Unemployment and Unionism; A. Lynch

UNEMPLOYMENT AND UNIONISM. t'J Atterfo Benegad otvnch THE MAIN CRITICISM leveled against econolnic freedom is the statement that, if things in the economic field are left to the spontaneous regulation of the free market, then so-called cyclical crises will ensue, with their se quel of mass unemployment. This is an unjust and baseless accusation. Sound theory demonstrates, and practice confirms, that in every case unemployment is a consequence of the direct or in direct action of the State. Economic liberty presupposes a free market for wages, just as for all other products and services. The price or wage paid for work is generally subject to controls altering its natural level, either by the direct action of a State which sets wages arbitrarily without regard to the market, or by indirect governmental action through unrepressed trade union violence. Mr. Benegas Lynch is. a .business leader in Buenos. Aires and Presi dent of the Centro De Difusion De La Economia Libre, an associ ation for the study and teaching of the philosophy of freedom.

This is an excerpt from his lecture of September 11, 1958, before the National Academy of Economics in Montevideo, Uruguay. 57 58 ALBERTO BENEGAS LYNCH To ask a higher price for one's product than the prospective buyer is willing to pay precludes a sale and contributes to a cumulation of unsold products. The same thing happens when, instead of a product, a service is offered. If the wage demanded by a worker is higher than the person requiring this service is will ing to pay, then the wage contract is not made and the worker is unemployed. Every time wages are raised above the natural level freely established by supply and demand, unemployment will be the unavoidable result. One alternative is to lower real wages and at the same time raise nominal wages by means of monetary inflation, a trick very wide ly used in the last few years. Nominal wages are raised, and at the same time money in circulation and bank credit are expanded, whereby real wages are kept at the same level, thus avoiding the unemployment which would otherwise have taken place. That is to say, the raising of wages above their natural level inevitably brings about either unemployment or inflation.

Man is not an object of trade, but his services are like any product-when he offers them in the market and expects payment for them. The difference in the case of services is that it is becoming increasingly com mon in many places for workers, acting in organized groups, to use force to get the price they want for their services. In its tendency toward mass action and indiffer ence to the interest and choice of the individual, trade unionism gives its leaders tyrannical authority over members and nonmembers alike.

UNEMPLOYMENT AND UNIONISM 59 Modern trade unionism, by the use of force, not only distorts the wage market, causing unemployment or in flation, but also interferes with the liberty to work, to trade, and to associate. Such action frequently makes it impossible to enter a wage contract voluntarily; the right to abstain from working becomes the obligation to take part in strikes against one's will; and the right to associate becomes the obligation to join this or that union. Coercive force, instead of being reserved exclu sively to the government for the protection of the life, liberty, and property of the citizens, is employed by these organized groups to attack many of those same fundamental individual rights. Undemocratic Behavior I t is paradoxical, however, that many of those who call themselves supporters of democracy and liberty should claim that the sort of compulsory unionism we have described is a legitimate manifestation of demo cratic life. This \kind of unionism neither follows demo cratic practices nor contributes to liberty. On the con trary, trade unionism that attacks fundamental indi vidual rights is an efficient weapon with which to kill liberty. Such unionism generally serves governments of a totalitarian tendency, and in conjunction with em ployers' associations appointed by the State, works to ward a corporative structure of society.

Free elections and democratic governments are no de fense against such developments. In many cases these 60 ALBERTO BENEGAS LYNCa governments, on the one hand, interfere where they have no business, exceeding their powers; and on the other, they neglect their basic duty of enforcing respect for the life, liberty, and property of the citizens. Against the rising authoritarianism of our times, which is at flood tide where the communist empire holds sway and every trace of liberty has completely disap peared, it must be realized .that democracy, of itself, is no guarantee of liberty for the countries of the West which practice it. In the areas of the world where there is yet a remnant of liberty, it is in danger of destruc tion through the popular vote-as in other ages-if ef fective brakes are not placed on political power. Excessive government is the usurpation of power by those in control and the abdication of liberty by those who consent. The tendency toward excessive growth of government is accelerated in the West by the common but false belief that liberty cannot be lost under democracy.

The task before us is to displace this false hope with the idea of the inviolability of natural rights-to life, liberty, and property-the only guarantee for human liberty against the constant threat of enslavement by au thori tarian governments.