Some unions are more collusive than others

I often hear defenders of "Right to Work" (RTW) laws say that unions are collusive and extortive in a way that is simply unfair to employers. Neither workers nor management should be forced to negotiate through unions, and RTW laws simply level the playing field by ensuring that employees can always negotiate directly with management. The point of labor unions, to the mind of RTW supporters, is to exploit the Wagner Act that forces all parties to negotiate in good faith, and to thereby move wages and benefits up in a way a free market in labor would never allow. The aforementioned article on RTW even compares unions with Mafia protection rackets in this regard.

To describe this line of reasoning as selective would be a gross understatement. After all, let's assume that labor unions are as evil as the RTW lobby says they are. Even granting that for the sake of argument, labor is not the only interest engaging in collective bargaining. What about the individuals involved in the employing corporation? Aren't these businesses effectively "capital unions" exploiting incorporation laws to achieve a better bargaining position relative to labor? Isn't the reason why investors pool their resources and form businesses to get better deals in the market through economies of scale? Isn't that why they try to get investors rather than simply borrowing all the money for their start-up costs--to spread the risk and the reward?

So unions of labor are only one side of this story; to emphasize collusion on the workers' side is to leave another form of collusion totally unaddressed. Corporations are capital unions, organizations whose members work together to negotiate wages and benefits (and other costs, of course) downwards to get the best return for themselves. Why is one form of collusion wrong and the other not?

I'd add that, in historical comparison to labor unions, corporations are much more fully creatures of the state. While labor unions have existed for much of their history in legally unrecognized forms, arising from the spontaneous organizing efforts of workers themselves, government-granted incorporation has always been a necessarily statist activity. There's nothing free market about dictating to the market that corporations must be dealt with on their own, special terms. Conferring limited liability, entity status, and other privileges on corporations is intervention to skew the market, a crime that can only be laid at the feet of the state and the capitalists that run it.

I view this RTW movement as not only the argument that capital gets to deal with labor in a privileged manner, but also a defense of the entire balance of power between employers and employees. It's about more than just authoritarianism and a system that favors capital over labor; it's also about the legal codification of class distinctions inherent in the structure of production. To the extent capitalists decry so-called "class warfare," I believe they are trying to gloss over the privileged terms on which they want to do business, allowing them to claim there are no classes of consequence while entrenching them further. That allows them to safely defer to the market, while ensuring it always delivers the balance of power they desire.

After all, if RTW folks truly believe that each and every worker deserves the right to negotiate individually with the capital union, why stop there? Why not also grant each and every shareholder, investor, creditor, and other owner of the corporate capital union the right to negotiate individually with the worker himself or his labor union? Why should both the worker and the owner be forced to deal with the extractive, exploitative management class as the exclusive agent of the corporation? If it's unfair for the labor union to monopolize labor relative to a given employer, isn't it equally unfair for the capital union to monopolize capital relative to a given employee?

The reason is that capital unions are politically and legally favored in labor negotiations, because they have always been favored. Our entire political economy is built around doing business on their terms. If you want a genuinely free market in labor, you can start by ridding yourself of the biased narratives that explain how collective barganing is virtuous and crucial for those with money, but unnecessary and evil for those who don't.

Written on Monday, December 17, 2012 | Tags: labor, libertarianism, free-market, economics, corporatism