19: Strikes and Trade Unions
Typically, workers make choices as individuals and the aggregate of their decisions has an impact on employers and other stakeholders in production. For example, if an employer offers insufficient wages his workers will leave for better wages that are on offer elsewhere and he will be unable to attract replacements - and he will in time recognize the need to increase wages if he is to retain his workers.
A worker's strike is an attempt to expedite this process: such that if workers agree among themselves to strike for better wages, they will bring the matter to the employer's attention far sooner than the slow loss of individual employees. A workers union is an attempt to facilitate this process: such that if it becomes necessary to petition the employer on a regular basis, these petitions can be arranged quickly through a standing organization.
These practices and organizations were new to Walker's time: until industrialization, most organizations were rather small in scale, such that there was a more intimate relationship between employer and laborers and, more importantly, the "collective bargaining" of a dozen workers is substantially less than that of several hundred, as they were more easily replaced.
There is much conjecture about unions and organized workers, but the question Walker means to consider is limited to whether the interests of the individual worker are better served by the organization of labor.
Historically, this question has been considered in regard to the wage fund, which itself is a fallacy. There does not exist a pool of capital reserved for hiring labor, but each employer determines how much he can afford to pay his laborers based on the income he predicts he will derive from the sale of product.
A demand on the part of the worker for greater wages is therefore an argument in favor of one of two possible solutions:
- The worker is arguing that he should be paid a greater share of the revenue, and that the financier or employer should accept a lesser share
- The worker is arguing that the customer should pay a higher price for his product, such that the additional price would provide funds to better compensate the labor require to make it
One cannot be correct in making a general assertion which of these two situations is applicable in all instances, as situations differ: there are instances in which financiers or employers can afford to accept less of a share, and others in which they cannot and the customer must provide the additional funds.
However, it is questionable whether the individual worker is so enlightened about economics. He may be aware only that the wage he receives is insufficient - whether it fails to provide him with sufficient funds to provide for his needs or mere ambition to have more money, the worker's main interest is his own income, and often fails to consider the economic realities.
And the economic reality may in some cases be thus: customers are unwilling to pay enough for a good to provide a living wage for those who produce it. In such instances, a company and perhaps an entire industry is simply not viable as a commercial operation.
Legislation against Strikes and Unions
Walker looks to the statutes that mention organized labor, and it seems that this is "not favored by the law" which regarded these organizations to be in conspiracy against the public, or a method of unfair competition in which those participants would "meddle in one another's work" to prevent free competition in the marketplace. Laborers are included along with various craftsmen in the list of individuals who were prohibited from entering into agreements about the price at which they would sell their work. Similar statutes are mentioned in other European countries: France, Belgium, Netherlands, Germany, Austria, etc. providing various levels of penalty for laborers who organize and for similar reasons.
In 1824, there was a statute that exempted these meetings from criminal penalties, permitting workers to discuss their prices and hours of work provided these meetings did not involve "violence, threats, intimidation, molestation, or obstruction" toward employers or other workmen. And in 1825, it was specifically proclaimed that "every man is entitled to carry that talent which nature has given him, and those acquirements which his diligence has obtained, to any market in which he is likely to obtain the highest remuneration."
Trade Unions
If a strike is a kind of conspiracy against the market, then a trade union is an association that facilitates conspiracy. Even back to the institution of guilds in the medieval era, there has always been the suspicion (and quite often justified) that any standing organization of suppliers engages in price-fixing and other practices to prevent free competition and colludes against competitors that could reduce prices to the consumer. As such, trade unions are often regarded as destructive agencies that are harmful to the general public.
Indeed, the organization of vendors has great potential to do harm - but this is based on the assumptions that they are "at least tolerably intelligent", understanding their own interests, having among them men of natural leadership, capable of uniting for a cause, and capable of maintaining solidarity even at their personal expense. But it is a "melancholy fact" that laborers are guilty of "dense ignorance" and overwhelming self-interest, and the leaders of such organizations are more often those who see great opportunity for themselves to profit. For these reasons, there is not in all of history a cartel that has been able to sustain itself.
He then draws a line between a trade union and an industry association - some of which exist for entirely "friendly" purposes such as encouraging and advancing a profession, insuring their members against sickness or unemployment, tending to widows and orphans, and the like. Such organizations are entirely benign, and even beneficial, so long as they refrain from practices that attempt to fix prices or restrict competition. He mentions a few examples in Scandinavia of trade associations that were successful in restricting themselves from harmful practices.
(EN: There's an oblique reference to organized negotiations with suppliers - a professional organization that negotiates for bulk discounts on its members may skew the price of supplies or services, but this seems of less importance as the sellers of those supplies are services are under no compulsion to accept a deal that is not in their financial interest.)
Another common harmful practice is the "constant warfare" against tradesmen who choose not to join the union. It is only by eliminating the competition that trade unions are able to be successful: a strike is of little value if an employer can find other workers to fill the posts abandoned by those who strike. Moreover, this activity prevents skilled laborers from entering or practicing a profession to which they are best suited, creating artificial shortages that keep the price of goods inflated in the local market.
(EN: Walker doesn't' mention the folly of this practice - as the inevitable result is that domestic goods become unaffordable and consumers shift to foreign imports, causing entire industries to leave an area. American manufacturing in the late twentieth century suffered this fate, with towns and cities being deserted by the industries that sustained them.)
One counter-argument is that without restrictions on the supply of labor, there would be constant instability: men will change jobs to go to where there is greatest demand, saturating profitable industries and reducing the wages of existing workers. Moreover, the constant movement would prevent workers from developing much skill at any given task. This is a theoretical possibility that has never been witnessed in reality, beyond short-term rushes. Employers recognize the value of skilled and stable workers, and offer wages to retain them.
Another argument is that the individual worker has little power to negotiate with capitalists and employers. In effect, the board of directors and management of a firm are both methods of organizing the forces that compete with labor for a share of the proceeds of a business, and that the labor must organize as well to make it a fair contest. The author offers no counter to this argument.
Third, it is taken as a basic human right for people to speak and associate freely, and to prevent them from doing so for any purpose is an unacceptable restriction upon their basic civil rights. This cannot be disputed, but it must be pointed out that even in the political sense, these basic rights are girded by provisions: speech or assembly that incites or organizes violence or deception is not considered to be defensible as a civil right. Recall the difference between a trade union and an industry association.
Underlying many of the claims is the concept of fairness - but this is often a misuse of the term, as "fair" is in terms of the interests of all participants, not just of one party in a negotiation.
There follows a list of the activities of trade unions that have been counterproductive to the general public or to the workers themselves (EN: The details seem a bit idiosyncratic and incidental, but it's interested to note that they are largely similar to the grievances against unions in the modern day: preventing people from entering a trade, meddling in the work, and the like.) In the bylaws and behavior of unions, there is a lot to be found that has nothing whatsoever to do with their stated purpose, but instead reflect the imperiousness of union leaders.
It's finally noted that unions are a short-term problem in the grander scheme of things, more harmful to their members than to consumers. Where a union interferes to an unreasonable extent, it will destroy the company on which it feeds - and while it has been seen that unions have caused the collapse of factories or caused entire industries to fall, it is generally within a limited geographic area: as with any cause that makes a line of business unprofitable, capitalists will remove their investment and employers their talent when the demands of labor are excessive - and the consumers will have the goods they need from other providers, even when it means importation.
So ultimately, a union is like any other parasite: it must find a way to feed upon its host without killing it.