or factory "careers" in a metropolitan area. The evidence for this is all around, Witness, for example, the signs of widespread discontent among younger factory workers at Lordstown, Ohio and chew here.

Factories in the country run on part-time jobs would provide a practical alternative to middle-class life within the framework of existing institution. By permitting a more flexible adjustment between the desires of the individual and the opportunities for satisfaction. It promises a new life-style, which would be less affluent, but more free.

What is envisaged is a standard of living roughly between two-thirds and three quarters the current average for factory workers. Instead of a single 40 hour-per-week jobs there would be two 15-18 hour-per-week jobs, with the man and the woman sharing equally in the financial support of the household. Wages would be based on the prevailing industry rate (which in a competitive market economy is equal to the marginal productivity of labor) minus the external diseconomies of locating away from the cities or. $3.32 per hour (which is the current average factory wage for all industries) minus 50 cents to 75 cents per hour (in extra transport charges and operating expenses for those industries which are best suited for location in the country) equals $90 to $100 per week. People would build their own houses (of an average size of two bedrooms and one bath, plus a kitchen and a living room) and transportation to work would be on foot or bicycle, or in buses instead of cars. Everybody would have chickens and gardens or leastwise everybody that wanted to. The aim is to restore a degree of coherence and autonomy to the material life of the individual, and at the same time to achieve a more simple relaxed way of living, a healthy materialism, with more time given to eating and talking and the pleasures of life, and greater opportunities to participate in the political life of the local community. Factories in the country run on part-time jobs promise, as a concrete possibility, all these things and more: they would, quite simply, establish the economic foundation for a new way of life.

TO PROTECT the community against the encroachment of the factories, there is recourse to the principle of establishing a radical interdependence between capital and the local community. This can be accomplished by giving the inhabitants of a local territory (in the legal form of a municipal corporation) exclusive rights to work in the factories in their area (which is not without precedent), and by attaching to the community in a permanent way -- that is, within its boundaries -- an agricultural land base (organized as a corporate farm, in the legal form of a perpetual land trust) sufficient in an emergency to provide the inhabitants with an independent food supply, or its equivalent in agricultural commodities. This defines the condition of a mutually responsible relationship. For while the community would be in an extremely strong bargaining position vis-a-vis the factories (with near perfect strike powers, and the land to fall back on for an independent food supply) unreasonable demands could be met by a withdrawal of working capital and non-fixed resources (including special management personnel, depreciation funds, and access to markets and suppliers) which would close the plants and leave the community without its source of external income.

The Corporation can be interested in this plan because it frees capital for investment abroad, where the rate of return is significantly higher than in the United States. It frees capital because a factory run on part-time jobs would employ less capital to support more people at a reduced standard of living. That is, two 15 hour-per-week jobs would tie up only three-quarters as much capital as one 40 hour-per-week job. The net effect is to release capital, while maintaining the corporation's share of the burden of employment. In view of the battle shaping up in-Congress over the Hartke-Burke bill -- which among other things, is designed to restrict foreign investments by corporations on the grounds that exporting capital creates unemployment in the U.S. -- such considerations as this may very well prove decisive in the long run. And if, in addition, the community agrees, as part of the original bargain, to forgo claims to future investments in the form of undistributed profits (and thus to the increased wages and productivity which such investments bring) then the corporations would look upon this plan as a potential vehicle for channeling significant quantities of capital into their higher-profit yielding overseas investments.

Let us now turn to the question of why it is that the prevailing rate of return on investments abroad (in Europe, and the underdeveloped countries) is significantly higher than in the United States. The reason for this has nothing to do as a general rule with greater exploitation of labor in those places. Rather, it is a natural and basic consequence of the fact that in a competitive market economy the rate of return on investments is determined by the marginal productivity of capital, and that the marginal productivity of capital tends to fall as the overall level of development -- measured by the level of capital invested per capita -- rises. This tendency for the marginal productivity of capital to fall as the general level of investment rises is a case of the well-known law of diminishing returns applied to capital. In practice it means that the less developed economies offer better fields of investment, in terms of rate of return, than the United States, which has, of course, the most highly developed economy in the world. The major corporations have responded to this fact in recent years by turning increasingly to foreign investments as a source of higher profits and a better rate of growth.

The strength of this motive is amply testified for by the spectacular rise of the U.S. based multi-national corporations in the post-World War II economic era. Most of this new activity has been concentrated in Europe, thus far, for the simple reason that only in Europe did an orderly legal environment, the necessary infrastructure, etc., already exist, ready-made. But as the level of European development rises and approaches that of the United States -- which is already happening -- the multi-national corporations will have to begin looking more and more to the truly underdeveloped regions, if they are to maintain the relatively high rates of return on investments to which they have become accustomed. Until now they have been denied access to these areas on a regular basis -- that is, they have been deterred from making large-scale investments in the crucial manufacturing sector - on account of the reigning political instabilities, and the consequent risks of doing business there.

BUT SUPPOSE the plan were adopted in this form in the United States -- factories in the country, run on part-time jobs, and interdependent with the local community: Could it not be made to serve as a precedent or model for a similar type of arrangement in the underdeveloped world? As a strategy for development, the plan offers certain definite advantages. In the first place, it would tend to preserve the traditional agrarian social structures of underdeveloped areas more or less intact, and would not produce the kind of dislocations and political instabilities inherent in current attempts to create urban proletariats in the midst or rural poverty: nor would it hold out the false promise of urban affluence, for which the resources probably do not exist. Furthermore, by establishing a genuine interdependence between capital and the local areas, it would undercut the main argument for expropriation and nationalization of foreign-owned enterprises: namely, that because these enterprises are owned by foreigners, they are not responsive to native interests. Indeed, the vested interest that would be established in local areas to specific groups of factories, or to the future prospect of such factories, would work on the side against expropriation. From the point of view of the local population the idea of the factories would be to supplement a subsistence agriculture economy with a minimum amount of money, in this connection, agrarian reforms might me instituted at the local level, under local initiative, as a condition for such investments, with the local landowners exchanging their rights in the land for a certain percentage interest in the factories.

If developed along these lines, this plan could serve as the basis of a stable penetrations of American capital into the underdeveloped areas. Multi-national conglomerate-type corporations would be interested in it as a potential strategy for long-term growth. Indeed, if successfully realized, not only would it increase profits and dividends substantially for the benefit of shareholders (see table) but equally important from the point of view of central management, it would increase the comparative trading value of company stock, with all this implies concerning offers in the field of conglomerate mergers.

FINALLY, this plan implies a complete turn about in U.S. relations to the underdeveloped world. Our present policy of regarding these areas primarily as sources of raw materials would have to cease, and give way to a new policy which puts the highest priority on true economic development. It means an end to our collusion in a situation which is scandalous, in which the land and scarce resources of the underdeveloped countries are controlled and exploited for the benefit of a privileged minority, while vast proportions of the people starve, and are ignored and neglected. It means recognizing as a fact, once and for all, that only a strong central government which is committed to the development of the country as a whole, and to all the people, can provide the kind of politically stable and orderly legal environment which is the first pre-requisite for investments in the all important manufacturing sector. And it means transforming our military aid and assistance programs into new programs of aid and assistance directed towards the creation of the necessary infra-structure, in terms of regional power, transport, and communication facilities. If these things were done, it would leave only agricultural reform, and local infra-structure (both of which can and should be undertaken at the local level, under local initiative, as a way to insure popular participation) in order to complete the precondition for industrial development, and prepare the ground for an influx of foreign capital into local manufacturing centers.

In the Wretched of the Earth, Franz Fanon calls for an end to the choice between capitalism and socialism "as they have been defined by men of other continents and other ages." Without large-scale private investments and technical aid from the capitalist world he says it will take centuries to lift themselves up from the inhuman poverty in which they exist today. Here is a plan -- a concrete program - which joins the cause of a freer and better life in America to the struggle for national liberation abroad and throughout the underdeveloped world. For those who have not lost faith in America, and in the New World of which America is a part, here is on opportunity to revive that faith in action.

Luke Smith is a 30-year-old social theorist who holds a B.A. from Reed College. He is in Cambridge organizing a movement to implement his plan of moving factories to the country.

A Concrete Example

The illustrate the commercial advantage of this plan with a concrete example, let us compare what would happen to the assets of a corporation if they were shifted from their present use into factories in the country run on part-time jobs. As a basis of comparison, let us suppose that $100,000,000 in assets are presently employed in four factories in the country run on part-time jobs. In place of those four factories, three similar factories in the country would employ $75,000,000 in assets and provide 8,000 part-time jobs, with the remaining $25,000,000 in assets being invested abroad. We will assume that the average prevailing after-tax rate of return on investments abroad is three points higher than in the United States, or ten per cent annually instead of seven per cent. In addition we will assume that in both cases 50 per cent of the profits are distributed as dividends each year, and the other 50 per cent is reinvested in the firm, with all undistributed profits under the proposed plan being invested abroad. A comparison of assets, profits, and dividends at the end of the first, tenth, 30th and 50th years is as follows: I At the end of the first Year  As Presently Employed  Under Prepared Plan A. Profits  $9,500,000  $10,250,000 (plus 8%) b. Dividends  $4,750,000  $5,125,000(plus 8%) II At the end of the tenth year A. Total assets  $159,052,000  $168,351,000 (plus 5.6%) B. Profits  $15,110,000  $18,794,000 (plus 25%) C. Dividends  $7,555,000  $9,397,000 (plus 25%) III. At the end of the 30th year A. Total assets  $402,365,000  $523,442,000 (plus 30%) Profits  $38,225,000  $63,180,000 (plus 66%) C. Dividends  $19,112,000  $63,590,000 (plus 66%) IV. At the end of the 50th year A. Total assets  $1,017,892,000  $1,717,272,000 (plus 69%) B. Profits  $96,700,000  $212,375,000 (plus 118%) C. Dividends  $48,350,000  $106,187,000 (plus 118%)

We conclude, therefore, that for corporations willing to undertake to venture, the commercial advantage might prove very substantial indeed.

We conclude, therefore, that for corporations willing to undertake to venture, the commercial advantage might prove very substantial indeed.