Freeman

ARTICLE

A Matter of Common Interest

AUGUST 01, 1960 by PAUL L. POIROT

When persons with a common in­terest cooperate voluntarily, their organized effort constitutes a powerful creative force. On the other hand, some of the world’s most perplexing problems stem from attempts to reconcile con­flicting interests by merging them into one big organization.’

Why organizational efforts suc­ceed in some cases and fail in others will continue to puzzle man­kind until the elemental fact is recognized and accepted that an individual does best what he un­derstands and wants to do of his own choice. No police force is needed to compel anyone to do as he pleases, whether by himself or in concert with others. When everyone involved in a project is truly interested and wants to help, no effort need be diverted to per­suade the unwilling or to whip the laggards into line.

Persuading a person to do other than he chooses seldom resolves conflicting interests but, more often, pushes the conflict into open violence. This, in turn, invokes gov­ernment action. Thus it is, that efforts to merge and organize con­flicting interests lead to increasing governmental power over human affairs.

One could cite many examples of the disastrous consequence of trying to organize without a com­mon objective, including the broken treaties and agreements at the international level. Closer to the experience or observation of most of us, however, is the ex­ample of actively competing sellers of a particular commodity or serv­ice trying to combine or organize to protect their presumed com­mon interests. What they presume to have in common is a right to supply all of a given market de­mand for their product or service. They hope for a monopoly power to exclude from "their" market certain other suppliers categorized as "unfair competition."

When competing sellers succumb to this ancient and hardy tempta­tion, they overlook the fact that any organization to control a par­ticular segment of a market neces­sarily must include the customers as members of the organization—because they constitute the de­mand side of that market. It is most difficult to explain to an intel­ligent customer that it would be to his advantage to buy at a high price from a "fair" seller when he could get the same thing at a lower price from an "unfair" seller. If the customers refuse to cooperate voluntarily in the or­ganizational effort, the stage is set for coercion—and government intervention. Sometimes the gov­ernment intervenes in behalf of sellers by imposing and enforcing tariffs or other trade barriers. In other cases, the government con­demns the action of the sellers as a "combination in restraint of trade." In either case, whether through protectionism or through antitrust activities, the govern­mental intervention is a conse­quence of an attempt to merge and organize conflicting interests. A true commonality of interest exists between a buyer and a seller—not between sellers who are competing for that buyer’s patronage, or be­tween buyers who are competing for the available supply of some commodity or service.

Price Control and Cartels

How often one hears the pro­posal: "If only the consumers would organize!" The implication is that consumers would be well advised to gang up on suppliers in some way, as though they could then command twice as much for half the price, or something like that. But what supplier wants to cooperate in such a program? Where is the supply to come from to give every consumer all he wants at a price he would like to pay? We have been through all that, many times, and especially under the price control and rent control regulations of World War II. We should know that consumers will not stay organized under such conditions; first one and then an­other will desert the organization and turn to "the black market" for supplies.

Compulsory Unionism

The same thing happens when sellers attempt to organize a cartel or monopoly. No sooner does such organized curbing of the supply begin to reflect itself in higher prices than one or more of the member suppliers finds an oppor­tunity to improve his own posi­tion by selling a little bit more than his quota. This is why such combinations in restraint of trade must, and do, quickly fall of their own weight, despite coercive efforts to enforce the monopoly. Meanwhile, as we have observed, the government will have been drawn in, either to suppress or to sustain the attempted coercion. No matter which side government takes, an organized effort that must rely on force against either its own members or against out­siders always results in an expan­sion of government activities—an extension of government control over human affairs.

The economic and moral case against business combinations in restraint of trade is fairly well un­derstood in the United States to­day. But not everyone who under­stands about cartels in business is equally aware that many, if not most, of the labor unions are or­ganized around that same absence of a common interest. What can be the common objective of two or more workers who are competing for the same job opportunity? And what could be more logical than peaceful cooperation between an employee who wants to perform a service and an employer who wants to hire him?

Nevertheless, we find labor unions insistent on compulsory union membership, compulsory col­lection of union dues, compulsion over their own members, and com­pulsion against their only cus­tomers: the employers of labor. This also is a form of combination in restraint of trade. It is quite possible that compulsory unionism, directly and indirectly, is account­able for a larger proportion of the growth of government in the United States in the past 30 years than is any other organized effort, including the threat of Soviet com­munism.

Lest anyone think this a reck­less and unfounded charge, let him consider some of the following as­pects or developments of a labor-oriented national policy of "full employment":

1. A Social Security program with its multibillion-dollar annual tax bill. One of the major arguments for the program in 1935 was that it would provide job oppor­tunities for younger workers as the older ones retired.

2. State and federal unemployment compensation payments of bil­lions of dollars a year.

3. Billions of dollars of farm price supports designed at least in part to slow the movement of farm workers into union-con­trolled jobs and to hold down the cost of living of urban families.

4. The countless make-work proj­ects—highways, airports, gov­ernment buildings, dams, river and harbor improvements, and other spending programs sup­posed to relieve "distressed areas" from one end of the country to the other.

5. Public housing, "urban re­newal," and other federal and state aid programs largely for the supposed benefit of low- and middle-income families.

6. The damage and cost of strikes, slowdowns, boycotts, featherbed­ding practices, and other bur­dens of compulsory unionism.

7. The legalized looting of private pensions, insurance funds, and other savings because of the in­flationary deficit financing that inevitably goes with a program of "full employment" through government intervention.

The foregoing list is not meant to suggest that organized labor is the only pressure-group activity responsible for the inordinate growth of government in our time. Nor would it be proper to conclude that competing workers have no common interest at all around which to organize. Their true com­mon interest lies in the restora­tion and preservation of a competi­tive market economy under a gov­ernment limited to the defense of life and property—an interest that ought to be shared by every person in the world concerned for his own well-being. Trying to or­ganize around a special privilege, at the expense of other persons or groups, is to forfeit freedom and invite government control.

If ever there were grounds for common cause in this nation, surely the paramount common in­terest today would lie in a re-ex­amination of our so-called volun­tary associations—all of them—so that we might support and strengthen the real ones, withdraw from the others, and thereby re­lieve ourselves of excessive gov­ernment and taxes.

Footnotes

1 For further discussion of some of the problems of organization, see: Read, Leonard E. “On That Day Began Lies,” Essays on Liberty, Vol. I. Irvington, N.Y.: Foundation for Economic Education, Inc., 1952. p. 231; Brown, W.J. “Imprisoned Ideas,” Essays on Liberty, Vol. V, 1958. p. 18.

 

 

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Ideas on Liberty

Woodrow Wilson

I have always in my own thought summed up individual liberty, and business liberty and every other kind of liberty, in the phrase that is common in the sporting world, "A free field and no favor."

ASSOCIATED ISSUE

August 1960

ABOUT

PAUL L. POIROT

Paul L. Poirot was a long-time member of the staff of the Foundation for Economic Education and editor of its journal, The Freeman, from 1956 to 1987.

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