Boulwarism; Ideas Have Consequences; W. H. Peterson

Boulwarism. An idea. Sweet or sour? Descrip tion or invective? The death of Lemuel R. Boul ware (1895-1990)in Florida last November recalls the controversy over his name as embodied in a General Electric employee strategy that prevailed for some 15 years after World War II. The contro versy is seen in a 1969 U.S. Second Circuit Court of Appeals decision upholding a National Labor Relations Board (NLRB) ruling that GE had committed an "unfair labor practice" via Boul warism. Asserted the Court in passing: "We do not think that [National Labor Relations] Board Member Fanning's use of the term 'Boulwarism' wasindicative of bias;the term is more description than invective." Certainly America's unions sought to make Boulwarism into invective, to undo Lemuel Boul ware's lifelong idea of avoiding force, public or private, by "trying to do right voluntarily." He held that labor and capital, employees and man agers, wages and profits, are allies and not ene mies in production. His ideas help explain GE's innovative employee policy following a rough seven-week strike in 1946 that saw acts of sabo tage at various plants.

The strike shocked the company, which had long voluntarily installed such forward-looking employee programs as a suggestion system (1906), pensions (1912), and insurance (1920).Employee Dr. Peterson, Heritage Foundation adjunct scholar, holds the Lundy Chair ofBusiness Philosophy at Camp bell University, Buies Creek, North Carolina. disapproval and distrust of the company, fanned by union hype, were widespread. GE charged Lemuel Boulware to correct the situation. So began "Boulwarism," the GE program that can be reviewed in his book, The Truth About Boulwarism (Bureau of National Affairs, 1969), written eight years after he retired from GE. Boulware tackled his charge first through job research, applying merchandising techniques that had been successful with GE's consumer products. He interviewed employees, for exam pIe, to find out what they knew about economics including the origin of jobs and wages. His find ing: Not much. His solution: employee economic education on a massive scale.

For starters, he borrowed Du Pont's flannel board economic study course entitled "How Our Business System Operates," and gained fullpartic ipation of every GE employee (then 190,000 of them) "from top management to the last non supervisory worker." The course involved three 90-minute sessions on company time. He also dis tributed thousands of copies of New York Univer sity economist Lewis H. Haney's book, How You Really Earn Your Living, to supervisors and other sponsors of study and discussion groups in GE plants, offices,and plant communities. In addition, in sustained employee communica tions Boulware hammered on the theme that mar ket competitiveness was decisive,that the GE cus tomer was the ultimate employer and paymaster, that quality and cost control were crucial to GE jobs. As GE's vice president for employee and public relations, he explained that at bottom industrial harmony springs from employee atti tudes and perceptions.

146 THE FREEMAN • APRIL 1991 Lemuel R. Boulware (1895-1990) Later on he hired a Hollywood actor named Ronald Reagan to heighten the popularity of GE's TV show.To bring about that goal, Reagan toured GE plants where he found that "we didn't chain the workers to the machines." The GE assignment apparently helped sell free enterprise to the future President. BreakingPatternWageSettlements The immediate point of Boulwarism, however, was the break with pattern wage settlements that especially had rippled out from auto and steel negotiations. To Boulware that pattern had elements of theatrics in the postwar era when employ ers felt they had to go through the motions.of first offering essentially nothing when the real plan all along was, say,an increase of five cents an hour. As he put the rest of the scenario in his book: "Then, under public strike-threat pressure, about half would be offered. Then, after all the union repre sentatives had been called in from the plants and the resulting vote for a strike had been well aired in a receptive press, management would 'capitulate' by upping the offer to the full five cents per hour."

Argued Boulware: Pattern settlements played into the hands of union officials who portrayed an employee need to "triumph over greedy and BOULWARISM: IDEAS HAVE CONSEQUENCES 147 " we have simply got to learn, and preach, and practice what's the good alterna tive to socialism. And we have to interpret this to a majority of adults in a way that is understandable and credible and attractive." -LEMUEL R. BOULWARE 1949 Commencement Address to Harvard Business School Alumni viciousmanagement," and who accordingly had to drag an unwilling company into doing the right thing by its employees. Boulware believed that such tactics discredited both capitalism and the company in the eyes of employees. He further believed that those tactics nurtured employee resentment and hurt productivity by appearing to give credit to the unions for wringing from the company what it had been willing to give at the very outset of negotiations.

Accordingly Boulware abandoned the pattern idea. Instead he painstakingly researched each opening GE offer. Soon after that he presented an up-front fleshed-out competitive "product" that he termed "fair but firm"-an offer he felt would be at once attractive to the employees and within the limited means of the company and its customers. Union officialsbristled at this new management approach and argued that the offer was but a rigid "take-it-or-Ieave-it" stand, that for all its talk of "balanced best interests" GE was "playing God," that the company was simply not bargaining "in good faith," that it could have offered GE employ ees lots more out of its "swollen" profits without having to raise prices. As Boulware rebutted this soon-standard union rhetoric in hisbook: "The trouble with our country's socalled 'free collective bargaining' in those days was that it too often turned out to be not free, not collective, and, in fact, too one-sided to be real bargaining at all." So what often passed for bargain ing, he went on, was but the imposition of a settle ment that some union officialshad already unilater ally decided, even though for public consumption they might later cut their initiallytoo high demands by as much as half in order to look reasonable.

Too, Boulware maintained that he was not inflexible, that only one of his opening proposals wound up without amendment in the GE union contract, that he was always receptive to the idea of letting the unions provide "any old or new infor mation proving changes would be in the balanced best interests of all." The ongoing Boulware-union officialsbattle of ideas became public knowledge, and the media had a field day, with politicians, commentators, and editorialists taking sides. But GE's 1960 negotiations with the Interna tional Union of Electrical, Radio, and Machine Workers, AFL-CIO, misfired, leading to a three week strike and the NLRB ruling that through Boulwarism General Electric had committed an "unfair labor practice." For, according to that 1969 U.S. Second Court of Appeals decision sustaining the ruling, GE had allegedly used "sham discus sions" instead of "genuine arguments"; too, GE supposedly conducted a communications program that emphasized "both powerlessness and useless ness of union to its members" and that "pictured employer as true defender of interest of employ ees, further denigrating union, and sharply curbing employer's ability to change its own position."

Boulware retired from GE in 1961, and Boul warism as an idea and policy passed into history. Yet so too did the heyday of adversarial unionism and the tide of union membership, with both the nation's and GE's labor force becoming sharply de-unionized in the new age of information and global competitiveness. Ideas have consequences. Lemuel R. Boul ware's prescient long-run employee economic education program, anticipating today's quality circles, Tgroups, and closer employer-employee rapport, may have triumphed in the end. D 148 The Objectives of Economic Education by Ludwigvon Mises Editors' note: Ludwigvon Mises (1881-1973)was a pre-eminentexponentof free marketeconomics duringhis longand distinguishedacademiccareer. He was associatedwith The Foundationfor Eco nomicEducationas aconsultantandpart-timestaff member from shortly after FEE was founded in 1946 until his death. These extractsfrom a 1948 memorandum to Leonard E. Read, founder and presidentof FEE, appearin Economic Freedom and Interventionism,an anthologyof articlesand essays by Dr. Mises recently published by The Foundationfor EconomicEducation.