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Friday, April 27, 2007

Labor’s “Right to a Free Market”

No issue is more contentious in labor relations than the Employee Free Choice Act (EFCA). This bill, now pending in Congress, would require the National Labor Relations Board (NLRB) to recognize a union when a majority of the employees in a unit appropriate for bargaining has signed valid authorizations. Under current federal law an NLRB-supervised election must be held and a majority must vote by secret ballot for the union before it becomes government-certified. The union-backed EFCA would presumably make it easier to establish a union in a company, but opponents say worker intimidation would be encouraged with an open card-signing process versus a secret-ballot election.

The expected polarization can be seen in the conflicting claims. The AFL-CIO blog calls the EFCA maybe the most important labor law reform in nearly 50 years. It adds: Currently, if employees present an employer with union authorization cards signed by a majority, the employer can demand a secret ballot election supervised by the National Labor Relations Board (NLRB). But the NLRB election process is broken because it enables employers to intimidate, coerce and harass workers and drag out the process indefinitely.

On the other side, the Coalition for a Democratic Workplace, whose members include the U.S. Chamber of Commerce and the National Association of Manufacturers, says, the EFCA would strip Americans of that right [to a federally supervised private ballot] and replace it with a system where your vote is no longer private, and it is made public to your employer, the union organizers and your co-workers. We believe the only way to guarantee worker protection from coercion and intimidation is through the continued use of a federally supervised private ballot election so that personal decisions about whether to join a union remain private.

The U.S. House passed the EFCA in March, 241-185. It’s now pending in the Senate.

What should free-market advocates say about this controversy? As might be expected, in a corporatist mixed economy such questions aren’t as clear-cut as they appear on the surface. Of course, the pro-business side opposes the EFCA, while the pro-labor side supports it. Both say they want to protect workers from intimidation. But looking deeper we see that the conflict is over how a government agency, the NLRB, should manage labor relations. Should libertarians be offering advice to interventionists on how to do a job that they shouldn’t be doing in the first place?

This question leads us in a direction perhaps many of us have not gone before. Advocates of the market typically assume that federal labor legislation since the New Deal puts the government squarely on the side of unionism. Some seek countervailing intervention, such as a national right-to-work law, which would forbid employers from signing union-shop agreements even they want to. Others go further and call for repeal of all labor laws, especially the Wagner Act, which established the NLRB during the New Deal.

But would such wholesale repeal really shift the pendulum away from labor? There’s reason to doubt it. Wouldn’t it be ironic if repeal of the labor laws increased workers’ clout? What if, subtly, government regulation of employer-employee relations has tended to benefit business to the detriment of labor? That’s counterintuitive, but let’s see how this might be so.

We start by recalling what the Wagner Act and then the Taft-Harley Amendments accomplished. The Wagner Act established a legal right of workers to be represented by a union if a majority in a bargaining unit wishes to be. As noted, the NLRB is empowered to certify unions that win elections conducted according to the government’s procedures. The certified union becomes the exclusive bargaining agent, and the employer has no choice but to deal with it in good faith. All affected employees have to join, or at least have to pay dues, except in right-to-work states, which Taft-Hartley later permitted .

Empowerment or Restriction?

This looks as though government has tipped the scales for the unions, but it’s not the full story. Labor laws also restrict — severely — how workers can organize and what a union can do after it is established. Before the NLRB regime, workers sometimes agitated for union recognition by striking spontaneously and engaging in other kinds of actions — both peaceful and violent. Many of those organizing tactics — even the peaceful ones — became illegal under the Wagner Act, which set out specific procedures for having a union government-certified, and the later Taft-Hartley Amendments. Thus wildcat strikes, sympathy strikes, and secondary boycotts — in themselves examples of freedom of non-association — became forbidden tactics. (Unsurprisingly, the ban on boycotts began as a wartime measure in 1942.) Also outlawed was minority unionism, in which a minority of workers could ignore the majority union and seek representation by another.

Although the new pro-labor regime conferred on workers the right to strike, the NLRB sets the rules and the president of the United States can impose a 60-day cooling-off period by invoking national security. It was more a permission than a right.

It’s an old story: no government favor comes without strings. One way or another, you pay for what you get. When we recall that for years, beginning in the Progressive Era, America’s corporate elite — through the National Civic Federation and the American Alliance for Labor Legislation –advocated labor laws, a story at variance from the standard one emerges. It appears that the New Deal and subsequent labor rules were not so much intended to empower workers but to divert unruly labor energies into safe, predictable forms more acceptable to the politicians and corporate establishment — a group that was always comfortable in partnership with government. Respectable labor leaders could thereby be anointed and given seats at the boardroom table — as junior partners, of course. How better to legitimate the American Federation of Labor and de-legitimate the Industrial Workers of the World (or Wobblies), which saw (and still sees) the NLRB as co-opting workers?

As historian Joseph Stromberg describes it, “The Wagner Labor Act of 1935, perhaps the most original of the New Deal measures[,] … finally defined the position of labor within the syndicalist or corporatist system. After this the unions settled down to fit in the corporatist mold and enjoy their share of the economic pie.”

Kevin Carson, a free-market political economist, sums up the situation neatly: “Far from being a labor charter that empowered unions for the first time, FDR’s labor regime had the same practical effect as telling the irregulars of Lexington and Concord, ‘Look, you guys come out from behind those rocks, put on these bright red uniforms, and march in parade ground formation like the Brits, and in return we’ll set up a system of arbitration to guarantee you don’t lose all the time.’”

This is not to say that organized labor got no favors from government. Federal laws (the Norris-LaGuardia Act, for example) and court decisions immunized violent acts from prosecution and shielded unions from liability for the sanctioned actions of their members. This was a departure from common-law principles. (On the legal status of union violence, see Charles Baird’s article.)

Further, I don’t mean to say that business leaders have liked everything that has happened since the labor regime was installed. Quite the contrary. But it is the case that many enlightened business leaders wanted to use government power to domesticate labor, to buy it off, and isolate the labor movement’s unruly anarchists, syndicalists, socialists, and communists for the sake of industrial peace. (Who knew which movement would catch on during the Depression?) Indeed, the whole welfare state can be seen in this light. The corporate elite willingly accepted some government interference with private property in return for labor-relations management and other protections. (See this account of the Swope Plan, the precursor to FDR’s NRA proposed by General Electric president Gerard Swope in 1931.) Business surely knew that once set up, the labor apparatus would not always go its way. He who lives by the sword may die by the sword.

Come and See the Violence Inherent in the System!

It should be obvious that government-managed labor organizing is no more deserving of libertarian support than government-managed trade or government-managed political campaigns. Laissez faire means that workers are free to use any tactics short of violence to press their case with employers. This would include peaceful unauthorized wildcat strikes, sympathy strikes, secondary boycotts, and other nonviolent activities now outlawed. Needless to say, violent interference with strike breakers would be illegitimate.

Similarly, employers would be free to use all peaceful tactics in opposing union organizing, including yellow-dog contracts and company unions (now illegal). Laissez faire would not sanction the horrors of the past: neither union violence against innocent persons and property nor police and private violence against peaceful workers.

But if violence against the innocent is illegitimate, we can’t ignore the larger context in which employer-employee relations take place in America — the cartelized liberal corporatist, or neo-mercantilist, political economy, which at its most fundamental level privileges entrenched business interests through a variety of interventions that dampen upstart competition and hence reduce the demand for labor and otherwise restrict worker options. The result is a systemic bias — albeit not insurmountable — against independent centers of economic activity, whether from upstart entrepreneurs, worker-owned cooperatives, or employees merely seeking better working conditions. The same principle that would eliminate the labor laws would also devour those anticompetitive interventions.

As the editor of the old Liberty magazine, individualist Benjamin Tucker, put it (emphasis added): “It is not enough, however true, to say that, ‘if a man has labor to sell, he must find some one with money to buy it’; it is necessary to add the much more important truth that, if a man has labor to sell, he has a right to a free market in which to sell it, — a market in which no one shall be prevented by restrictive laws from honestly obtaining the money to buy it. If the man with labor to sell has not this free market, then his liberty is violated and his property virtually taken from him.”

  • Sheldon Richman is the former editor of The Freeman and a contributor to The Concise Encyclopedia of Economics. He is the author of Separating School and State: How to Liberate America's Families and thousands of articles.