A Disturbing Sign of the Times


Recently a news story about a McDonald’s worker suing her employer has started making the rounds on the internet. Twenty-seven year old Natalie Gunshannon of Dallas Township (Pennsylvania) found that instead of receiving her first paycheck via direct deposit or an actual paper check, she got a Chase debit card attached to a list of instructions and fees. What kind of fees? The complaint lists $1.50 for ATM withdrawals, $5 for cash back with purchases, and even $1 for balance inquiries, among others.

Gunshannon’s complaint lists her wages at $7.44 an hour, barely over the minimum wage of $7.25 an hour. The complaint alleges that the fees associated with the card will effectively push her wages below minimum wage. Naturally there is a chance that both the employer and the bank may get away with the scheme, as the former can claim that they did in fact pay over the minimum wage. Whatever happens, there is reason to see this as more than a simple outrage of the week. It may very well be an ominous sign of things to come.

A History Lesson

Few people in our country have a good sense of history. This is not their own fault; the blame must be laid at the feet of the textbook publishers, school officials, and popular media. Oftentimes our perception of the past is almost entirely constructed from popular films and television programs. Add to that a constant drone throughout the years by parents and grandparents about “the good old days,” and the end result is a very unrealistic view of the world, or in this case, the United States. This unrealistic worldview is one explanation as to why there are massive communities of so-called “libertarians” and “anarcho-capitalists” throughout the country, promising us that all our problems would be solved if we could just end government regulation and intervention in the market. Only a person who doesn’t know what life was like for most workers during the 19th century and the early 20th century could fail to realize that this theory was in fact put into practice, and the results were terrible for most people during that time (much longer if you trace back to the dawn of capitalism in Britain centuries before).

Coming from the so-called “left” in America, we hear a different fairy tale about how progressive, forward-thinking liberals starting with FDR decided to grant the working rights and give them justice, simply out of the goodness of their hearts. This began with the New Deal and the National Labor Relations Act of 1935, which guaranteed the right of workers to organize. Later on, this progressive liberal government would take steps to see that after the Second World War returning servicemen would be able to get an education and acquire assets, thus creating a big “middle class,” because apparently this is the most desirable thing to both sides of American mainstream politics. Democracy helped the working people get a fair shake, or so the story goes.

Of course all these ideas, right or “left”, are in fact utter nonsense. Capitalism has never existed without the presence of a state, particularly since the whole basis of the system is private property and thus private property rights must be not only established but enforced. Conditions for workers didn’t improve because of progressive liberals in government suddenly feeling guilty wanting to do what was just. The reality is that from its earliest inception, liberalism, the ideology of capitalism, preached a brutal war against the working individual, who was deemed to be too lazy, too dull, too incapable of acquiring property and thus undeserving of the liberty so praised by the philosophers of liberalism. By whatever means, the working people were dehumanized and said to be to blame for their own plight, thus making it practically a sin not to extract the most profit from their labor. In early capitalist Britain this took the form of workhouses, the description of whose conditions made them almost indistinguishable from concentration camps. The poor could also expect to be press-ganged into the navy or sometimes army, often dying in the process, and the punishment for desertion was death for many years. Slavery or indentured servitude was also another prospect for workers at one time. Anyone interested in looking deeper into these matters may consult such sources as Liberalism: A Counter History by Domenico Losurdo, The Condition of the Working Class in England by Friedrich Engels, Capital by Karl Marx, The Good Old Days: They were Terrible! by Otto Bethmann, among many other sources. The matter at hand, however, brings us to late 19th century America up until the New Deal era.


Company houses in a coal town in Floyd county, Ky, U.S., c. 1930s. Credit: Library of Congress, Washington, D.C.

Company Towns and Scrip

Older readers may remember Tennessee Ernie Ford’s 1946 hit song “Sixteen tons,” the chorus of which went like this:

‘You load sixteen tons, what do you get
Another day older and deeper in debt
Saint Peter don’t you call me ’cause I can’t go
I owe my soul to the company store’

The song refers to a time when America’s mines and lumber camps featured so-called company towns, settlements for workers and their families. Company towns contained company stores from which workers purchased their daily needs. Typically new workers were required to pay for their basic equipment as well as rent in company housing, so the company would advance them the money, making the workers indebted to the company. As company stores held a monopoly in their community they were able to set extortionate prices for goods. Due to their low wages and the need to repay past advances, the workers often ran up accounts in these stores and, as the song says, sank deeper into debt. What the song doesn’t mention, however, is that in many company towns workers didn’t even receive their wages in money. Instead they were paid in company “scrip,” which were basically tokens supposedly representing money.

The ultimate purpose of company scrip was to bind the workers to the company and cement their dependency. Scrip could typically only be used in the town or community it was issued in. If workers had the opportunity to exchange their scrip, it would not be done on a 1-1 basis despite the fact that it supposedly represented actual money. Scrip helped control the workers by denying them freedom of movement and by getting the workers to give their wages back to the very company that hired them.

Various forms of coal scrip

Various forms of coal scrip

New Forms of Scrip

Returning to the present day, it is obvious that McDonald’s debit card payment system, like company scrip, is a sign of increasing exploitation of workers. One wonders what McDonalds got out of their deal with J.P. Morgan Chase, but none need wonder what effect this has on workers. While they receive near minimum-wage hourly rates, the bank continually picks their pockets with fees, charging them money for any transaction which would put cash in their hands. Electronic pay cards are by no means new either, so working people should be on the lookout for similar schemes on the horizon.

One often hears people lament the decline of the so-called “middle class” and the rise of low-paying service sector jobs which are often only part time so as not to require the employers to provide health insurance or other benefits.  Far more worrying is that with the levels of unemployment being what they are today, not only are these low-paying jobs becoming the only prospect for many Americans, but they are actually becoming worse. Any low-wage worker has stories about being forced to waste hours in useless “orientation seminars” that could have easily taken only thirty minutes, being forced to pay for their own tools or safety equipment, being made to work off the clock, or being forced to work oddball hours according to “flexible” timetables. Using special debit cards effectively forces the employee to work with particular banks, thus allowing those banks to hit them with all kinds of fees just to have access to the money they earned. At this point would it really be totally incredible to imagine that one day some employers might start paying their employees in full, if not partially, with some form of “gift card” which can only be used in certain establishments? And if such cards are made on a local or regional basis, this would effectively limit employees’ freedom of movement in a manner not far removed from that of company scrip. This may seem alarmist, but one ought to remember that the U.S. is a country where a Presidential candidate with great clout in his party once publicly suggested that kids in low income neighborhoods work as custodians in their schools to help keep costs down.

How did it get this way?

It isn’t hard to imagine that if capitalists in the 19th and early 20th century could devise systems such as company towns, stores, and scrip, one cannot rule out the possibility that some enterprising 21st century capitalists might find a way to reincarnate past modes of exploitation which squeeze ever more surplus value out of the American worker. From the millennials back to the last remaining baby boomers, Americans have forgotten the trappings of the Gilded Age, much less the bloody struggles which made their way of life possible. These days the internet is clogged with videos that purport to explain how America began to decline. While most of these theories are utter nonsense, they are certainly popular, which suggests that many Americans want to know what happened.

Entire books have been written on the economic changes in the post-war U.S. to the present, so this article does not purport to provide anything like a full, detailed explanation. However there are a few key events and developments which need to be looked at in order to build a framework for understanding how workers lost the gains they made of the course of many decades of struggle.

  • 1917-1919 – The Bolshevik Revolution set off a chain reaction which would bring down the Russian, German and Austro-Hungarian empires. The victorious imperial powers attempted to stop the revolution in Russia by sending military forces and arms to help the counter-revolutionary “White” forces. Workers in those countries (mainly the U.K., U.S.A. and France) responded with massive strikes and dockworkers refused to load ships with arms bound for Russia. This, coupled with White failures on the battlefield, led the Entente powers to withdraw their intervention forces. The imperial powers were eventually faced with the realization that Bolshevik Russia, and later the Soviet Union, was not some kind of local rebellion which could be crushed like the Paris Commune of 1871, and if the workers of Russia could overthrow their ruling class, and the workers in the U.S., U.K. and France had the power to influence those government’s foreign policy, it wasn’t hard to imagine that they too might one day overthrow their own capitalists.
  • 1945 – It may be hard to believe these days after years of Cold War propaganda plus the sometimes even more hysterical anti-communist propaganda of the last few years, but in 1945 the U.S.S.R. enjoyed a great reputation the world over. It was seen as the destroyer of fascism, the liberator of peoples, and the greatest hope of those languishing under colonialism. Even if it was largely due to the needs of the alliance to beat Hitler, the popular press in America embraced the Soviet war effort and many people responded with expressions of goodwill towards the U.S.S.R. Communists in other formerly German, Italian or Japanese-occupied countries also enjoyed a good reputation for their role in the local resistance; in many of these countries communists organized the most aggressive, effective resistance organizations, if not the only ones.  As the Cold War began, capitalists in the West realized that their position in relation to the working classes had become precarious, and that compromises would have to be made. Thus came the rise of the European welfare state as well as America’s own “Great Society” initiative under President Lyndon Johnson. U.S. client states in the middle of the Cold War were often known for state intervention in the economy, tariffs on imports, state-owned or partially state-owned enterprises and subsidies, all things which today would earn stern warnings if not serious consequences from the World Bank, WTO and IMF. But in the early days of the Cold War capitalists had to accept these terms; workers had an alternative, at least in theory, and in dozens of countries that’s what they chose for better or for worse.
  • 1970s – There are several key developments in the 1970s which are relevant to our examination, but two stand out. One is the sharp increase in productivity of American workers thanks to the introduction of computers and digital equipment in the workplace, along with the sudden stagnation and in some cases decline in real wages which accompanied this, thus breaking a streak of rising real wages stretching all the way back to 1820, when such records started being kept. This history is thoroughly explained by Dr. Richard Wolff in his lecture “Capitalism Hits the Fan.” While this situation meant higher profits for American capitalist firms, by this time the Germans and the Japanese had fully recovered to the point where they were once again able to compete with American industry. In some fields they excelled against American firms, forcing the latter to seek cheaper labor outside the borders of the U.S. to compensate.
  • 1980s – Ronald Reagan in the U.S. and Margaret Thatcher in the U.K. ushered in a new era of neo-liberal economics, pushing privatization, free trade and deregulation. Thatcher herself popularized the slogan TINA, “There is no alternative (to capitalism).” Indeed, with China implementing market reforms even faster than the U.S.S.R., which found itself in the throes of the disastrous policies of “perestroika,” the ‘alternative’ no longer looked so enticing.
  • 1991 – The Soviet Union collapsed, along with the rest of the formerly socialist states of Eastern Europe. Other self-proclaimed socialist states began to turn towards neo-liberal capitalism to varying degrees. Yesterday’s communists turned into social-democrats or in some cases hardcore reactionaries. Writer Francis Fukuyama declared the “end of history.” From this time on, the capitalists had nothing to fear. The workers of the world would be continually told that socialism was a total failure and that capitalism was the natural, eternal order. Privatization, deregulation, and “free market” solutions were triumphant. Of course for Americans, the 90’s brought technological changes which were extremely profitable for the capitalist class, and while the champagne flowed freely and housing values continued to rise it was easy for America’s “middle class” to be lulled into believing that unions are an unnecessary relic of the past, a high tide lifts all boats, wealth trickles down, and the free market always provides the best outcomes.

The corporate scandals of the early 2000’s were largely overshadowed by the September 11th attacks and later the invasion of Iraq, but in 2008 the writing was on the wall. The elite had gambled their money away and the public would be forced to pay for it. The word “austerity” suddenly became ubiquitous in public discourse. Governments, the representatives of the capitalists, have begun to snatch back the concessions they were forced to make throughout the 20th century. And why not? After all, what could the workers do about it?

What can the working class do about it?

That is a question that begs an answer. It needs an answer soon because the story of Natalie Gunshannon is more than a story about one worker getting screwed over by an employer. It’s a warning sign of things to come. Does this mean that we will see the full revival of company towns, scrip, child labor and sweatshops? To be realistic, probably not. Then again, one could say that the late 19th century American mine wasn’t the 18th century British workhouse, but considering that the latter was comparable to a concentration camp the former looks horrible by today’s standards. It is also important to remember that if enough capitalists come to believe that a particular practice will significantly increase profits, they will seek to implement it even if it means lobbying to remove any laws or regulations which might bar them from doing so. In a state of high unemployment, workers are also pressured to tolerate all sorts of practices that they might not otherwise put up with if they had other options. If a particular employer believes that it could get away with paying people in some form of company scrip, and that this would increase profits, it would certainly implement such a program.

Stories like Natalie’s must be taken in aggregate with thousands of other lawsuits, complaints, and stories about assaults on worker’s rights. By collecting these stories and passing them on, it becomes far easier to show other workers what the predominant trend in America really is. It shows that contrary to the claims of the media pundits, America is and always has been a class-based society like every other capitalist society, and that their employer has more incentive than ever to put the screws to their workers. Once people are made aware of this fact, it’s essential to help them learn the history of the labor struggle in America, so they will understand precisely why it is that workers will get no concession they aren’t willing to stand up and fight for. Lastly, people must be made aware that the core interests of workers and capital are diametrically opposed and irreconcilable. The history of the 20th century has proven beyond any debate that all the concessions of the capitalist class to the workers were the result of struggles lasting many years and in many cases costing lives. When there was the threat of revolution or that of a successful, strong socialist state with global influence, the capitalists had no choice but to give in. Now that they consider those threats gone, they have begun the process of marching the working class back over all the ground it once held. How far the capitalists manage to push the American working class depends on how far the latter will allow. It might be a good idea to act like Natalie Gunshannon, and start pushing back now.



Categories: Colonialism, Economic Exploitation, Economics, Economy, Government, History, Imperialism, Imperialist War, Internet, Labor, Media & Culture, Revolutionary History, Second World War, Statements, Theory, TV, U.S. News, United States History, Workers Struggle, World History

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