In the midst of postal strikes, teamsters’ stoppages, and predictions of upheavals in the auto workers’ union, it is reassuring to read Merryle Stanley Rukeyser’s Collective Bargaining: the Power to Destroy (Delacorte Press, $7.50). Mr. Rukeyser, a long-term student of the labor movement, has such a sublime trust in the market that he actually undermines the part of his title that speaks of "the power to destroy." What he is saying is that sanity will prevail as long as the customer is the final arbiter of both wages and prices.
Before dealing with the good news in this book, however, the reviewer must admit that a lot of "ruin" can happen before sanity takes over. Mr. Rukeyser is quite aware that the unions, in putting their faith in Keynesian doctrinesthat lead to perpetual inflation, can hurt the customer badly before he reacts. Mr. Rukeyser doesn’t think much of AFL-CIO boss George Meany’s "diversionary" attack on profits. The general labor animus against Lemuel Boulware’s efforts to inject some common honesty into collective bargaining tactics bothers Mr. Ruckeyser. But in the final analysis this is a supremely hopeful book. It sees prudence taking over in labor-management relations before there is any disastrous plunge over the precipice.
The sophisticated modern employer, says Mr. Rukeyser, is no longer a labor-baiter intent upon "liquidating" the unions. The prudent employer, in his opinion, knows that he is only a middleman who stands between the worker and the customer. The problem is always to reach a compromise on wages that will not push costs so high that the customer will revolt. At the same time labor must be given the incentive to reduce the unit cost of producing something that the customer will like. The far-seeing manager will try to remain just a bit ahead of the labor market rather than behind, for he knows that "lagard employers get the least productive workers."
Man vs. Machine
Mr. Rukeyser realizes that ambitious labor leaders, fighting to remain in control of their unions, will often press management too hard. In cases where the unions have monopoly power this could result in an industry pricing itself into bankruptcy. But instances of actual union monopoly are few and far between. The truth, says Mr. Rukeyser, is that the human worker is always in competition with machines. It is not "man hours" that provide an accurate measure of productivity; it is "man-tool hours." When unions force costs up faster than productivity rises, the whip is on management to invest in the latest thing in automation. The superior tool cuts the unit cost of production by putting men out of work.
The tenure of employment, Mr. Rukeyser insists in several places in his book, depends on ratification by the customer of management’s judgment about working conditions. Mr. Rukeyser’s analysis follows the economics of Ludwig von Mises. "The open marketplace," he says, "is a quasi-democratic voting booth where consumer plebiscites continuously take place."
It is Mr. Rukeyser’s hope that both management and labor in the future will concur in the desirability of establishing "conditions for optimum growth." The union effort should be to "expertly determine what slice of the growth-income pie can go to employees without impairing expansion." It follows from this that the unions should welcome what is now called "Boulwarism."
End the Tomfoolery
As students of post-World War II labor-management history know, Lemuel Boulware of General Electric flabbergasted the unions by advising management to "do right voluntarily." The Boulware idea was to open up a continuing dialogue between rank and file union workers and a company’s cost accountants and personnel directors. Under "Boulwarism" information about a company’s competitive position would be made available to the workers before negotiations. With everything on the table, a company would be able to make a "fair, firm" offer to the union. The offer would be subject to change in detail, but it would be up to the union negotiators to show where it would not be hurtful to the industry and to the workers themselves if any drastic alterations were accepted. There would be an end to flummery under the Boulware dispensation. No more phony preliminary offers, and no more phony demands, all pitched toward making the union negotiators look like indispensable supermen in the eyes of a hoodwinked rank and file after a compromise had been reached.
It is a sad commentary that the unions have never accepted Boulwarism. Still, Mr. Rukeyser puts his trust in the final triumph of the scientific approach. He doesn’t think that politicians in Washington can be trusted to make realistic economic decisions. Unions and management must come to accept the "new ideals of collective consultation." "Boulwarism," perhaps under a different name, will become the general working practice.
David McDonald, former head of the United Steel Workers, was groping toward the Boulware concept when I. W. Abel defeated him for the presidency of the steel union. But, despite this setback the "innovation of all-year-round consultative machinery," as a replacement for "eleventh-hour crisis bargaining," had growing support among the steelworkers. Former UN Ambassador Arthur Goldberg, once a prominent union attorney himself, brought forth the idea of a Human Relations Committee, which is "Boulwarism" with a union label cachet.
Harmony of Interests
Mr. Rukeyser knows that the Marxian idea of a perpetual class conflict dies hard. But he cites instances where Henry Carey’s "harmony of the interests" has routed the Marxists. When the Federal Communications Commission was threatening an investigation of telephone rates, Joseph Beirne, the head of the AFL-CIO Bell Company union, publicly accused the FCC staff of trying to punish the American Telephone and Telegraph Company for success. Mr. Beirne made the point that the government was hoping to reward Western Union for being a less powerful competitor by making things difficult for the more efficient AT&T. The FCC had proposed to divest AT&T of its leased wire services and to turn these over exclusively to Western Union, which would have ended customers’ choice in TWX, or leased wire, services. The ridiculous thing about the whole business was that the FCC itself had approved the rates for the AT&T TWX services. If they were so low as to provide unfair competition, it was the FCC’s own fault.
Mr. Rukeyser thinks it is up to the unions and management to make common and enlightened cause in fighting the drift to what he calls "American Falangism." Falangism, of course, is what they have in Franco’s Spain, where the symbols of free enterprise are retained but the government makes the crucial economic decisions. When President Kennedy substituted his judgment for that of the market in the steel price controversy of 1962, he was acting as a Falangist. The attempts to substitute compulsory restraints for free bargaining are also in the Falangist pattern. It is because of the menace to "both their houses" that labor and management have a common interest in moving toward "collective consultation" as a substitute for "primitive collective bargaining."