Unions or the Division of Labor

Today is Labor Day. Should classical liberals and libertarians celebrate this holiday? Or is it just another state sponsored holiday (which FEE founder and former president Leonard Read used to refer to as Hollowdays)? It is after all a day where we are supposed to celebrate the advances made by workers in the work place. What is important is how this is interpreted.

The standard view of this day seems to be to cheer the victories of workers over the exploitative capitalists who employ them. Without the abilities of the workers to join together in Unions the capitalist economy would fail to provide fair wages and decent working conditions.

Now, to be fair, not everyone sees this day like this but a great many do. The first Labor Day, in 1882, was even organized by a union. The problem is that this line of thinking is just wrong. It was even the subject of the Cliché of Socialism number 11. In this short article, Hans Sennholz illustrates not only why the market would provide fair wages (based on productivity) but also why coercive unions are dangerous and harmful to the very employment they propose to want to help (as well as harmful to the economy as a whole).

Still, if all we want to do is celebrate the non-coercive act of physical labor to produce the things we want, then there is nothing wrong with that. In this way, we can view Labor Day as a day to celebrate the division of labor. Society is the division of labor. Realizing we can achieve more through cooperation rather than in isolation. As Ludwig von Mises said “Now the greatest accomplishment of reason is the discovery of the advantages of social cooperation, and its corollary, the division of labor.”

This is actually quite amazing given that it is achieved by channeling self-interest (with the proper institutions such as private property and freedom of contract of course). As Adam Smith famously said, “It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own self-interest.” So, there is nothing wrong with celebrating the productivity of labor. To quote Mises once more, “The greater productivity of work under the division of labor is a unifying influence. It leads men to regard each other as comrades in a joint struggle for welfare, rather than as competitors in a struggle for existence. It makes friends out of enemies, peace out of war, society out of individuals.” In this way, there is plenty to celebrate.

Download the Cliché of Socialism number 11 by Hans Sennholz here.

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