Preface

ONE OF this book’s conclusions is that fear of strikes inflicts far greater damage on the economic system than actual strikes. That is why its title is The Strike-Threat System, not The Strike System. The harmful consequences upon the capital structure alleged here may all be experienced without actual strikes. The mere right to disrupt the continuity of the productive process is having deplorable effects, regarding both the size of real income and equity in the distribution of that income.

In 1930 I published a small book entitled, The Theory of Collective Bargaining (London: P. S. King). In 1954 it was republished, unchanged, in the United States (Glencoe, Ill.: The Free Press). This early contribution of mine argued that, while the power to strike can redistribute income in favor of the members of particular unions, it cannot redistribute income in favor of labor in general at the expense of capital in general. Despite so clear a thesis, it has yet to be successfully refuted. Yet if the argument is valid, its importance for the contemporary world can scarcely be exaggerated.

The present work advances a wholly new exposition in which the same conclusion is reached via a somewhat different route. Its purpose is to analyze the nature, distributive consequences, policy implications and ethical significance of the strike-threat in modern societies. During this analysis, it examines typical arguments which are used, especially by “labor economists,” to justify notions of the kind that I challenged in 1930.

Already in the late 1920s I had reached the conclusion that all the textbook treatments I could find of this important subject were—superficially considered—definitely indefensible or inadequate and unconvincing,¹ For instance, the great Alfred Marshall’s treatment of what he appeared to regard as the crucial issue—bilateral monopoly—was illustrated by his famous example of the barter of nuts and apples; yet as I saw the problem, the circumstances he was thus postulating were, for a variety of reasons, of negligible practical significance.² And Marshall was widely regarded as the greatest economist of his age.

I expected that the obvious challenge of my book would prompt a major contribution, from economists better qualified than myself, to deal with the questions I raised. During my entire academic life I have been expecting an authoritative book. But although there have been many splendid contributions, mainly in the form of articles that have given more or less the same answers that I myself have given, they have had hardly any policy impact. The following economists have all written cogently on aspects of the problems discussed here, and I have gained something substantial from each of them (although some might differ—or would have differed—sharply on certain issues): Fritz Machlup, Ludwig von Mises, Milton Friedman, Friedrich A. Hayek, Aaron A. Director, M. Reder, Goetz A. Briefs, John Van Sickle, Armen A. Alchian, William R. Allen, Marshall Colberg, Yale Brozen, Arthur A. Shenfield, S. Rottenberg, H. Gregg Lewis, Gottfried Dietze, Clarence Phil-brook, Henry Hazlitt, H. Demsetz, F. A. Harper, A, Rees, P. Sultan, V, Orval Watts, C. E. Lindblom, C, H. Cooley, Henry Simons, W. Eucken, E. H. Chamberlin, Wilhelm Röpke, David McCord Wright, Gottfried Haberler, Sylvester Petro, N. J, Simler, Ben Rogge, Helmut Schoeck, H. G. Johnson, and P. Mieskowski.³ Of course, there are many others who would share some or most of my conclusions. Yet these economists have not yet succeeded in making their convictions on the strike-threat issue influential. They have failed, particularly, to win the sympathy even of those of their academic colleagues whose minds are not closed (which, unfortunately, I often think today is a small proportion).

It seems almost arrogant of me to attempt to achieve what I feel economists of such eminence have failed to achieve. Yet try I must. I speak to those who do not refuse “dialogue.” But I am hopeful, above all, that this contribution will have some influence among that small but active group of young, skeptical, independent-minded students in colleges and universities whose misgivings cause them to see further than their teachers. These students discern, I know, that something is more fundamentally wrong in the labor market than they are being taught, while the conventional diagnoses of today (they perceive) go disastrously astray.

There is of course today an enormous literature on “labor economics.” I find it for the most part tendentious, often derivative, and usually devoid of any original or independent thinking. Much of it has been written, I guess, to satisfy the imperative in American universities to “publish or perish.” Trying to judge whether there is anything worthwhile in all these volumes has been exasperatingly time-consuming and unrewarding. But it is the bias of most of this literature which is most disturbing. In an article published a few years ago, I ventured a diagnosis.⁴ I said that most books on “labor economics” have been by labor consultants, arbitrators, conciliators, mediators, labor attorneys, labor correspondents; and that such “economists” cannot think or write dispassionately on matters affecting their incomes.

Two decades ago, a leading member of the British Labor party, Lady Wootton (Barbara Wootton), stated quite categorically, that it is “the business of a union to be anti-social; the members would have a just grievance if their officials and committees ceased to put sectional interests first.”⁵ F. A. Hayek, commenting on this passage, noted “few liberal sympathizers of the trade unions would dare to express . . . [this] obvious truth.”⁶ But why should trade union sympathizers, including their academic advisers, not dare to refer to such a truth unless they felt that their political ambitions or prospects as consultants, or advisers, or labor journalists would be jeopardized by so frank art admission?

Having referred to a mass of works on “labor economics,” which I judge to be worthless on the topics to be discussed here, I must make it clear that I am not referring to a relevant field in which research in the best sense of the word “scientific” has occurred. Especially since World War II, there has been a considerable output of scholarly statistical and empirical studies in the sphere of wage-rates and income distribution, including some books and articles by the economists I mentioned on p. viii. These works, of which some of the most impressive have been published under the auspices of the National Bureau of Economic Research, have bolstered my confidence in the conclusions I have reached. Their investigations have convinced me that the opinions I had formed at the beginning of my academic life, and to which I find myself adhering (dogmatically or steadfastly) toward its end, are consistent with the findings of empirical research.

In Chapters 15 and 16 I discuss the limits to which studies of measurable “economic quantities” can be useful on the particular topics I have covered. But I ought at this stage to express my indebtedness to all those who have explored the statistical material with such care, patience and ingenuity. Apart from the contributors mentioned on p. viii, the economist-statisticians whose works have contributed most to my confidence are those quoted in Chapter 16 although I must not claim (for I do not know) that they would all agree with the inferences I draw from their research.

Teachers of economics in the “classical tradition” often warn their readers that economic science is not concerned with moral valuations but simply with explaining the causes of exchange values and prices and the actions that create them and respond to them. Nevertheless, ethical speculation can seldom occur usefully unless the economic implications of human interaction are understood. The purpose of my analysis is to assist those who are genuinely concerned with building “the good society.” I want to help them to think rigorously about what I myself have come to regard as the crucial issue respecting interpersonal relations.

I have tried to write for the layman and the economist. Where I have found it expedient to use the technical jargon of economics, the reader will usually find a paraphrase which avoids such terminology or that I have provided simple definitions, either in the text or in footnotes. And I have throughout found it useful to disclose the general trend of my argument as early as possible, developing my case as I meet objections or after meeting predictable objections. If readers who are shocked by the thesis outlined in Chapter I will patiently withhold judgment, they will I think discover that the grounds for their initial dissent (and in some cases expostulations) will be dispassionately examined in the appropriate context later on. Often I repeat points made earlier because, despite many cross-references, repetition has seemed to be the most effective way of reminding the reader of what has already been shown.

Although I shall most often enunciate what I myself judge to be the accepted principles of “classical economics,” I shall at times argue for propositions which some economists would be inclined to challenge. When I resort to the first person, it will indicate that I do not wish to leave any impression of reliance on authority. That is, without making claim to originality, I want to stress at that point that economists in general might not necessarily accept my logic or premises.

The branch of economic relations on the operation of which I am trying to throw light is one of which, because the fortunes of men may be influenced by what is clarified, the findings (not assumptions or logic) may be bitterly challenged. A century and a half ago the logician Whately pointed out that if the teachings of Euclid had borne on human affairs they would have been subject to violent controversy down to his day. My own crucial thesis, sketched in Chapter 1, will be praised or damned for this reason whether it is right or wrong. Self-interest (including supposed self-interest) tends to warp even the most sincere judgments. Most labor unionists firmly believe that their material standards, their security and even the respect in which they are held are indirectly derived from the right to strike. Their present well-being has been won, they are convinced, by “long and bitter struggles”; and what they have achieved, they have no doubt at all, is capable of being preserved only by retaining the powerful weapons they have forged. Such convictions are, I shall try to show, wrong. But most of labor’s critics today accept the same ideas. They have grave misgivings and they deplore what they think of as the abuses of strike-threat power. But the existence of that power they still regard as a guarantee of justice. It is this stereotype which it is my task to demolish.

I wish to express my indebtedness to the following universities and colleges in which I have served as visiting professor or research fellow while the ideas here expressed have been taking shape: the University of Virginia; Rockford College; Wabash College; Texas A & M University; the Hoover Institution on War, Revolution and Peace at Stanford University; California State College at Hay ward; and the University of Dallas. I must acknowledge the encouragement and assistance of the Relm Foundation, the Principles of Freedom Committee and the Institute of Humane Studies.

W. H. Hutt

NOTES

¹ I did not then know of Eugen Böhm-Bawerk’s important Control or Economic Law? which reached conclusions similar to those I reached. It had not then been translated into English. Nor had works by Ludwig von Mises which dealt briefly with the same issue.

² I discuss Marshall’s contribution on pp. 7-9.

³ I noticed the important contribution of Professors Johnson and Mieskowski too late to permit a discussion of it in all appropriate contexts. I refer to its findings in an appendix to Chapter 15. I received E. P. Schmidt’s splendid study. Union Power, on the day I received the page proofs of this book.

⁴ W, H. Hutt, “Misgivings and Casuistry on Strikes,” Modern Age, Fall 1968.

⁵ Barbara Wootton, Freedom under Planning (Chapel Hill: University of North Carolina Press, 1945), p. 97,

⁶ F. A, Hayek, The Constitution of Liberty (Chicago; University of Chicago Press, 1960), p. 505.