4. The Nature of the Strike

THE STRIKE, like the boycott, is a coercive or punitive device. It is deliberate disruption of the process of human cooperation by way of the collusive, coordinated withdrawal of labor from an organized activity. Hence “the strike-threat” is essentially a threat to disrupt unless (as Henry Simons once put it) “bribed” not to do so. “The strike-threat system” is a social order in which the right or effective power exists for those who can apply this method of coercion to seek private objectives by threatening to use it.

Such a system is conventionally described as “the collective bargaining system.” In my Theory of Collective Bargaining (London: P.S. King, 1930), I referred to the term “collective bargaining” (which had been coined by Beatrice Webb) as “a very useful term.” I have since come to perceive that it is a misleading euphemism. We could appropriately describe “collective bargaining” as “a particular procedure for arranging the sale of labor” or as “the cooperative marketing of labor,” if there were no question of the strike threat, no such threat of disruption. A union could bargain on behalf of all its members but, so to speak, individually, warning the management that, if the wage rate offered should be below a certain figure, the union would be in a position gradually to find better jobs (with better remuneration, conditions of service or prospects) for so many of their members. That would be “arranging the price of labor through a common agent.” But this is not what distinguishes collective bargaining from entrepreneurial action under the social discipline of the free market. The United States Industrial Commission of 1902 claimed that, under collective bargaining, “the labor contract is precisely similar in nature to the process of bargaining between two parties regarding any other contract.”¹ That is a basically false description unless attempted “exploitation” and/or resistance to it are assumed to influence such “other contracts.” What actually goes under the name of “collective bargaining” nearly always involves the strike threat (“the gun under the table”), in some countries even when the field is one in which strikes are illegal.

The case against the strike-threat system is partly that the strike is an intolerable weapon in a civilized era whatever its objectives. The strike is, of course, capable of being used for ends of which all could approve. Theoretically, it might be directed against an oppressive government (see p. 49) or against exploitation by other unions in competing or noncompeting occupations. But it is my thesis that strike-threat power is an unacceptable method of redressing wrongs in any circumstances, while it is of course doubly objectionable when it is used for indefensible objectives. Even if it could exert an equalitarian influence, we should, I suggest, have to condemn it, just as we should have to condemn the Mafia even if it could be shown that the revenues of racketeering were being used to subsidize opera, cancer research or civil rights movements. But almost meaningless phrases are commonly resorted to in describing present methods of determining wage rates and conditions of service, as though to avoid reference to their essential aggressiveness. For instance, the strike-threat system has recently been described as action to close “the remaining gap between limited means of want-satisfaction on the one hand and desires on the other,” and “the need to adapt distribution of income or power in some fashion to changed conditions within the dynamic and complex industrial society.”² The key word here is “gap.” How is it defined? Has part of the “gap” already been closed as the words “the remaining gap” suggest? But will there not always be a “gap”? And won’t its presence always displease some? If moralists fail to condemn such resentments, won’t they persist as long as one person’s income from property, or one person’s ability to earn without exploitation exceeds that of another? Suppose the “gap” exists between a poor stockholder and a relatively rich artisan. Does the implied desirability of closing the “gap” still exist? All my life my “desires” have exceeded my “limited means of want-satisfaction,” and I assume that everyone else is in the same position. How can the “gap” justify strike warfare?

And what is this “need” to “adapt the distribution of income”? Society—the people collectively—may decide that the institutions determining income distribution require refashioning according to some explicit principle. But can a civilized social order permit any group with a grievance to be judge and policeman in its own cause and attempt to change income distribution in its own interest?

One of the problems in a good society is greed. An even more important problem is that of curbing the activities of those who seek profit from fostering and battening on human greed. These are problems which grow more acute the more affluent men become. We have been somehow inveigled into apologizing for man’s urge to exploit by describing the incentive to get more at the expense of others in terms through which envy and cupidity are almost ennobled; while we have been led to condemn individuals who try to get more by serving others more efficiently, or more faithfully, or more cheaply.

I shall try to show, however, that the notion that some form of distributive justice can emerge when there is reliance upon the strike threat is fallacious. For if the terms of wage “contracts” are dependent on the capitulation of one of the parties in order to avoid warfare, or on the results of actual warfare, the principle of might is right must ultimately prevail in each individual “agreement” about how the value of the product of industry is to be divided. Victory in war is to the powerful, not the righteous.

Even if it were possible, therefore, to demonstrate that the right to strike (actually exercised or not) may discourage or prevent exploitation of the poor by the rich, or promote welfare and equality by transferring income from the rich to the poor, we should still be forced back to the question of whether it is a tolerable method of achieving such “social benefits.” For what guarantee can there be that strike power (or any other form of private coercive power) will be used for the good of the poor or the underprivileged and not to win private or sectional advantages?

In practice, the sheer arbitrariness of any detailed redistribution effected ought to cause misgivings. Let us face this simple question: How far is it just to transfer income from those who, in every business, risk providing the assets which multiply the yield to labor? Any such transfer will be for the benefit of those who have already gained from that multiplication in non-competing fields. Hence can any transfer of that kind be just? And if it is, what proportion of the investor’s earnings ought to be taken for the benefit of the workers? What criteria can be applied in different defined circumstances? Are there any principles at all? What particular investors (assumed to be rich) are to be “soaked”? What particular workers (assumed to be poor) are to receive the transferred income? Surely, the capriciousness of the method ought to condemn it. Why should the beneficiaries be those workers who just happen to contribute to the production of output for which the demand is inelastic or those for whose labor there is no effective substitute? Well, in the whole voluminous literature dealing with labor unions and collective bargaining, I have been able to trace no attempt at rigorous consideration of the ethical issue involved in attempts to answer such questions. Have we not tended to rationalize the use of a form of coercive power which it has been politically inexpedient to suppress, and inhibit concern with a glaring problem of ethics?³

We can classify arguments that through the strike-threat a more just distribution of a community’s income can be effected under two broad headings: (a) that the system serves the purpose of preventing workers from being exploited for the benefit of investors, or (b) that it serves the purpose of enabling investors (assumed to be rich) to be exploited for the good of workers (assumed to be poor). At this stage, however, we are to consider solely the ethical aspect—the question of whether such a system is a defensible method of trying to protect the just earnings of the workers from being filched from them to enrich investors or, alternatively, of attempting to serve the community as a sort of Robin Hood device.

If redistribution is to be sought on the grounds that income differences, even those determined in a free market, are in some sense “unjust,” then the obviously defensible way of achieving distributive justice is by transfers via (a) progressive taxation which discriminates solely on grounds of income, and (b) a schedule of handouts which discriminates solely in favor of the smaller incomes. As H. C. Simons pointed out (in 1944), “it is one merit of our present (past) system that inequality is measured closely by income and can most easily be modified systematically through taxation and spending.”⁴

In any case, the easy assumption that investors are rich and workers poor is rather dubious today. In a country such as the United States millions of relatively poor people are making provision for their old age or retirement, for their children’s education, for the future well-being of their family generally, and for the security of all those for whom they are responsible, by investing in common stocks directly or through mutual funds. Inflation has spurred this form of saving. But it makes no difference to the point here at issue whether the “poor investors” are dividend receivers or interest receivers; for if prospective yields in general are reduced, the yield to current and past savings (the rate of interest) will be reduced (thrift being the same). A by no means negligible volume of income from property must be received by people whose incomes from wages plus savings are less than the average income—in the United States, say, less than the present wage earnings of New York City garbage collectors! Then if income from property is exploitable through the strike threat, why should this group, with incomes below the average, be exploited for the benefit of those union members whose incomes are already greater? The “poor investors” are, on the whole, the most independent and worthy of their income class. They exercise foresight; they plan their future; they insure against life’s hazards where possible; and, except when they encounter wholly unpredictable misfortune, they seldom make demands on the community. Can we tolerate a system in which their exploitation is an explicit even if an incidental aim?⁵ I make these points only to underscore the remarkable failure of apologists for the strike-threat system to face the relevant ethics. The blatant arbitrariness of such redistributions as are effected are habitually glossed over in public discussions and in most “labor economics” textbooks.

Other forms of organized disruption may supplement “the strike proper”: the “sit-in,” “ca canny” (going slow), “working to rule,” deliberately spoiling work, “luddism,” and various other forms of sabotage, intimidation of nonstrikers, “demonstrations” to impress with the strength of intimidatory power—all these methods of disruption may be threatened or used. They are all forms of the private use of coercive power.

The organization of the power to disrupt can sometimes be effective on a small scale when key workers in an industry are concerned; and in these cases the unions may be quite small.⁶ Sometimes the labor monopoly to be protected will be that of a craft, the skills of which can be relatively easily learned by interlopers, in which circumstances the scale of organization likely to be preferred will cover a single craft alone. Under other conditions, disruptive power is maximized when the organization covers an occupation or an industry. In yet other circumstances, a “general” organization covering several occupations and industries will be in a position to inflict the greatest harm. Another way of multiplying the potency of the simple strike threat is cooperation with other unions, with which “strategic alliances” may be formed. This can increase the menace of disruption in breadth and depth. The so-called “sympathetic strike” is an example. We have even had the “super-strike”—the use of disruptive power simultaneously in many fields, sometimes described, euphemistically, as “coordinated bargaining” and represented as the answer to the great corporate conglomerates and mergers. And the unions have never lost sight of the occasional effectiveness of what is today called (in the United States) “the whipsaw,” or what the Webbs earlier termed “the strike in detail.” This device involves the coercion of one firm after the other, so that the strikers in each case can be supported out of contributions from those still working elsewhere.⁷ Or, as was the case with the newspaper industry in the United States, the unions preferred “collective bargaining” on an individual company basis in order to “force a favorable agreement on the most vulnerable employer and then apply the ‘pattern’ to the other firms.”⁸ Careful timing also can magnify the harm threatened. For instance, agricultural unions can threaten farmers with the loss of a whole year’s income through the withdrawal of their labor just as it becomes essential to harvest a perishable crop. And generally, since the Wagner Act, American unions seem to have been organizing an apparatus for maximizing their power to disrupt a functioning economy when or where the disruption would be most deleterious. One of the most effective forms of exercising privately contrived coercive power in the United States is “the honoring of picket lines” by all unions.⁹

The connection between the use of the strike and recognized union organization is not simple. “Unofficial,” or “wildcat,” strikes sometimes occur and usually appear as challenges to the authority of the elected leaders. But union members who seem to defy their leaders in such circumstances still rely upon the kind of coercive powers of which their leaders claim the monopoly. Moreover, rarely is the machinery of legally established unions used for “strike-breaking” when the elected rulers decide against a strike and their decision is flouted by some part of the membership. For this reason, the suspicion has arisen that, on occasion, “wildcat” aggression (supposedly unauthorized strike action) has been quietly encouraged.

Managements in the United States, realistically perceiving that the critical problem in disputes is nearly always protection of the security in office, and hence the financial prospects of the union’s elected rulers, have sometimes (I do not suggest often) found it less costly to reward the officials directly in the form of bribes than to satisfy them indirectly through agreeing to terms of capitulation which sufficiently preserve their prestige and authority. But even when no vestiges of corruption exist, it is the interests of the officials which seem to prevail. Realism on this point must color our judgment on the issue.¹⁰ I often think that the only net gainers from the strike-threat system are union officials (as well as union lawyers, consultants, artibrators, mediators, conciliators and the like) who thrive on the union income from membership dues. The interests of this group alone are a powerful bulwark to prevent the rank and file from learning the lesson which John Stuart Mill suggested they would learn¹¹, namely, that strikes must fail to achieve their claimed objectives.

In using their disruptive power the unions must, at times, recognize the need for some measure of public approval. They must also give due weight to the expediency of satisfying the more critical and observant factions, with divergent interests, within their own organizations. Such considerations plus the cost of strikes (in terms of wages sacrificed and funds depleted), plus the danger of driving too many existing firms into insolvency (discussed on pp. 70-71, 140-142) have been the chief restraints to which the strike-threat system has been subject.

On occasion, managements try directly to bring public opinion to bear on negotiations via advertisements, but usually only after an actual strike has occurred and managements feel that they must apologize to the public for the breakdown in service. On the whole, although public opinion condones union aggression rather uneasily, the fact that it does not condone all demands which unions put forward is a reality with which exploiters of the strike threat must reckon. The terms of settlement in the so-called bargaining field are influenced by current ideas about what is equitable.¹² Whether on balance public bias toward approval of what has become customary works as a mitigating factor or the reverse on strike-threat exploitation is difficult to judge.

We can say, then, that the typically “broad-minded” view of well-informed, sensible people about the “right to strike” is that it is obviously legitimate when employed with “moderation.” It just happens at times (or often), they think, to be used “irresponsibly,” and they feel the only remedy to be that the unions must be persuaded or somehow forced to act responsibly—“not to go too far.” I have already suggested that such a view is unacceptable (see pp. 15-16). As Fritz Machlup has put it,

We frequently hear about some very exceptional trade union leaders who have exhibited an exemplary degree of responsibility and moderation. With all due credit for the wisdom and sincerity of these men, I believe that their moderation was conditioned by the particular circumstances of their trades. The trades in question were characterized by exceptionally high elasticities of demand and of technological, occupational and regional substitution. “Moderation” in these circumstances was in the interests of the members of the union. . . . Full exploitation of a union’s bargaining position may appear as “irresponsible highway robbery” or as “responsible statesmanship” depending on whether the union’s monopoly power is strong or weak.¹³

Having referred to public opinion’s influence on union policies, I must at once confess that, in my judgment, it is not very important at present. Until the public generally is better educated about the problems we are discussing, its views on what is proper will seldom exert more than a mildly conservative effect—and probably help to conserve more evil than good.

The strike, and particularly cooperation in strike aggression can be extended to achieve political objectives. The most sensational form in which such action may be taken is that of “the general strike.” But unions in cooperation (that is, using “sympathetic strikes”) are now often in a position to threaten to create, or actually create, a state of general unrest, disorder or recession; and for that they may be able successfully to blame governments which refuse to legislate as they, the unions, command.

The private use of coercive power to achieve political ends which cannot be won via the democratic voting process occurs in contemporary society in spheres wider than those in which labor unions are concerned. Nondemocratic “dissent”—resort to “peaceful” demonstrations, protests and demonstrations with a view to the incitement of violence, disorder and intimidation of the public, of commercial institutions, and of government (as distinct from their use for publicity purposes)—is now almost accepted in the United States as a fundamental human right (see p. 283). As with other rebellions and mutinies, the objectives sought may be good. Under the “one-man, one-vote” form of representative government, for instance, unless racial or religious minorities are safeguarded by some weighting of the franchise, or some independently enforced “declaration of rights,” the revolt of the minorities in one form or other may be the only path to racial or religious justice. But if governments—elected or otherwise—suppress rebellions, their action can hardly be characterized as “oppression.” The policies against which the revolt is aimed might be so characterized. In this field, as in all others, no government which regards itself as having been legitimately appointed can justify revolt or the infringement of the civil rights of some persons because those who rebel believe (acting as judges in their own cause) that they are the victims of injustice.

The absence of strikes does not mean the absence of private coercion. An armed robber is usually reluctant to assault or slay his victim. And, of course, unions will not want to strike if they can get what they ask without the cost and risks of stoppages. When defenders of the present system sometimes stress this reluctance of the unions actually to carry out the threat which dominates “negotiations,” that is all their argument implies.¹⁴ Attempts to distinguish “militant” unionism from “peaceful” unionism seem never to be expressed in comprehensible terms. To say that we can distinguish “extreme” from “moderate” leaders, and to define as “extreme” those whose demands are most “unreasonable,” “irresponsible” or “unrealistic” is not very helpful. The only clear difference as a rule is that the “moderate” leaders think it right or expedient to aim at taking less by the identical method. For if the unions led by “moderate” officials fail to secure what they think is just and worth a fight to obtain, they will strike; so that negotiations always take place in the full knowledge that a conflict is possible. The words “reasonable” and “realistic” in this context tacitly assume that there is some criterion of the expedient or just amount to be taken. (See above, p. 45, and Chapter 15.)

Agreements reached under strike-threat pressure but without an actual stoppage are described at times by propagandists as “mutually agreeable to the parties,” as though in some circumstances capitulation under duress is acceptable. Sometimes, indeed, tendentious writings have gone so far as to represent strikes and lockouts as “inherent in free market decision-making.” But there is no justification for the use of the word “free” when any worker can be prevented (as he can be today) from improving his income or prospects by accepting any offer of remuneration.

Moreover, even when the terms of wage contracts have been uninfluenced by force majeure, if they have resulted from industry-wide negotiations, the “peaceful solution” may well embody some measure of what I termed in 1930 “joint monopoly” (see pp. 72-73, 122, 128, 169). There is a possibility that, through many industry-wide collective agreements, the unions (together with the “employers associations” with which they have collaborated) are engaged in exploiting the rest of the community (mainly as consumers) more effectively than could have been achieved by union monopoly alone, and sharing the spoils. But there can be no greater justification for contrived scarcities inflicted on the public under these conditions than those engineered by the most uninhibited cartel action. There is no special problem here. In a regime in which antitrust is effective in all spheres (labor included) and its administration free of political manipulation, there may be little likelihood of abuse of the public.

In negotiations with “employers,” union officials typically proceed today with the traditional courtesy of diplomats. Yet they seem to have felt that in economic warfare (as in all warfare) it is essential to keep alive mistrust or even hatred of “the enemy” (see above, p. 22). Managements have found it almost impossible at times to prevent the infiltration of professional troublemakers into the work force. Skilled “agitators” can be planted in a firm with instructions quietly to subvert the efforts of management to create staff harmony and general contentment among these employed (see pp. 87-89). At one time, indeed, some large enterprises in the United States engaged in counterespionage to ferret out those among their employees who were under instructions from outside to sabotage good human relations. Mainly because of the vote-controlling power possessed by the union leaders, the public has been persuaded to regard counterespionage as having invariably involved gross abuses. No one would suggest that there were no abuses of the system. It may well be true, for instance, that on occasion “company spies” acted as agents provocateurs. Yet counter-espionage was resorted to as a desperate attempt to mitigate the cold war which usually precedes open war.

Faced with the social discipline of the market (exerted often via foreign competition), managements at one time had an effective incentive to resist any collusive imposition of costs; but both the will and the power to resist have been seriously weakened during recent decades. In the large-scale industries of the United States, there were relatively few strikes before the 1930s, largely because managements had succeeded in discouraging effective unionization. Since the New Deal, however, managements have mostly become bewildered and demoralized by their feeling of helplessness when confronted with the growing ruthlessness of union power. Often, only the larger concerns remain in a position to do anything positive to check or prevent strike-threat coercion; and even they are forced to act under tremendous disadvantages.

But why should managements be expected to organize resistance? In a really free society, resistance to private force is a function which is properly undertaken by government. When our personal safety or security requires that we all carry guns, it means that government is failing in its functions.

One of the reasons for the appeasement attitude of managements in wage negotiations has been their desire to assuage, as far as possible, the lasting bitterness on the part of the rank and file of their workers which it is so often union tactics to arouse. But long-continued resort to the stratagems through which staff harmony and satisfaction of the union rulers have been sought, legitimate though they may be, seems to have created a defeatism on the part of the managers. The feeling that “concessions” must be made has tended to become habitual. And this apparent tendency has been reinforced when, through inflation, continuous upward wage-rate adjustments seem inevitable for the retention of staff.

Because the right to carry the strike weapon means the right to threaten private warfare the actual declaration of a strike has, if we can trust the very earliest accounts of such activities (for example, Adam Smith’s), tended throughout history to be accompanied by bodily violence, intimidation and sabotage (see pp. 33-37). The apparent tribute which a successful strike can levy (on the consuming public, on present or potentially competing comrades, and on rash investors) often seems so tempting¹⁵ that unmitigated hatreds are apt to be aroused firstly, at managements which seek to defend the community’s interests, and secondly, against nonstrikers or strikebreakers. The bitterness and resentments engendered can be profitably fanned by politicians, in some cases by a cynically subservient press, and by union officials who think it expedient to foster and perpetuate a war psychology. Such is the cupidity of man that, when managements have stood on principle to resist strike pressures, they have at times been in danger of their lives (as have nonstrikers). Even the police have often been compelled to defend themselves against violence when they have tried to protect managers and nonstrikers from physical assault; and when the police have, in self-defense, answered physical force with physical resistance, allegations of “police brutality” have become routinely common.

“Organized economic warfare,” wrote Simons, “is like organized banditry and, if allowed to spread, must lead to total revolution.”¹⁶ Most readers will probably feel that this dismal forecast exaggerates the consequences. Yet Simons’ misgivings should be treated with the greatest respect. He predicted no inevitable outcome. But the democratic regimes have drifted ominously during the last few decades. Partly because union leaders have shrewdly used the funds and propaganda power at their disposal, the right to inflict civil injury (even on person who are in no sense parties to disputes) without risk of civil suits from those harmed, and the virtual right to commit what would be criminal acts unless carried out in the course of wage negotiations, have been conferred by judicial interpretation and statute law in many countries.

These privileges are defended on the grounds that the unions need protection from the possibility of financial ruin through exorbitant damages. But has not the whole purpose of the common law, which traditionally has accorded injured parties the right to sue for damages, been that of suppressing, or at least discouraging, privately-imposed harm on others? Private prosecution has, to some extent, been the servant of prevention.

Siegel claims that strikes today have tended

to become more rational, predictable and stylized. Sporadic riots, violence, explosive outbursts are replaced by more peaceful varieties of collective bargaining, joint consultations, or political bargaining. Strikes may take place, but if so they are different from those of the past. . . . The new-fashioned strike . . . has become “enlightened, orderly, bureaucratic”—almost chivalrous in its tactics and cold-blooded in its calculatedness.¹⁷

This sort of writing, which has become almost conventional, expresses wishful thinking, or a semitruth, or perhaps exhortation—the outcome of a desire to lead the union movement to a more “reasonable” or “responsible” use of its powers.

We sometimes hear it said in the United States that public opinion does not, as a whole, condone the failure of the authorities to protect basic civil rights in the course of trade disputes. It is argued that the public recognizes, cynically but realistically, the control of political voting-power wielded by the union rulers. This power makes it suicidal for any ambitious mayor, governor, president or other official subject to election to call for effective resistance to strike power or even to crime when the crime is committed under union cover or direction. There is no point, it is believed, in demanding politically unthinkable reforms. I have dealt with this issue specifically elsewhere.¹⁸ In the present context I can simply suggest that the political difficulty exists largely because the public has been conditioned to see the strikebreakers’ acts as despicable and the strikers’ acts as heroic (see above, p. 44). That is, I believe, a chief explanation of the moral chaos of the present setup. It accounts for the fact that the ethical issue is virtually never discussed frankly or dispassionately.

I have referred to such obviously deplorable methods of coercion because they often form a regular part of the modern labor unions’ armaments and because they illustrate the reality that the strike threat is the private use of coercive power. But in granting labor organizations what almost amounts to a general indulgence to incite bodily intimidation and physical sabotage during wage disputes, governments have made what, seen in perspective, is merely a concession that aggravates what should already be held to be intolerable. That is, the case which I am making against the strike-threat system does not, as I insisted above (pp. 15-16), depend on the indefensibility of coercion permitted through those particular immunities and privileges before the law. The really vital immunity is that which the unions have won from the ancient common law against “conspiracy in restraint of trade.”

Public opinion, although often flouted, can sometimes temper the ruthlessness of union aggression; and it does tend today to look with disapproval at violence or intimidation. But they are regarded, as I have said, as abuses of the strike-threat system. The private use of coercive power as such is not condemned. Yet surely, in a community which does not regard the idea of “the Great Society” as sheer cant, the right to the private use of coercive power in itself—the concerted, disruptive withdrawal of labor, however “peacefully” it is carried out—should be recognized as the truly deplorable privilege. The suppression of crime committed under labor union cover, connivance or command would not eliminate the major evil. Tolerated illegalities merely reinforce an indefensible power. It is the strike weapon as such, however “peaceful” or lawful the negotiations in which a lurking threat to use it may appear to be, which I contend is responsible for the wage injustices and employment insecurities of the present era. For these reasons, I shall seek the reader’s support for the proposition that, even when the strike threat does not give rise to fears of physical sabotage, outrage or disorder, but merely to fears of disruption, its use remains objectionable. Properly seen the disruption is sabotage in its most serious form; its use remains warfare; and its acceptance as a system implies (as I have already suggested) acquiescence in the principle of might is right.

The ability of the majority employed in any field to compel—by physical intimidation—a reluctant minority to strike certainly does, however, enhance the disruptive power of an enforced stoppage. Hence the protection of the nonstriker or of the strikebreaker against all forms of intimidation (including the threat to deprive the nonstriker of his livelihood) must have a high priority in any move toward a more humane and just system.¹⁹ That is why some statesmen and some economists have felt that, if the “right to strike” ceased to be interpreted as the “right to force others to strike,” the worst abuses of the present system would have been eliminated. And such a judgment could turn out to be correct. But our thinking has gone awry if we fail to recognize that the threat of physical harm to person or property is not essential for monopolistic exploitation. The “peaceful strike” can be as reprehensible as the “peaceful boycott.” The threat to disrupt a complex system of social organization by collusive action can intimidate in the same sense that the threat of physical violence to persons or property can intimidate.

To forbid strikes and boycotts would not be to restrain any basic human right. Every person would remain free to refuse to sell his assets, his products, and his services, when the refusal is not a breach of contract. That is, a person would retain his unrestrained right to prefer (a) to be employed by another, (b) to work on his own account, or (c) to enjoy leisure instead of pecuniary remuneration. But this right cannot be appealed to as justification for the concerted or the simultaneous refusal of a group of persons to continue to work in an industry, in a firm, or in a key position in an industry or firm.

The tragedy of general public acquiescence in the strike-threat system lies, indeed, in the sincerity of many of its defenders and most of its victims. An enormous number of idealistic, middle- and upper-class people (possibly encouraged in their convictions because they suffer from a guilt complex for having inherited differential opportunities and wealth) genuinely believe that—through strike warfare—the workers are fighting for justice; trying to rectify an indefensible sharing of the community’s incomes; resisting a sordid and ruthless profit system. And the public shares a stereotype of “profits” which has never fully emancipated itself from the medieval prejudice toward charging interest, or charging for risk-taking, or charging for services performed by the merchant. But the ideas disseminated by the leaders of opinion are seldom the fruit of sophisticated thought, still less of study. When the typical humanitarian devotes some of his mind and much of his heart to the problem, he is almost certain to read of “labor’s disadvantage in bargaining,” of “labor’s bitter struggle” and so forth in the flood of tendentious, and by no means disinterested, academic literature on labor unionism.

John Stuart Mill defended the tolerance of the strike-threat system partly on the grounds that, being allowed the right to strike, would rapidly teach the workers that strikes were futile. “Experience of strikes,” he said, “has been the best teacher of the laboring classes. . . . .and it is most important that this course of instruction should not be disturbed.”²⁰ But this case for tolerating the strike-threat system is unacceptable, whether judged by economic analysis or in the light of bitter historical experience. Unions can gain sectional advantages for their members or for the majority of their members. They have learned well the opposite lesson from that which Mill suggested.²¹

The argument upon which Mill relied, namely, that general abuse of strike power (presumably to force wage rates above their free market values) would recoil upon the strikers’ heads by causing unemployment, is defective for three reasons (each of which is to be rigorously examined later):

1. It emphasizes only the less serious collective detriment which must be borne by the community. Displacement or exclusion of some workers from unionized occupations does not prevent those diverted from finding employments of lower remuneration and earnings (unless independent causes like “unemployment compensation” or social security handouts are present).

2. Mill shut his eyes to what was plain to others of his day: namely, that majorities under union protection are notoriously unconcerned about the harm wrought to those excluded, or the reduction caused in the aggregate income of the community.²²

3. Mill’s argument fails to perceive that displacement of those employed by a wage rate above the free market level (as distinct from the exclusion of those who might otherwise have entered a protected trade) might hardly occur at all where the demand for the product is inelastic.

The deplorable truth is that strikes often do pay; and the incredible cost of the “course of instruction” recommended by Mill has failed because the lesson has been diametrically opposed to what his obviously wishful thinking led him to believe.

I do not suggest that many strikes have not turned out to be against the strikers’ advantage. I admit that occasionally even when the unions have “won” a drawn-out dispute, they have reduced the net income of those of their members who have retained employment for a period of many years following the settlement, because the income foregone during the strike could not be made up by the additional earnings gained until a decade or more later. And I am prepared to go still further and agree that in all probability virtually no group of workers is absolutely better off materially than it would have been in a strike-free economy.²³ But in a society in which the rules of the game permit a “free for all” at the community’s expense, any group which fails to fight for its own interests, without regard for those on whom it tramples, may well come off worst. Moreover, when the majorities in one union observe gains achieved by the majorities in other trades who retain employment at higher labor costs, they are often prepared to take big risks in attempts to win similar gains through the sacrifice of income foregone during the strike period.

This consideration is relevant to labor-pricing which is initially free from obvious duress-imposed influences. Thus, if managements in nonunion firms or industries can rely upon their staff not being inveigled into joining or forming unions at some future time, then investment risks and hence important nonlabor costs of production may be greatly reduced. But under a regime that permits the strike-threat, there is always the possibility of presently un-unionized workers, prompted by an awareness of yields to private coercion elsewhere, resorting to similar methods, after investment in nonversatile assets has occurred. For this reason, managements in nonunion undertakings often deem it profitable to discourage unionization by offering wage rates higher than would otherwise have been forced by the free market.²⁴ Hence the strike-threat system must be regarded as tending to raise labor costs in this manner in certain nonunion industries, with consequences similar to those caused by the direct use of union power.

The high cost of warfare is one of its chief deterrents. But the costs of a strike do not fall only or even mainly on willing contestants. The disruptive effects normally spread injuries over a wide area occupied by noncombatants. When, therefore, the prospective sectional gains seem to exceed the sectional costs, a strike will follow irrespective of the social cost. Is the cost of warfare, then, an adequate deterrent when the detriment to noncombatants may be ignored by the aggressors?

In judging the validity of the arguments submitted in the chapters which follow, readers should be constantly asking themselves whether, unless the strike-threat system is soon effectively checked, it may not turn out to be the major development impelling what were originally democratic and free societies along what F. A. Hayek has called “the road to serfdom.” Henry Simons had no doubts in 1944. Democratic government, he wrote, “must guard its powers against great trade-unions, both as pressure groups in government and monopolists outside. . . . Democracy cannot live with tight occupational monopolies; . . . If democratic governments cannot suppress organized extortion . . . they will be superseded by other kinds of government.”²⁵

Simons’ words, “if allowed to spread,” were prophetic.²⁶ Since he wrote, the strike-threat system has spread and has been giving rise to growing concern. Moreover, in Britain widespread misgivings have prompted the first token reversal of policy in this field since 1824, namely, the Industrial Relations Act of 1971. It seems to me, however, that because the strike threat as such has not yet been recognized as wholly unacceptable in a good society, no thought-out policy to insure simple justice in the wages field has yet emerged. Public discussions of policy changes are groping, pragmatic, and lack formulated principle. In the United States, for example, we experience pathetic calls to the unions for “responsibility” by presidents, governors, mayors of large cities and so forth, addressed to union managements and members. But they amount to abject prayers that the unions shall not actually use the coercive apparatus they have been so carefully fashioning over the years. Have not the unions devised and built this apparatus with legislative approval and encouragement?) And if, with courageous imagination, we take “responsibility” to mean not seizing more than is “reasonable” by the use of such weapons, we must be prepared to disclose our criteria of “reasonable.” We are here back to the problem we encountered above. Exactly how could a would-be “reasonable” union management calculate how much it is “reasonable” to squeeze out of “trapped” investors (see Chapter 10) through strike threats, or how many actual or potential comrades it is “reasonable” to deprive of opportunities via the standard rate? As long as an apparatus designed for the winning of sectionalist gains survives, can we be surprised that, when union leaders happen to feel it expedient to be “reasonable,” and refrain from taking all they calculate can be safely taken from others, rank-and-file members are apt to ignore them and resort to “wildcat” strikes?

It is rather absurd to expect unions not to play according to the rules of the game. These rules have been deliberately drafted in their favor; they authorize union officials to act against the interests of minorities in, or potential entrants to, the occupations they monopolize; they give scant consideration to the interests of the people as consumers; and they were framed with no apparent concern for the desirability of preserving entrepreneurial inducements to attract the services of assets and labor to where their prospective earnings will be maximized. “It is one of the popular naïvetés of our time,” says Machlup, “to praise the existence of an institution but to condemn it when it carries out its functions.”²⁷

Not only have the world’s opinion-makers hardly begun to discern the implications of the strike-threat age, they can be observed to have been inhibiting the effort. Certainly they have been growing increasingly apprehensive of the power of the great union rulers, and the influence these people wield on electorates and legislatures. Yet they have not perceived the extent to which the economic ills of present-day society can be traced to an arbitrariness in the valuation of different classes of output. The pricing of labor (and hence products) has been largely shielded from the coordinating pressures of “free market” discipline and determined instead by a process of warfare.

I do not claim that I have here explained adequately the astonishing blindness of judges, congressmen, academicians, school teachers, editors, clergy, and others on this subject. To attempt to answer the question satisfactorily and fully would require a major essay on the genesis of popular opinion. But the fact is that to challenge the virtues of the strike-threat system today is, as H. C. Simons put it, like questioning the virtues of motherhood and the home. To suggest that the system is injurious to the workers, he said, brands one as a reactionary; for “one is either for labor or against it and the test is one’s attitude towards unionism.”²⁸ A sentimental public, he thought, regarded the labor movement “as a contest between workers who earn too little and enterprises which earn too much,” while they failed generally to perceive “the identity of interest between the whole community and enterprise seeking to keep down costs.”²⁹

But there is another, not unconnected, reason to which I have already referred. It has been said that in the U. S. Congress every interest is represented except the public interest. It would be felt to be political madness for most congressmen, or most candidates for elective office in any country, to take a lead in educating the community on the great issue we are here studying. Is there then any conceivable method of finding a way out of the moral maze which a long alliance between politicians and the opinion-makers has created?

This is a question I have tried among other things to answer in my book, Politically Impossible. . . .? and I return to the subject in Chapter 19. But I want my present readers to ask themselves whether any solution of the problem of industrial warfare is conceivable unless “the peaceful dispute” is eliminated? Such a solution would require legislation which placed three objectives above the vested interests of labor union officials and the relatively small numbers of workers³⁰ who are the final beneficiaries of the contemporary “dog-eat-dog” chaos.

The three paramount objectives are; (1) the highest possible wages flow, (2) the most equitable distribution of that flow, and (3) the greatest possible measure of employment security. To achieve these objectives we must, I shall suggest, eliminate “the dispute.” We must aim at the creation of institutions which facilitate the free market determination of the value of labor’s contribution.

I suggest that if we are ever to achieve peace and justice in the field of wage rate determination, it will be necessary to insure that no party shall ever gain as a result of the private use of coercive power. This means that the issues about which economic wars are waged or threatened shall be decided in a different way. And here I categorically challenge my fellow economists. There is no other way than the determination of all prices by the free, democratic, social process of the market, to the full extent to which human ingenuity can plan the required institutions. And “all prices” covers, of course, the price of labor’s contribution to output (the value of the wage rate plus fringe benefits). Must this price continue to be the outcome, almost everywhere, of a contest or a threatened contest in which the principle of victory to the most strongly armed is tempered only by the fear of going too far and destroying the source of income?

The frequent direct burden of strikes on third parties has sometimes engendered general misgivings in the public mind. But it would be a mistake to think that the observable social detriment in this case is nearly as deleterious from society’s angle as is the distortion of the production structure caused, even when there is no actual strike disruption. The source of the burden that the community must carry remains invisible to the masses and their leaders. Consumers are, I shall show, almost universally passive and helpless. They normally bear the brunt. And workers excluded from all hope of entry at the wage rates imposed are usually unaware of the injustices they bear; they are not prompted to any spontaneous protest; and few politicians judge it profitable to champion their cause.

In conclusion I must again refer to the feeling that “the right to strike” is one of the unchallengeable “rights of man” when it is unaccompanied by any threat of physical harm to person or property, because its aims are then good and achievable. If we rely on the goodness and achievability of objectives, we must be prepared also to defend the unions’ immunities and privileges which make resort to violence and sabotage an ever-menacing reality. Can it not be claimed, equally legitimately, that the right to coerce evil-doers—like nonstrikers and strikebreakers—by the threat of assault, also assists the pursuit of ends which are assumed to be good and achievable?

In this chapter, I have argued simply that the strike-threat system is an intolerable method of attempting to prevent the exploitation of labor, or of organizing the exploitation of investors. In Chapters 6 to 10 I shall discuss the possibility of that method actually achieving either of these objects.

NOTES

¹ Quoted in N. W. Chamberlain, Collective Bargaining, 2nd ed. (New York, McGraw-Hill, 1915), p. 122.

² Abraham J. Siegel, “Method and Substance in Theorizing About Worker Protest,” Aspects of Labor Economics: A Conference of the Universities—National Bureau Committee for Economic Research, Report of the National Bureau of Economic Research (Princeton: Princeton University Press, 1962), p. 42.

³ In E. R. Phelps Brown’s scholarly Economics of Labor (New Haven: Yale University Press, 1962), there are several references to “justice,” regarding the rights of the worker. I have failed to find a single use of the word in reference to the rights of the investor.

⁴ H. C. Simons, “Some Reflections on Syndicalism,” in Economic Policy for a Free Society (Chicago: University of Chicago Press, 1948), p. 128.

⁵ In Chapter 10, I shall show that investors, rich or poor, are inexploitable in that role when they foresee exploitation probabilities. But aggregate net interest receipts (after allowance for inflation) will tend to be reduced through strike-threat pressures (as will the aggregate flow of wages) and affect the less affluent savers regressively.

⁶ On occasion, it has been possible indeed to bring a great range of vertically-integrated operations to a standstill by the withdrawal of a few essential workers in one workshop.

⁷ See above, p. 34. My 1930 discussion of the device is relevant. See W. H. Hutt, The Theory of Collective Bargaining (P.S. King, 1930), pp. 28, 100.

⁸ The phrase (not the illustration) is from Arnold R. Weber, “Stability and Change in the Structure of Collective Bargaining,” Lloyd Ulman, ed., Challenges to Collective Bargaining, The American Assembly (Englewood Cliffs, N. J.: Prentice Hall, Spectrum Books, 1967), pp. 20-21.

⁹ Although the legality of this extraordinarily potent method of disruption is doubtful under certain clauses of the Taft-Hartley and Landrum-Griffin acts, political considerations appear to have prevented prosecutions. However, some “labor economists” have been hinting that the Nixon Administration has been tactfully threatening to enforce the law unless the A.F.L.-C.I.O. refrain from using this weapon, at least during the Administration’s attempt to “fight inflation.”

¹⁰ The position resembles that which has become common in international relations between the newly independent states where the interests of the inarticulate masses are rarely of any importance, the interests of a very small ruling minority (who may be genuinely seeking the welfare of their subjects) being the paramount consideration in diplomatic dealings. This was recognizably the position in the relations between nations in the Middle Ages. It was largely the ambitions and aims of those who held the royal power which had to be satisfied. The people as a whole were expected, in some cases under the explicit claim of divine right, to accept the objectives set by their rulers without question. That the rulers were usually more enlightened than the ruled does not affect the point I am making.

¹¹ See pp. 54-55.

¹² Of two jobs demanding comparable skill and energy, the public will tend to regard a wage rate of 20 percent higher for one person than for another as unfair, unless such a differential has become customary. The criterion may be in practice mere job description. If a high rate of remuneration for a crane operator has been established in the past through union pressures, or for some other reason, the man in the street will say, “But that is the fair wage for a crane operator.” And most people will similarly tend to regard the number who are employable at any such wage rate as an acceptable standard of “an adequate supply” of the labor in question. This point is discussed in Chapter 13.

¹³ F. Machlup, “Monopolistic Wage Determination,” in Wage Determination and the Economics of Liberalism (Washington, D.C.: Chamber of Commerce of the United States. 1947), pp. 53-54.

¹⁴ For example, consider the quotation from Siegel, quoted above, p. 52.

¹⁵ Although the gains are never as great as they are believed to be. (See pp. 47, 54-56, 248.)

¹⁶ Simons, op. cit., p. 127.

¹⁷ Siegel, op. cit., p. 44.

¹⁸ W. H. Hutt, Politically Impossible. . . .? (London: Institute of Economic Affairs, 1971), especially Part 6. I return to this topic in Chapter 19.

¹⁹ As things are, the political power of the union organizations in the United States has succeeded, in certain states, in getting legislation to make the use of strikebreakers illegal.

²⁰ John Stuart Mill, Principles of Political Economy, ed. W. J. Ashley (London: Longmans, Green and Company, 1909), pp. 936-937.

²¹ What they have not perceived is the incidence of their gains from others. Neither they nor their apologists, recognize that vigilant investors are unexploitable, a reality to which Chapter 10 is devoted.

²² As Machlup has pointed out, what the union members expect their leaders to obtain for them is “the largest wage bill” and “not to sell them down the river in the interests of a fancy ‘gross national product’ . . .” The unions “will fight for bigger pay envelopes of their members, regardless of the ‘un-proven’ effects upon the economy which academic economists may ascribe to these policies. . . . To expect the union leader to act as a responsible statesman in the interests of the nation is to expect him to do what his followers would consider ‘selling out to the bosses.’ ” (Machlup, op. cit., pp. 52-53).

²³ For justification of this assertion, see p. 248.

²⁴ But every wage rate raised by duress (or fear of future duress) forces other wage rates down, including some which are still fixed above what the free market would otherwise have determined. See Chapter 7.

²⁵ Simons, op. cit., pp. 126-7.

²⁶ Ibid., p. 127.

²⁷ Machlup, op. cit., p. 54.

²⁸ Simons, op. cit., p. 121.

²⁹ Ibid., p. 122.

³⁰ I say “relatively small numbers” for reasons which are mentioned in Chapter 17.