How Do Unions Work — Trade or Theft?

In his work The State, sociologist Franz Oppenheimer draws a distinction that has been widely adopted among libertarian intellectuals. Oppenheimer outlines two methods of acquiring wealth (and here we mean not just wealth narrowly construed, viz. money, but broadly construed — “welfare” would be close in meaning). On one hand, we have production and exchange; on the other, theft and extortion. The first method Oppenheimer terms “the economic means,” the latter he calls cheekily “the political means.”

The economic means constitute a positive-sum game. When two parties engage in a trade it is because each judges that they stand to gain. The distinguishing features of the economic means are peacefulness and mutuality. The political means are at best a zero-sum game. One party’s gain can be produced only by another party’s loss. The distinguishing features of the political means are predation and antagonism.

By now I’ve treated the political means with enough scorn that it should be clear which of the two I feel is a more appropriate principle to govern human interactions. However, it probably won’t do to assert so without argument — although I think preferring the economic means should have a certain intuitive appeal. Fans of utilitarian/economic arguments should note that it is only through the economic means, and only with the exclusion of the political means, that a Pareto optimum is attainable. We might also employ the more obvious ethical arguments against theft and violence, and remark that at the heart of many of our ideas about ethics, consensuality seems to be central.

I gloss over these considerations because I am concerned primarily here not with teasing out all the ethical implications of economic/political distinction, but in determining which classification describes union activity.

Unions have two core purposes:

  1. To increase the compensation rate of union members (including money compensation and benefits).
  2. To improve working conditions of employed union members.

I am being generous here. Often times, unions are just rackets to enrich union bosses. That is not the sort of organization I’m talking about — under consideration is the ideal example, free of corruption. The next question we must ask is “What baseline situation is the union trying to improve upon?”

I have carefully avoided using the term “wage” above. Some unions favor the abolition of the wage system and (what they view as a correlative) the profit system. Even in this extreme case, the goal is still to increase wages — they argue that owners of capital are skimming off an undue amount of money which rightfully would go to their employees (the “just” amount of such skimming, according to this line of thinking, being zero). It should be fairly noncontroversial, given the above qualification, that the union tries to increase wages over the long-run equilibrium “market-clearing” rate.

It is less clear what the appropriate baseline is to take for improvement of working conditions; a quick look at the Teamsters constitution (page 4) says only that the organization favors “improved working conditions.” The AFL-CIO website had a lot of mentions of worker health and safety, and about giving employees a say in the production process, and even a few endorsements of specific legislation (like OSHA), but I couldn’t find anywhere a platform about what constitutes a healthy, safe working environment.

There are basically two ways you can go with a working conditions claim. Either you can posit an absolute standard (perhaps tailored industry-by-industry, perhaps not) which must be met by employers, or you can favor continual improvements over time. I include in the latter category the notion that unions are necessary to push back against the desire by employers to sacrifice the safety and health of their workers for increases in efficiency. Given how ill-defined this notion is, I think the best we can say is that unions seek improvement in working conditions over the present case; i.e., either we are currently below the minimum and need to improve, or continuing improvement is always necessary.

In light of the foregoing discussion, we can reformulate the previously stated purposes of unions as follows:

  1. Unions attempt to increase the wages of their members over the long-run equilibrium “market-clearing” rate.
  2. Unions seek improvement in working conditions over the present case.

Now we must turn to the question of how such things might be accomplished. Like any other price, the price of labor is determined by the decisions of individuals; in this case, on one hand decisions to employ or not employ a person at a given price, and on the other decisions to work or not work at a given price. The long-run trend will be for wages to be determined by the productivity of labor (a worker with a backhoe is more valuable than a worker with a shovel).

In light of this, there are several ways one might try to accomplish the first goal. One might open a new business, thereby increasing demand for labor. Unions don’t do this; unions are concerned with already existing employee-employer relationships. One might try to increase the capital stock, thereby making labor more productive. Unions don’t do this, either. Another thing you could do is restrict supply. I will argue below that this is the primary method unions use to increase wages for union members. The final way is persuasion; unions are often portrayed as advocacy groups for workers. I will argue below that this is not what unions do.

I was once struck by the fact that most examples of union violence are not against capitalists (in the sense “owners of capital”), but against other workers: scabs, strikebreakers, etc. But this no longer shocks me. Because the primary method unions use to achieve higher wages for their members is to restrict the supply of labor. They use violence to forbid people from competing with them. There was a time when this meant forcibly preventing from going to work or intimidating them into toeing the union line. There are still cases where this happens, but for the most part unions have succeeded in institutionalizing this violence in the form of the minimum wage. Now, instead of a union thug stopping you from undercutting the union’s wage offer, the government will exercise force instead.

But even with these threats against the unemployed, they still have a strong incentive to work. This is what Marx was worried about when he talked about the “reserve army of labor” which the capitalists would use to keep wages down (there were also some Malthusian concerns, but these are mostly beside the point), and what the IWW is concerned about when it says it wants one union for all workers, rather than many unions that can be set against each other. So something must be done to reduce the incentive to defect away from worker solidarity. This is what “unemployment insurance” programs and the like are for — to placate the people most hurt by union (now, government) violence. How is this accomplished? It is accomplished by nothing less than the forced confiscation of property from its rightful owners.

Anyone can ask for higher wages; they have freedom of speech. Anyone can join with others to advance a common purpose; they have freedom of association. And if unions stopped at persuasion, there would be no problem. But unions are by nature rights-violators. They force others to associate with them against their will. In some states, even non-members of unions are required by law to pay union dues. In states where forced unionism is legal, union organizers can impose a union on the employees of a company by a simple majority vote. Thereafter, the company is forced to negotiate “in good faith” with the union whether it wants to or not. There are also freedom-of-association problems with right to work laws, but I am not dealing with that topic here.

It might be objected that you could have a union without forced collective bargaining, without forced collection of dues, and so on. This is certainly true; likewise, you could have a mafia without “insurance” rackets, concrete shoes, and so on. Still calling it a union, or a mafia, seems odd at that juncture, however. You could have a chocolate cake and insist on calling it “salad.” It isn’t the name of the thing anyone objects to. It’s what the thing does.

If you want to form a group that mediates contractual negotiations between workers and employers, or one that agitates for workplace safety improvements, that’s fine by me. These functions are innocuous (even salutary under certain conditions) and at can be considered at most auxiliary functions of unions. Unions are not, at their core, about voluntary mediation and persuasion. They are about violence. Take away that violence, and the unions will wither.

Unions use the political means to increase their wealth. We would do well to keep this in mind as we watch the drama unfold in Wisconsin and soon, perhaps, elsewhere.