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Unions or the Division of Labor

By Nicholas Snow
Published: 6 September 2010

Today is Labor Day. Should classical liberals and libertarians celebrate this holiday? Or is it just another state sponsored holiday (which FEE founder and former president Leonard Read used to refer to as Hollowdays)? It is after all a day where we are supposed to celebrate the advances made by workers in the work place. What is important is how this is interpreted.

The standard view of this day seems to be to cheer the victories of workers over the exploitative capitalists who employ them. Without the abilities of the workers to join together in Unions the capitalist economy would fail to provide fair wages and decent working conditions.

Now, to be fair, not everyone sees this day like this but a great many do. The first Labor Day, in 1882, was even organized by a union. The problem is that this line of thinking is just wrong. It was even the subject of the Cliché of Socialism number 11. In this short article, Hans Sennholz illustrates not only why the market would provide fair wages (based on productivity) but also why coercive unions are dangerous and harmful to the very employment they propose to want to help (as well as harmful to the economy as a whole).

Still, if all we want to do is celebrate the non-coercive act of physical labor to produce the things we want, then there is nothing wrong with that. In this way, we can view Labor Day as a day to celebrate the division of labor. Society is the division of labor. Realizing we can achieve more through cooperation rather than in isolation. As Ludwig von Mises said “Now the greatest accomplishment of reason is the discovery of the advantages of social cooperation, and its corollary, the division of labor.”

This is actually quite amazing given that it is achieved by channeling self-interest (with the proper institutions such as private property and freedom of contract of course). As Adam Smith famously said, “It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own self-interest.” So, there is nothing wrong with celebrating the productivity of labor. To quote Mises once more, “The greater productivity of work under the division of labor is a unifying influence. It leads men to regard each other as comrades in a joint struggle for welfare, rather than as competitors in a struggle for existence. It makes friends out of enemies, peace out of war, society out of individuals.” In this way, there is plenty to celebrate.

Download the Cliché of Socialism number 11 by Hans Sennholz here.

7 Comments »

I think Kevin Carson and Charles Johnson (myself included) should use this to celebrate non-coercive, purely voluntary unions. Before Gompers came along, unions were sort of a means of mutual help for their members.

//Tristan Band
6 September 2010 at 7:05 pm

I’ve only recently discovered FEE and I love the content, but I confess, I’m not following this article.

While the principles of liberty and capitalism have served to elevate society more than the alternative philosophies we are usually presented with, surely we can look at history and acknowledge the tendency of the “haves” to grind the faces of the “have-nots”. Where geography, depression, political will or any other factor induces the employee to join his voice with others and so strengthen their collective persuasions, wielding as their weapon only the refusal to work, of what ill can they be accused? As long as the rights of property are held intact, it seems to me that all parties concerned are making lawful and moral use of that which is their own.

The evils seem to me to arise when unnatural protections are placed upon either party. An employer ought to be able to employ (and fire) whom he pleases, and an employee to work where he deigns to accept an offer. Unions may strike and immediately lose their labor. That’s the game of chicken they must play.

Is there any difference when consumers join in a boycott of a given entity, good or service? Under your above assumption, surely market forces and self interest, allowed proper sway, would always bring satisfaction to all concerned and boycotts would be unnecessary. It doesn’t work that way, and because it doesn’t work that way, the ones with lesser individual influence unite, voluntarily or involuntarily, consciously or unconsciously, to equal those with greater influence.

While what we see in unions in the convoluted and marred marketplace of today amounts to corruption and extortion with the weapon of choice is the intervention of government in the contract, help us find the core principles where all (the “haves” and the “have nots”) may have their rights more fully and blessedly protected.

//J. Cook
9 September 2010 at 1:58 am

Also, from the article you referred to above, “the Cliché of Socialism number 11″, comes this thesis statement: “To believe that labor unions actually improve the lot of the working people is to admit that the capitalist economy fails to provide fair wages and decent working conditions.”

How on EARTH can this be the case? If we acknowledge 1) that the employer has the right to employ whom he will and offer in pay what he will and 2) every individual has the right to establish price and conditions on his or her own labor, then the role of unions is purely capitalistic in nature.

To take the socialistic interference of government as indictment of the principle of voluntary labor organization seems like a very big jump to me.

If I’m missing something, please educate me.

//J. Cook
9 September 2010 at 2:17 am

One important thing that no one is touching on here is that employers always try to pit employees against each other. They start with the blame game. The story ends with the employee working for an hour each day for free because Joe Brownnose did and before you know it,the company has a high turnover rate.
Unions see thier fair share of wimps like the above non-union crowd. The only reason unions are among us in the blue collar fields is because the white collar crowd takes advantage of thier managirial status. Look at the difference in pay level and benefit level among any non-union company. They most always bid a project in a similar result, but the non-union contractor sees more for himself and less for his workers.
If I’m not telling you something you already know you are fresh out of school.
In conclusion, unions are better for the overall health of our societies human beings. Healthcare should have been changed to single payer. Taxes or no higher taxes, it’s about the health of people.

//Eric Brown
12 September 2010 at 1:08 pm

Labor unions are inherently unfair and destructive. Some are also criminal to this day. The Teamsters have a long history of violence and intimidation, and continue to log a high number of reported criminal violations in recent years.
Here’s why they are unfair.
Let’s say I start a business. I scrape together some capital, take a big risk, and begin producing a product. I work 7 days a week, 12 hours a day. Nobody guarantees my success, and indeed I may fail, as many do. To produce this product, I offer you a job at, say, $20 an hour. Later, though, even though you agreed to that wage, you say I must pay you more. I say, no thanks, there are many people out there who would jump at the chance to have the job for $20 an hour, even $18, and I have to watch my costs. But with unions, that private contract, labor for a wage, is subverted. Unions are empowered by extracting compulsory dues that enable them to dominate certain industries (at least in the past) and exert unfair advantage. They do not allow me to hire those willing to work, those who have a right to work, blackmailing the courageous man who started a business, created jobs, and helped many people earn a living. He is supposed to bear all the risk, while the employee is supposed to be granted guaranteed security and income. The above example though hardly describes what has actually happened in history, and I know, because I witnessed the brutality and criminality of the Teamsters, which involved firebombing cars, threatening employers and employees with guns and knives, and drive by shootings. All unions do not do these things, but many extort compulsory dues, due to the power of the labor movement (a huge and unhealthy special interest that buys favors from Congress and gets its way through intimidation). Labor unions outlived their need long, long ago. They are now merely parasites upon the backs of productive entrepreneurs, and upon taxpayers (in the case of public employees unions) to the extent that they are driving California into bankruptcy. And they stifle job creation.
They exist mostly as a huge special interest (organized labor) because they have paid off politicians to get special legal advantages and because they extort compulsory dues from workers to expand their power over job creating entrepreneurs, the backbone of the United States.

//David Lewis
12 September 2010 at 7:37 pm

why do you need to hire me in the first place? because while you can do a lot of things, there is one thing you cannot do, everything. you reach your saturation point and you must ask for assisstance from others. your labor will only produce so much wealth. as in you cannot stuff 10 gallons of stuff in a 5 gallon bucket. the ugly truth is that in this country as an example, the free market, which from what i can see is least regulated here, cannot solve humanities problems alone. unless you can hustle customers and do all the work yourself, then you must realize you need to share. if not, then you plagerize the craftspersons work. if i see you on a jobsite, i can use more direct superlatives. i am a capitalist too. i have the skills to use the tools. i might even be able to perform the task better than you. just because i choose to trade my skills for a daily wage, does this make me less than you? 8 hours for work, 8 hours for rest, and 8 hours to CREATE CULTURE. not just be a slave to money. i work to live, not live to work. i have seen it in the non-union sector. there is an subtle yet powerful intimidation dynamic in play at all times. in some cases it’s healthy competition. more often it’s bullying. i recommend studying not only labor history, but christian scriptures as well. there is more about economic justice than vilifying and finding scapegoats to cover our own shortcomings. this system we’ve created of putting a price tag on everything will come back and bite us. it already is. if the private sector would be scutinized the way unions are, things like this recent economic meltdown would not happen. the negative effects of unregulated freemarket capitalism kill and disspirit people as surely as despotic dictators with big guns. one kills her and there, one kills en mass. the totals are the same, but it is analogus to auto versus airline fatalities. one is subtle, one is sensational. the light man is coming and eventually it will work out. but for now, there are darker forces in charge of this world. nuff said. t.t.f.n.

//ya the carpenter
14 September 2010 at 4:54 pm

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