Can Capitalism Survive?

Chapter 1

Capital_151-200.indd 163 1/3/12 7:47 PM Chapter 1 The Labor Monopoly In the paragraphs to follow you will find me critical of both the goals and techniques of trade unionism. Nor can I soften this position by announcing that, in spite of my sharp words, I am basically pro-union. I am not for "good" but opposed to "bad" (e.g., racketcontrolled ) trade unionism. I am not for "responsible," but opposed to "irresponsible" trade unionism. I am simply not pro-union, period. I can no more be prounion than I can be pro- the Southern California Fruit Growers' Association or pro- the Retail Druggists Association of America. But there is worse to come: I am not even anti-union but pro-labor. I cannot direct my concern to one man rather than another simply because one is a laborer and the other an entrepreneur or a landowner or even (God help us!) a member of the rentier class. But, as W. C. Fields once said, "No man who hates both dogs and children can be altogether bad," and I Capital_151-200.indd 164 1/3/12 7:47 PM 164. Can Capitalism Survive? will confess to one weakness. I am persuaded that proper economic policy requires that we fix our gaze steadily on the long-run interests of the consumer and ignore all else. Surely you are prepared by now for a quotation from Adam Smith, and here it is: Consumption is the sole end and purpose of all production ; and the interest of the producer ought to be attended to only so far as it may be necessary for promoting that of the consumer. The maxim is so perfectly selfevident , that it would be absurd to attempt to prove it.1 As a matter of fact, in the modern literature on my specific topic, the labor monopoly, I have found almost nothing that was not explicitly and intelligently discussed in The Wealth of Nations. My regret is that our public policy in this area has moved so far from his wise counsel. In effect, Adam Smith proposed that unions be tolerated but in no way encouraged or granted special privileges and immunities. This was Adam Smith's position and it is also mine. In the sections to follow I shall present the reasoning and the value judgments that lead me to take this position. I Review of Opposing Views I am aware that the policy position I have taken is not consistent with the present policy of this country. 1 Adam Smith, The Wealth of Nations (New York: Modern Library , 1937), p. 625. Capital_151-200.indd 165 1/3/12 7:47 PM The Labor Monopoly •165 I am keenly aware of the fact that it is not only opposed by but is deeply disturbing to many persons, both in and out of the academic world, whose good will and intelligence I respect. Both this respect and the desire to make my reasoning, my assumptions, and my judgments as explicit as possible impel me to state why I cannot accept the conventional policy of the government or the conventional wisdom that supports it. In beginning this review of the various shadings of the conventional wisdom, I must apologize for the obvious oversimplification and distortion of individual positions that is involved in creating such useful and meaningful but arbitrary groupings as "the humanrelations group" and "the labor economist group." The Human-Relations Approach Perhaps the most extreme position is that taken by the personnel, human-relations group. To the members of this group, the question of whether there is or is not a labor monopoly is simply irrelevant. It is irrelevant because monopoly is a market-type word and they have decided that the market doesn't exist. Recently I scanned a collection of books with titles such as "Human Relations in Industry" and was dismayed to find that my discipline, economics, is obsolete. Thus Norman Maier in his book, Psychology in Industry , writes, "Except in very general ways the law of supply and demand no longer applies to labor."2 Joseph 2 Norman Maier, Psychology in Industry (New York: Houghton Mifflin, 1955), p. 6. Capital_151-200.indd 166 1/3/12 7:47 PM 166. Can Capitalism Survive? Tiffin in the book, Industrial Psychology, writes, "In general, management as well as labor is becoming less and less dependent on the so-called 'law...