Two Kinds of Power

For years, the term “economic power” was used almost exclu­sively to suggest something bad about Big Business. But now, with the increasing concern over the “economic power” of labor unions, it seems high time to examine the charge. Just what is the nature of economic power? and to what ex­tent, if any, do labor unions have it? Or, is it some other kind of power that unionism exerts?

In terms of human relation­ships, the word power means the ability to influence others, whereas economic has something to do with the management of one’s own busi­ness. Economic power, then—un­less it is a total contradiction of terms—must refer to the volun­tary market-exchange arrange­ments in a so-called free society. It must mean purchasing power, or the ability to get what you want from others by offering to trade something of yours that they want.

A workable exchange economy presupposes various conditions, in­cluding the infinite variability in human beings with their differing wants and differing capacities to fulfill such wants. Men with spe­cialized skills, tolerant of their reasonable differences, and re­spectful of the lives and properties of one another, have reason to co­operate, compete, and trade, thus serving others in order to serve themselves. This is the kind of noncoercive, creative power that has provided most of the tools, capital, technological development, goods, services, and leisure that are available in increasing quanti­ties to increasing numbers of per­sons over the world. This, briefly, is economic power.

In what respects, then, and to what extent, do labor unions pos­sess and wield economic power? Unions, as organizations of la­borers, represent a great deal of economic power in the form of ever-scarce, always-valuable, crea­tive human effort. Any person with the skill and strength and will to produce something of value to himself or to any potential cus­tomer possesses economic power. If others will buy his goods or services, he has purchasing power. Every man who works with head or hands and has a valuable serv­ice to offer is a potential customer or trader or buyer for the services of other laborers. The variability of natural talents, magnified in many instances through special­ized training, explains why la­borers can and do trade services to mutual advantage. All savers and property owners also are po­tential buyers of labor, particu­larly when their savings are in the form of business properties with facilities and tools and man­agerial talent of the job-providing type. The greater such capital ac­cumulation within a society, the greater is the demand for human labor to put it to its most produc­tive use, and the greater is the purchasing power of every avail­able laborer. Clearly, human labor possesses tremendous economic power, with infinite opportunity for multiplication through judi­cious accumulation and use of sav­ings. But such purchasing power inheres in individuals, whether or not they belong to labor unions.

As previously hinted, one of the prior conditions for an optimum of production, trade, and voluntary cooperation among men is a com­mon or mutual respect for human life and for the personal means of sustaining life: namely, private property. Peace and progress with­in society are threatened every time any person resorts to vio­lence, coercion, theft, or fraud to fulfill his wants at the expense of, and without the consent of, others involved. Such power, used in an attempt to obtain something for nothing, is in sharp contrast to the economic power involved in peaceful purchase or trade.

Respect for Life and Property

Obviously, if human labor is to achieve its maximum purchasing power, then it is essential that savings, as well as skills, be pro­tected as private property in the hands of, and under the control of, those individuals responsible for their accumulation and develop­ment—those who have proven themselves in open competition most fit to be in charge of the eco­nomic goods or services involved. Throughout history, mankind has looked to government to provide such protection for life and prop­erty. Government is organized coercive power, hopefully designed to suppress any and all attempts at violence, force, or fraud that might threaten the life or property of any peaceful person. The power of government is political rather than economic, a power of taxation and seizure rather than purchasing power through volun­tary exchange. This is why the ideal of a free society requires that government be strictly limited in scope to the defense of life and property, otherwise leaving all peaceful persons to their own de­vices, producing, trading, and what not.

Examples of Coercion

Now, consider for a moment some forms of human action—some expenditures of human labor—that might be classified as coer­cive rather than economic. For in­stance, robbery, or seizure of an­other person’s property without his consent, would so qualify. The enslaving and forcing of other human beings to work against their will could not properly be called an exercise of economic power. It isn’t economic power if force is used to curb active or potential competition—as when one producer or group threatens or employs violence to bar the efforts of others to produce; or when one or more sellers deny other sellers access to an uncom­mitted market demand; or when certain laborers combine to deny other laborers access to open job opportunities. Such individual ac­tions or combinations in restraint of production and trade are coer­cive in nature—monopolistic at­tempts to suppress, prohibit, re­pulse, control, and interfere with the economic power of peaceful cooperation.

It is precisely such coercive practices that the government is supposed in theory to suppress, so that all individuals may concen­trate on their respective creative specialties. And whenever the offi­cially recognized government co­operates with, condones, or merely fails to inhibit private or unofficial resort to violence and coercion, these forces, in effect, take control and become the government, thus perverting it from an agency of defense to one of actual assault against life and property.

Well-Intended Mistakes

Nor is this abuse of coercive power always or necessarily the product of bad intentions; more often than not the aims may seem quite laudable—to aid the poor, the weak, the young, the old, the underdeveloped, the sick, the starving. But however worthy the aims, troubles arise the moment coercive power instead of eco­nomic power is employed to achieve such goals. Coercive power, while the safest and most effective kind of power when politically or­ganized and managed for protective purposes, is wholly unsuited for any creative purpose. That’s why it is so very important that government be strictly limited in scope and function to the suppres­sion of lesser or private attempts at violence and coercion. Leave all else to the unbounded creative economic power of individuals competing and cooperating volun­tarily in their mutual interest and to their mutual benefit. Every ex­tension of coercive power, beyond the bare minimum required to maintain peace and order, is at the expense of economic power and diminishes its potential achieve­ments for the improvement of man and society.

Let us summarize here with a listing of some of the major dis­tinctions between the two kinds of power:

Economic        Coercive

Purchase        Seize

Exchange        Tax

Diversify         Conform

Compete         Monopolize

Advertise        Suppress

Promote          Prohibit

Serve             Control

Cooperate       Interfere

Assist             Restrain

Attract           Repulse

Create            Destroy

Develop          Limit

Multiply          Divide

Tolerate         Assault

Reward           Penalize

Union Power Reconsidered

Now, let’s return to our original question and consider in what re­spects and to what extent labor unions in the United States today possess and wield economic power as distinguished from coercive power. We have already recognized the tremendous economic power possessed by laborers in the form of creative human effort. But what happens to this economic power in the process of organizing a labor union?

If membership in the union is voluntary, then exchange presum­ably occurs, the laborer offering his dues in return for something useful from the union such as im­proved communication with man­agement, better knowledge of job opportunities, of market condi­tions, of competitive wage rates, and the like. Conceivably, some laborers may well gain consider­ably from such an expenditure or trade, greatly improving their ca­pacities to serve themselves and others, without coercion against or injury to anyone concerned. Such a beneficial representative function would clearly come under the category of economic power in a labor union.

But what can be said of other union powers: the flaunting of minority and individual rights; the tax-like collection of dues for uses objectionable to some members; the enforced conformity to featherbedding and make-work practices, boycotts, seniority pat­terns, slowdowns, strike orders, and the like; the monopolistic practice of excluding nonmembers from job opportunities; the war­like picketing of private property; the shootings, bombings, wreck­ing, destruction, open violence, and intimidation? What kind of power is this?

If it is a coercive threat to life, liberty, and property, then in theory the government must sup­press it. Otherwise, such coercion will, in effect, displace the duly constituted government and per­vert it into an agency of assault against life and property. In any event, it seems highly improper to refer to this major, coercive aspect of modern labor unionism as a form of economic power. Economic power is a blessing—not a burden—to individuals and to society.

 

 

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Ideas on Liberty

Comedy at the Bargaining Table

During the sixteenth and seven­teenth centuries the “commedia dell’ arte,” an Italian form of drama, was very much in fashion in our part of the world. Characteristic of this drama were such standardized roles as the deceived and ludicrous hus­band, Pajazzo; the cunning servant, Harlequin; the comic fat man, Pul­cinella; the blustering soldier, II Capitano; the coquettish young wom­an, Colombine.

The annually recurrent comedy around the bargaining table, where employers and employed play the main parts, reminds one of the “com­media dell’ arte.” The employers al­ways play the part of the villain in the piece by appearing to oppose with all their might the workers’ de­mands for wage increases. The trade union representatives, on the other side of the table, just as consistently play the hero’s role by indefatigably fighting for higher wages and thus a higher standard of living.

In spite of the annual comedy, everything shows that it is actually the competition on the labor market that decides the wage level. If nego­tiations with the trade unions were discontinued entirely, employers still would be forced by competition with other employers to pay about the same wages as they now do. Why is it that, in such circumstances, the employers agree to take part in the annual comedy around the bargain­ing table and, in front of the whole country, play the part of villains—reactionaries who are trying to put the brake on progress?

PROFESSOR SVENRYDENFELT, University of Lund, Sweden