Massive Exploitation of Datsun Workers

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Reprinted from Tokyo •University's Annals of the Institute of Social Science, no 21.

Economic background: An analysis of labour's relative share in value added.

History of Nissan's Business Performance.

Nissan's postwar business performance clearly shows the company • has been expanding very rapidly in terms of both its annual production and sales. 1) Production and Sales.

Nissan's production in the financial year 1975, i.e. 2.11 million vehicles, is 150 times larger than production in 1952, of 14,000 vehicles, and 92 times the level of 1955's 23,000 vehicles.

In the 20-year period from 1955 to 1975, Nissan's production increased about 9 times as fast as Japanese manufacturing industries as a whole, which expanded only about 10 times.

This simple comparison eloquently indicates the rapid postwar growth of the Japanese automotive industry and of Nissan Motor, one of its giants.

Nissan's growth rate in the 24-year period from 1952 to 1975, measured in terms of sales in constant prices, was an incredible 8500%.

Four periods Petiodisation.

Upon closer examination, however, Nissan's rapid growth in production and sales was far from steady. Its growth can be divided into four distinctive periods which directly correspond to the business cycles of Japanese capitalism.

What four years marked the beginning of these four periods? The first period began in 1950 the year in which the Korean War broke out.

At that time, Japanese industry was in the depths of a serious depression due to the chaotic •conditions that prevailed in the aftermath of Japan's defeat in World War II and also to the deflationary policies (Dodge Plan) enforced by the US occupation authorities.

Even Toyota Motor Co., now the leading Japanese auto manufacturer, faced an inevitable bankruptcy.

Toyota was given a new lease of life by emergency rescue measures devised by the Nagoya Branch Office of the Bank of Japan and by the US forces which placed orders with Toyota for 3,329 military vehicles in July and August 1950, immediately following the outbreak of the war in Korea.

Nissan, which was in equally desperate straits, was also able to resume full production only after it received an order for 2,915 vehicles for use by the US military in August 1950.

Watershed

To both the automotive industry of Japan and to Japanese capitalism as a whole, the outbreak of the Korean War in June 1950 represented a watershed.

The war ended the period of post World War II confusion and ushered in a period of reproduction on an expanded scale.

The second period dates from 1954, when Japan was in a depression following the August 1953 truce agreement in Korea. The year 1954 was very significant, especially for Nissan, which had just experienced a major 100-day long strike in 1953.

In the course of this strike, labour union at Nissan split the present Nissan Workers' Union was established. What were the causes of the 1953 strike?

In an effort to start producing passenger cars, Nissan concluded in December 1952 an agreement for a technical tie-up with British Austin.

The management of Nissan hoped that knockdown assembly of Austin's model 40 would enable their company to learn the skills necessary for passenger-car production.

In their eyes, however, one serious obstacle clouded Nissan's future: the labour union was staging strikes too frequently and was unwilling to cooperate in production.

Management decided to crush the union. The workers tried to protect their rights by staging a 100-day strike. In the end, however, they were miserably defeated, and the union was split.

The second union is the present Nissan Workers' Union which completely cooperates with the company. Thus, it was by crushing the workers' struggle that Nissan managed to lay the foundation for its prosperity in the subsequent years.

The third period began in 1965, which coincided with a medium-term swing of a tenyear cycle. The beginning of the fourth period was marked by the oil crisis of November 1973.

In each of the years that marked the beginning of the four periods, Nissan was suffering from stagnant production and sales. In each period both production and sales grew at unusually rapid rates; from 1955 until 1964, they grew at an annual rate of about 30%. Even in the 1970s till the oil crisis, production and sales continued to expand at a rate of more than 10% per year. 3) Enormous profits.

Needless to say, ded production and sales enabled Nissan to earn tremendous profits.

Nissan's gross profits in 1952 amounted to a mere 1.24 billion yen (or 2.22 billion in 1975 prices) and in 1955 to 2.56 billion yen (or 4.68 billion in 1975 prices).

But in 1972 the year before the oil crisis, gross profits soared to a staggering 151.1 billion yen (or 236.9 billion yen in 1975 prices),, which is 55 times the figure for 1955.

In the following section, I would like to clarify the basic mechanism that helped Nissan generate these profits. a) Labour productivity: Let us first look at the trend of labour productivity. We shall put the level of production per worker in 1955, i.e. 3.45 vehicles, equal to 100. The labour productivity index which stood at a low of 60.6 (or 2.1 vehicles) in 1951 increased rapidly to 1,190 (or 41.1 vehicles) by 1975.

This is approximately a 20fold increase in the 24 years from 1951 to 1975 and about a 12-fold increase in the 20 years from 1955 to 1975.

As a result, Nissan now enjoys extremely high labour productivity: more than 40 vehicles per worker per year.

Productivity

With respect to the changes in labour productivity, each period can be characterised as follows. In period I, labour productivity remains at a low level of about two vehicles produced per worker per year. It rapidly increased in period Il to 17 vehicles. In period III labour productivity increased, although not as quickly as in period II, to approximately 37 vehicles. In period IV it leveled off at the high rate of 40 vehicles.

b) Wage rate: Let us next look into personnel cost per worker, the average wage. Needless to say, in order to examine costs over a long period we must use the real wages which are caiculated to negate the effects of price fluctuations.

In 1952 Nissan paid its workers an average annual wage of 438,000 yen (or 1,598,000 yen in 1975 prices) and in 1955, 445,000 yen (or 1,446,000 in 1975 prices). The wage rate in 1975 was 2,920,000, or an increase of about 1.8 times in 23 years.

Twenty times

Given the fact that in the same period the physical productivity of labour increased about 20 times, the wage rate not only failed to increase in proportion to the productivity hike but its rate of increase was less than one tenth of the productivity increase.

To put it differently, the pie produced by each worker grew 20 times in 23 years, but the slice of pie dished out to him less than doubled.

What is more, in the same period the average real wage paid in Japanese manufacturing industries as a whole trebled. The real wage rate at Nissan increased at a rate far slower than that of the average Japanese manufacturer.

c) Value added and personnel cost per worker: On the basis of these observations about physical labour productivity and real wages I shall now analyse value added and personnel cost per worker.

Let us first look at the functions which the gross value added productivity of labour and personnel cost per worker play in determining the l level of labour's relative share in value added and in causing it to fluctuate. The trends of the three variables, i.e. labour's relative share, gross „value added per worker and personnel cost per worker, are summarised in Table In period I (1952-4), gross value added per worker was at a low of 1,110,000 yen (in 1975 prices, which are used hereinafter), but personnel cost amounted to as much as 780,000 yen.

It should be pointed out, however, that in this period gross value added per worker was fairly stable or beginning to show sings of increase, while personnel costs were declining.

All in all, however, period I can be characterised as a time when the workers were able to enjoy a relatively large share due to the fact that Nissan Motor's operations were still moribund.

The picture changed drastically in period II (1955-64). Gross value added per worker continued to increase rapidly at reaching than 10% per yeo more 2,070,000 yen in the first half of the period (1955-59) or twice the level in period I and 4,280,000 yen in the second half (1960-65) or four times the level of period I.

In stark contrast, payroll cost per worker decreased from 780,000 to 770,000 yen in the first half: it increased again in the latter half, but very slowly.

Through "technological innovation"-through the process of acoumulation accompanied by "advancement of organic composition of capital, labour productivity rose very quickly, and labour's relative share decreased rapidly.

Picture changed

This is exactly what labour's relative share in gross value added at Nissan Motor is when business is on the rise.

In period III (1965-1973), the picture again changed drastically. Labour's relative share in the first half of the period increased. This was due to the fact that whereas gross value added per worker increased at a slower rate than in period II, reaching 4.41 million yen in the first half, personnel cost per worker increased more than 10% per year, reaching 1.31 million yen in the first half and 2.42 million in the second.

These phenomena can be attributed to the "shortage of labour" that prevailed in the final phase of the long term cyclical uptrend of business.

In fact, at the time when not only Nissan Motor but spokesmen for Japanese capitalism as a whole were eulogising the blessing of "numerical prosperity", , their growth potential was nearly exhausted.

'In period IV (1974 to the present), the Japanese economy has been in a depression following the oil crisis, and labour's relative share has been leveling off.

Gross value added per worker has been stagnating at a high level and with a slight downward movement. Personnel costs per worker have leveled off at a high level with a slight upward trend.

Nevertheless, the situation has drastically changed since the oil crisis of November 1973. Gone are the days of excitement and enthusiasm that once characterised the period of high economic growth when real wages increased rapidly, and labour productivity still more rapidly.

The capitalists were able to earn enormous profits and the workers could dream of improving their livelihood within a capitalist society:

It has now become self-evident to both the workers and the capitalists that job insecurity, unpaid wages and reduced profits are an integral part of a capitalist society. Conclusion.

The 20-year period of Nissan's operations from 1955 to 1975 can be viewed as a rapid process of expansion and capital accumulation for Nissan.

Underlying this rapid accumulation was the low rate of distribution to the workers (i.e. high rate of surplus value), for the accumulation of capital is essentially a process by which surplus value is transformed into capital.

Day after day the workers have been trying to earn their living by hard labour at the assembly line's endless conveyor belts.

To be sure, the 20-year period seems to have been the brightest for workers in the whole history of Japanese capitalism in the sense that it was accompanied by expanded job opportunities and a steady increase in real wages.

Yet in the production process, the workers have produced capital, which exploited their labour in the subsequent cycle of production at a rate several dozen times or even hundreds of times faster than their wages increased.

LIAISON

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