Book Reviews

Before dealing with the good news in this book, however, the reviewer must admit that a lot of "ruin" can happen before sanity takes over. Mr. Rukeyser is quite aware that the unions, in putting their faith in Keynesian doctrines that lead to perpetual inflation, can hurt the customer badly be fore he reacts. Mr. Rukeyser doesn't think much of AFL-CIO boss George Meany's "diversion ary" attack on profits. The general labor animus against Lemuel Boul ware's efforts to inject some com mon honesty into collective bar gaining tactics bothers Mr. Ruck eyser. But in the final analysis this is a supremely hopeful book. It sees prudence taking over in la bor-management relations before there is any disastrous plunge over the precipice. The sophisticated modern em ployer, says Mr. Rukeyser, is no longer a labor-baiter intent upon "liquidating" the unions. The pru dent employer, in his opinion, knows that he is only a middle man who stands between the worker and the customer. .The 381 382 THE FREEMAN June problem is always to reach a com promise on wages that will not push costs so high that the cus tomer will revolt. At the same time labor must be given the in centive to reduce the unit cost of producing something that the cus tomer will like. The far-seeing manager will try to remain just a bit ahead of the labor market rather than behind, for he knows that "lagard employers get the least productive workers."

Man V5. Machine Mr. Rukeyser realizes that am bitious labor leaders, fighting to remain in control of their unions, will often press management too hard. In cases where the unions have monopoly power this could result in an industry pricing itself into bankruptcy. But instances of actual union monopoly are few and far between. The truth, says Mr. Rukeyser, is that the human worker is always in competition with machines. It is not "man hours" that provide an accurate measure of productivity; it is "man-tool hours." When unions force costs up faster than produc tivity rises, the whip is on man agement to invest in the latest thing in automation. The superior tool cuts the unit cost of produc tion by putting men out of work. The tenure of employment, Mr. Rukeyser insists in several place~ in his book, depends on ratifica tion by the customer of manage ment's judgment about working conditions. Mr. Rukeyser's analy sis follows the economics of Lud wig von· Mises. "The open market place," he says, "is a quasi-demo cratic voting booth where con sumer plebiscites continuously take place."

It is Mr. Rukeyser' s hope that both management and labor in the future will concur in the desira bility of establishing "conditions for optimum growth." The union effort should be to "expertly de termine what slice of the growth income pie can go to employees without impairing expansion." It follows from this that the unions should welcome what is now called "Boulwarism." End the Tomfoolery As students· of post-World War II labor-management history know, Lemuel Boulware of Gen eral Electric flabbergasted the unions by advising management to "do right voluntarily." The Boulware idea was to open up a continuing dialogue between rank and file union workers and a com pany's cost accountants and per sonnel directors. Under "Boulwar ism" information about a com pany's competitive position would be made available to the workers before negotiations. With every1970 COLLECTIVE BARGAINING 383 thing on the table, a company would be able to make a "fair, firm" offer to the union. The offer would be subject to change in de tail, but it would be up to the union negotiators to show where it would not be hurtful to the industry and to the workers themselves if any drastic alterations· were accepted.

There would be an end to flum mery under the Boulware dispen sation. No more phony preliminary offers, .and no more phony de mands, all pitched toward making the union negotiators look like in dispensable supermen in the eyes of a hoodwinked rank and file after a compromise had been reached. It is a sad commentary that the unions have never accepted Boul warism. Still, Mr. Rukeyserputs his trust in the final triumph of the scientific approach. He doesn't think that politicians in Washing ton can be trusted to make real istic economic decisions. Unions and management must come to ac cept the "new ideals of collective consultation." "Boulwarism," per haps under a different name, will become· the general working prac tice. David McDonald, former head of the United Steel Workers, was groping toward the Boulware con cept when 1. W. Abel defeated him for the presidency of the steel union. But, despite this setback, the "innovation of all-year-round consultative machinery," as a re placement for "eleventh-hour crisis bargaining," had growing support among the steelworkers. Former UN Ambassador Arthur Goldberg, once a prominent union attorney himself, brought forth the idea of a Human Relations Committee, which is "Boulwarism" with a union label cachet.

Harmony of Interests Mr. Rukeyser knows that the Marxian idea of a perpetual class conflict dies hard. But he cites in stances where Henry Carey's "har mony of the interests" has routed the Marxists. When the Federal Communications Commission was threatening an investigation of telephone rates, Joseph Beirne, the head of the AFL-CIO Bell Com pany union, publicly accused the FCC staff of trying to punish the American Telephone and Tele graph Company for success. Mr. Beirne made the point that the government was hoping to reward Western Union for being a less powerful competitor by making things difficult for the more effi cient AT&T. The FCC had pro posed to divest AT&T of its leased wire services and to turn these over exclusively to Western Union, which would have ended customers' choice in TWX, or leased wire, services. The ridicu384 THE FREEMAN June lous thing about the whole busi ness was that the FCC itself had approved the rates for the AT&T TWX services. If they were so low as to provide unfair competi tion, it was the FCC's own fault.

Mr. Rukeyser thinks it is up to the unions and management to make common and enlightened cause in fighting the drift to what he calls "American Falangism." Falangism, of course, is what they have in Franco's Spain, where the symbols of free enterprise arere tained but the government makes the crucial economic decisions. When President Kennedy substi tuted his judgment for that of the market in the steel price contro versy of 1962, he was acting as a Falangist. The attempts to substi tute compulsory restraints for free bargaining are also in the Falangist pattern. It is because of the menace to "both their houses" that labor and management have a common interest in moving toward "collective consultation" as a substitute for "primitive col lective bargaining." , HANDSOME BLUE LEATHERLEX FREEMAN BINDERS $2.50 each Order from: THE FOUNDATION FOR ECONOMIC EDUCATION, INC. IRVINGTON-ON-HUDSON, NEW YORK 10533 the Freeman VOL. 20, NO.7. JULY 1970 ASong for All Seasons A salute to our National Anthem.