Essentials of Economic Theory Part 23

The system requires that prompt action be had whenever a strike or a lockout is impending, but it enforces decisions only by imposing on workmen who choose to be recalcitrant the penalty of forfeiting the right of owners.h.i.+p of positions, the claim to which they esteem so highly that they are ready literally to fight in defense of it.

_A Mode of Dealing with Rebellious Employers._--An employer might refuse to accept the result of an arbitration. In view of the strong pressure that public opinion would exert after the decision should have been rendered, frequent refusals are not probable. If, however, the employer should reject an award, the logic of the case would require that he lose his tenure of place as the men do for a like offense; and the only way to accomplish this is to throw him out of his business connections. The tenure which an _entrepreneur_ most values consists in his relation to his customers; and if the state should see to it that the goods he makes could always be had from some other source, the _entrepreneur_ would be unlikely to close his mills.

How the state shall keep the sources of supply open will become an important question if it shall appear that producers do defy the public opinion and reject the court's awards.[1]

[1] If the employer were a corporation possessing a monopoly of its department of production, it would be difficult quickly to open such new sources of supply as would be requisite; but a temporary reduction of import duties would often go far in this direction. And a measure which would insure the running of the plant under a temporary receivers.h.i.+p would, of course, do it.

_The Practical Working of the Arbitration Proposed._--Let us see how such a system of arbitration as is here described would work in the case in which, as we have supposed, a strong trade union is dealing with a monopolistic employer. At the outset all violence on the men's side is ruled out. No a.s.saulting, maiming, or killing of so-called "scabs" is tolerated, and, moreover, the first temptation to this is removed by the act of the state in recognizing for an interval the men's tenure of place. There are no strike breakers to be attacked.

While proceedings of arbitration are pending, the obnoxious cla.s.s is out of sight, and all the places are transiently reserved for their original holders. The court has submitted to it two possible rates of pay, one demanded by the men and the other offered by the employers.

It may confirm either of these rates or any rate that is intermediate between them, and it is likely to pursue the latter course. In any case, it announces a rate, the one which to it appears to be fair and is more likely to be so than the one claimed by either of the parties.

"This is a just rate," declares the tribunal to the men; "you may take it or leave it, but if you leave it a certain thing will happen,--workmen who refuse it will forfeit all claim upon their positions." Workmen will not often refuse the award, and the pressure of public opinion makes it improbable that the employer will do so.

Coupled with arbitration and an essential part of the system is a policy which shall remove the danger of monopoly. In its perfectly secure form monopoly as yet scarcely exists, but what does exist is a great number of partial monopolies able to handle compet.i.tors roughly and extort profits from the people. Directly connected with the adjustment of wages is the disarming of such monopolies. The preventing of strikes may often be accomplished without this, but the insuring of just wages requires it. With a solution of the problem of monopoly in view, all other needs of the situation might well be met by arbitration without compulsory power.

We may now tabulate our conclusions.

1. In the making of the wages contract the individual laborer is at a disadvantage. He has something which he must sell and which his employer is not obliged to take, since he can reject single men with impunity.

2. A period of idleness may increase this disability to any extent.

The vender of anything which must be sold at once is like a starving man p.a.w.ning his coat--he must take whatever is offered.

3. Collective bargaining enables men to withhold, for a time, something which is of importance to an employer. He cannot let them all go with impunity.

4. A strike is a contest of endurance; and if it continues until the men are exhausted, they are collectively in the position of the hungry individual seller, who is at the buyer's mercy. The wages they then take may be far below the natural standard.

5. If their places are filled at once by men who are already thus necessitous, the resulting rate may be equally below the natural standard.

6. The power of the union often depends on its use of force in keeping the needy out of its field.

7. The rate of pay gained where compulsion is freely and successfully practiced is above the normal rate.

8. Conciliation does little in the way of changing the results which are realized without it, but it lessens the frequency of strikes.

9. Arbitration by a court, which must make a decision but cannot enforce it--by a court which confirms the workmen's tenure of place while action is pending and declares it forfeited if the men reject its decree,--such arbitration would secure a closer conformity to the normal standard of wages than any other action. It would establish rates which give the workmen the benefit of every legitimate advantage from collective bargaining.

10. Arbitration by a court which is compelled to act, and can enforce its decision, may deviate in a particular case from the rate of pay which strikes would yield; but if the deviation is frequent and great, it will induce a rebellion against the system of compulsory arbitration. The rate under this system cannot differ greatly from the result secured with no arbitration at all. The chief value of all the foregoing modes of settling disputes lies in their prevention of costly interruptions of business. They may reduce the number of strikes and prevent much waste and suffering.

11. A mode of procedure which aims chiefly to end strikes usually depends on making compromises between opposing claims. This secures an approach to a reasonable adjustment, as between employers and employed, but does not affect the differences between the wages of different cla.s.ses of laborers.

12. In order that any mode of adjusting wages may give fair comparative rates, monopolies must be repressed; and this can only be accomplished by measures which are independent of tribunals of arbitration.

CHAPTER XXVII

BOYCOTTS AND THE LIMITING OF PRODUCTS

When free from the taint of monopoly, trade unions, as has been shown, help rather than hinder the natural forces of distribution. Collective bargaining is normal, but barring men from a field of employment is not so. Connected with this undemocratic policy are certain practices which aim to benefit some laborers at the cost of others, and thus tend to pervert the distributive process.

_Restrictions on the Number of Members in a Trade Union._--If a trade union were altogether a private organization, it might properly control the number of its own members. Before it is formed all members of the craft it represents are, of course, non-union workers, and the aim of the founders is to "unionize the trade"--that is, to enlist, in the members.h.i.+p of the body, as large a proportion as is possible of the men already working in the subgroup which the union represents.

From that time on it can fix its own standard of admission, and allow its members.h.i.+p to increase slowly or rapidly as its interests may seem to dictate.

_How a too Narrow Policy defeats its Own End._--Very narrow restrictions, while they keep men out of the union, attract them to the trade itself. An extreme scarcity of union labor and the high pay it signifies causes the establishment of new mills or shops run altogether by non-union men. If these mills and shops are successful, the union may later admit their employees to members.h.i.+p; and a series of successful efforts to produce goods by the aid of unorganized labor thus interferes with the exclusive policy of unions. The number of their members grows in spite of efforts to the contrary.

_Free Admission to a Trade Equivalent to Free Admission to a Union._--We may recognize as one of the principles in the case that free admission to the craft itself involves free admission to the union. When once men are successfully practicing the trade, the union is eager to include them, though it enlarges its own members.h.i.+p by the process.

_How a Government might prevent a Monopoly of Labor._--It is entirely possible that a government might require trade unions to incorporate themselves, and might include in the charter a clause requiring the free admission of qualified members, subject only to such dues as the reasonable needs of the union might require. That is not an immediate probability, but the end in view can be attained by making members.h.i.+p in the trade itself practically free--which means protecting from violence the men who practice it without joining the union. This is not difficult where a mill in an isolated place is run altogether by independent labor, and it is natural that the unions should endeavor, in other ways than the crudely illegal ones, to prevent the successful running of such mills. If they run with success, their employees will have to be attracted into the unions. A measure designed to impede the running of non-union mills is the boycott. It is a measure which does not involve force and which is yet of not a little value to workers.

_The Nature and Varieties of the Boycott._--A boycott is a concurrent refusal to use or handle certain articles. In its original or negative form, the boycott enjoins upon workers that they shall let certain specified articles alone. If they are completed goods, they must not buy them for consumption; and if they are raw materials, or goods in the making, they must not do any work upon them or upon any product into which they enter. They may thus boycott the mantels of a dwelling house and refuse to put them in position, or, in case they have been put in position by other workmen, they may, as an extreme measure, refuse to do further work on the house until they are taken out. A producers' boycott, such as this, falls in quite a different category from the direct consumers' boycott, or the refusal to use a completed article. When a raw material is put under the ban, workers strike if an employer insists on using it. If the cause of the boycott is some disagreement between the maker of the raw material and his workmen, the measure amounts to the threat of a sympathetic strike in aid of the aggrieved workers. If the cause is the fact that the materials were made in a non-union shop, the men who thus made them have no grievance, but the union in the trade to which these men belong has one. It consists in the mere fact that the non-union men are working at the trade at all and that their employer is finding a market for their product. Workers in other trades are called on to aid this union by a sympathetic strike, either threatened or actually put into effect. Such a boycott as this may therefore be described as amounting to a potential or actual sympathetic strike somewhat strategically planned. If the strike actually comes, it may a.s.sist the men in whose cause it is undertaken; and the principles which govern such a boycott are those which govern strikes of the sympathetic kind.

_Direct Consumers' Boycotts economically Legitimate._--The other type of boycott is a concurrent refusal to buy and use certain consumers'

goods. Legally it has been treated as a conspiracy to injure a business, but the prohibition has lost its effectiveness, as legal requirements generally do when they are not in harmony with economic principles. Of late there has been little disposition to enforce the law against boycotting, and none whatever to enforce the law when the boycott carries its point by taking a positive instead of a negative form. The trade-label movement enjoins on men to bestow their patronage altogether on employers included within a certain list, and this involves withdrawing it from others; but the terms of the actual agreement between the workers involve the direct bestowing of a benefit and only inferentially the inflicting of an injury. The men do not, in terms, conspire to injure a particular person's business, but do band themselves together to help certain other persons' business.

Economic theory has little use for this technical distinction. It is favorable rather than otherwise to every sort of direct consumers'

boycott, and is particularly favorable to the trade-label movement.

This movement may powerfully a.s.sist workers in obtaining normal rates of pay, and it will not help them to get much more.

_The Ground of the Legitimacy of the Boycott._--An individual has a right to bestow his patronage where he pleases, and it is essential to the action of economic law that he should freely use this right. The whole fabric of economic society, the action of demand and supply, the laws of price, wages, etc., rest on this basis. Modern conditions require that large bodies of individuals should be able concurrently to exercise a similar right,--that organized labor should bestow its collective patronage where it wishes. This can be done, of course, only by controlling individual members, for the trade union does not buy consumers' goods collectively. If it can thus control its members, it can use in promoting its cause the extensive patronage at its disposal.

_Unfavorable Features of the Indirect Boycott._--The boycott we have thus far had in view is a direct confining of union laborers'

patronage to union-made goods. Why this is a thing to be encouraged we shall presently see. What we have said in favor of it does not apply to boycotting merchants on all their traffic because they deal in certain goods. If a brand of soap is proscribed, the workers are justified in concurrently refusing to use that variety; but it is not equally legitimate to prevent a merchant, whose function it is to serve the public, from selling this soap to the customers who want it.

To refuse to buy anything whatsoever from a merchant because he keeps in his stock a prohibited article, and sells it to a different set of customers, is interfering, in an unwarranted way, with the freedom of the merchant and of the other customers. Indirect consumers' boycotts have little to commend them, but those of the direct kind have very much.

_The Merits of the Trade-label Movement._--This appears most clearly in connection with the trade-label movement. As a result of this movement union laborers will, as is hoped, buy only union-made goods.

The existence of such a movement in itself implies that there are goods of the same sort to be had which are not made by union labor.

The shop that is run by the aid of independent labor is the cause of the existence of the union label. If all the labor in a group were organized, the label would have no significance. At present the trade unions offer to an employer a certain amount of patronage as a return for limiting himself to union men, and so long as the cost of making his goods is not much increased, the inducement may be sufficient to make him do it.

_The Movement as affected by Extravagant Demands on Employers._--Unduly high wages mean, of course, unduly high prices.

Without here taking account of the "ca'-canny" policy, which aims to make labor inefficient, extravagant wages for efficient labor increase the cost of goods. This opens the way, as we have seen, for the free shop and the labor which is willing to sell its product at a cheaper rate. If union labor then firmly resolves to buy only the goods with the label, it proposes a heroic measure of self-taxation.

_Trade Labels and the Quality of Goods._--The experience of the trade-label movement thus far has been, that in some instances the label vouches for prices which are high, if quality be considered, or for a quality which is poor if the prices are the current ones.

Instead of telling the purchaser that the shoes, hats, cigars, etc., which bear the label are surely the best that can be had for the money, the labels are more apt to tell him that the goods are poorer than others which can be had. In some instances this is not the case, and the union-made articles are as good and as cheap as others. When the label stands for a high price or a poor quality, the union fails to control its members and especially its members' wives. Having the meager pay of a week to invest, the wife needs to use it where it will do the most for the family. There is so strong an inducement to buy goods which are really cheap and good that the trade-label movement fails whenever loyalty to it means very much of self-taxation.

_The Object Lesson of the Consumers' Boycott._--Organized labor gives itself a costly and impressive object lesson when it tries to force all men of its cla.s.s to buy the dearer of two similar articles. What this shows is that the demands of unions must be limited, and that for the highest success they must be so limited that there shall be no decisive advantage given to an employer who has a non-union shop. A marked difference in costs of production will cause the free shop to grow and the union shop to shrink. A certain moderate difference in wages there may be, provided always that the union labor is highly efficient; but more than such a difference there cannot safely be. If the trade-label movement should be generally successful, that fact would prove that the demands of trade unions were kept within reasonable limits.

_The Policy of Restricting the Product of Labor._--It is a part of the policy of trade unions to limit the intensity of labor. The term "ca'-canny" means working at an easy-going pace, which is one of the methods adopted in order to make work for an excessive number of men.

For some of this the motive is to avoid an undue strain on the workers. If the employer selects "pacemakers," who have exceptional ability and endurance, and tries to bring other laborers to their standard, then the rule of the trade union, which forbids doing more than a certain amount of work in a day, becomes a remedy for a real evil--the excessive nervous wear of too strenuous labor. This, however, by no means proves that the policy as carried out is a good one. Beyond the relief that comes when undue speeding of machinery and driving of workers is repressed, it will be impossible to prove that in the long run there is any good whatsoever in it, and the evil in it is obvious and deplorable.

_"Making Work" as related to Technical Progress._--The policy reverses the effects of progress. That which has caused the return to labor to grow steadily larger is labor saving or product multiplying, and labor making and product reducing are the ant.i.thesis of this. Enlarging the product of labor has caused the standard of pay to go steadily upward and the actual rate to follow it; and the prospect of a future and perpetual rise in the laborers' standard of living depends almost entirely on a continuance of this product-multiplying process. A single man maintaining himself in isolation would gain by everything that made his efforts fruitful, and society, as a whole, is like such an isolated man. It gains by means of every effective tool that is devised and by every bit of added efficiency in the hands that wield it.

_Reversing the Effect of Progress._--It follows that undoing such an improvement and going back to earlier and less productive methods would reverse the effect of the improvement, which is higher pay for all; it is restoring the condition in which the product of labor and its pay were lower. The "ca'-canny" policy--the arbitrary limiting of what a man is allowed to do--has this effect. It aims to secure a reduction of output, not by enforcing the use of inferior tools, but by enforcing the inferior use of the customary tools. The effect, in the long run, is, and must be, to take something out of the laborers'

pockets.

_The Effect of the Work-making Policy under a Regime of Strong Trade Unions._--It is, of course, only a strong trade union that can enforce such a policy as this. Making one's own work worth but little offers a large inducement to an employer to hire some one else if he can.

Within limits, the powerful union may prevent him from doing this, and if for the time being society is patient and tolerant of anarchy,--if it allows men who are willing to work well in a given field to be forcibly excluded from it by men who are determined to work ill,--the policy may be carried to disastrous lengths.

_How Static Law thwarts the Work-making Policy._--Even strong unions, as we have seen, succeed in maintaining only a limited difference of pay between their trade and others. The effort to maintain an excessive premium on labor of any kind defeats itself by inducing free labor to break over the barrier that is erected against it. The same thing happens when we reduce the productive power of organized labor.

If, at a time when the premium that union labor bears above the non-union kind is at a maximum, the policy of restricting products is introduced, it so increases the inducement to depend on an independent working force that there is no resisting it. The palisade which union labor has built about its field gives way, and other labor comes freely in. If the ca'-canny policy makes it necessary to pay ten men for doing five men's work, the union itself will have to give place to the independent men. No single good word can be said for the ultimate effect of the policy as carried beyond the moderate limit required by hygiene. Up to the point at which it will avert undue pressure upon workers, stop disastrous driving and the early disabling of men, the effect is so good as amply to justify the reduction of product and pay which the policy occasions. Beyond that there is nothing whatever to be said for it, and if it shall become a general and settled policy of trade unions, it will be a clog upon progress and mean a permanent loss for every cla.s.s of laborers.

Notwithstanding all this, it must be true that some motive which can appeal to reasonable beings impels workers to this policy. No plan of action, as general as this, can be sustained unless some one, at least transiently, gains by it. Workers have a tremendous stake in the success of any plan of action they adopt, and they have every motive for coming to a right conclusion concerning it. They are in the way of getting object lessons from every mistaken policy, as its pernicious effects become apparent, even though some local and transient good effects also become evident. It is not difficult to see what it has been that has appealed to so many laborers and induced them voluntarily to reduce the value of their labor.